Brand or Anti-Brand?

Dec 3, 2010 Stacey L. Dogan2 comments

Stacey L. Dogan

How many law review articles begin with a scene from Wayne’s World?  For Sonia Katyal, such an opening is par for the course.  Since she entered the scene a decade ago, Katyal’s scholarship has celebrated irreverence, and examined the ways in which the law tolerates, enables, and often discourages commentary on dominant culture, icons, and in this case, brands.  This essay – written for a symposium on advertising and the law at SUNY Buffalo Law School – continues the Katyal tradition.

In Stealth Marketing, Katyal takes up the question of whether and how the law should deal with the increasing convergence between speech from trademark holders and speech about trademark holders.  The essay picks up on a phenomenon that Ellen Goodman raised several years ago in her article, Stealth Marketing and Editorial Integrity, 85 Tex. L. Rev. 83 (2006).  Goodman’s piece had explored the various ways in which advertisers pay to slip their messages into communicative products, leaving consumers uncertain as to the objectivity or veracity of the content they consume.  Goodman’s inquiry focused on the extent to which the law can or should require disclosure when a business, advocacy organization, or even an arm of the government pays to have its messages incorporated into a third party’s communicative work.

Katyal’s essay observes that the growth of stealth marketing has coincided with another cultural phenomenon:  the use of “anti-branding” by commentators seeking to shape popular perception of dominant brands.  Anti-branding involves the use of a brand to comment on the brand itself or to make a broader social commentary about advertising, consumerism, or some other political or societal concern.  Katyal gives several colorful examples of anti-branding.  Take the Absolut Nonsense campaign:

[A]n image of an Absolut vodka bottle is depicted with the slogan, “Any suggestion that our advertising campaign has contributed to alcoholism, drunk driving, or wife and child beating is absolute nonsense.  No one pays any attention to advertising.” (P. 807).

As Katyal points out, this use of the ABSOLUT mark arguably aims at several different targets at once:  the ABSOLUT vodka product, the ABSOLUT marketing campaign, and the general practice of advertising.  (One could easily add other satirical targets to this list, including our society’s widespread denial of alcohol’s harmful effects.).  More generally, anti-branding seeks to “expose, dissect, and then recode messages in advertising.”  (P. 811).  It uses marks to convey a message that may be complementary, oppositional, or orthogonal to the one cultivated by the trademark holder, but that comes from a distinct – and often critical – source.

Although Katyal spends some time exploring the extent to which the law allows or obstructs various forms of anti-branding, her real goal in this essay is to make a different point:  that the existence of this often irreverent, ironic, edgy, and unauthorized use of marks further complicates consumers’ perception of the many different communicative forms in which they encounter trademarks in their everyday lives.  As Katyal observes, stealth marketing itself has begun to take on some of the characteristics of anti-branding, by using third-party agents and sometimes self-mocking messages to enhance brand awareness among consumers.  In the afore-mentioned Wayne’s World scene, for example, the actors ridiculed the idea of product placement while guzzling and gobbling brand name food and drinks on-screen.  As stealth marketing itself becomes edgier, stealthier, and more irreverent – and as it broadens the cast of spokespeople paid to achieve its commercial objectives – consumers may have an ever-harder time distinguishing between messages conveyed by objective third parties and those delivered, sponsored, or paid for by the trademark holder.  Anti-branding and stealth marketing, in other words, may become increasingly indistinguishable.

Katyal does not fully develop the normative implications of her insights, nor does she pretend to.  She gives an approving nod to suggestions by Rebecca Tushnet and Ellen Goodman to increase disclosure of payments to those who tout, mention, or otherwise promote particular brands.  And she mentions the Federal Trade Commission’s recent movement in that direction.  But the essay’s real value lies in its artful description of the complex ways in which old-fashioned branding, anti-branding, and stealth and guerrilla branding appear, overlap, and interact, and the implications for our information-overloaded society.  Besides, it’s an awfully fun read.

Consumption-Based Distinctions Consuming Themselves: The Rise and Fall of Intellectual Property as the Enabler of a Sumptuary Code

Sep 30, 2010 Kevin E. Collins

Kevin E. Collins

If you ever find that your reading in the field of intellectual property is becoming repetitive, or if you feel you’ve already cataloged all of the different cookie cutters that are commonly used to stamp out contemporary scholarship, then here’s what you should do: sit down to read Barton Beebe’s Intellectual Property and the Sumptuary Code and enjoy the ride.  It’s not exactly conventional beach reading for the dog days of August, but Beebe does build an intricate sand castle—he articulates a highly original thesis concerning the social function that certain trademark-related doctrines are playing in contemporary society—both expecting and hoping that it will soon collapse under its own weight.

For those of you who, like me, are not entirely literate in the history of fashion, a sumptuary law is a law that regulates luxury expenditure and enforces social hierarchy.  (P. 810.)  A sumptuary code, in turn, is roughly the social-norm analog of a sumptuary law.  It is a semiotic system of consumption practices through which individuals send signals about their differences and similarities.  (P. 812.)¹  And unlike sumptuary laws, which have largely disappeared, sumptuary codes are very much alive and well.

Beebe argues that emerging technological conditions threaten the viability of the contemporary sumptuary code in that “most competitively consumed goods can be persuasively simulated,” meaning that “our increasingly powerful copying technologies threaten quickly to dilute the rarity and thus the distinctiveness of otherwise distinctive goods.”  (P. 814.)  In much less refined language, where once upon a time I could rely on scarcity, price, and closely guarded knowledge to ensure that the things that I and my kind consumed were not available to everyone immediately, and therefore to ensure that my consumption of those goods was meaningful under the sumptuary code, advanced technologies of dissemination and reproduction, overseas sweatshops, and overnight delivery mean that I no longer can.

Beebe sees intellectual property law as a last line of defense for those who are interested in maintaining a meaningful sumptuary code.  “If we wish to preserve our system of consumption-based distinction, then we require a set of laws to do the work that our material conditions once did.”  (P. 815.)  In particular, Beebe convincingly discusses at length how antidilution law, geographic indications, and traditional cultural protections restrict the production—and thus indirectly the consumption—of goods and enables consumption to retain some meaning in a sumptuary code.

Beebe’s recasting of these doctrines lying at the periphery of trademark law as the tools of last resort for those who are interested in maintaining a meaningful sumptuary code is an insightful elaboration on a more general theme that carries through a great deal of recent trademark scholarship.  The commonly observed trend is that trademarks are moving from being means (the labels placed on goods desired by consumers to indicate the origin of the goods) to ends (the desired goods themselves).  What does it mean for the mark to be a good desired by the consumer?  The mark is valuable because it signifies something to those who see the consumer consuming it.  What does the mark signify?  It sends a message about social status that, absent expansive trademark law, would be drowned out by static.  Trademark-related doctrines serve the social function of enabling marks to carry meaning not only about the goods to which they are attached to the consumer but also about the people to whom the goods are attached to those who witness the consumption.  In other words, trademark-related doctrines serve the social function of enabling a sumptuary code.

