Category: Intellectual Property

What Would Europe Do?

Muni Wifi Router.jpgI went to a few trying panels at the annual law prof conference, but overall I felt presentations in my fields were great. (Perhaps it’s just like Congress–people hate the institution but love their own representative). My two favorite panels were on the internet & telecommunications, and on health insurance. But I felt the latter was ultimately more satisfying than the former, largely because many of the health scholars were deeply aware of comparative health policy, but the internet/telephony panel focused very tightly on U.S. policies.

That’s not to say the internet/telephony panel was at all bad–many big names in the field were there, they directly argued with one another, and a high-level senate staffer injected some political realism into what could have become a speculative discussion. Perhaps the most compelling arguments for the status quo (as opposed to “net neutrality intervention“) were offered by Christopher Yoo, who put forward a quasi-Gilderian vision of Darwinian competition unleashing quantum advances in communication services. For example, Yoo said it would be foolish for the FCC to protect Google from “gouging” by broadband networks, since the danger of such discrimination might just drive Google to massively invest in a satellite network to provide a third alternative to the the telephone/cable duopoly. Some would say it’s that duopoly that’s largely responsible for the US’s pathetic ranking of 21st in the world (right behind Estonia) in broadband penetration.

That makes a lot of sense as far as it goes, and reminds me generally of Schumpeterian visions of innovation–let monopolies rack up rents so they’ll either use profits to innovate or provoke someone else to swipe their customers. But another, gentler vision animates some European policy on the matter, where most customers get much lower prices for much faster services than Americans do.

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Fisking Posner on Inequality

In a recent post on the B-P blog, Richard Posner addresses soaring inequality. In the U.S., “since 1980 the percentage of total personal income going to the top 1 percent of earners has risen from 8 percent to 16 percent.” He concedes a few bad effects from this situation, but ultimately concludes that, aside from upping the estate tax, nothing should be done. My favorite part of the post involves Posner’s speculation that “[m]assive philanthropy directed abroad can interfere with a coherent foreign policy;” fortunately, the administration is already on the case.

It’s astonishing how assiduously Posner ignores the work of Robert H. Frank. In 20 years of rigorous articles and books, Frank has documented over and over the ways that growing inequality harms society. Some of us in the legal profession have applied his theories; Cass Sunstein on cost-benefit analysis, Richard McAdams in Relative Preferences, and my own work on luxury health care and the rise of low-volume, high-margin business models in IP.

But in this post, and even in longer treatments of the subject, Posner ignores the leading American theorist on the consequences of economic inequality. Frank takes his libertarian critics seriously, but somehow falls under the Posner’s radar. (Even in articles published in Westlaw, where a search for [au(posner) and (“robert frank” or “robert h. frank”)] got no hits evidencing engagement with Frank’s work on inequality.)

In what follows, I try to “fisk” Posner’s account of the effects of inequality.

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Chained Melodies

chainbest.jpgThe record industry is reportedly steamed that iPod users only buy, on average, 22 songs per device via iTunes. How could it possibly be that people aren’t rushing to fill up their iTunes library? Who wouldn’t entrust their music to a fragile digital demimonde so shackled by DRM that its best physical analogue would be CD’s chained to a bike rack? (The Zune makes the extraordinary concession of permitting one to “squirt” songs wirelessly for–get this–three days or three plays.)

After a couple of songs of mine disappeared during a computer switch, I swore the whole iTunes-purchase thing off. I get CD’s now, buying far less than I would if I could just get durable copies of songs I like. DRM is designed to minimize piracy, not to maximize sales, a “cut off your nose to spite your face” strategy long ago skewered by McKinsey & Co.

