Archive for the ‘Intellectual Property’ Category
posted by Deven Desai
My paper with Gerard Magliocca made the New York Times in a piece called “Beyond 3-D Printers’ Magic, Possible Legal Wrangling,” and the fun continues. With patent reform on the table (pdf to the bill), the New America Foundation is holding a conference called Just How Broken Is the Patent System?. I will be on the kick-off panel with my friend Adam Mossoff. After some jousting over patents, property, and more with the help of Annie Lowery, the day will turn to industry folks, policy wonks, and more professors, to get into health and patents, green innovation, patent assertion, fixes to the patent system, and a keynote by Maureen K. Ohlhausen, Commissioner, Federal Trade Commission.
It promises to be a fun day. Hope to see folks there.
posted by Gerard Magliocca
Here’s something sort or random that I wonder about from time to time. Why do we have a separate category of plant patents? In other words, is there any good explanation for why a separate statute governing plant patents was enacted, and is there any valid reason for treating plants differently from other utility patents? It is a curiosity in that we use the same patent requirements for all other functional inventions. (Design patents are distinct and have their own issues, but leave that aside). Plant patents are probably an inadequately theorized subject, for anyone who is looking for a topic.
posted by Orly Lobel
What a rollercoaster week of incredibly thoughtful reviews of Talent Wants to Be Free! I am deeply grateful to all the participants of the symposium. In The Age of Mass Mobility: Freedom and Insecurity, Anupam Chander, continuing Frank Pasquale’s and Matt Bodie’s questions about worker freedom and market power, asks whether Talent Wants to Be Free overly celebrates individualism, perhaps at the expense of a shared commitment to collective production, innovation, and equality. Deven Desai in What Sort of Innovation? asks about the kinds of investments and knowledge that are likely to be encouraged through private markets versus. And in Free Labor, Free Organizations,Competition and a Sports Analogy Shubha Ghosh reminds us that to create true freedom in markets we need to look closely at competition policy and antitrust law. These question about freedom/controls; individualism/collectivity; private/public are coming from left and right. And rightly so. These are fundamental tensions in the greater project of human progress and Talent Wants to Be Free strives to shows how certain dualities are pervasive and unresolvable. As Brett suggested, that’s where we need to be in the real world. From an innovation perspective, I describe in the book how “each of us holds competing ideas about the essence of innovation and conflicting views about the drive behind artistic and inventive work. The classic (no doubt romantic) image of invention is that of exogenous shocks, radical breakthroughs, and sweeping discoveries that revolutionize all that was before. The lone inventor is understood to be driven by a thirst for knowledge and a unique capacity to find what no one has seen before. But the solitude in the romantic image of the lone inventor or artist also leads to an image of the insignificance of place, environment, and ties…”. Chapter 6 ends with the following visual:
Dualities of Innovation:
Individual / Collaborative
Passion / Profit
And yet, the book takes on the contrarian title Talent Wants to Be Free! We are at a moment in history in which the pendulum has shifted too far. We have too much, not too little, controls over information, mobility and knowledge. We uncover this imbalance through the combination of a broad range of methodologies: historical, empirical, experimental, comparitive, theoretical, and normative. These are exciting times for innovation research and as I hope to convince the readers of Talent, insights from all disciplines are contributing to these debates.
November 16, 2013 at 12:56 pm Posted in: Antitrust, Articles and Books, Behavioral Law and Economics, Book Reviews, Bright Ideas, Economic Analysis of Law, Empirical Analysis of Law, Employment Law, Innovation, Intellectual Property, Law and Psychology, Symposium (Talent Wants to be Free), Technology Print This Post No Comments
posted by Orly Lobel
I promised Victor Fleisher to return to his reflections on team production. Vic raised the issue of team production and the challenge of monitoring individual performance. In Talent Wants to Be Free I discuss some of these challenges in the connection to my argument that much of what firms try to achieve through restrictive covenants could be achieved through positive incentives:
“Stock options, bonuses, and profit-sharing programs induce loyalty and identification with the company without the negative effects of over-surveillance or over-restriction. Performance-based rewards increase employees’ stake in the company and increase their commitment to the success of the firm. These rewards (and the employee’s personal investment in the firm that is generated by them) can also motivate workers to monitor their co-workers. We now have evidence that companies that use such bonus structures and pay employees stock options outperform comparable companies .”
But I also warn:
“[W]hile stock options and bonuses reward hard work, these pay structures also present challenges. Measuring employee performance in innovative settings is a difficult task. One of the risks is that compensation schemes may inadvertently emphasize observable over unobservable outputs. Another risk is that when collaborative efforts are crucial, differential pay based on individual contribution will be counterproductive and impede teamwork, as workers will want to shine individually. Individual compensation incentives might lead employees to hoard information, divert their efforts from the team, and reduce team output. In other words, performance-based pay in some settings risks creating perverse incentives, driving individuals to spend too much time on solo inventions and not enough time collaborating. Even more worrisome is the fear that employees competing for bonus awards will have incentives to actively sabotage one another’s efforts.
A related potential pitfall of providing bonuses for performance and innovative activities is the creation of jealousy and a perception of unfairness among employees. Employees, as all of us do in most aspects of our lives, tend to overestimate their own abilities and efforts. When a select few employees are rewarded unevenly in a large workplace setting, employers risk demoralizing others. Such unintended consequences will vary in corporate and industry cultures across time and place, but they may explain why many companies decide to operate under wage compression structures with relatively narrow variance between their employees’ paychecks. For all of these concerns, the highly innovative software company Atlassian recently replaced individual performance bonuses with higher salaries, an organizational bonus, and stock options, believing that too much of a focus on immediate individual rewards depleted team effort.
Still, despite these risks, for many businesses the carrots of performance-based pay and profit sharing schemes have effectively replaced the sticks of controls. But there is a catch! Cleverly, sticks can be disguised as carrots. The infamous “golden handcuffs”- stock options and deferred compensation with punitive early exit trigger – can operate as de facto restrictive contracts….”
All this is in line with what Vic is saying about the advantages of organizational forms that encourage longer term attachment. But the fundamental point is that stickiness (or what Vic refers to as soft control) is already quite strong through the firm form itself, along with status quo biases, risk aversion, and search lags. The stickiness has benefits but it also has heavy costs when it is compounded and infused with legal threats.
November 15, 2013 at 12:05 am Posted in: Behavioral Law and Economics, Bright Ideas, Contract Law & Beyond, Corporate Finance, Corporate Law, Economic Analysis of Law, Empirical Analysis of Law, Employment Law, Innovation, Intellectual Property, Symposium (Talent Wants to be Free), Technology, Uncategorized Print This Post No Comments
posted by Margot Kaminski
This is my second post about the leaked draft of the Trans-Pacific Partnership Agreement. Here, I address some of the copyright provisions. This is not an exhaustive analysis, and I’ve tried to make it complimentary to what’s already out there. For analysis of additional provisions, see KEI, Public Citizen, Ars Technica, Kimberlee Weatherall for an Australian perspective, and EFF. [Note: I have updated this post .]
First, there are major splits between countries. The United States consistently takes the position of pushing for stronger IP, while others—especially Canada and New Zealand— advocate a more balanced approach. The divisions are particularly prominent when it comes to preliminary statements about the public domain and public health, none of which the U.S. supports. These analyses are on one subset of proposed language, not finalized language, and a lot of the agreement could change. I focus my analysis primarily on the U.S. proposed language.
Second, the U.S. proposals look very similar to our past Free Trade Agreements, including the earlier texts of ACTA. Whatever message was sent when the EU refused to ratify ACTA, the U.S. Trade Representative did not receive it. Many of the provisions that appeared in ACTA are also areas of proposed reform in the United States—the U.S. proposed text for the TPP would internationally bind this country and prevent many proposed reforms to our copyright law.
Third, and this is an important point: U.S. proposals are less balanced than U.S. domestic law. As I noted in my previous post, this is because a subset of IP industries provide the USTR advice, leaving out important balancing viewpoints and sometimes misrepresenting U.S. law.
