Theories of IP, William Fisher (version 2015.1.30)
  Personality
    Roots: Personhood theory of "real" property
      Human needs served by private property rights
        1. Peace of Mind
          e.g., Fried
        2. Privacy
          e.g., Waldron
        3. Autonomy
          e.g., Lincoln
        4. Self-realization as a social being
          e.g., Rose
        5. Self-realization as an individual
          e.g., Hegel, Kant, Hughes, Merges
        6. Security and leisure
          e.g., Waldron, Fitzhugh
        7. Responsibility
          e.g., Green, Mill
        8. Identity
          e.g., Radin
        9. Citizenship
          e.g., Arendt, Classical Republicanism
        10. Self-expression
          e.g., Green, Larson
    Personhood theory of IP
      Intellectual products are manifestations or extensions of the personalities of their creators
        the artist defines herself in and through her art
        artists consequently are entitled to considerable continuing control over their products
          because injuries to those products injures the creator's self, or
          because control over products is part of general project of creating and maintaining an identity
      Appreciation of creators' personhood interests provides support for "moral rights"
        right of attribution
        right of integrity
        right of disclosure
        right of withdrawal
        right against excessive criticism
        droit de suite
      Modern Modifications
        all persons must be enabled and encouraged to express themselves artistically
        recognize increasing dependence of creativity upon re-use of extant intellectual products
      Difficulties
        Should an artist who invests herself in a work of visual art be able to prevent imitations?
          no; the copy would be a product of the copyist's mind -- Hegel
          yes; Hughes
        May an author alienate her right to control the copying of her work?
          deciding when and how to speak is an inalienable aspect of one's personality -- Kant
          expressions of mental aptitudes are external to the author and therefore alienable -- Hegel
        Should a celebrity's persona be protected against commercial exploitation by others?
          yes; it's a repository of selfhood
          no; it owes as much to the media and the audience as to the celebrity -- Madow
    Possible Applications
      Cast doubt on IP terms that extend beyond (or are shorter than) the life of the author?
        Shiffrin
      Cast doubt on defensibility of work-for-hire doctrine and pre-employment invention assignment agreements?
        opportunities for "exit"
          Merges
      Need to protect artists more against their own folly or ignorance?
        Pro-artist interpretation of long-term licenses?
          Merges
      Expanded interpretation of fair use for transformative works?
      Does equality of opportunity require an adjustment of moral rights?
        preservation of right of attribution
          Dastar is backwards
        but diminished protection for right of integrity and right of withdrawal
      Heightened nonobviousness requirement in patent law?
      Justification for (qualified) trade secret doctrine?
        Paine
    Bibliography
  Culture
    Sources
      Philosophy
        Aristotle
          Politics
        Amartya Sen
          "Equality of What?" (1982)
          Quality of Life (1993)
          Development as Freedom (1999)
        Martha Nussbaum
          Women and Human Development (2000)
          Frontiers of Justice (2006)
          "Constitutions and Capabilities: 'Perception' Against Lofty Formalism," 121 Harv. L. Rev. 4 (2006)
      Political Theory
        Commonwealth men
          See Bailyn, Ideological Origins of the American Revolution (1967)
        Marx
          Economic and Philosophic Manuscripts of 1844
        Alexis de Tocqueville
          Democracy in America (1835/1840)
        Hannah Arendt
          On Revolution (1963)
      Psychology
        Edward Deci & Richard Ryan
          The Empirical Exploration of Intrinsic Motivational Processes, in 13 Advances in Experimental Social Psychology 39 (Leonard Berkowitz ed., 1980)
          "Intrinsic Motivation and Self-Determination in Human Behavior" (1985)
          "A Motivational Approach to Self-Integration in Personality," 38 Persp. on Motivation 237 (1990)
          "Self-Determination Theory and the Facilitation of Intrinsic Motivation, Social Development, and Well-Being," 55 Am. Psychol. 68 (2000)
          "The 'What' and 'Why' of Goal Pursuits: Human Needs and the Self-Determination of Behavior," 11 Psychol. Inquiry 227 (2000)
          "Living Well: A Self-Determination Theory Perspective on Eudaimonia," 9 Journal of Happiness Studies 139-170 (2008)
        Martin Seligman
          "Positive Psychotherapy" (2006)
        Christopher Utman
          "Performance Effects of Motivational State" (1990)
        Barry Schwartz