But what I find even more strange about the whole situation is the rigidity of pricing. Forget about the obvious equity issues–the almost spiteful flouting of the the principle of nonrivalry in consumption involved in denying content to those with no chance of paying. The industry and its partners appear to be shunning even profit-improving discounts. As Chris Sprigman noted in The 99 Cent Question, 5 J. Telecom. & High Tech. L. 87:

In 2003, the Rhapsody download service . . . [briefly] offered tracks at 99¢, 79¢, and 49¢. The prices do not appear to have been differentiated according to quality. . . . Rhapsody sold three times as many of the 49¢ tracks as the 99¢ tracks. Given that the marginal cost of selling each track is virtually zero, the 49¢ price yielded greater revenue. . . . Had Rhapsody sorted the tracks by quality (measured by demand at the previous uniform 99¢ price), it could have enjoyed additional sales for the lower-quality tracks (sales that would be profitable if the price Rhapsody pays to the major record labels for licenses to particular tracks were also varied to track demand), and maintained its margins for the higher-quality ones. But for some reason the music industry hasn’t absorbed this lesson.

Indeed. The difficult thing for everybody to realize is that there may well be no “right price” for digital music. Rather, the most efficient solution would have to involve a broadbased tax on either (or both) devices and ISPs. (As The Register puts it, “Free legal downloads for $6 a month. DRM free. [Terry Fisher] explains how.”) Verizon gets it. The RIAA gets it when it comes to compositions and lyrics. Why can’t they get it when it comes to recordings?

Photo Credit: Darwin Bell/Flickr.

Why Google is Taking Over the World (of Ideas)

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I had just written the post to end all posts–seamlessly interweaving commentary on Fauxlovean grading, Cute Overload, Yochai Benkler, Ze Frank, reality television, Posner as Richard E. Neumann, The NYT Mag. Ideas of 2006 edition, and assorted oddities.

But then I accidentally hit the “back arrow” button, and it was gone.

Had this post been composed in Gmail, a draft would have been there. I cannot tell you how many times that feature has saved me from losing some rapid-fire composition to clumsy hands. Perhaps the auto-draft-save is only a way to assure that Google’s commercial database perpetually records, not only what I write about, but what I’m thinking writing about. But whatever sacrifice of privacy that entails seems rather minor compared to the infuriating experience of watching the winged words of e-conversation drift into the digital ether.

And now comes Google Patent Search, a nice improvement over the already useful USPTO interface.

So however much I may worry about Google, I have to admit, they are masters at organizing information. Governmental regulation here (such as this interesting Finnish intervention) has to take into account any potential drain of resources from a company that’s doing immense good. Geoff Rapp has worked out cognate ideas on “roundabout redistribution” here.

Photo Credit: greenergrassdesigns (great gift ideas here!)

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Hewlett Packard Pays for Privacy . . . and Copyright?

hewlett-packard.jpgHewlett Packard has agreed to pay $14.5 million to resolve a lawsuit by the California attorney general over its phone records scandal. From the New York Times:

Hewlett-Packard said Thursday that it would pay $14.5 million to settle a lawsuit by the California attorney general over the company’s use of private detectives to obtain private phone records of board members and journalists.

The company is paying $650,000 in fines for “statutory damages,” but the bulk of the money, $13.5 million, is going to create a state-administered Privacy and Piracy Fund. The fund is to finance the investigation of consumer privacy violations and of intellectual-property theft, including the copying of movies and music.

“We wanted very much to enhance our ability to enforce our laws against property theft,” Bill Lockyer, the attorney general, said in an interview.

From the article, it sounds as though most of the money will go to helping the state help businesses police copyright. The purpose of the settled lawsuit was purportedly to protect privacy, and I am perplexed at how protecting against copyright piracy suddenly became an aspect of the settlement. I sure hope that the fund from the settlement is mostly used to protect consumer privacy, not as one more arrow in the music and movie industry’s copyright quiver.

For more about the HP scandal, see this terrific post by guest blogger Timothy Glynn.

Law & Technology Theory

prometheus.jpgI just wanted to plug a new forum that Gaia Bernstein, Jim Chen, and I recently launched–Law & Technology Theory. The big question we’re addressing is whether our experience of past regulation of technologies teaches generalizable lessons for future policy. Gaia has nicely summarized some of the key issues we’ll be considering:

Whether [a theory of law & technology] should have broad principles that apply to all technologies or whether it should offer narrower principles relevant to different categories of technologies?

[Can we] formulate a theory that differentiates on the basis of the social values or institutions a new technology destabilizes?