Similarities to ACTA:
Intermediary liability (Article QQ.I.1): As in ACTA, the central copyright argument in TPP is over what kind of intermediary liability regime will be internationally required. Currently, online intermediary liability is not governed at an international level. Michael Geist has done a great job of outlining the basic differences in the TPP proposals for intermediary liability. The United States is pushing for notice-and-takedown, with a coalition of countries, including Canada and New Zealand, pushing instead for a notice-only provision. These regimes offer different levels of due process for Internet users.
Statutory damages (ARTICLE QQ.H.4.Y(15)): As in ACTA, countries are fighting over statutory (or “pre-established”) damages: damages awarded to copyright owners without a showing of actual harm. Australia opposes this provision because it does not have statutory damages. Statutory damages are an often-criticized part of the U.S. regime, enabling disproportionately large awards in copyright cases.
Criminal liability (Article QQ.H.7(2)): As in ACTA, countries have split over the definition of criminal copyright infringement. The U.S. proposal, like U.S. law, pushes to criminalize very low level infringement, to go after even low level filesharing. Other countries want to keep it at the international requirement, which requires a motive of financial gain or commercial advantage. The United States lost a recent WTO case on criminal copyright, and has since been trying to ratchet up international criminal copyright law through free trade agreements.
Criminal Intermediary liability (Article QQ.H.7(6)): As in ACTA, the TPP criminalizes aiding and abetting infringement. This allows authorities to go after websites under criminal law, rerouting around protections from civil liability. Coupled with a low underlying threshold for criminal infringement, this could sweep in a lot of activity. Thanks to Kimberlee Weatherall for catching this.
Asset Forfeiture (Article QQ.H.7(c) p. 79): As in ACTA, the TPP allows the seizure of “any related materials and implements used in the commission of the alleged offense”. In the United States, asset forfeiture has been used to seize websites before trial.
DRM/Technological Protection Measures (Article QQ.G.10): As in ACTA, the United States is trying to export the DRM provisions of the DMCA, as its version of implementation of the WIPO Copyright Treaty. As I note below, however, what’s proposed is a worse version of what we have at home. The recent conflict over cell-phone unlocking shows that this is likely to be the focus of domestic policy reform. Some suggest that the DRM provisions here criminalize unlocking even when the underlying purpose is fair use.
De minimis border measures (the “Ipod search”)( Article QQ.H.6(8)): As in ACTA, the United States is pushing to shrink the “personal use” border exception that currently exists in international law, in TRIPS Article 60. For now, however, it looks as though the de minimis provision is functionally the same as TRIPS, due to a strategic footnote (235). This is something to watch.
Account termination (Article QQ.I.1(p. 88)): In U.S. copyright law, there’s a provision requiring online intermediaries to have a termination policy in place for repeat copyright infringers. Similar language has been proposed in the draft TPP. As Annemarie Bridy has pointed out, this language may have different implications in different countries. It probably does not require graduated response. However, its inclusion can also be read as endorsing recently developed private-ordering graduated response in the United States: agreements between private companies to kick infringing users offline. And transplanting this language into other countries might lead them to push for similar or more draconian policies.
Things that differ from US law:
Fair Use/Exceptions and Limitations language (Article QQ.G.Y): There‘s no fair use. The broadened copyright exceptions language that the USTR bragged about earlier this year is not very broad. And it’s not fair use. This may harm our exporting businesses. Google just won the Google Books case, where Google books was found to be fair use; TPP shows no evidence of extending that kind of exception abroad.
International First Sale Doctrine (Article QQ.G.3, Article QQ.G.17): Despite the fact that the Supreme Court held in Kirtsaeng in March that first sale doctrine applies abroad—and trumps the importation right—the USTR is exporting the opposite. The USTR also opposes saying that countries are encouraged to establish international exhaustion of rights. All other countries (except Canada, which is neutral) want international first sale doctrine. It’s not clear to me why the USTR thinks it can bind the US to law contrary to Kirtsaeng—and this draft is from months after the Kirtsaeng opinion came down. I’m happy to be convinced otherwise, but I can’t see how the two are reconcilable.
Temporary reproductions (Article QQ.G.1): Despite the fact that there is a circuit split over whether temporary reproductions are considered “fixed” enough to be copyrightable, the USTR proposes exporting a requirement that temporary reproductions are covered by copyright.
Standard technical measures (Article QQ.I.1(p. 88)): In the DMCA, there is a requirement that intermediaries accommodate “standard technical measures.” However, those measures must be arrived at through a multi-industry process that is open and fair. In practice, this means that there are no standard technical measures in the United States. The words “multi-industry” and “fair” get left out of the TPP, which means that standard technical measures may get developed abroad, and online intermediaries will have to accommodate them there, where they don’t have to at home.
Criminal liability ((Article QQ.H.7(2)): U.S. criminal copyright law contains a numerical threshold for criminal copyright infringement that is done without commercial motivation- $1000 of infringement in 180 days. The TPP proposal substitutes the word “significant” for an actual number. This difference could go either way.
Notice-and-takedown misuse & attorneys’ fees (Article QQ.I.1 (p.89)): In the DMCA, people who misuse notice-and-takedown can be sued, and are subject to attorneys’ fees. Even though the US proposal clearly asks for attorneys’ fees in other places, it does not include attorneys’ fees in the material misrepresentation provision.
Reverse engineering exemption to TPM/DRM (Article QQ.G.10): Thanks to Jonathan Band for pointing this one out to me originally. The reverse engineering exception to DRM exported by the US is not as broad as the one available domestically.
Privacy (Article QQ.I.1): TPP barely mentions privacy. There are some discussions of a no-duty-to-monitor provision, but no broader assertion of privacy principles that I can find. We don’t normally think of U.S. law as containing a nod to balancing copyright enforcement with privacy, but it turns out that 512(m)(2), which says providers shall not access content contrary to law, was intended to bolster the “no monitoring necessary” requirement to mean “no monitoring necessary, AND don’t violate wiretap law.” This didn’t make it in.
posted by Orly Lobel
Each in his own sharp and perceptive way, Brett Frischmann, Frank Pasquale and Matthew Bodie present what are probably the hardest questions that the field of human capital law must contemplate. Brett asks about a fuller alternative vision for line drawing between freedom and control. He further asks how we should strike the balance between regulatory responses and private efforts in encouraging more openness. Finally, he raises the inevitable question about the tradeoffs between nuanced, contextual standards (what, as Brett points out, I discuss as the Goldilocks problem) versus rigid absolute rules (a challenge that runs throughout IP debates and more broadly throughout law). Frank and Matt push me on the hardest problems for any politically charged debate: the distributive, including inadvertent and co-optive, effects of my vision. I am incredibly grateful to receive these hard questions even though I am sure I am yet to uncover fully satisfying responses. Brett writes that he wanted more when the book ended and yes, there will be more. For one, Brett wanted to hear more about the commons and talent pools. I have been invited to present a new paper, The New Cognitive Property in the Spring at a conference called Innovation Beyond IP at Yale and my plan is to write more about the many forms of knowledge that need to be nurtured, nourished, and set free in our markets.
Matt describes his forthcoming paper where he demonstrates that “employment” is reliant on our theory and idea of the firm: we have firms to facilitate joint production but we need to complicate our vision of what that joint production, including from a governance perspective, looks like. “Employers are people too” Matt reminds us, as he asks, “Do some of the restrictions we are talking about look less onerous if we think of employers as groups of people?” And my answer is yes, of course there is a lot of room for policy and contractual arrangements that prevent opportunism and protect investment: my arguments have never been of the anarchic flavor “let’s do away with all IP, duties of loyalty, and contractual restrictions”. Rather, as section 2 (chapters 3-8) of Talent Wants to Be Free is entitled we need to Choose Our Battles. The argument is nicely aligned with the way Peter Lee frames it: we have lots of forms of control, we have many tools, including positive tool, to create the right incentives, let us now understand how we’ve gotten out of balance, how we’ve developed an over-control mentality that uses legitimate concerns over initial investment and risks of opportunism and hold-up to allow almost any form of information and exchange to be restricted. So yes: we need certain forms of IP – we have patents, we have copyright, we have trademark. Each one of these bodies of law too needs to be examined in its scope and there is certainly some excess out there but in general: we know where we stand. But what about human capital beyond IP? And what about ownership over IP between employees and employers?