          "Self-Determination: The Tyranny of Freedom" (2000)
          The Paradox of Choice (2004)
      Economics
        Richard Easterlin
        Bruno Frey
        Daniel Kahneman
        Alan Krueger
        Alois Stutzer
      Law
        Keith Aoki
          Bound by Law
          "Pastures of Peonage" (2012)
        Yochai Benkler
          The Wealth of Networks (2006), chapters 5, 10
        Oren Bracha
          "Beyond Efficiency" (with Talha Syed, 2014)
        Julie Cohen
          Configuring the Networked Self (2012)
        William Fisher
          "Reconstructing Fair Use" (1988), pp. 1744-94
          "Theories of Intellectual Property" (2001)
          Promises to Keep (2004), Chapter 1
          "Global Justice in Health Care" (2006)
          "The Implications for Law of User Innovation" (2010)
          Infection (forthcoming), Part III
        Neil Netanel
          Copyright's Paradox (2008)
        Madhavi Sunder
          "IP3" (2006)
          From Goods to a Good Life (2012)
        Talha Syed
          "Global Justice in Health Care" (2006)
          "Beyond Efficiency" (with Oren Bracha, 2014)
    Foundations
      Human Nature
        There exists such a thing as human nature, which is mysterious and complex but nevertheless stable and discoverable
        People's nature causes them to flourish more under some conditions than others
        Social and political institutions should be organized to facilitate that flourishing
      Good Life
        Conditions necessary for the full realization of personhood
        (1) Life
          “Being able to live to the end of a human life of normal length; not dying prematurely, or before one’s life is so reduced as to be not worth living.”
            Nussbaum
        (2) Health
          “Being able to have good health, including reproductive health; to be adequately nourished; to have adequate shelter.”
            Nussbaum
        (3) Autonomy
          George Kateb
            "One's dignity resides in being, to some important degree, a person of one's own creating, making, choosing, rather than being merely a creature or a socially manufactured, conditioned,manipulated, thing: half-animal and half mechanical and therefore wholly socialized."
          J.S. Mill
            "The human faculties of perception, judgment, discriminative feeling, mental activity, and even moral preference, are exercised only in making a choice. He who does anything because it is the custom, makes no choice. He gains no practice either in discerning or in desiring what is best. The mental and moral, like the muscular powers, are improved only by being used."
          John Rawls
          Ronald Dworkin
          Yochai Benkler
            The Wealth of Networks
          Nuances
            Key variable is subjective feeling of self-determination, not objective number of options
            Self-determination of this sort is adaptive
              correlated with better problem solving, job performance, and education
        (4) Engagement
          participation in shaping an important dimension of one's environment
          (a) meaningful work
            Marx
              "Meaningful work requires skill and concentration, presents the laborer with challenges and problems he can overcome only through the exercise of initiative and creativity, and is part of a larger project he considers socially valuable and must take into account in making his decisions"
            behavioral economics
              above a modest level, happiness is not significantly correlated with income or wealth
                sudden change (positive or negative) produces a temporary shift in happiness, but it soon dissipates
                relative income (with reference to peer group) is correlated with happiness, but not absolute income
                  Easterlin 1999
                  Clark & Oswald 1996
                  Ferrer-i-Carbonell 2005
              by contrast, happiness is strongly (inversely) correlated with unemployment
                lending support to contention that flourishing is correlated with meaningful work
            history
              Safety net in Argentina
                2001 economic crisis
                  see Tcherneva 2012
                First governmental response
                  Plan Jefes
                  guarantee of public employment for heads of households
                  unexpectedly, most of the participants proved to be female heads of households
                  public opposition grew, because the program appeared to be compelling women with children to be entering the workforce
                Second governmental response
                  Plan Familias
                  income support policy for poor women only
                Women beneficiaries overwhelmingly lamented the change
                  preferred public employment to cash payment that equalled their salaries
                  many volunteered to continue working at old jobs without pay
                  why?