Our “virtual symposium” will host an international group of scholars with a wide range of theoretical commitments. We’ll be publishing the proceedings in the Minnesota Journal of Law, Science, and Technology this Spring. We hope you’ll consider reading and commenting as the discussion progresses. (Some of us will also be at the IASTS conference in Baltimore this February.)

By the way, on a completely untheoretical note, I have to say that the travel time involved in this symposium is great–zero! By developing a forum somewhere between a blog and a conference, we’re trying to promote a new kind of academic exchange. We hope it ends up being a bit more inclusive than the average conference circuit, which can be inhospitable to those who have a tough time traveling.

Art Credit: Elsie Russell, Prometheus (1994).

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IP and Development

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Greetings from Namibia! (Do I win the contest for posting from the most far flung place?) I am in Namibia (of Brad & Angelina fame) for a conference organized by IIPI on “IP Used in Support of Culture Based Industries.” The main question being addressed is whether IP (especially copyright & trademark) can help improve the markets for African art. The problem is that although the US is the major market for African art, US consumers are not willing to pay enough for the art in order to support the communities that create it. Beautiful, hand-crafted pieces made of indigenous materials using ancient techniques are sold at bargain prices that reflect tiny sums paid to the artisans that created them. We buy these pieces at places like World Market because they look nice, but we learn nothing about their origin and significance. If that’s all we value why not buy even cheaper versions made in China? These artisans are hopeful that they can stop that type of competition by asserting IP rights in the art. Many obstacles exist of course, including the current absence of appropriate legal mechanisms and the fact that much art is already in the public domain. namibian art.pngBut the audience and participants at this conference were optimistic and very creative. One idea: could certification marks be used to prevent others from appropriating the terms used to describe the places and techniques used to create the art? Of course that won’t prevent others from copying the works; it just prevents them from using the terminology. It’s a start, but it will only be effective where it is accompanied by an education campaign about the art. The hope is that consumers will come to value the authentic, once they know what it is.

Grimmelmann: “Is Fashion a Bad?”

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I always enjoy James Grimmelmann’s blog and learn much from his articles. He combines a passion for precision with an unerring sense of the big picture. That’s evident today on the Picker MobBlog discussing Raustiala & Sprigman’s work on IP protections (or the lack thereof) in the fashion industry. Rather than engage the usual dialogue on innovation maximization, Grimmelmann asks flat out: is fashion a bad?

Sure, the fashion cycle may work for the fashion industry, but is that really something we should be glad about? . . . If low IP protection is good for the fashion industry because it enables rapid copying and a quick cycle of obsolescence, and if that cycle involves waste induced by conspicuous consumption, then isn’t a low IP regime a bad thing?

I’m sympathetic with Grimmelmann’s position, and this gap is symptomatic of a larger problem: “most economists believe that the core of economics can be developed with no assumptions at all about what an economy should aim to provide” (Dupre & Gagnier). But I also feel obliged to give the other side its due. And recently, one of the most enthusiastic exponents of laissez-faire here has been Virginia Postrel. Consider this encomium to style:

Even analysts who do not view luxury goods as waste do not [adequately] credit the goods’ intrinsic sensory appeal. . . . [They have] a hard time noticing any qualities beyond status badges and advertising-created brand personas. [But] more is going on. . . . People pet Armani clothes because the fabrics feel so good. Those clothes attract us as visual, tactile creatures, not because they are “rich in meaning” but because they are rich in pleasure. The garments’ utility includes the way they look and feel.

So the challenge for the latter-day Veblen is to disaggregate the “status-conferring” aspect of the fashion from its aesthetic, tactile, and expressive appeal (as Jeff Harrison notes). But as Veblen himself realized, this is an inquiry that has to share in both economic and humanistic approaches. And perhaps it even involves a bit of “norm entrepreneurship” in reinterpreting fashion . . .