Beebe is no fan of exclusive consumption-based social hierarchies that sumptuary codes usually maintain and reinforce, so he seems to delight in foreseeing the possible demise of the very social function of trademark-related doctrines that he so carefully and ingeniously unveils.  Intellectual property does not simply maintain the meanings of extant marks.  It creates incentives for “Progress” (with the capital “P” to be taken with some irony, as Beebe fully recognizes²) in that new market entrants will fabricate new marks and attempt to endow them with new meanings.  In Beebe’s crystal ball, the inevitable “arms race” among mark producers will wear out consumers’ abilities to consume meaningful symbols and thereby herald the end of the sumptuary code.  In Beebe’s own language, “as our system of consumption-based social distinction produces more and more commodified forms of distinction, the ability of individuals to comprehend these forms may reach a limit, one beyond which a seeming infinitude of such forms of distinction appears to blur into indistinction.”  (P. 882.) Beebe then concludes with a utopian vision of what non-consumption-based systems of social distinction might rise from the pile of sand into which his castle has crumbed, but, to avoid spoiling all of your beach-time fun, this final twist I leave for you to discover yourselves.

1. Beebe’s interest in the sumptuary code is therefore a natural extension of his long-standing interest in the semiotics of trademark law.  See Barton Beebe, The Semiotic Analysis of Trademark Law, 51 UCLA L. Rev. 621 (2004).
2. “Progress” is an enlightenment concept that implies not only movement away from the status quo but a directed journey to a more perfect world.  See generally John Bagnell Bury, The Idea of Progress: An Inquiry into its origins and Growth (1921).

Distinction With(out) a Difference: Attribution’s Challenge to Intellectual Property Law

Sep 30, 2010 Laura A. Heymann

Laura A. Heymann

In his most recent article, Barton Beebe provides a typically sophisticated and rich analysis of the ways in which intellectual property law is used to reinforce exclusivity, much as sumptuary laws have done throughout history.  Such laws, by regulating the fashions of the citizenry, enacted a dialogue about distinction and group identity, in which those permitted to wear certain costuming could communicate to others their inclusion in a particular class.  Sumptuary laws accomplished formally what now sometimes occurs through more vague forces of collective action: the price of a designer handbag forecloses wide adoption (until its double becomes available at Target), and limited editions of collectibles ensure that the competition for exclusivity is played out openly.  The same processes take place in the noncommercial realm: the names given by those in higher socioeconomic classes to their children, for example, trickle down over time to parents in lower socioeconomic classes with particular aspirations for their children, thus diluting the prestige of the name among the wealthy, who then abandon it in the next generation.

The importance of a system of distinction is not necessarily, Prof. Beebe notes, tied to a desire for superiority or opposition, although presumably at least some individuals are so motivated.  Rather, a level of “optimal distinctiveness” allows individuals to construct their own identities while affiliating with other individuals who share their interests.  (Indeed, in some cases, these affiliations coalesce around a message of “counterconformity” that rejects the hierarchy created by status goods, thus resulting in, ironically, a new mode of conformity that further contributes to the clamor of voices all proclaiming themselves to be different.)  And for some consumers, close enough is good enough:  so long as a handbag appears to others to be a designer brand and doesn’t fall apart on repeated uses, it serves both the purpose of holding one’s personal items and the purpose of signaling one’s place in the social and economic hierarchy — as Prof. Beebe phrases it, it represents relative utility, if not full absolute utility.

Prof. Beebe contends that although the sumptuary laws of old may no longer be in force, such codes are still enacted today through intellectual property law.  The ability of modern technology to create near-perfect copies — whether of diamonds, musical recordings, or handbags — means that material manufacture no longer contains its own inherent constraints on acquisition and consumption.  Indeed, even the producers of “authentic” goods have difficulty distinguishing these simulations from their own products.  Intellectual property law, Prof. Beebe argues, provides these constraints, imposing by legal means what can no longer be imposed naturally.  Intellectual property law, after all, often concerns itself with acts of copying, impersonation, and inauthenticity: purporting to be something or someone other than the original.

To illustrate this phenomenon, Prof. Beebe considers two forms of authenticity protection that intellectual property law takes:  antidilution law and geographical indicators.  Trademark’s antidilution law nominally concerns itself not with uses that substitute for the utility of the good in the marketplace but with uses that chip away at the uniqueness of the trademark, a feature that by definition, and unlike other forms of intellectual property, is rivalrous.  As Prof. Beebe points out, however, courts’ reluctance to embrace this theory of antidilution law has led to their use of other intellectual property doctrines, such as post-sale and sponsorship confusion in the trademark context as well as copyright law, to accomplish the same goal.  Indeed, Prof. Beebe astutely notes, copyright law’s extension of infringement to works that are substantially similar to the protected work “include[s] copying that, while perhaps not fully substitutive in nature, is nevertheless dilutive of the distinctive style or ‘aesthetic appeal’ of the plaintiff’s work.”  (P. 862.)  Likewise with the pending Innovative Design Protection and Piracy Prevention Act:  As Prof. Beebe notes, it is not the threat of lost sales that motivates such legislative efforts — the market for the Versace gown is not likely to overlap significantly with the market for the department-store copy — but a desire to maintain a hierarchy of distinction in which the class-based signals sent by the wearer of the Versace gown are clear and unmistakable.

Geographical indicators and other statements of authenticity (such as those identifying a good as from a particular indigenous group) serve as a similar communication of distinction and difference.  Whereas the circumstances of production might previously have indicated authenticity — only certain producers had access to the materials and know-how that could result in certain goods — technology has often eliminated this advantage, requiring producers to communicate their products’ origin stories explicitly.  Of course, when copies can barely be distinguished on their face from the original, a statement of authenticity tends to communicate nothing more about a product’s qualities than the claimed authenticity itself.  And yet presumably, as Prof. Beebe suggests, these statements are made because consumers care about such origins.  It matters to them from whom or from where a product originated — that “Champagne” comes from France, not from California — even though the qualities of that product may be identical to its differently denoted competitor.

The use of intellectual property to replicate the force of sumptuary laws, argues Prof. Beebe, unmoors intellectual property law from its core interests in promoting the creation of goods so as to eventually encourage copying (in the case of copyright law and patent law) and in ensuring consumers are able to find the goods or services they want without being confused as to the product’s source (in the case of trademark law).  Prof. Beebe is somewhat despairing of any major change in this state of affairs, although he notes one bright spot on the horizon: the emergence of a commons-based system of innovation in which freely given creation, rather than consumption, is the focus.  In order for this system of innovation to flourish, however, it needs to provide contributors the reputational gains that, at least in part, inspire them to create and contribute.  So, as Prof. Beebe concludes, attribution becomes a key value that intellectual property law should promote, if only by encouraging “the growth and extension of the social movements that both rely on and help to propagate this system of social distinction.”   (P. 885–86.)