So yes, we need joint inventorship doctrines for sure when two inventors work together. But what about firm-employee doctrines? Do we need work-for-hire and hired-to-invent doctrines? Here we arrive to core questions about the differences between employment versus joint ventures or partnerships between people. And even here, the argument is that we continue to need during employment certain firm protections over ownership. But the reality is that so many highly inventive and developed countries, diverse as Finland, Sweden, Korea, Japan, Germany, and China, all have drawn more careful lines about what can fall under “service inventions” or inventions produced within a corporation. These countries have some requirement for fair compensation of the employee, some stake in inventions, rather than a carte blanche to everything produced within the contours of the firm. The key is a continuous notion of sharing, fairness and boundaries that we’ve lost sight of. Intense line-drawing as Brett would have it that is based on context and evidence, not on an outdated version of the meaning of free markets.
What about non-competes and trade secrets? Again, my argument is that these protections alternate, they should be discussed in relation to one another, and we need to understand their logic, goals, and the cost/benefit of each given that they exist in a spectrum. Non-competes is the harshest restriction: an absolute prohibition post-employment to continue in one’s professional path outside the corporation. This is unnecessary. The empirics are there to support their absolute ban rather than the fine dance that of balancing that is needed with some of the other protections. Sure it makes life momentarily easier for those who want to use non-competes, but over time, not only can we all live without that harsh tool, we will actually benefit from ceding that chemical weapon in the battle over brains and instead employ more conventional arms. And yet, even in California, this insight doesn’t and shouldn’t extend to partnerships. The California policy against non-competes is limited to the employment context. If two people, as in Matt’s hypo, are together forming a business, their joint property rights in that business suggest to us that allowing some form of a covenant not to compete will be justified. There will still be a cost to positive externalities but the difference between the two forms of relationships allow for absolute ban in one and a standard of reasonableness for the other. And yes, as Brett alludes to, the world is not black and white and we will have to tread carefully in our distinctions between employees and partners.
I completely agree with Matt and Frank that there are fundamental injustices created by our entire regime of work law. Talent Wants to Be Free takes those deep structures into account in developing the more immediate and positive vision for better innovation regimes and richer talent pools. Matt writes that a more radical alternative lies within Talent but “deserves more exegesis: namely, whether we should eliminate the concept of employment entirely.” What if people will always be independent contractors?, he asks. The reforms promoted in Talent Wants to Be Free, allowing more employees more control over their human capital, indeed bring these two categories – employees and independent contractors – closer together in some respects. But far more would be needed to shift our work relations to be more “democratic and egalitarian: a post-industrial Jeffersonian economy.” As both Frank and Matt show, in their own scholarship and in their provocative comments here, this will require us to rethink so much of the world we live in.
Frank Pasquale’s review is so rich that I hope he extends and publishes it as a full article. Frank says that “for every normative term that animates [Orly’s] analysis (labor mobility, freedom of contract, innovation, creative or constructive destruction) there is a shadow term (precarity, exploitation, disruption, waste) that goes unexplored.” I would agree that the background rules that define our labor market, at will employment, inequality, class and power relations, are not themselves the target of the book. They do however deeply inform my analysis. To me, the symmetry I draw between job insecurity and the need for job opportunity is not what Frank describes as a “comforting symmetry”. It is a call for the partial correction of an outrageous asymmetry. And yes, as I mentioned at the very beginning of the symposium, I hoped in writing the book to shift some of the debates about human capital from the stagnating repetition of arguments framed as business-labor which I view not only as paralyzing and strategically unwise but also as simply incorrect and distorting. There is so much more room for win-win than both businesses and labor seem to believe. On that level, I think Frank and I actually disagree about what we would define as abuse. I do in fact believe that many of us can passionately decide to give monetary gains in return for a job that provides intangible benefits of doing something we love to do. Is that always buying into the corporate fantasy? Is that always exploitation? Don’t all of us do that when we become scholars? Still, of course I agree with many of the concrete examples that Frank raises as exploitation and precarious work – he points to domestic workers, which is a subject I have written about in a few articles (which I just realized I should probably put on ssrn - Family Geographies: Global Care Chains, Transnational Parenthood, and New Legal Challenges in an Era of Labor Globalization, 5 CURRENT LEGAL ISSUES 383 (2002) and Class and Care, 24 HARVARD WOMEN’S LAW JOURNAL 89 (2001)]. Frank describes a range of discontent in such celebrated workplaces as Silicon Valley giants, which I too am concerned with and have thought about how new hyped up forms of employment can become highly coercive. Freeing up more of our human capital is huge, but yes, I agree, it doesn’t solve all the problems of our world and by no means should my arguments about the California advantage in the region’s approach to human capital and knowledge flow be read as picturing everything and anything Californian as part of a romantic ideal.
November 14, 2013 at 4:21 pm Posted in: Behavioral Law and Economics, Book Reviews, Bright Ideas, Empirical Analysis of Law, Employment Law, Innovation, Intellectual Property, Law and Inequality, Law and Psychology, Symposium (Talent Wants to be Free), Technology, Uncategorized Print This Post No Comments
posted by Margot Kaminski
Yesterday, Wikileaks leaked the draft IP chapter of the Trans-Pacific Partnership Agreement (TPP). This is the first of two posts I’ll make on the significance of the leak. In this post, I discuss why the leak matters from the process perspective. In the next, I’ll point out detailed substantive issues in the draft’s copyright provisions. Unsurprisingly, the process and the substance are closely intertwined.
Up until this leak, only a subset of domestic IP stakeholders has had access to the TPP text. The U.S. Trade Representative has shown the draft text to its closed advisory committees, but not to anybody else. Content industries and pharmaceutical industries sit on the IP advisory committee. Internet industries, smaller innovators, generics companies, and public interest groups do not.
This is no accident. When Congress established the trade negotiating system, it exempted the Trade Representative from requirements of an open government law that was enacted to prevent agency capture, the Federal Advisory Committee Act (FACA). FACA requires transparency, a limited term length for industry advisory committees, and balanced membership on those committees. The trade advisory committee on IP does not have balanced membership. It is not subject to public oversight. And it has an extended term limit, at the discretion of the USTR. Other open government laws also don’t apply—the USTR exempts itself from the Freedom of Information Act (FOIA) by claiming a national security exemption, and the Administrative Procedure Act (APA) doesn’t apply to international lawmaking. As a consequence, the U.S. role in international IP lawmaking is captured through one-sided industry advice.
The USTR is supposed to be exporting US IP law. But what the USTR exports is not US law. The USTR paraphrases US law; it doesn’t export our statutes. This process allows information capture to have substantive consequences.
The paraphrasing USTR sends out is worse than our law. It’s less balanced, and it’s missing things. In places, the USTR misrepresents that one side of a current circuit split is the authoritative word on issues that deeply divide domestic constituents.
These skewings and omissions are not an accident. Some are directly requested by the IP advisory committee—you can see the requests in past advisory committee reports on other free trade agreements. Others are the result of the USTR’s failing to consult public interest, academics, or opposing industries, who would point out what must be included, what’s wrong, and which omissions matter.
Balanced advice is necessary at the level of the text. The USTR recently conducted a series of “stakeholder phone calls,” where it takes questions on broad policy issues. These calls are transparency theater, not transparency. They lump together stakeholders on an impossibly wide range of issues—from dairy to textiles to IP. Discussions are high-level, where many of the problems with USTR’s policies are textual problems. The devil, in law, is very much in the details.
The USTR is captured in other ways, too. There is a significant revolving door problem. USTR negotiators come from and leave for employment in the same IP industries that sit on its advisory committee. But the crux of the problem is that nobody outside of the advisory committees sees the text.
This is why the TPP leak is so important: it levels the playing field. It lets those who aren’t on the advisory committees, like me, find and point to misrepresentations the USTR is making. If there is one thing I’d say to our negotiating partners, it’s this: find yourself a good U.S. lawyer who can tell you what is actually in U.S. IP law. And let them read what you’re negotiating.
Our domestic IP law is the result of democratic political process. Even if that process has been subject to significant collective action problems, it still shows compromise. Constituents on opposing sides of an IP issue arrive at legal meaning through statutory and regulatory compromise, and litigation. Courts play an important role in reinserting balance into the system. The international agreements we negotiate and sign are produced by a closed and captured process. What little balance we achieve domestically is not what we are sending abroad.