          (b) civic engagement
            classical republican tradition
              celebrated "civic virtue"
                active participation in politics
                altruistic, deliberative, genuinely committed to the welfare of the polity as a whole, not to the advancement of self-interest or factional interest
            Tocqueville
            Frank Michelman
            Cass Sunstein
          (c) semiotic engagement
            John Fiske
            Michael Madow
            Jack Balkin
        (5) Self-expression
          Projecting oneself into or onto the world is key to personhood
            art (broadly defined)
          incorporate contemporary version of personhood theory of IP
          Kant, Hegel, Green, Radin, Lessig
        (6) Competence
          We feel better, and we do better, when we have the sense that we are capable of performing the tasks we address.
          psychology
            Deci & Ryan
            Seligman
          economics
            amount of time spent in school is positively correlated with overall life satisfaction
              even when schooling is compulsory, not chosen
                Oreopoulos 2003
              although it's unclear whether education is directly or indirectly connected to happiness
                Helliwell 2004
        (7) Connection
          Helliwell, J. F., Putnam, R. D. (2005). "The social context of well-being," Philosophical Transactions of the Royal Society of London
            "Our new evidence confirms that social capital is strongly linked to subjective well-being through many independent channels and in several different forms. Marriage and family, ties to friends and neighbours, workplace ties, civic engagement (both individually and collectively), trustworthiness and trust: all appear independently and robustly related to happiness and life satisfaction, both directly and through their impact on health."
          philosophy: "affiliation"
            Nussbaum
          psychology: "relatedness"
            Deci & Ryan
          political theory: communitarianism
          economics: persistent correlation of "sociability" with happiness
            Helliwell, J. F., Putnam, R. D. (2005). The social context of well-being. Philosophical Transactions of the Royal Society of London
              "Our new evidence confirms that social capital is strongly linked to subjective well-being through many independent channels and in several different forms. Marriage and family, ties to friends and neighbours, workplace ties, civic engagement (both individually and collectively), trustworthiness and trust: all appear independently and robustly related to happiness and life satisfaction, both directly and through their impact on health."
            Examples
              extraversion
              friendship networks
              bonds with children
                Franz v. United States (DCCir 1983), paragraph 40
              sexuality
              carpooling neutralizes unpleasantness of commuting
            exceptions
              teenagers
              marriage
                general life-satisfaction measures are strongly correlated with marriage -- and inversely correlated with divorce
                  Stutzer & Frey (2006)
                  Becchetti et al. (2008)
                but life satisfaction associated with marriage arguably exhibits adaptation
        (8) Privacy
          zone for experimentation and intimacy
            Waldron
      Distributive Justice
        Currently, access to these conditions is both limited and systematically unequal
        Our ambition should be to expand and (to some degree) equalize access
          Variants of egalitarian criteria
            "universal basic capabilities"
              Nussbaum/Sen
            "sufficientism"
              Harry Frankfurt
            "democratic equality"
              Elizabeth Anderson
          Reinforced by behavioral economics
            absence of correlation of happiness or life satisfaction above a moderate level of income or wealth argues for redistribution of wealth and opportunity
      Culture
        Diversity
          The more multifarious the life-styles and ideas on public display in a society, the more each of its members must decide for herself what to think and how to act, thereby developing her own "mental and moral faculties" and rendering the culture as a whole even more "rich, diversified, and animating."
            Mill
        Art
          The more complex and "resonant" the "shared language" of a culture -- the richer it is in the raw materials of representation, metaphor, and allusion -- the more opportunities for creativity and subtlety in communication and thought it affords the members of the culture.
            Dworkin
        Education
          universally available
          empowering
        Democracy
          political
            Netanel
          semiotic
            John Fiske, Michael Madow, Jack Balkin
    Implications
      Copyright Reform
        (1) Education
          we should modify aspects of copyright law that impede educational activities
          e.g., more generous exceptions for distance learning
            for educators, exceptions to rights of distribution and public performance
            for students, exceptions to right of reproduction
          e.g., create exceptions to anti-circumvention rules for teaching, studying, scholarship
          e.g., differential pricing in the context of software is good
        (2) The Idea/Fact/Expression Distinction
          no protection for things essential to deliberation and civic engagement
            e.g., use by GBH of excerpts of speeches by Martin Luther King
        (3) Fair Use
          adjust incentive/loss ratios associated with potential entitlements to reflect impact on:
            (a) culture
            (b) opportunities for access to the good life
          increase opportunities for commentary and criticism
            e.g., parody
          increase opportunities for creative reuse of copyrighted works
            construe "transformative" as "creative"
          decrease privileges for consumptive uses
          most broadly, construe the 4 statutory factors in section 107 in light of the normative beacon of the good life and good society
        (4) Moral rights
          weaker protections for right of integrity
          strengthened rights of attribution
            e.g., British rules on fair dealing
            e.g., reconsider Dastar
        (5) Libraries
          no public lending rights, at least if patrons would bear cost