Prof. Beebe does caution that the modes of attribution that allow innovators to get credit for their work are the same modes that allow designers to promote their sumptuary code–based interests, but this should concern us only so much.  So long as consumers of all types — whether economic or intellectual — know what they are getting and from whom they are getting it, the choice as to how much to consume from what sources should remain theirs.  This is not to say that intellectual property law is currently operating within such narrow boundaries — Prof. Beebe’s discussion of post-sale confusion, which is typically not confusion at all, illuminates the fact that trademark owners use the law in many cases not to eliminate confusion but to eliminate competition.  But it is to say that intellectual property law should not much care that Louis Vuitton’s trademark has a signaling effect as well as a source-identifying effect, even if some might believe that the purchase of the former is a wasted expenditure.

The importance of attribution and our fluid system of naming practices also mean that intellectual property law has more work to do about what authorship and source mean in the realm of creative products.  Although these are exalted concepts in copyright and trademark law, they are more complicated in practice.  Copyright law uses the word “author” both for the writer whose hand holds the pen and for the corporate entity that merely sponsors the creative work, and trademark law allows corporations to disseminate goods under various sub-brands and change their names after public relations blunders without fear of liability.  And sometimes, as in the case of Andy Warhol’s Factory — which created original “Andy Warhols” for which the artist’s primary role was to affix his signature — a communicative product complicates questions both of authorship and of source, leaving us the task of distinguishing authentic from inauthentic.  For now, we can be fairly confident that, contrary to the Court’s view in Dastar Corp. v. Twentieth Century Fox Film Corp., authorship and source are indeed of interest to consumers of creative products.  And as Prof. Beebe correctly asserts, it will be intellectual property’s challenge going forward to determine how to appropriately address these interests.

Marks on Marks

Aug 2, 2010 Sara Stadler

Sara Stadler

There’s nothing like the realpolitik of copyright to push you into the arms of trademark law (see Dotan Oliar on Bill Patry, supra), but as Mark Lemley and Mark McKenna reveal in Owning Mark(et)s, there’s plenty of corporatism at work in the evolution of trademark law, too. Lemley and McKenna don’t put it that way, and they probably wouldn’t. But it’s hard to read Owning Mark(et)s without reflecting on how thoroughly legal rules are changing to favor the great and powerful, whose primary goal, as ever, is to foreclose markets to new entrants—including markets that the great and powerful haven’t entered.

Knowing that it doesn’t pay to be a bully, trademark owners have styled themselves victims of junior users who, in using established marks in “unrelated” markets, “are mere free-riders, reaping where they have not sown.” This may sound appealing, but trademark rights are supposed to flow from use in trade. One who hasn’t entered a market isn’t supposed to “own” it. As Lemley and McKenna write, “[t]he idea that a mark owner is harmed because a defendant interferes with its ability to expand operates on a presumption that the mark owner ought to have the right to expand without interference.” But the trademark owner doesn’t have that right unless the law says it does. This is the circularity that “seems to have carried the day in copyright,” and as Lemley and McKenna demonstrate, it’s transforming trademark law, too, as courts give trademark owners priority in markets that their trade hasn’t entered, but to which it might conceivably extend.

Fortunately, the authors have a plan.

I’ve divided Owning Mark(et)s into three parts: the law; the evidence; and the proposal. In the first part, Lemley and McKenna relate the “traditional” case for trademark protection—namely, the prevention and punishment of source confusion—and then describe how, beyond that, things “get a little more complicated.” The complication lies in the fact that trademark owners now allege, as harm, not the diversion of existing trade, but the usurpation or destruction of future trading opportunities. If, for example, a third party were to offer Apple watches for sale, Apple’s complaint wouldn’t be, “They deceived my customers,” but instead would be that “the existence of another Apple in the watch market impedes the original Apple’s ability to expand—either into the watch market or other related markets.”

This is a powerful argument for trademark owners precisely because it’s always available, regardless of how little proximity there is between plaintiff and defendant in the marketplace. Lemley and McKenna illustrate the point by describing a handful of recent trademark cases in which source confusion was absent, but in which, nonetheless, courts acted to remedy the “harms” of market preemption and free riding. None of these cases should be news to trademark scholars (or practitioners), but taken together, they tell an interesting story. It’s a coherent and engaging read.

This part also contains more than a few sentences that made me reach for my pen. In revealing how trademark owners characterize benefits to defendants as harms to themselves, for example, Lemley and McKenna write, “[i]n fact, however, these claims of harm and claims of benefit run together, particularly in [intellectual property], where the entire concept of harm is in some sense an artificial construct based on the government’s decision to create a right.” The authors’ focus on the relationship between harms and benefits is one of the more intriguing aspects to Owning Mark(et)s. As they point out, we now appear to live in a world in which it’s not enough to suffer no harm; others must not be allowed to benefit, either. Copyright already has embraced this orthodoxy, which is why it’s so hard to care about copyright law any longer. Et tu, trademark? As Lemley and McKenna observe, “a right to control ancillary markets bears striking resemblance to the derivative work right in copyright law.” It’s all coming together now, and not in a good way for consumers.

The second part of the article discusses marketing studies showing that brand extension doesn’t damage consumers’ perceptions of the “core brand” (e.g., Neutrogena hand lotion) but, at worst, damages their perceptions of the “parent brand” (e.g., Neutrogena) in an abstract sense. According to Lemley and McKenna, this doesn’t translate to much, if any, harm to brand value, and I think they’re right, although I’ve always been suspicious of the sorts of studies on which they rely. The problem is that trademark owners aren’t likely to take much, if any, comfort from this, which means they aren’t likely to stay their hands as a result. The great majority of trademark scholars know, in their hearts, that these harms to brands aren’t occurring. But we’re not the ones bringing the cases.

Which brings me to the third part of the article. A solution to the problem that Lemley and McKenna describe isn’t obvious, primarily because courts have used a variety of doctrines to satisfy the demands of trademark owners. Lemley and McKenna resolve this difficulty by proposing to require plaintiffs in trademark actions to show “trademark injury,” which the authors define as a material amount of “confus[ion] about actual source or about responsibility for quality.” This is a nifty solution because, like antitrust injury, the doctrine could be created by courts. Congress is not about to adopt such a thing because the International Trademark Association, which drafts the bills, is not about to propose it. Now, I’m the last person to ask courts to legislate, but when Congress uses lawmaking to cultivate its most powerful constituents, it’s hard not to look to courts for help—particularly where, as here, there’s precedent for courts to act. Of course, “[a] trademark injury doctrine is not a panacea.” But at least it’s something workable, and maybe even wise. That, in itself, is worth celebrating.