This approach will have consequences. As many rightfully point out, it will harm developing countries. But it will also harm domestic constituents. Google now makes over 50% of their profits overseas, and we export copyright law that will make it more difficult for them to operate abroad. What’s more, the Internet is global—digital copyright law made abroad affects online content available to people here. And the law the USTR exports affects our policymaking process at home. It binds us to detailed IP law created by advising incumbents. Deviations from that law may result in threats of trade sanctions.
Killing fast track is one way to change the system. If fast track is stopped, Congress will have much more input into the trade process. It will be able to amend trade agreements. But this is a blunt instrument, and it might kill international trade. A more tailored combination of changing the advisory system, giving the USTR precise and enforceable negotiating objectives, and increasing transparency could produce the changes we need. This is why I signed the law professors’ letter calling for transparency in trade, issued today. One leak won’t fix things, but it’s certainly a start.
Sunlight is the best disinfectant. Many thanks to Wikileaks for doing what we rightfully expect our government to do.
posted by Orly Lobel
As Catherine Fisk and Danielle Citron point out in their thoughtful reviews here and here, the wisdom of freeing talent must go beyond private firm level decisions; beyond the message to corporations about what the benefits of talent mobility, beyond what Frank Pasquale’s smartly spun as “reversing Machiavelli’s famous prescription, Lobel advises the Princes of modern business that it is better to be loved than feared.” To get to an optimal equilibrium of knowledge exchanges and mobility, smart policy is needed and policymakers must to pay attention to research. Both Fisk and Citron raise questions about the likelihood that we will see reforms anytime soon. As Fisk points out — and as her important historical work has skillfully shown, and more recently, as we witness developments in several states including Michigan, Texas and Georgia as well as (again as Fisk and Citron point out) in certain aspects of the pending Restatement of Employment — the movement of law and policy has actually been toward more human capital controls rather than less. This is perhaps unsurprising to many of us. Like with the copyright extension act which was the product of heavyweight lobbying, these shifts were supported by strong interest groups. What is perhaps different with the talent wars is the robust evidence that suggests that everyone, corporations large and small, new and old, can gain from loosening controls. Citron points to an irony that I too have been quite troubled by: the current buzz is about the intense need for talent, the talent drought, the shortage in STEM graduates. As Citron describes, the art and science of recruitment is all the rage. But while we debate reforms in schooling and reforms in immigration policies, we largely neglect to consider a reality of much deadweight loss of through talent controls.
The good news is that not only in Massachusetts, where the governor has just expressed his support in reforming state law to narrow the use of non-competes, but also in other state legislatures , courts and agencies, we see a greater willingness to think seriously about positive reforms. At the state level, the jurisdictional variations points to the double gain of regions that void or at least strongly narrow the use of non-competes. California for example gains twice: first by encouraging more human capital flow intra-regionally and second, by its willingness to give refuge to employees who have signed non-competes elsewhere. In other words, the positive effects stem not only from having the right policies of setting talent free but also from its comparative advantage vis-à-vis more controlling states. This brain gain effect has been shown empirically: areas that enforce strong post-employment controls have higher rates of departure of inventors to other regions. States that weakly enforce non-competes are on the receiving side of the cream of the crop. One can only hope that legislature and business leaders will take these findings very seriously.
At the federal level, in a novel approach to antitrust the federal government recently took up the investigation of anti-competitive practices between high-tech giants that had agreed not to poach one another’s employee. This in fact relates to Shubha Gosh’s questions about defining competition and the meaning of free and open labor markets. And it is a good moment to pause about the extent to which we encourage secrecy in both private and public organizations. It is a moment in which the spiraling scandals of economic espionage by governments coupled with leaks and demand for more transparency require us to think hard. In this context, Citron is right to raise the question of government 2.0 – for individuals to be committed and motivated to contribute to innovation, they need some assurances that their contributions will not be entirely appropriated by concentrated interests.
November 14, 2013 at 1:36 am Posted in: Antitrust, Articles and Books, Behavioral Law and Economics, Corporate Law, Economic Analysis of Law, Empirical Analysis of Law, Employment Law, Government Secrecy, Intellectual Property, Law and Psychology, Symposium (Talent Wants to be Free), Technology Print This Post One Comment
posted by Orly Lobel
Peter Lee’s thoughtful review of Talent Wants to Be Free goes straight to the heart of the issues. Peter describes a “central irony about information” – so many aspects of our knowledge cannot lend themselves to traditional monopolization through patents and copyright that their appropriation is done under the radar, through the more dispersed and covert regimes of talent wars rather than the more visible IP wars. We’ve always understood intellectual property law as a bargain: through patents and copyright, we allow monopolization of information for a limited time as a means to the end of encouraging progress in science and art. We understand the costs however and we strive as a society to draw the scope of these exclusive rights very carefully. and deliberately. We have heated public debates about the optimal delineation of patents, and we are witnessing new legislative reforms and significant numbers of recent SCOTUS cases addressing these tradeoffs. But patents are only a sliver of all the information that is needed to sustain innovative industries and creative ventures. Without much debate, the monopolization of knowledge has expanded far beyond the bargain struck in Article I, Section 8 of the Constitution. Through contractual and regulatory law, human capital – people themselves - their skills and tacit knowledge, their social connections and professional ties, and their creative capacities and inventive potential are all the subject to market attempts, aided by public enforcement, of monopolization. Peter refers to these as tacit versus codified knowledge; I think about inputs, human inventive powers versus outputs – the more tangible iterations of intangible assets – the traditional core IP, which qualifies patentability to items reduced to practice (rather than abstraction) and copyrightable art to expressions (rather than ideas). Cognitive property versus intellectual property, if you will.
Lee is absolutely correct that university tech transfer and its challenges and often discontent is highly revealing in this context of drawing fences around ideas and knowledge. Lee writes “in subtle ways, Orly’s work thus offers a cogent exposition of the limits of patent law and formal technology transfer.” Lee’s recent work on tech transfer Transcending the Tacit Dimension: Patents, Relationships, and Organizational Integration in Technology Transfer, California Law Review 2012 is a must read. Lee shows that “effective technology transfer often involves long-term personal relationships rather than discrete market exchanges. In particular, it explores the significant role of tacit, uncodified knowledge in effectively exploiting patented academic inventions. Markets, patents, and licenses are ill-suited to transferring such tacit knowledge, leading licensees to seek direct relationships with academic inventors themselves.” And Lee’s article also uses the lens of the theory of the firm, the subject of the exchanges here, to illuminate the role of organizational integration in transferring university technologies to the private sector. I think that in both of our works, trade secrets are an elephant in the room. And I hope we continue to think more about how can trade secrets, which have been called the step child of intellectual property, be better analyzed and defined.
November 13, 2013 at 12:30 pm Posted in: Behavioral Law and Economics, Bioethics, Contract Law & Beyond, Corporate Law, Intellectual Property, Law and Psychology, Symposium (Talent Wants to be Free), Technology, Uncategorized Print This Post No Comments
posted by Frank Pasquale
The reader of Talent Wants to be Free effectively gets two books for the price of one. As one of the top legal scholars on the intersection of employment and intellectual property law, Prof. Lobel skillfully describes key concepts and disputes in both areas. Lobel has distilled years of rigorous, careful legal analysis into a series of narratives, theories, and key concepts. Lobel brings legal ideas to life, dramatizing the workplace tensions between loyalty and commitment, control and creativity, better than any work I’ve encountered over the past decade. Her enthusiasm for the subject matter animates the work throughout, making the book a joy to read. Most of the other participants in this symposium have already commented on how successful this aspect of the book is, so I won’t belabor their points.
Talent Want to Be Free also functions as a second kind of book: a management guide. The ending of the first chapter sets up this project, proposing to advise corporate leaders on how to “meet the challenge” of keeping the best performers from leaving, and how “to react when, inevitably, some of these most talented people become competitors” (26). This is a work not only destined for law schools, but also for business schools: for captains of industry eager for new strategies to deploy in the great game of luring and keeping “talent.” Reversing Machiavelli’s famous prescription, Lobel advises the Princes of modern business that it is better to be loved than feared. They should celebrate mobile workers, and should not seek to bind their top employees with burdensome noncompete clauses. Drawing on the work of social scientists like AnnaLee Saxenian (68), Lobel argues that an ecology of innovation depends on workers’ ability to freely move to where their talents are best appreciated.