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Matlock Needs CLE on IP

Andy%20Griffith%20wallpaper.jpgThe Washington Post has a story today about Andy Griffith suing a man who changed his name to Andy Griffith to run for sheriff. According to the Post (but one can never be sure because the press is always confusing IP laws), the famous Griffith is suing for trademark, copyright and right of privacy violations. Bad reporting or bad lawyering I say. Can’t see that any copyrights are involved. As to right of privacy, publicity seems a better choice. Privacy laws usually are more exacting in their requirement of use in advertising. But even right of publicity mandates commercial misappropriation. Assuming the candidate was advertising his candidacy and soliciting campaign contributions, does this use meet either threshold? Since his advertisements are not for a commercial venture and since his solicitation is not commercial in nature, I say no. This issue of whether or not a defendant’s use a trademark must be used commercially is currently hotly contested, with my vote and slightly more authority suggesting such a requirement. The one strong point the plaintiff has is the fact of a trademark in his name. I never did understand why a show about a sheriff named Andy Taylor was called “The Andy Griffith Show,” perhaps Griffith had prescient trademark lawyers at the time.

The Griffith formerly known as William Harold Fenrick admitted that he legally adopted the new name to create publicity to aid his race. The best laid plans…he came in third. Curiously, Andy of Mayberry in addition to damages and fees, is also asking the court to order the defendant’s name change. A court ordered “Opie” would sure send a message to would-be pirate sherrifs. Remedies experts, please weigh in.

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Finally, Koons Won

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Some of the most wrong-headed copyright law was developed by Post-Pop artist Jeff Koons–-by losing. It all started with Rogers v. Koons and Judge Haight (no relation & I’d deny it if there were just based on this opinion). In that case commercial photographer Art Rogers (yes, his name is Art with a capital A) sued Koons for copying his photograph of a seated couple holding numerous puppies on their laps. Koons sent the photo (he found it on a greeting card) to a art studio in Italy with instructions to reproduce it in a sculpture. Judge Haight easily ruled that this was copyright infringement and the 2d Circuit affirmed. In two subsequent SDNY cases, Koons had Judge Haight’s reasoning thrown back at him. (In these cases the photographer of “Boys with Pig” and the copyright owner of Odie were victorious.) Given Koons’ string of losses, photographer Andrea Blanch must have thought she won the jackpot when she saw her work reproduced in his collage painting “Niagra.” I don’t mean to comment on her motives, but the copyright lawyer she consulted probably envisioned attorneys fees.

There’s much to comment on here, including what the opinion does to fair use doctrine (especially transformative use & the parody/satire dichotomy) and what it does to the law’s treatment of appropriation art. But since I’ve written about these cases before, I’ll confine my post to an analysis of why the court reached a different conclusion in this case. As I read the opinion, I kept wondering why earlier Koons courts could not have taken the same approach. Let me first set out what’s the same in these cases. Koons has stuck with the same lawyer throughout, all the litigation has been in the 2d Circuit (SDNY), and this plaintiff’s profile is similar to Art Rogers’.

Now for the differences: 1) Here the plaintiff’s photograph is an advertisement. While this should make no difference and while other successful plaintiffs have certainly made commercial use of their copyrighted works, I suggest this difference matters to the court. In both the district court and 2d circuit opinion, plaintiff’s photograph is characterized as not being creative. (This affects the analysis under FU factors 2 & 3.) And as an advertisement, these courts are able to easily contrast it’s objective and message with Koons’ objective and message, thereby aiding Koons’ argument that his use is “transformative.” 2)The court “gets” Koons’ work. In the 1st Koons case, Judge Haight’s lack of esteem for the artist pervades the opinion. (For instance, he remarks how Koons’ 1st career was as a commodities trader & how he hires other artists to make his work.) After that, the 2d Circuit and subsequent SDNY courts replayed that assesment without any further opportunity for Koons to explain his work. The district court in this case produced a short opinion heavy on block quotes, including many from Koons’ affidavit. Here, the 2d Circuit paints a different portrait of the artist and weaves his testimony into a coherent story of how fair use law enables just this kind of creativity by granting to artists access to “raw materials” such as Blanch’s photography.

In the end, justice was done here both to Jeff Koons and to the fair use doctrine. Unfortunately, the price of this legal success may be Koons’ status as bad boy of the art world. The doctrinal fit is so cosy that his work feels staid. It doesn’t push boundaries; it doesn’t piss off judges. His work is no longer illegal art, and, if we take him at his word that he’s created an entirely new work out of raw materials, it may not even be properly deemed appropriation art.