            if lending rights are merely a mechanism to shift costs to governments, not so bad
          opt-out rule for digital libraries
            e.g., Google Print Library Project
              Bracha 2007
        (6) Formalities
          appropriate preconditions for copyright protection
          registration systems to facilitate location of owners
          (qualified) privileges for nonpermissive use of "orphan works"
            cf. treatment of restored copyrights
        (7) Compulsory Licensing
          increased reliance on liability rules, rather than property rules, particularly with respect to violations of 17 USC 106(2)
            reduce impediments to free flow of information
            increase diversity of works available to the public
              cf. 17 USC 115
          lower rates for socially beneficial activities
            e.g., PBS
        (8) Differential Pricing
          Opportunities
            may increase incentives for innovation, while reducing social costs
              depends on the shape of the demand curves
            equalize access to entertainment and informational products
              e.g., Kirtsaeng (2013)
              e.g., region coding of DVDs and Blu-ray discs
          Risks
            PD is bad if it increases the “granularity” of social life䩴ꁚߐĀ김汝
              Gordon
            PD is bad if it corrodes the spirit of altruistic sharing
              Benkler; von Hippel
            PD is bad if it fosters invasions of privacy
              possibly manage through restrictions on gathering and using data
        (9) Supplementary Government Funding
          see, e.g., European cinema, discussed in Welfare Theory
        (10) Alternative Compensation System for Recorded Entertainment
          see Welfare Theory
          among other benefits, increase consumers' access to diverse arrays of recordings
            traditional outlets (e.g., radio) are becoming less diverse
              Hannah Karp, WSJ, 16/01/2014
        (11) Traditional Knowledge
          conflicting aspirations:
            In favor of more legal protection
              Community
                TCEs are one way a community defines and sustains itself
              Diversity
                resist global cultural homogenization
              Distributive Justice
                temper inequality of wealth and resources
            In favor of less legal protection
              Semiotic Democracy
                encourage creative refashioning of culture
              Autonomy
                increase cultural choices; freedom to select among them
      Trademark Reform
        (1) Increase opportunities for creative use of trademarks
          expanded opportunities for trademark parody
          expressive genericity
            Rochelle Dreyfuss
        (2) Tighter restrictions on advertising
          particularly those that capitalize on and reinforce the sources of distortion to which consumers are already subject
      Patent Reform
        Developing Drugs for Developing Countries
          modify patent law and other incentive systems to increase the development and distribution of drugs that prevent or address contagious diseases in developing countries
    Concerns
      (1) Paternalism
        Sources
          Feinberg, "Legal Paternalism," 1 Ca. J. Phil. 105 (1971)
          Gerald Dworkin, "Paternalism," in Morality and the Law (1971)
          J. Kleinig, Paternalism (1984)
        Mitigated by
          demonstration that people exhibit "bounded rationality" when seeking to maximize utility
            Sources
              Kahneman, Kruger, Schkade, Schwartz & Stone, "The Day Reconstrution Method" (2004)
              Kahneman & Krueger 2006
              Becchetti et al. (2008)
            we engage too much in activities that do not bring us happiness or satisfaction
              spend money on large houses far from work, which necessitate commuting and to which we adapt quickly
            we engage too little in activities that do bring us happiness or satisfaction
              socializing
              education
          The non-coercive character of the proposed reforms
            cf. Thaler & Sunstein, Nudge (2009)
      (2) Hazards of Government
        Bureaucracy
        Rent-seeking
        Corruption
      Partial Response
        Alter the types of organization to which we confer this power
          capitalize on the deterioration of the public/private distinction
          institutions that have increasing control over our lives
            employers
            suppliers of information services
              e.g., Google and Facebook with respect to privacy
  Welfare
    Incentive Theory
      Roots
        Utilitarianism
          Jeremy Bentham, Introduction to the Principles of Morals and Legislation (1789)
          J.S. Mill, Principles of Political Economy (1848)
          Criterion: "greatest happiness of the greatest number"
            prospective
            collective
        Economic Analysis of Law
          an approach to legal scholarship that became increasingly influential starting in 1980
          for explication of the approach and an associated bibliography, see the map on Economic Analysis
      Public-Goods "Problem"
        Conditions that define a public good
          Nonrivalrous
          Nonexcludable
        Examples of public goods
          navigational aids
          national defense
          roads
          inventions
          reproducible art
        The problem: underproduction
          Original creator will not be able to recover costs of creation
          Anticipating this effect, creation will not occur in the first instance
            Mill (1848)
            Pigou (1924)
            Arrow (1962)
        Circumstances that exacerbate the problem
          a. High costs of creation
          b. High uncertainty
            Risk aversion may discourage potential innovators
              for detailed assessment of this variable, see Horowitz (2012)
          c. Low marginal cost of production
          d. Ease of reverse engineering
          e. Positive externalities from the public good
            "infrastructure" or "generativity" functions
              Jonathan Zittrain, The Future of the Internet (2008)
              Brett Frischmann, Infrastructure (2012)
        Circumstances that mitigate the problem
          a. Lead time protects first mover
            e.g., trade books
              Breyer (1970)
              Breyer in retrospect (2011)
            e.g., fashion?