For Lobel, many restrictions on the free flow of human capital are becoming just as much of a threat to economic prosperity as excess copyright, patent, and trademark protection. Both sets of laws waste resources combating the free flow of information. A firm that trains its workers may want to require them to stay for several years, to recoup its investment (28-29). But Lobel exposes the costs of such a strategy: human capital controls “restrict careers and connections that are born between people” (32). They can also hurt the development of a local talent pool that could, in all likelihood, redound to the benefit of the would-be controlling firm. Trapped in their firms by rigid Massachusetts’ custom and law, Route 128′s talent tended to stagnate. California refused to enforce noncompete clauses, encouraging its knowledge workers to find the firms best able to use their skills.
I have little doubt that Lobel’s book will be assigned in B-schools from Stanford to Wharton. She tells a consistently positive, upbeat story about management techniques to fraternize the incompatibles of personal fulfillment, profit maximization, and regional advantage. But for every normative term that animates her analysis (labor mobility, freedom of contract, innovation, creative or constructive destruction) there is a shadow term (precarity, exploitation, disruption, waste) that goes unexplored. I want to surface a few of these terms, and explore the degree to which they limit the scope or force of Lobel’s message. My worry is that managers will be receptive to the book not because they want talent to be free in the sense of “free speech,” but rather, in the sense of “free beer:” interchangeable cog(nitive unit)s desperately pitching themselves on MTurk and TaskRabbit.
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November 13, 2013 at 9:59 am Posted in: Book Reviews, Corporate Law, Employment Law, Intellectual Property, Philosophy of Social Science, Political Economy, Sociology of Law, Symposium (Talent Wants to be Free) Print This Post No Comments
posted by Orly Lobel
Both Vic Fleisher and Shubha Ghosh in their thoughtful commentary about Talent Wants to Be Free invoke the theory of the firm to raise question about the extent of desirable freedom in talent and knowledge flows. In its basic iteration, the theory of the firm suggests that arms-length contracting will not be optimal when one party has the ability to renegotiate and hold the other party up, which is the conventional rational for the desirability of talent controls. This is what I describe in the book as the Orthodox Model of employment intellectual property: firms fear making relational investment in employees and then having the employees renegotiate the contract under a threat of exit. Firms respond through mobility restrictions aimed at eliminating the transaction costs of this kind of opportunism. In the book, I accept, at least for some situations, this aspect of the benefits and confidence that are created for firms in internalizing production and ensuring ongoing loyalty by all players. The orthodox model thus explains post-employment controls as necessary to encourage optimal investment within the corporation. More company controls = more internal R&D and human capital investment. The new model developed in the book doesn’t deny these benefits but argues that the orthodox model is incomplete. The Dynamic-Dyadic Model asks about the costs and benefits when controls are employed. It suggests that yes, often, protecting human capital and trade secret investments is often in the immediate interest of a company, but that too much control becomes a double-edged sword. This is because of both the demotivating effects on employee performance when lateral markets are reduced and because over-time, although information leakage and job-hopping by talented workers may provide competitors with undue know-how, expertise, and technologies, constraining mobility reduces knowledge spillovers and information sharing that outweigh the occasional losses. The enriched model is supported by a growing body of empirical evidence that finds that regions with less controls and more talent freedom, such as California, have in fact more R&D investment, quicker economic growth and greater innovation.
Vic is of course right that one solution to this problem is to recreate high-powered (market-like) incentives for performance within the firm. This is an aspect that I am greatly interested in and I analyze it in Talent Wants to Be Free as the question of whether controls and restrictions can effectively alternate with the carrots of performance-based compensation, vesting interests, loyalty inducing work environments, employee stock options and so forth. I too like Shubha am a fan of Hirschman’s Exit, Voice, and Loyalty and have found it useful in analyzing employment relations. I view the behavioral research as shedding light on these questions of what these intra-firm incentives need to look like in order to preserve the incentive to innovate. In a later post I will elaborate on the monitoring and motivational tradeoffs that exist in individual and group performance.
More generally, though, the research suggests that at least in certain industries, most paradigmatically fast-paced, high-tech fields, innovation is most likely when the contracting environments have thick networks of innovators that are mobile (i.e. Silicon valley) and firms themselves are horizontally networked. The flow of talent and ideas is important to innovation and rigid boundaries of the firm can stifle that interaction even with the right intra-firm incentives. The benefits in terms of innovation rise in these structures of denser inter-firm connections, but also, the costs of opportunism that drive the conventional wisdom are in fact lower than the traditional theory of the firm would predict. This is because talent mobility is a repeated game and at any given moment, a firm can be on either side of the raiding and poaching. Policies against talent controls have the effect of reducing the costs of opportunistic renegotiation by ensuring the firm can hire replacement innovators when it loses its people. To push back on Vic’s phrasing, talent wants to be appreciated and free. MIT economist Daron Acemoglu’s analysis of investments and re-investments in workers as a key ingredient of production and growth is helpful in understanding some of this dynamic. People invest in their own human capital without knowing the exact work they will eventually do, just as companies must make investment decisions in technology and capital funds without always knowing who they will end up hiring. Acemoglu describes the positive upward trajectory under these conditions of uncertainty: When workers invest more in their human capital, businesses will invest more because of the prospects of acquiring good talent. In turn, workers will invest more in their human capital as they may end up in one or more of these companies. The likelihood of finding good employers creates incentives for overall investments in human capital.
November 13, 2013 at 1:12 am Posted in: Behavioral Law and Economics, Economic Analysis of Law, Empirical Analysis of Law, Employment Law, Innovation, Intellectual Property, Symposium (Talent Wants to be Free), Technology, Uncategorized Print This Post No Comments
posted by Orly Lobel
This is a thrilling week for Talent Wants to Be Free. I am incredibly honored and grateful to all the participants of the symposium and especially to Deven Desai for putting it all together. It’s only Monday morning, the first official day of the symposium, and there are already a half a dozen fantastic posts up, all of which offer so much food for thought and so much to respond to. Wow! Before posting responses to the various themes and comments raised in the reviews, I wanted to write a more general introductory post to describe the path, motivation, and goals of writing the book.
Talent Wants to Be Free: Why We Should Learn to Love Leaks, Raids and Free Riding comes at a moment in time in which important developments in markets and research have coincided, pushing us to rethink innovation policy and our approaches to human capital. First, the talent wars are fiercer than ever and the mindset of talent control is rising. The stats about the rise of restrictions over human capital across industries and professions are dramatic. Talent poaching is global, acquisition marathons increasingly focus on the people and their skills and potential for innovation as much as they look at the existing intellectual property of the company. And corporate espionage is the subject of heated international debates. Second, as a result of critical mass of new empirical studies coming out of business schools, law, psychology, economics, geography, we know so much more today compared to just a few years ago about what supports and what hinders innovation. The theories and insights I develop in the book attempt to bring together my behavioral research and economic analysis of employment law, including my experimental studies about the effects of non-competes on motivation, my theoretical and collaborative experimental studies about employee loyalty and institutional incentives, and my scholarship about the changing world of work, along with theories about endogenous growth and agglomeration economies by leading economists, such as Paul Romer and Michael Porter, and new empieircal field studies by management scholars such as Mark Garmaise, Olav Sorenson, Sampsa Samila, Matt Marx, and Lee Fleming. Third, as several of the posts point out, these are exciting times because legislatures and courts are actually interested in thinking seriously about innovation policy and have become more receptive to new evidence about the potential for better reforms.
As someone who teaches and writes in the fields of employment law, I wrote the book in the hopes that we can move beyond what I viewed as a stale conversation that framed these issues of non-competes, worker mobility, trade secrets and ownership over ideas as labor versus business; protectionism versus free markets (as is often the case with other key areas of my research such as whistleblowing and discrimination). A primary goal was to shift the debate to include questions about how human capital law affects competitiveness and growth more generally. Writing about work policy, my first and foremost goal is to understand the nature of work in its many evolving iterations. Often in these debates we get sidetracked. While we have an active ongoing debate about the right scope of intellectual property, under the radar human capital controls have been expanding, largely without serious public conversation. My hope has been to encourage broad and sophisticated exchanges between legal scholars, policymakers, business leaders, investors, and innovators.