Finding a Place for Data in the Patent Troll Debate

Jun 24, 2010 Jason Schultz3 comments

Jason Schultz

Patent lawyers, like many of our kind, are obsessed with classifications, determinations, and definitions: is a patent claim a true invention or is it part of the prior art? Is it an abstract idea or a specific method? Does it claim a means or a function? In fact, the very notion of intellectual “property” is premised on the idea that we can discern one category of things from another in order to establish metes and bounds and enforce exclusion.

No patent classification schema has been more controversial in recent years than that applied to patent litigation plaintiffs that do not make, use, sell or offer for sale a product or service. Are they trolls or investors? Are they rent-seekers or research incubators? Are they pests or pioneers? Such rhetoric has filled essays, academic articles, courtrooms and legislative halls without much actual evidence to support one characterization versus another.

Thus, it was refreshing to read Colleen Chien’s “Of Trolls, Davids, Goliaths, and Kings: Narratives and Evidence in the Litigation of High-Tech Patents”, 87 N.C. L. Rev. 1571 (2009). In this article, Chien looks beyond the mere labels applied to patent plaintiffs and studies actual data from cases filed to discern the narratives, practices, and strategies that could legitimately distinguish one patent plaintiff from another.¹ The article also demonstrates the fruits born by the enormous effort of Stanford’s Intellectual Property Litigation Clearinghouse to collect and make available data on U.S. patent litigation.

Chien’s key contribution is taking the narratives of Trolls (or “non-practicing entities” – NPEs), Davids, Goliaths, and Kings and applying context to them via data. In other words, she tells us how much we might care about a given narrative by looking at the actual practices of those entities instead of the rhetoric or the hype. As she notes in her introduction, “Although the ‘squeakist wheel’—that is, the patent story that gets the most attention—may deserve the grease, without data it’s hard to be sure.” Chien breaks the data down into meaningful categories based on who sues whom and the size and revenue of each party.

So who deserves the grease? According to Chien, non-NPE corporations still bring the largest number of patent lawsuits (76%) and thus, the Sport of Kings (multiple-patent, often multiple-venue, lawsuits between large corporations) remains a strong narrative. Yet Trolls still deserve the attention they are receiving, not for their sheer numbers perhaps, but instead for their growing business model. The data shows that NPEs account for 17% of all high-tech patent lawsuits from 2001-2008, with the numbers of cases and defendants-sued-per-case increasing over time. This was particularly true with financial patents – 26% of all financial patent suits were initiated by NPEs – where decisions such as State Street Bank & Trust Co. v. Signature Financial Group, 149 F. 3d 1368 (Fed. Cir. 1998) broadened and reinforced the scope of patentable subject matter for financial methods and products.

Chien also uses the data to call into question “defensive patenting” – a practice of patenting to prevent offensive lawsuits via a strategy of détente instead of patenting to pursue licensing fees or exclusion – noting that the high number of large corporate suits suggests it may be failing to prevent such litigation.

In the end, I found Chien’s paper useful and interesting not so much for its conclusions (she is understandably conservative about how far the data can take us), but for its forthright attempt to challenge the narratives that patent lawyers have historically relied upon to make their policy points and rhetorical courtroom arguments. Mapping data to these narratives provides much needed insight into the real practices in the world of patent litigation and leaves us much better informed about the trends and trajectories to consider when entering any conversation about patent reform. For those who wish to tread on this ground, I highly recommend this article as a primer to help orient the conversation.

1. It is worth noting that Chien limits her study to software, hardware, and financial patents, as those are the categories where plaintiff classification has been the most contested.

Bill Patry’s War on Copyright Rhetoric

May 28, 2010 Dotan Oliar3 comments

Dotan Oliar

Bill Patry’s “Moral Panics and the Copyright Wars” is the latest word on the way in which copyright law has responded to technological change. In eclectic and humorous prose, drawing on history, linguistics, philosophy, behavioral economics and the Bible, among other sources, Patry provides harsh criticism of the ways in which Congress and the copyright system have responded to disruptive technologies such as the VCR and file-sharing networks – and by “responded”, Party means did whatever the content industries demanded.

The book sets out the well-formed perspective of an important figure within the copyright cognoscenti. For almost three decades now, Patry has engaged with the copyright system in various roles, including a practitioner in private practice, full-time academic, author of a multi-volume copyright law treatise, copyright law blogger, copyright advisor to the House of Representatives and policy advisor to the Copyright Office. His intimate familiarity with the copyright system makes the pessimistic tone of his book especially notable.

Patry sees a pattern: technology companies generate innovation, and in response copyright industries generate litigation. According to Patry, “This cycle of copyright owners shaking down innovators is a central trope in the business of the Copyright Wars and has been repeated over and over again with almost every new innovation.” Importantly, “Copyright has become the mechanism to eliminate consumer choice, innovation, and the creation of culture. Copyright is now a serious impediment to technological and social progress.”

Patry’s book focuses on the role rhetoric and metaphor have played in legislative and public debates relating to copyright lawmaking, and how they were instrumental in the continuous expansion of copyrights in both duration and scope. In particular, Patry explores the function metaphors like “property” and “piracy” have played in the lawmaking process. Because abstract concepts such as copyright law are difficult to grasp, people tend to rely upon and fall prey to imperfect metaphors, especially when they are used repeatedly by industry lobbyists.

Patry is no fan of a common stock of well-worn copyright metaphors, and he attacks one after another: expressive works as bearing a personal relation to their author (the “copyright as giving birth” and “orphan works” metaphors), ownership of copyrighted works as an absolute, unlimited title (the “property” metaphor), copyrighted works as the singular product of genius (the “creation on a clean slate” metaphor), and the money to be earned from copyrighted works as the rightful reaping of what an author has sown (the “agrarian” metaphor).

In Patry’s view, these inapt metaphors serve only to distract us from the real issue, which is how to structure copyright law – a form of economic regulation – to best promote authorship, learning, innovation and progress. And while Patry documents various rhetorical tricks played on Congress’s floor, he also laments what has been missing from the debate: “in my 27 years of practicing copyright law, I have never seen a study presented to Congress that even makes a stab at demonstrating that if the proposed legislation is passed, X number of works that would not have been created will be.”

Central to Patry’s argument is the structural role that “moral panics” have played in this process, namely the furtherance of a public state of hysteria respecting illusory threats emanating from “folk devils”. Such panics often concern youth behavior and new technologies, both of which are not well understood and portrayed as a danger to core social values. Such panics are manufactured in order to capitalize on public (over)reaction to such (imaginary) threats in order to advance economic and social regulation that entrenches incumbent interests. Moral panics contain the following elements: the suggestion that a dire state of emergency is being brought about by a new threat to social order; the suggestion that swift action must be taken in order to prevent imminent social harm; the presentation of false and misleading data to lawmakers regarding the magnitude of that harm; and the suggestion that preemptive action – in this case action protecting copyright industries – serves the national interest. As one would suspect, Jack Valenti makes guest appearances throughout the book.