              this was once true; less so now
            e.g., football
          b. Custom or extralegal norms protect first mover
            e.g., trade books
              Breyer (1970)
            comedy?
              Oliar & Sprigman
          c. Opportunities for increasing excludability through self-help
            Secrecy
              e.g., soft drinks; chocolate; software
            Encryption
            Contracts
              e.g., Databases
              e.g., Lexis/Westlaw
          d. Alternative motivations for production
            Passion
            Prestige/fame
            Tenure
            Norms of science
              Rai (1999)
              Golden (2001)
            Advertising
              Harlan/McKenna in Bleistein
              sound recordings may serve as ads for performances
            Collaborative
voluntary creation
              Benkler, "Coase's Penguin" (2002)
              Benkler, "Sharing Nicely" (2004)
          e. Philanthropy
            traditional source of funding for music
              Scherer
            Public radio in USA
      Possible Solutions
        Solution #1: Government Provides the Good
          Examples
            Space Research
              NASA
            Agricultural Research
              Department of Agriculture
            Medical Research
              National Institutes of Health
            National Defense
            Navigational Aids
              Compare Coase (1974) with
              Van Zandt (1973) and Shavell (1996)
          Advantages
            Minimizes deadweight loss through income-tax funding
              [see discussion of Prizes]
            No rent dissipation at primary or secondary level, because government coordinates innovation at both levels
            Flexibility in responding to changes in research agenda
          Disadvantages
            Errors by government officials in determining which projects are (most) socially valuable
            Low salaries and bureaucracy make government a poor venue for innovative activity
            Incompatibility of bureaucratic culture and artistic culture
        Solution #2: Government Selects and Subsidizes Private Innovators
          Examples
            National Institutes of Health (NIH)
            National Endowment for the Arts
            European cinema
              In most countries in Europe, government agencies contribute funding for film productions
                most of the monies are distributed by national agencies
                modest amounts distributed by regional agencies
              sources of the funds
                general tax revenues
                tax on television stations or television advertising
                  especially important in France
                tax on box-office receipts
              pattern of distribution
                offset biases of the private market
                favor SMEs, unconventional projects, first and second films
            military procurement contracts
            Variation: Auction off the right to provide a particular innovation
          Advantages
            Avoids rent dissipation, by targeting resources to one or a few firms
            Avoids inefficiency of multiple firms making redundant assessments of the social value of particular research projects
            Minimizes deadweight loss through income-tax funding
              Gallini/Scotchmer (2002)
              [see discussion of Prizes]
          Disadvantages
            Errors by government officials in determining which projects are (most) socially valuable
            Errors by government officials in identifying best innovators
              e.g., debacle in malaria research
              e.g., controversy concerning the quality of French and Portuguese cinema
            Poor motivator of innovative activity once the grant recipient has been selected
              Gallini/Scotchmer (2002)
        Solution #3: Government Issues Prizes to Successful Private Producers
          Proponents
            Madison
              see Waltersheid (1994)
            Macfie (1863; 1875)
            Polanvyi (1944)
            Kremer (1998; 2000)
            Calandrillo (1998)
            Shavell & Ypersele (2001)
            Netanel (2003)
            Fisher (2004)
          Existing Examples
            USSR
            PRC
              Huang (2003)
            Atomic Energy
              Reisenfeld (1958)
            Audio Home Recording Act (1992)
              All Digital Audio Recording Devices (DARDs) must contain SCMS
              Compulsory Royalty on DARDs (2% of wholesale) and Media (3% of wholesale)
                1/3 to Musical Works Fund
                2/3 to Sound Recordings Fund
              Safe harbor for sale of DARDs and noncommercial use of DARDs
              see Fisher (2004), chpt. 3
          Proposed Examples
            Mandatory
              In patent context
                see Shavell/Ypersele (2001)
                Awarded to all inventors who meet creativity requirements and who apply
                Inventors have no right to exclude competitors and thus no monopoly power
                Financial incentives derive from revenues distributed ex post by government on basis of sales data and surveys
                  Objective: pay inventors the full “social surplus” of the invention
                  requires including in the prizes estimates of the social value of follow-on innovations
                Revenue raised from income taxation
                Limited duration?