And still, there is so much more to do! The participants of the symposium are pushing me forward with next steps. The exchanges this week will certainly help crystalize a lot of the questions that were beyond the scope of the single book and several new projects are already underway. I will mention in closing a couple of other colleagues who have written about the book elsewhere and hope they too will join in the conversation. These include a thoughtful review by Raizel Liebler on The Learned FanGirl, a Q&A with CO’s Dan Solove, and other advance reviews here. Once again, let me say how grateful and appreciative I am to all the participants. Nothing is more rewarding.
November 11, 2013 at 5:25 pm Posted in: Behavioral Law and Economics, Book Reviews, Corporate Law, Economic Analysis of Law, Empirical Analysis of Law, Employment Law, Innovation, Intellectual Property, Symposium (Talent Wants to be Free), Technology, Uncategorized Print This Post No Comments
posted by Peter Lee
Orly’s ambitious and thought-provoking book covers a significant amount of intellectual ground. She deftly navigates covenants not to compete, nondisclosure agreements, trade secrets, and intellectual property assignments to provide a compelling argument for the free flow of talent in the modern economy. Orly’s work raises a host of questions that space constraints no doubt prevented her from more fully exploring, and I would encourage her to extend her analyses in subsequent work.
One aspect of Orly’s work that I found particularly intriguing is that it reveals a central irony about information. The title of her book is a play on Stewart Brand’s famous phrase “information wants to be free.” While this statement has a contemporary ring, the observation that information is “slippery” and readily appropriable has a long pedigree and has had significant legal and policy ramifications. As Orly notes, Thomas Jefferson invoked the freely appropriable nature of technical information to help justify exclusive rights on inventions. More formally, economists have long characterized technical knowledge as a public good that is nonrival, nonexcludable, and capable of nearly costless transmission. The “slipperiness” of technical information is now largely taken for granted and provides significant theoretical justification for exclusive rights on knowledge assets. Indeed, IP scholars such as Polk Wagner have argued that information’s natural tendency to slip through cracks and build upon itself should alleviate concerns that strict exclusive rights can bottle up knowledge. Information, after all, wants to be free.
Orly’s account of the talent wars, however, reveals that much information does not naturally want to be free. As Orly recognizes, much technical information is tacit and personal to a particular creator or inventor. Such tacit knowledge takes the form of intangible know-how that is difficult and sometimes impossible to codify. Importantly, even when an invention is disclosed in a patent, much valuable technical knowledge related to that invention often remains tacit and is not formally shared. The inadequacy of patent disclosure and the difficulty of transmitting tacit knowledge create a need for companies licensing patents to somehow obtain this information. This is evident, for example, in university patenting and technology transfer, a field that Orly addresses. Empirical accounts of academic technology transfer show that private companies, in parallel to licensing university patents, often seek direct interactions with faculty inventors precisely to obtain their patent-related tacit knowledge.
The tacit, sticky nature of technical information relates to another theme that permeates Orly’s work: agglomeration economies and the importance of place. In theory, patents adequately disclose the inventions they cover, which has the effect of reducing transaction costs in licensing negotiations. Among other implications, such ex ante disclosure should make licensing negotiations less sensitive to geographic proximity; at least with respect to appropriating technical knowledge, a potential licensee should not have a great need to interact directly with an inventor, for the patent itself discloses the technology. However, empirical studies of academic licensing show that licenses tend to cluster around licensor universities. To be sure, a host of factors helps explain such clustering, from universities’ commitment to local economic development to the spatially concentrated nature of professional networks (a theme that Orly also highlights). But the need for faculty inventors to literally sit down with licensee firms to convey patent-related tacit knowledge also contributes to such agglomeration. While some information can be transmitted by reading a patent a thousand miles away, sometimes transferring patent-related technical knowledge requires side-by-side demonstrations of a new technology or that ever-valuable personal conversation over a cup of coffee.
In subtle ways, Orly’s work thus offers a cogent exposition of the limits of patent law and formal technology transfer. In theory, the patent system provides a public repository of technical knowledge from which all can draw in their innovative pursuits. At the very least, licensees themselves should be able to rely on the disclosure of patents to adapt licensed inventions for commercial use. However, much information is not freely appropriable. Even when an invention is disclosed, much information remains tacit and personal to the inventor. Thus, patents are inherently limited as a vehicle for disclosing and transferring technologies, thereby creating a need for much costlier, geographically constrained, tacit knowledge transfer between individuals.
In a broader sense, Orly’s observations highlight an interesting paradox about the “freedom” of information. In the classic economic account, the ease of appropriating technical information represents a problem. This problem is resolved by subjecting technical information to exclusive rights, thus shoring up incentive to invent. However, Orly’s study reveals that much information is subject to a different problem: it is too difficult to appropriate, as it resists formal codification and disclosure. This creates a need for a different type of policy intervention, one that focuses on enhancing the mobility of the underlying sources of information—people—rather than information itself. Paradoxically, the fact that much information is not truly free provides all the more reason that the talent generating that information should be.
November 11, 2013 at 12:46 pm Tags: human capital, innovation, patent law, tacit knowledge Posted in: Innovation, Intellectual Property, Symposium (Talent Wants to be Free), Technology, Uncategorized Print This Post No Comments
posted by Catherine Fisk
This book is a terrific synthesis of many literatures on legal rules regulating employee-generated intellectual property, human capital, and the nature of innovation. Through her broad and perceptive reading in law, economics, sociology, geography, psychology, and organizational behavior, among other fields, Lobel has compiled a persuasive argument in favor of free employee mobility. She explains the law of trade secrets, noncompetition and nondisclosure agreements, pre-invention assignment agreements, and works for hire in copyright in terms that can be understood by nonlawyers. She explains economic concepts like prisoners’ dilemmas, agglomeration economies, and the rigidity of labor markets in simple terms and links them to legal rules and to news accounts of how legal rules affect company and employee behavior.
One of the book’s great strengths is how engaging the writing is and how deftly Lobel constructs her synthesis. The prose style is jaunty. The examples are ripped from the pages of the Wall Street Journal, magazines aimed at business readers, academic studies published in peer-reviewed journals of business and economics, as well as canonical stories of genius inventors and entrepreneurs ranging from Ben Franklin to Thomas Edison to Steve Jobs. In a mere two pages, she skips from academic studies of business to anecdotes about her experiences consulting with inventors to a story reported in Forbes Magazine to Joseph Schumpeter’s classic economic works published in the 1920s (pp. 202-203). She makes great use of a diversity of sources to develop her argument about why the law ought to allow a great deal more mobility of human capital than it currently does.
The book is clearly aimed at an audience of business people and policy makers rather than legal scholars. As she says at the end, “If many of your best employees are leaving you, it serves as a warning sign to make changes.” (p. 244) That is all to the good. Many of the ideas in this book aren’t new – scholars have been criticizing overbroad enforcement of noncompetes, trade secrets, and invention and copyright assignments for decades, and the research on agglomeration economies (like Silicon Valley) is no longer novel. But the broad scholarly consensus in both law and business/economics that employee mobility leads to economic growth has not yet had much impact on law. Indeed, the proposed Restatement of Employment Law is poised to make some aspects of the law in this area more hostile to employee mobility. So an appeal to nonlawyers seems essential. As Lobel points out (pp. 72-73), at least one state (Massachusetts) has been engaged in a serious look at whether to dramatically change its laws governing noncompete agreements to allow much more employee mobility, and a book like this is tailor made to be read by legislators mulling over whether Massachusetts businesses would be helped or hurt by making noncompete agreements unenforceable. She translates the empirical work of a number of scholars into clear and simple lessons for business executives and policy makers.
posted by Brett Frischmann
I applaud Orly for this excellent contribution. There is much to praise and much to comment on. I was particularly attracted to the interdisciplinary perspective of the book and its heavy reliance on and reporting of studies in economics, psychology, and other literatures—including but not limited to Orly’s original research. The book provides an excellent discussion of various dimensions of innovation studies. It also provides compelling descriptions of many different real world contexts where the lessons from the academic studies play out on the ground. The combination is quite amazing. I also think it is quite important that she focused attention on people, and the human, social and intellectual capital that actually drives innovation across sectors. Too often, innovation studies lose sight of the actual people involved. Orly’s book covers so much ground and connects with various topics I’m also interested in. It is difficult for me to pick a particular topic of theme to comment on in this blog post. (I’m tempted, for example, to push her to say more about technology transfer offices at universities and how they’ve evolved over time in terms of their approach to control. I also would like to hear *much* more about the application of commons governance ideas.) Instead, I’ll say something about the broad ambition of the book.