Those familiar with Patry’s writing and public speaking have probably noted his penchant for linguistic playfulness, and the book further speaks to his fascination with the potency of language. It is thus probably a testament to Patry’s engagement with and immersion in the subject matter of his research that the reader is at times left wondering whether his interest in rhetorical hype is merely deconstructive. Strung throughout the book are such statements as: “Corporatism was previously thought to have reached its zenith during Mussolini’s Fascist Italy, but [now] it is enjoying a healthy resurgence.”  Or, “Amazon.com’s Kindle ebook reader has more digital locks than CIA headquarters”.  Or, topping it all perhaps, that “The DMCA is the twenty-first century equivalent of letting copyright owners put a chastity belt on someone else’s wife.”

These ornamental bits aside — and perhaps partly because of them — “Moral Panics and the Copyright Wars” is not only a worthy and substantive read, but also a fluent and enjoyable one. The at-times amusing tone certainly serves, whether deliberately or not, as comic relief that softens Patry’s harsh and pessimistic underlying message. The book is likely to attract public notice and controversy not only for its content, but also because of who’s written it, and – most importantly – because its conclusion comes close to saying that the system is beyond repair, the last sentence hinting (although in a somewhat obscure way) that we might be better off abolishing it.

Patent Utility Reduxit

May 5, 2010 John F. Duffy1 comment

John F. Duffy

In academic scholarship, it sometimes happens that an entire field of inquiry becomes neglected year after year—to the point that nearly everyone believes the area incapable of yielding anything much of intellectual interest.   Such beliefs are almost always wrong, for it is the fallow fields of thought that are prime to be fruitful again.  An excellent example is patent utility doctrine, and specifically the issue whether inventions must be proven commercially useful as a prerequisite to patentability.  The conventional wisdom is that the law resolved this question against imposing such a requirement  more than a century and a half ago.  The issue is long dead; forgotten; abandoned.  Until now.

In his new article Reinventing Usefulness, Michael Risch reexamines patent utility doctrine and advances creative and insightful arguments for requiring that all inventions demonstrate “commercial utility” prior to patenting.  The highest compliment I can pay this article is not that I agree with it—I’m still somewhat doubtful—but that the article has forced me to think hard about an area I foolishly thought to be largely barren.  The article is memorable precisely because its thesis is unsettling; it demands rethinking of utility doctrine and other aspects of the patent law.

The standard, nutshell version of current utility doctrine begins by recognizing utility as one of three great requirements of patentability.  To be patentable, inventions must be “new, useful and nonobvious.”  Those three requirements are a familiar mantra to any modern patent attorney, but “useful” is typically viewed as the poor cousin of the other two.   Novelty analysis is the ubiquitous first step in every single patent examination, and it is a fruitful area yielding both interesting cases and scholarship.  (Recent cases include, for example, the controversial inherent anticipation case of Schering Corp. v. Geneva Pharmaceuticals, Inc., 348 F.3d 992 (Fed. Cir. 2003), as well as cases such as In re Klopfenstein, 380 F.3d 1345 (Fed. Cir. 2004), which involved an especially close question about whether certain materials qualified as novelty-defeating prior art.)  Nonobviousness is the “ultimate gatekeeper” of the patent system.  It is nearly always contested in patent prosecutions and litigations; it accounts for numerous Supreme Court decisions on patent law, most recently KSR v. Teleflex; and it has generated rich veins of scholarship (see, for example, the collection of articles from the post-KSR conference in 12 Lewis & Clark L. Rev. 323 et seq. (2008)).

By contrast to ubiquitous issues of novelty and nonobviousness, utility is rarely even contested.  The doctrine is conventionally divided into three strands, “operability,” “beneficial utility,” and “specific and substantial utility,” with each strand relevant only in unusual circumstances.  Of course, a patented invention must be operable, but few seek patents on the unworkable and fewer still seek to infringe such patents.   Thus, operability doctrine typically bars patents only to the trickle of loony inventors who continue to pursue perpetual motion machines and the like.  The “beneficial utility” requirement, even at its historical zenith, barred patents only in limited fields viewed to be deceptive or immoral, such as gambling devices.  Recent case law now emphasizes that this doctrine “has not been applied broadly in recent years” and that institutions other than the Patent Office and the courts are best positioned to regulate matters of personal or business morality.   Similarly, the leading scholar in the area, Margo Bagley, argues that Congress, not the courts, “is the only actor competent to clarify … the extent to which moral issues should be considered in patentability determinations, if at all.”  Margo A. Bagley, Patent First, Ask Questions Later: Morality and Biotechnology in Patent Law, 45 Wm. and Mary L. Rev. 469 (2003).

The requirement of a specific and substantial utility has been the most important part of utility doctrine, but it wins that title only because competition is so weak.  Though the requirement of a “substantial utility” may sound demanding, the courts have repeatedly held that the doctrine does not require developing the invention to the point where it would be “presently commercially salable in the marketplace.”  In re Langer, 503 F.2d 1380, 1393 (CCPA 1974).  The Patent Office has expressly endorsed that view (see 66 Fed. Reg. 1092, 1094 (Jan. 5, 2001)) and emphasized that the “utility threshold is not high.”  In re Fisher,  421 F.3d 1365, 1370 (Fed. Cir. 2005) (summarizing the position of the Patent Office).

Against this background of nearly moribund utility doctrine comes Michael Risch’s new article, which argues that patents should not issue except on proof of “commercial utility,” which he defines as requiring “that a) there is a market for the invention, and that b) the invention can be manufactured at a cost sufficient to fulfill market demand.” (P. 38)  Risch doesn’t hide that he is attempting to resurrect a position very similar to that argued by Daniel Webster, and firmly rejected by Justice Story, in a case decided nearly two centuries ago (see Lowell v. Lewis, 15 Fed. Cas. 1018 (C.C D. Mass. 1817)).  Risch also candidly acknowledges that the courts have never required a commercial utility of the sort he envisions.  Still, there many excellent reasons that even skeptics (like myself) should consider Risch’s article carefully.  I will focus on only three of them.

First, Risch unearths some fascinating history to support his view.  The central piece of legislative history associated with the 1836 Patent Act—a Senate Report written by Senator John Ruggles, the primary author of the legislation—seems to be quite critical of Justice Story’s lax utility requirement.  (P. 35)  Moreover, the relevant passages in the Report are not merely unenacted comments in a legislative report, for the 1836 Act did restore a requirement, which had been repealed in 1793, that patents should only be granted on “sufficiently useful” inventions.  Patent Act of 1836, § 7, 5 Stat. 117, 120 (July 4, 1836).  Risch concludes, however, that the courts “quickly gutted” this restored statutory requirement.   (P. 36)

The implication of this history is that modern utility doctrine may be based on a radical form of judicial activism—willful disregard of a congressional attempt to overturn prior judicial precedent.  The history is not, it should be noted, unambiguous.   In one crucial passage, the Senate Report describes Justice Story’s take on utility as “settled” doctrine, and the overarching focus of the Report is on the evils of the then-existing patent registration system (which included no administrative examination of patent applications), not on the evils of a lax utility doctrine.  Still, the passages identified by Risch raise serious historical questions about the legitimacy of modern utility doctrine.  Defenders of the status quo will have to respond.