              In copyright context
                see Netanel (2003)
                see Fisher (2004), chpt. 6
            Optional
              Authors and artists are permitted to choose between copyright system and reward system
              Inventors are permitted to choose between patent system and reward system
            NASA plan to mimic privately funded $10M X-Prize
            Patent Purchase Program
              Government offers to purchase patents
              Possible techniques for determining offer prices:
                fair market value on date of purchase
                Patent Buy-out system: Government holds auctions on patented inventions, then offers to buy out (most) patentees at the highest plus a markup (to reflect gap between private and social value)
                  Kremer (1998)
              Which patents?
                all?
                patents in industries characterized by cumulative innovation or patent thickets?
                patents in industries the government wishes to promote?
                patents in industries where social costs of monopoly pricing are especially high?
                  e.g., life-saving drugs
            Patent Expropriation Program
              28 USC 1498(a)
                "Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner's remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture."
              Theory
                Dominant Theory: Form of Eminent Domain; 5th amendment thus requires "just compensation"
                  in effect, "inverse condemnation"
                Subordinate Theory: Prospective Implied Easement (since 1910); statutory interpretation requires "just compensation"
                  cf. Bayh-Dole Act reserves to federal government a nonexclusive, nontransferrable right to practice the patent arising out of federally funded research anywhere in the world
              Practice
                No injunctive relief
                No recovery for contributory infringement or inducement
                a few older (pre-1940) cases awarded lost profits
                modern cases create strong presumption that only remedy is reasonable royalty
                  for criticism, see Cahoy (2002)
              Additional statutory authority might be necessary to empower the federal government to authorize third parties to make and sell embodiments of patents
            An Alternative Compensation System for Recorded Media
              Principles
                1. Money should be collected from businesses that capitalize upon consumers' demand for digital movies, but currently pay no fees
                  Internet Service Providers
                  Manufacturers of consumer electronic equipment
                    computers
                    smartphones
                    tablets
                  Media-related software applications
                2. The funds collected in this manner should then be distributed to creators
                  The formula used to determine shares would vary by country
                    USA
                      strong commitment to principle of consumer sovereignty
                      suspicion of governmental involvement in the arts
                      points toward criterion: funds distributed in proportion to popularity
                        i.e., copyright owners receive shares proportional to the frequency with which their works are watched or listened to
                    Europe
                      multiple criteria would likely be combined in different proportions
                        relative popularity
                        voting
                        cultural fund
                      see Philippe Aigrain
                3. Thereafter, online distribution of movies and recorded music should be legalized
              Variants
                1. Governmental
                  Funds collected through levies on ISPs, manufacturers of media-related consumer electronic products, etc.
                  Funds distributed by national government agency
                  modification and enlargement of the public funding mechanisms already in place in Europe
                2. Private
                  Alter rules of secondary copyright liability to put pressure on ISPs, manufacturers to participate in the construction of a nongovernmental system
                    immunize them from antitrust liability for negotiating such a system collectively
                  Funds collected and distributed by the resultant nonprofit organization
              Mechanics (USA version)
                1. Registration
                  Copyright owner registers
unencrypted recording with
Copyright Office
                  Owner provides data concerning
duration and incorporated works
                  Copyright Office supplies
creator with copy containing
unique digital signature
                  Small registration fee
                  Opposition procedure
                2. Size of the fund
                  Possible Criteria
                    1. Provide creators
social surplus
                      Distort larger system
of incentives
                      Expensive & politically
unpalatable
                      Psychic benefits of creativity mean
that full social value is not necessary
to sustain creativity at current levels
                    2. Fairness
                    3. Make creators whole
                    4. Preserve Flourishing Entertainment Culture
                3. Taxation
                  Income Tax
                    Advantages
                      Low administrative costs
                      Limited distortionary effects
                        If incidence of the tax
matches incidence of benefits
                        Consumption of entertainment
products roughly correlated with
income
                          But cf. Pew data
                        Income tax is mildly progressive
                    Disadvantages
                      Politically unpopular
                        Any increase in the
income tax is unpopular
                        Fear, especially in developing
countries, that the money would
be diverted to other programs
                        "My tax dollars are paying for
smut, misogyny, etc.?"