Orly presents the book as new wisdom – a “dynamic model” — to challenge conventional wisdom – the “orthodox model” – about the necessity of strict control over talented employees, ideas, and various other complementary resources that drive creative and innovative progress and economic growth. I think the book does a wonderful job of pointing out the many ways in which theoretical and empirical work across many fields of inquiry combine to challenge if not completely undermine the conventional wisdom. Controls on the flow of ideas and employees often backfire and are costly to the firm and the public. Orly describes very well the substantial benefits – benefits all too often ignored or assumed away – in sustaining the freedom to operate, to move, to experiment, to tinker, and so on. She effectively makes the case for a much more nuanced approach to thinking about innovation and the various ways in which freedom (to operate, to move, to think, to experiment, to ride, etc.) impact innovation and social welfare more generally.
That said, I don’t think the book supplies a fully formed alternative vision, theory or model about what degree of control/freedom may be needed to sustain innovation. The Goldilocks nature of the problem, which Orly describes, surfaces throughout, and it is hard to know where or how to strike the right balances as a matter of public policy (law) and private strategy (corporate practice). The book at times seems to suggest that it will offer a solution or that the solution might be absolute freedom / no control. But that is not really what the book ends up saying, as I understand it. In the end, we remain stuck with the problem of nuance and variety and context- or industry-specific balancing. Frankly, I don’t think this is a bad result at all; it’s probably where we need to be if we’re basing our judgments in reality.
For some reason, I was surprised when the book ended. I wanted more. I expected more. In a sense, this is a good thing because the book provoked me to think about and look for more. But I wonder whether the final part of the book could have tied the themes together a bit more tightly and at least proposed a research agenda for developing a more nuanced approach to innovation. Many of the pieces of the puzzle are in Orly’s book. But the puzzle remains incomplete.
posted by Deven Desai
This week Concurring Opinions is hosting a symposium on Professor Orly Lobel’s book, Talent Wants to be Free: Why We Should Learn to Love Leaks, Raids, and Free Riding. In simplest terms, Professor Lobel takes on some thorny problems in innovation policy debates including whether to lock down talent and ideas or to embrace the movement of people and knowledge. Though these tensions seem easy to understand, the natural desire to keep what one has means arguments to tie up whatever seems to be giving one an advantage creates larger debates about optimal control and outcomes. Professor Lobel’s work tangles with these core ideas and more.
Professor Lobel is leading thinker on the intersection of employment law, intellectual property law, regulatory and administrative law, torts, behavioral economics, health policy, consumer law and trade secrets as they relate to innovation. She is the Don Weckstein Professor of Labor and Employment Law at University of San Diego School of Law and holds an SJD and LLM fro Harvard as well as an LLB from Tel Aviv University. She is a member of the American Law Institute and the recipient of research grants from the Robert Wood Johnson Foundation, the American Bar Association litigation Fund, the Searle-Kauffman Fellowship, the Southern California Innovation Project, and Netspar, University of Tilburg. We are honored to have her join us for the symposium as our great list of guest authors engage with her book.
Our line-up of authors include Matt Bodie, Anupam Chander, Danielle Citron, Catherine Fisk, Vic Fleischer, Brett Frischmann, Shubha Ghosh, Ron Gilson, Peter Lee, and Frank Pasquale. We look forward to everyone’s contributions.
posted by Gerard Magliocca
In response to my post about President Eisenhower’s statement about innovation from his Farewell Address, Michael Risch comments that:
“Lamoreaux, et al., have an article called “Patent Alchemy” that argues (and I extend the argument in an essay I’m working on) that part of the rise of patent trolls is due to a dialing back of company based research, coupled with “individual tinkering” in the form of software patents that can be developed at home. This is [one reason] why people used to large company patenting are freaking out, and historians generally say this is just a repeat of the past.”
The thought that software patents are a modern form of garage invention is an interesting one.
posted by Paul Berman
I remember back in 2003, Anupam Chander and I both took part in a cyberlaw retreat on Cape Cod sponsored by Harvard Law School’s Berkman Center for Internet and Society. Most of the professors assembled at the retreat were concerned with how to “solve” the problems that local regulation of internet activity might pose. In contrast, Anupam Chander and I repeatedly made the case that this was not a problem to be solved, but an inevitable expression of cultural diversity. Further, we argued that there might even be some benefits that could accrue from such legal pluralism, properly managed.
We have been fellow travellers ever since, and I am very pleased to see Anupam’s project finally come to fruition in this lively and agile book. As befits a broadly synthetic work about the electronic silk road, Anupam stiches together an impressive array of examples that convincingly demonstrate the importance of the global trade in services. In addition, turning from the descriptive to the normative, he lays out principles that might undergird a governance regime for this cross-border activity that leaves open the possibility for multiple competing normative voices.
Anupam’s approach is one that is consonant with the conception of global legal pluralism I have been pursuing for over a decade, and so I have few objections to his account. Quite rightly, Anupam steers a useful middle ground on issues of so-called extraterritorial regulation. He neither says that local regulation should always trump all other possible normative authorities (as sovereigntist territorialists often do), nor does he call for a full universal harmonization scheme. Instead, he adopts a pithy aphorism: “harmonize where possible and glocalize where necessary.” The key here is that a decisionmaker in a cross-border dispute should always ask whether it is possible to defer to another legal regime in the interests of a harmonious interlocking transnational legal system. Even asking such a question can, over time, inculcate habits of mind that cause decision-makers to be restrained about reflexively applying their own law in all circumstances. At the same time, Anupam recognizes that there will be instances when such deference is impossible and local populations will feel the need to impose local norms on cross-border activity. In such cases, he asks global services companies to “glocalize”: customize their global services product to conform to the law of various localities.
My guess is that such an approach will be workable in many cases, and so Anupam’s argument is an advance. It is also usefully pluralist in that it leaves space for multiple communities—local international, and transnational—to assert normative authority. This is in marked contrast to an approach that seeks to elide normative difference and tries to impose a single authoritative set of norms. Thus, I fully embrace his project.
I do have two quibbles, however.
posted by Haochen Sun
The Life of Pi presents an epic journey that a boy survives by maximizing spiritual strength in the most adverse circumstances. Called Pi, the boy harnesses curiosity, spirituality, and love to go through his adventurous “international” journeys through religions, cultures, and most notably nature with a stormy ocean.
In his new book The Electronic Silk Road: How the Web Binds the World in Commerce, Anupam Chander also narrates an epic journey that we must embark on in the digital age. Skillfully written with elegant prose, the book explores complex challenges posed by culture, politics, and technology associated with trade in information services.
As a boundless venue hosting trade in services, cyberspace turns out to be the ocean that Pi crossed. According to Anupam, it has enormous barriers blocking the freedom of trading information services in the global context. Culture matters. While some information services are totally fine in western societies, they may be seen as hostile to Islamic beliefs. Politics matters. It has resulted in information suppression in certain authoritarian countries. Technology matters. It facilitates the growth of information services. But it has been used to block trade in information services.
The great firewalls that exist in the electronic silk road best illustrate the difficulty of promoting trade in information services. As mighty as the storm and waves that Pi suffered on the ocean, they are utilized by repressive regimes to monitor, filter, and even shut down the Internet. In 2010 Google withdrew its operations from mainland China. This incident, as I understand from reading Anupam’s book, is a shipwreck as serious as the one that Pi remembers as the darkest day of his life. But it is also a shipwreck similar to the one that Pi regards as a new journey into knowing himself, other beings with him, and the world or nature at large.