A second reason to pay attention to Risch’s article is that it may turn out to be both prescient and practical.  When I first read an early draft of this paper, I had thought it interesting but completely divorced from the realities of legal doctrine.  Soon thereafter, however, a split panel of the Federal Circuit decided Janssen Pharmaceutica v. Teva, 583 F.3d 1317 (Fed. Cir. 2009), which was an extremely rare decision holding a patent invalid for lack of utility in infringement litigation. The patent in Janssen disclosed a method of using a particular drug as a treatment for Alzheimer’s disease.  It turns out that the disclosed method was highly useful and valuable, but the court nonetheless invalidated the patent because, at the time of filing, the inventor did not have sufficient proof that the method would be useful—i.e., that it would work.   Janssen seems to signal a new judicial willingness to enforce the utility requirement more stringently than in the past, and to cut back on the availability of what has been known as “prophetic patents”—patents that make accurate prophesies about technology that the inventor has not yet reduced to practice and thus not yet fully proven.

More recently, in Ariad Pharmaceuticals v. Eli Lilly, the en banc Federal Circuit articulated a view of the patent system that might very well, the court acknowledged, bar patents on “[m]uch university research.”  598 F.3d 1336, 1353 (Fed. Cir. 2010) (en banc).  The result, the court believed, was consistent with the “intention” of the patent system because “[p]atents are not awarded for academic theories .”   Id. To prove that point, the court referred to the only modern Supreme Court case on the utility requirement, Brenner v. Manson, 383 U.S. 519, 536 (1966), which famously stated that “a patent is not a hunting license.”   While certainly neither Janssen nor Ariad imposes a commercial utility requirement of the sort Risch endorses, both cases push patenting away from more fundamental research work and toward the practical and commercial, and both cases rely in part on utility precedents to justify the shift.

A third reason to pay attention to Risch is that his article is theoretically complex and nuanced.  The article is part of a growing body of theoretical literature that focuses on the timing of innovation and the importance of commercialization.  The roots of this literature trace back to Ed Kitch and his famous prospect theory.  Recently a new generation of scholars, including Scott Kieff, Ted Sichelman, Benjamin Roin, Michael Abramowicz and myself, have devoted increased attention to the problems of patent timing and commercialization. ((Professor Kitch’s prospect theory was first outlined in Edmund W. Kitch, The Nature and Function of the Patent System, 20 J. Law & Econ. 265. (1977).  Recent patent scholarship focusing on timing and commercialization considerations includes F. Scott Kieff, Property Rights and Property Rules for Commercializing Inventions, 85 Minn. L. Rev. 697 (2000); Ted Sichelman, Commercializing Patents, 62 Stan. L. Rev. 341 (2010); Benjamin Roin, Unpatentable Drugs and the Standards of Patentability, 87 Tex. L. Rev. 503 (2009); Michael Abramowicz, The Danger of Underdeveloped Patent Prospects, 92 Cornell L. Rev. 1065 (2007); Michael Abramowicz & John F. Duffy, Intellectual Property for Market Experimentation, 83 N.Y.U.L. Rev. 337 (2008); and John F. Duffy, Rethinking the Prospect Theory of Patents, 71 U. Chi. L. Rev. 439 (2004).))  Michael Risch joins this group but brings an original perspective in arguing that patent law should begin imposing a much different utility doctrine than has ever been applied in the U.S. courts.

Risch’s proposal, it should be noted, is not merely imposing more burdens on patent applicants.  A commercial utility standard would mean that inventions would not be complete until they were market-tested and commercialized.  Thus, the “experimental use” exception to patent law’s one-year statutory bar would have to be expanded to encompass such market experimentation—a distinct change from current law which would afford innovators more leeway in market testing their innovations prior to seeking patents.  (P. 41)  Also, because innovators could file later, the patent term would end later, and thus the early years of the patent would not be eaten away by efforts to begin commercialization  (P. 43) That change might be especially helpful to pharmaceutical firms, for the early years of their patents are often lost as they try to develop a safe, effective and commercially feasible versions of their patented drugs.   In sum, Risch’s proposal has a theoretically interesting basis and cannot be dismissed as merely reflexively anti-patent.

The renewed academic focus on commercialization has been spurred by an intensely practical, indeed even populist, industrial revulsion to what are known as “patent trolls,” entities that have obtained patents but that do not attempt to commercialize or otherwise to practice their patented technologies.  The backlash against patent trolls presents a deep challenge to the dominant theory of the patent system that the courts embraced in the twentieth century.  If, as the Supreme Court has said, “[t]he disclosure required by the Patent Act is ‘the quid pro quo for the right to exclude,’” J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124, 142 (2001) (quoting Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 484 (1974)), then the hostility to patent trolls is inexplicable, for their disclosures must pass the same legal standards applied to patentees who have commercialized their innovations.  Yet the industrial reaction to patent trolls suggests that the judicial theory of the patent system may be incomplete, and that perhaps commercialization efforts should be given more importance in interpreting and applying the general provisions of the Patent Act.  Michael Risch has shown one way to accomplish that end as his article returns to, and provides new intellectual support for, a long abandoned doctrinal argument.  Even those skeptical of his ultimate conclusions can appreciate that his work is fresh, original and theoretically provocative.  Under the most demanding of standards, it is “useful” scholarship.

“This Milk Doesn’t Taste Hormone-free”: Creating Trademark Liability when Companies Alter Credence Qualities

Mar 13, 2010 Christopher J. Buccafusco1 comment

Christopher J. Buccafusco

What if you learned that those Niman Ranch steaks you’ve been purchasing for $40 per pound were no longer pasture-raised?  What if Aveda, without notifying you, decided to begin testing its products on animals?  Or if your Bridgestone tires were no longer union-made?  In each of these cases, it would be nearly impossible to detect the change merely by using the product.  For an increasing number and variety of products, consumers choose a particular brand or pay premium prices based on imputed qualities that they never experience.  Trademark and false advertising law exist to protect consumers from deceptive branding practices, but the situations described above are currently immune from liability.  Or at least they will be until more people read Shahar Dillbary’s new paper.

Since its origin in the tort of deceit, trademark law’s goal has been the prevention of passing-off, or as Dillbary refers to it, inter-brand fraud.  The typical case is one where the consumer, intending to purchase A’s goods is fraudulently induced to purchase B’s.  Trademark law exists to protect both producers and consumers and to minimize the substantial deadweight losses that would otherwise exist if consumers were forced to undertake extensive searches to obtain the appropriate products.  As Dillbary notes, however, trademark law is substantially less concerned with situations of intra-brand fraud where “the trademark owner uses its own mark to misrepresent its own goods.”  Dillbary, at 334.  According to Dillbary the unequal treatment of trademark misuse stems from the widely accepted premise that “the only legally relevant function of a trademark is to impart information as to the source or sponsorship of the product.” Id. at 332, quoting Smith v. Chanel, 402 F.2d 562 (9^th Cir. 1968).  This premise ignores the substantial role that a mark play in providing information about the product itself, and it enables a particularly insidious class of consumer fraud.

Because trademark jurisprudence is concerned only with false or misleading attributions of product source, its application to fraudulent uses of marks by the mark owners themselves is considerably limited.  Section 43 of the Lanham Act establishes a hierarchy of marks based on their distinctiveness, that is, their ability to distinguish the seller’s goods from others’.  At the top of the hierarchy are fanciful marks–those that have no apparent relationship to the product (e.g., Kodak cameras).  At the bottom are descriptive marks–those that seem to describe some feature of the product (e.g., Stevia sweetener which is derived from the stevia plant).  A number of legal issues follow from a mark’s classification in the hierarchy, but one is of particular importance to Dillbary’s point.  According to the current interpretation of the Lanham Act, descriptive marks but not fanciful marks may not be registered or may be cancelled if they are or become misleading.  Thus, if consumers incorrectly believed and purchased it because they so believed that Stevia was made from the stevia plant, then the mark would be “deceptive” and unregisterable.

At first blush, this distinction seems to make sense.  How could a fanciful mark, which is definitionally not descriptive of the product, ever be misdescriptive of it?  How could a Kodak camera not be sufficiently kodak-y?  It can occur, Dillbary argues, when a fanciful, arbitrary, or suggestive mark develops what he calls “secondary descriptive meaning.”  Id., at 330.  Marks that, when introduced, were fanciful or arbitrary may, over time, become associated with a variety of qualities.  Kodak, for example, may come to symbolize in consumers’ minds high quality paper, easy to focus lenses, or “green” manufacturing, and consumers purchase Kodaks or pay premiums because of these associations.  If, overnight, Kodak executives switched to cheap paper or complicated lens or environmentally-unfriendly production, purchasers who relied on the secondary descriptive meaning attached to the brand would be defrauded.  Dillbary’s recognition and elaboration of this concept alone would make the paper worth reading.

But Dillbary is too much the economist to be carried away by his new idea.  He realizes that just because he has a hammer, everything isn’t a nail, and like Holmes he recognizes that the “cumbrous and expensive machinery [of the state] ought not to be set in motion unless some clear benefit is to be derived from disturbing the status quo.”  Holmes, The Common Law, p. 96.   Accordingly, not all product changes should be treated identically.  Obviously, if the changed characteristic isn’t material to consumers’ decisions, it shouldn’t matter.  Similarly, if Kodak began using poor quality paper or lens, consumers would rapidly detect the change.  They could return their purchases and take their complaints to the Internet, seriously damaging Kodak’s reputation and goodwill.  The threat of consumer backlash is a sufficient deterrent.

Switching away from green manufacturing, however, presents a different situation.  The camera might work identically, and consumers would have no way of knowing about the shift.  They happily pay more because they want to protect the environment, and they end up defrauded while the manufacturer pockets the premium.  For so-called credence qualities like green manufacturing the consumer is not in a position to distinguish products experientially, and she is prevented by prohibitive search costs from detecting noncompliance.  Without the threat of consumer backlash associated with experience qualities (those like paper quality that are more or less immediately detectable), producers are not deterred from fraudulently misrepresenting the credence qualities of their products.

The incentive to misrepresent credence qualities is surely growing.  As painfully ironic as it must seem to a certain class of Crits, consumers are increasingly turning to the market as a medium for social and political communication.  Consumers routinely spend millions of dollars on sweatshop-free clothes, humane food and cosmetics, hormone-free milk, and products that are made in the USA, or by unions, or sustainably for reasons entirely irrelevant to their experiential quality.  (Not to mention the considerable boost in perceived experiential quality derived from the placebo effect of knowing that the product has some valued credence quality.)  While this kind of social policy driven purchasing might not be maximally efficient, it would certainly be disastrously inefficient to allow companies to bilk consumers by surreptitiously altering purchased credence qualities.

Dillbary’s solution to the problem is straightforward and politically feasible:  convince courts to follow the plain meaning of the Lanham Act to establish a private right of action in competitors to sue for intra-brand fraud.  According to Dillbary, the text of 1988 amendment to the Lanham Act clearly provides for such an action, but through tortuous misinterpretation, the action has been read out of the statute.  A proper reading of the Act would establish all classes of trademarks on the same footing for purposes of deceptiveness.  Mark owners would be liable when they changed without notice a materially important credence quality of their product, that is, one that substantially motivated consumer purchases.

Dillbary leaves until a future paper the task of establishing the precise contours of the cause of action.  While we wait, a number of questions present themselves for consideration:  Are competitors rather than consumers the appropriate plaintiffs in such actions?  How should the law treat hybrids of experience and credence qualities where the credence quality acts as a proxy for an experience quality (e.g., the belief that organic foods taste better)?  How should damages be calculated, and should defendant culpability (e.g., by inducing belief in the credence quality through advertising) affect damages?  And would liability create perverse incentives by discouraging producers from adopting certain valuable techniques if they are subject to liability when they switch away from them?

Trademark Use on the Loose

Nov 12, 2009 Ann Bartow1 comment

Ann Bartow

Not all uses of a trademark constitute trademark use. It is this proposition that brings consternation and confusion to courts and legal scholars alike. Mark McKenna looked into this abyss, the abyss looked back at him, and neither liked what they saw: a pitched but ultimately unhelpful ongoing debate about the “trademark use” doctrine. And so he sought to shrink this chasm with insightful analysis.

The abstract for Mark P. McKenna’s recent article Trademark Use and the Problem of Source is as follows:

This paper mediates a scholarly debate regarding the existence and desirability of a trademark use doctrine. It argues that trademark use is a predicate of liability under the Lanham Act, but those who advocate treating trademark use as a threshold question put much more weight on that concept than it can bear. Courts cannot consistently apply trademark use as a distinct element of the plaintiff’s prima facie case because trademark use is not separable from the question of likelihood of confusion. Under modern trademark law, courts can determine whether a defendant has made trademark use of a plaintiff’s mark only by asking whether consumers are likely to view the defendant’s use as one that indicates the source of the defendant’s products or services. Because such an inquiry is, by its nature, highly context-sensitive, trademark use is not a concept capable serving the limiting function advocates hope. The trademark use debate, however, reveals a fundamental problem in modern trademark law and theory. Consumer understanding, and particularly consumer understanding of source, defines virtually all of modern trademark law’s boundaries. But as trademark law’s dramatic expansion aptly demonstrates, these boundaries are never fixed because consumer understanding is inherently unstable, particularly with respect to an ill-defined term like source.