On the one hand, Google’s retreat sounded the loudest alarm to the protection of freedom of information in repressive regimes. Nearly 1.3 billion Chinese citizens as well as many other fellow human beings are subject to cyberspace information suppression by authoritarian regimes. As Anupam bluntly reminds us, “[w]hen allied with willing Internet service providers, websites, software providers, and financial intermediaries, a government can gain an omniscience heretofore unknown.” In the digital age, it is the cross-border information services that supply state-of-the-art technologies and abundant financial resources to the authoritarian regimes.
On the other hand, the Google incident calls for immediate and long-term interventions in order to reshape cyberspace as a sphere free of uncivilized surveillance. This journey to information freedom is, indeed, as arduous as the one that Pi experienced across the ocean and continents. Religion, language, imagination, dignity, and even capacity for love all play an important part contributing to Pi’s triumph. The same applies to the journey toward information freedom. After all, people subject to information suppression live with (or without) different religions and speak different languages. Therefore, the capacity for a concerted effort to empower human dignity and love to address information suppression varies significantly across the world. Toward the end of book, Anupam hints that the World Trade Organization, an international institution that governs global trade both in goods and services, might be of little help to resolve this issue. Without any competent international organizations charting the map, the journey to the heaven of information freedom is destined to be a long and tricky adventure.
Reading The Electronic Silk Road together with The Life of Pi prompted me to think about issues that go beyond information suppression existing in repressive regimes. I realized that there are two major issues looming large in the digital age. While we enjoy the unprecedented freedom, convenience, and entertainment that digital technology can bring to us, we must ponder the dark side of digital technology and how the law should tackle it.
First and foremost, we can identify and understand the ways in which the ubiquity of information services can spawn profound problems. The Life of Pi conveys problems of this kind: hostility toward another religion and culture; indifference to other human beings deemed as inferior; and unwillingness to reciprocate others’ good deeds (Richard Parker, the tiger who has a human name, runs into the nearby jungle without a glance back). All these problems remain for Pi, although he has miraculously made it to shore. Online information services have caused similar problems. For example, the websites hosting information services are rife with fraud. Shortly after I posted an advertisement on Craigslist for subleasing my apartment last fall, I received several emails through which the senders attempted to persuade me to deposit money into their bank accounts before they took over the lease. After doing a bit research about online fraud, I could not help asking myself why there are so many people who choose fraud as their jobs.
Thus, digital technology is a double-edged sword. It promotes free flow of information and provides the social glue to bind many people together to wage revolutions against repressive regimes (e.g., the Jasmine Revolution). However, it also wields the power to alienate many people from the social network of direct interactions, leaving them increasingly alone in their spaces of egoism. Today, the majority of people on the subway spend much of their time using their smartphones or tablets. They appear in the tangible public spaces, but they confine themselves to those machines connected with the Internet, enjoying the private fun of checking Facebook or Twitter, playing electronic games, reading news, shopping online, or watching YouTube videos. Digital technology has facilitated widespread use of emails and text messages, further reducing the occasions for face-to-face conversations, greetings, or smiles. Thus, these trends raise the question whether digital technology promotes engagement with others or reinforces the individual quest for solitude. A new book by Sherry Turkle, Alone Together: Why We Expect More from Technology and Less from Each Other, has a comprehensive and nuanced discussion about this tangled issue.
How should the law tackle the double-edged nature of digital technology? Law is critically important in this regard, because it informs people of what they can and cannot do. Anupam teaches us that core to the law regulating trade mediated via cyberspace is the protection of “the right of individuals to share and receive information.” This core right prioritizes the “delivery and consumption” of information “regardless of frontiers” (p.202). His novel proposal that combines globalization together with harmonization of laws serves the full realization of this right.
But can celebration of the individual right to share and receive information offer means by which we can deal with the alienating effect of digital technology? In other words, does the language of rights really increase the consciousness of sharing information as it purports to? To some extent, it does. Anupam proves this with many vivid examples, particularly the Jasmine Revolution in which sharing information about freedom and democracy was the focal point. But as I discussed earlier and others’ works have proven, digital technology has also driven an increasing number of people to withdraw from traditional means of communication and confine themselves to an egoistic world of isolation.
I believe the language of responsibility can play a big part in dealing with this problem. In my recent article entitled Copyright and Responsibility, I point out that law “regulates human affairs through rules that require people to enjoy their freedoms and exercise their rights in responsible ways.” Responsibilities always come together with rights. Without the infusion with responsibilities, rights are meaningless. Persons are not only individuals but also social members of communities, countries, and the whole world. As social members, persons must not single-mindedly pursue only the realization of their individual rights. Rather, they should also constantly ask what responsibilities they should take on and how they can fulfill them in their social membership.
Anupam does mention the importance of responsibility. For example, he urges that Internet service providers follow the “Do No Evil” responsibility, which requires them not to collaborate with repressive regimes that suppress the free flow of information. Indeed, this responsibility is crucial. But should we also ask Internet service providers to take on more responsibilities to encourage people to spend slightly less time using computers, smartphones, or tablets and slightly more time interacting with others in various ways? In this sense, Internet service providers may have a responsibility to cultivate a healthy environment and culture for human interactions. A follow-up question is whether individuals should have the responsibility to spend slightly more time paying attention to others and their communities via computers, smartphones, or tablets.
Both The Life of Pi and The Electronic Silk Road prompt me to think more about the problems in the human world. The Life of Pi teaches me how a person can grow and mature through overcoming tough challenges and even evils. Anupam’s The Electronic Silk Road teaches me how globalized human societies can continue to flourish through overcoming the obstacles caused by national boundaries and the self-centered energy embedded in each human being. Both The Life of Pi and The Electronic Silk Road celebrate the beauty of human spirituality and its power to deter selfishness and even evil.
posted by Deven Desai
Will we ever be able to go off-grid again? What do we gain and lose if not? These questions came to mind as I was reading Anupam Chander’s Electronic Silk Road. The book is excellent. Indeed, these questions and the rest of this post’s ideas would not have come to mind had he not set out how the Electronic Silk Road operates and might operate. And my questions are perhaps prompted by a good book that addresses much and better still opens the doors to the next questions. Chander makes a strong case for benefits of a modern silk road where trust and trade work together and promote “net-work” which he defines as “information services delivered remotely through electronic communications systems.” This two way world facilitates labor shifted to Asia but also Google and Facebook spanning the globe with their services. His plea for new laws to address this change in trade makes sense. Our world of goods is fading to a world of digital things. Yet I wonder whether this new rule of trade maps to all the wonders we may want.
There may be unintentional irony here. Chapter One epigraph quotes Keynes “What an extraordinary episode in the economic progress of man that age was which came to an end in August, 1914!” Does trade stop war or at least make countries less likely to war against each other? Maybe. To get there Chander points out that, “the characteristics that permit net-work trade might be deployed to create a robust infrastructure for such trade: real-time information transfer, low information and other transactions costs, the ability of individuals around the world to collaborate, and electronic identification.” But the same systems that may promote trade can lead to greater surveillance and repression.
In other words, the recent spying amongst countries may be a good thing. I fear greater coordination amongst countries rather than friction. Chander calls this issue “Stalinization—the imposition of the world’s most repressive rules on cyberspace, in aggregated form.” He acknowledges this point at p. 197. Nonetheless this greater connection and improved grid may be inescapable. The idea that local laws must balance global over-reach does not appear to address what happens when the big boys agree. The electronic silk road thus seems to kill the romance of the silk road.
The Silk Road evokes adventure, the ability to test, change identities, and yet somehow trade worked. Failure on the Silk Road or even mistakes or cheating could be hidden by moving from the Road to some other country. In that sense, a modern system of trade on a global scale seems to defeat the room for play that Julie Cohen has described in Configuring the Networked Self. To where would one go to experiment, reinvent, and rehabilitate? Even with greater freedom to communicate things can go awry. A WTO response may be futile if all agree on bad behavior. Public shaming of corporations may mean little when they are forced to comply. To be clear, I agree with much of what Chander offers and have hope that the mitigation he offers will take it root. At bottom it may be a faith that discourse and debate defeats evil in all forms. Part of me thinks this idea is true. Part wonders whether we have come that far from the days leading up to World War I or II. If not, tighter understanding and trade may do less than both Chander and I hope. Then again Chander may be setting us up for the next step in his ideas. I certainly hope so.