It is a terrific article because it lays out the complexities of the “trademark use” doctrine in a clear and comprehensive manner. McKenna does a wonderful job of explaining the approaches that courts take to defining and using the “trademark use” doctrine, and also summarizes and critiques the scholarly debate over the concept. McKenna astutely notes that if “trademark use” could be delineated with bright lines, the doctrine could bring predictability to trademark disputes in which courts need to determine whether the unauthorized use of a trademark ought to trigger liability under the Lanham Act. But unfortunately, he ruefully observes, defining “trademark use” in a clear and consistent manner has so far proven impossible. This is because “trademark use” is not susceptible to a fixed definition. Instead it is inextricably linked, piecemeal, to any given court’s determination, usually based on intuition rather than facts, about whether consumers will perceive the use to be source identifying.

McKenna correctly criticizes the view that a signifier of “trademark use” is a deployment that is likely to cause confusion. If likelihood of confusion is the benchmark that creates an actionable wrong, the “trademark use” doctrine adds nothing to a court’s analytical toolbox. But if it is unbound from courts’ projections about consumer understandings of source, and instead given boundaries related to specific relationships, McKenna argues that a reconfigured “trademark use” doctrine can bring renewed coherence to trademark law.

The scope of trademark rights are delineated by use of the mark. If the mark “Smith” is used as a trademark for screwdrivers in commerce, the rights that accrue preclude others from using the same or similar mark on the same or similar products. That is simple enough. Where things start to get complicated is when an online hardware store uses the “Smith Screwdrivers” mark to indicate that Smith screwdrivers can be purchased there. Or when an artist writes a song referencing Smith Screwdrivers and releases it commercially. Or when an Internet search engine assumes the people searching for web pages using the words “Smith Screwdrivers” would like to see results relating to competing brands of screwdrivers as well as the authorized Smith website.  Consumers may well believe that these uses cannot legally be undertaken without the permission of the mark holder, but that does not transmogrify these uses of the Smith trademark into trademark uses. None is an effort to mark or sell counterfeit or competing screwdrivers, so none are uses of the mark in commerce as a trademark. Seems pretty clear to me, but as McKenna aptly illustrates, many courts and commentators would not agree.

In iterating the deficiencies with current conceptions of the “trademark use” doctrine McKenna also constructs a broader critique of trademark law generally; there is a pervasive over-reliance on alleged consumer understandings, which are often discerned primarily via instinct and divination by judges who harbor a wide range of assumptions about the mental capacities of their fellow citizens. This leads to uncertainty and precludes effective checks upon inappropriately broad assertions of trademark powers.

Consumers may indeed harbor many misconceptions about the accrual and scope of trademark rights, but asking judges to attempt to predict and account for projected misunderstandings one case at a time is not a good way to bring clarity or coherence to Lanham Act jurisprudence. Construction of reliable limiting principles for “trademark use” can serve as a model for reigning in expansionist trademark lawmaking generally; McKenna is quite convincing about this, and in my view, absolutely correct.

Patent Crisis?/Judicial Solution?

Oct 27, 2009 Michael W. Carroll1 comment

Michael W. Carroll

Is there a crisis in the patent system, and if so, what should be done about it?  Two recent books respond to cries of alarm emanating from some in the patent system, and each makes a large contribution to the understanding of this system:  James Bessen & Michael J. Meurer, Patent Failure:  How Judges, Bureaucrats, and Lawyers Put Innovators at Risk (2008) and Dan L. Burk & Mark A. Lemley, The Patent Crisis and How the Courts Can Solve It (2009).  Both books proceed from, or demonstrate, a core empirical premise: those inside the patent system experience its effects quite differently depending on their industrial setting and technical field of innovative endeavor. Both books are well worth reading, but the space here allows only for a few comments on Burk and Lemley’s more recent contribution.

Reprising, updating, and extending arguments made in prior works, Burk and Lemley set out to persuade the reader of three propositions: (1) the tradition of a one-size-fits-all approach to patent law is out of step with the diverse needs of today’s innovators in wide range of industries; (2) the response to diversity should be to retain a single Patent Act rather than to provide industry-specific legislation; but (3) the federal courts should use the flexibilities embedded in that single Patent Act to tailor its application to account for industry diversity.

Not all readers will agree that they succeed in this quest, but the journey rewards all who travel along.  For teachers, Burk & Lemley’s initial summary of the patent system (pp. 7-20) provides an excellent reading assignment for any law or applied sciences class on patent law.  For scholars, the authors helpfully summarize the literature(s) on industry-specificity in innovation and patenting strategies, and they argue that this diversity helps explain the diversity in theoretical justifications for the patent system.

Now the argument.  The authors first sweep aside the prospect that Congress can solve the crisis posed by industry diversity by reviewing the history of some industry-specific legislation and four years of failure to pass broader systemic reform because of warring industry coalitions.  While Burk and Lemley raise many valid concerns and issues on this score, many readers, including this one, would need deeper institutional analysis and analysis of  the economically more important legislative tailoring done by the Bayh-Dole Act and the Hatch-Waxman Act, respectively, before conceding the point.

Nonetheless, the heart of the argument is that the existing Patent Act confers upon federal courts, and in particular the U.S. Court of Appeals for the Federal Circuit, interpretive discretion to take account of salient economic and technological differences among innovators.  This argument, which they first made in Policy Levers in Patent Law, 89 Va. L. Rev 1575 (2003), has been updated, extended, and strengthened by taking into account numerous intervening developments, including significant Supreme Court decisions, that further enlarge the scope of judicial discretion in the patent system.

The book closes with case studies of patent tailoring for inventions arising in the biotechnology and information technology industries.  While again not all readers will accept these accounts, Burk and Lemley succinctly summarize the literature on the economic effects of patents in these fast-moving, economically significant sectors and challenge readers to think more deeply about how the law could more coherently and consistently adapt to the scientific and business realities in these sectors.

The authors acknowledge the limits of their argument by allowing that the courts should not use each and every flexible provision of the Patent Act to fashion industry-specific interpretations and that courts could not realistically do so even if so inclined in light of the dynamism and uncertain trajectories of the innovative sectors.  But they challenge all who are interested in a well-functioning patent system to recognize the real differences in how innovators appropriate returns on their investments and the real costs of a one-size-fits-all approach to patent law imposed on the majority of these innovators.  They show that at least in the domestic context, the federal courts have a range of tools available to play a more active and helpful role in responding to industry difference.  Finally, they recognize that the argument is not complete, and they invite further analysis of innovation policy and institutional design options to respond to industry diversity.