                        "I don't listen to music or
watch movies. Why should
I have to pay for them?"
                    Tax burden
                      2004 data
                        87 million households
pay taxes
                        Each American household
currently spends aprx. $470
per year on recorded
entertainment
                          Plus aprx. 200 hours
per person per year
watching or listening
to advertisements
                        Annual tax during first
year of operation: average
of $27 per household
                        Annual tax if the system
fully displaces existing
business models (using
"worst-case" assumptions):
average of $254 per household
                  Tax on Devices
and Services
                    Advantage
                      More politically
acceptable
                        More "voluntary"
                        Largely limited to
consumers of digital
entertainment
                    Disadvantage
                      Greater cross subsidies
and associated distortions
                    Tax rate: 11.8% in 2004
                      Most visible form: tax on
broadband access of
$5.36 per month ($64.33 per year)
                    Tax rate if the system fully displaces
existing business models (using
"worst-case" assumptions):
$16.84 per household per month
($202 per year) in taxes on Internet
access and all devices and services
                    Variations
                      Higher rates on devices
than on ISP access?
                      Ramsey pricing?
                        Original problem: What pricing
scheme by a multiproduct monopolist
would maximize social welfare subject
to a profit constraint?
                        Answer: markup on MC of each
product should be inversely
proportional to price elasticity
of demand for that product
                        Adapted: tax rates on devices
and services should be inversely
proportional to elasticity of
demand for each
                        Danger: may have perverse
distributional effects
                          E.g., high tax rates on things
consumers see as necessities
(broadband access)
                          E.g., low taxes on things
consumers see as dispensable
(DVRs?)
                4. Measuring Value
                  Goal: Estimate relative
total value of each
entertainment product
to consumers
                    Provide appropriate
signals to creators
                    Fairness: equity theory
of distributive justice
                    Minimize hazards of
governmental determination
of merits of works
                  How?
                    Count Consumption
                      Consumers will gravitate
toward what they like,
what gives them pleasure
                        Loosely resembles
a market system
                        In effect, "paying" for the
entertainment with their time
                        Cost to them is
opportunity cost
                      Streaming
                        Noninteractive webcasters
report playlists and numbers
of subscribers
                        Interactive webcasters
report number of streams
                      DVD Burning
                        Sales data on DVDs
                        Surveys to determine frequency of copying
                      Downloading
                        Sources of Distortion
                          1. Consumers download
media but then watch only portions
                            AT&T data for music
                          2. Differences in
frequency of playback
                            less serious than with music
                          3. Ballot-Stuffing
                        Possible Solutions
                          Usage Sampling
                            Large numbers of sampled
households, selected at random
                            Software
                              Responsibility of Copyright Office:
certify software systems
                              Most plausible mechanism:
SourceForge
                              Distribution Mechanism:
Plug-in for P2P, streaming,
and CD/DVD copying programs
                            Automatic reporting, by registration
numbers, of all songs and films
played from beginning to end
                            Aggregation of data
                              Privacy assurances
                            Limit: Only count consumptions
using devices connected to -- or
capable of reporting to -- the Internet
                              Percentage of such devices
will steadily expand
                    Measure Duration
                      Longer works are worth more
to consumers than shorter ones
                        Reflected in the fact that they
pay more of their time; larger
opportunity cost
                      Present system takes such
considerations into account roughly
                        Short films
                      Will reliance on this factor
prompt creators to lengthen works?
                        Opposing factors:
                          Cost of producing longer version
                          Consumers resent poorly edited,
overly drawn our works
                    Voting (Blur/Banff/Eckersley)
                      Benefits: measure
intensity of enjoyment
                      Hazards
                        Difficulties of inducing people to vote
                        Risk of ballot-stuffing
                        Reinforce cult of appearance
                        Diversion to political causes (Volohk)
                        Distortion of signals to creators
                    External estimates
of relative value
                      So long as one can make reference to a parallel or recent market system, can use consumer spending patterns as a guide
                        E.g., aggregate value of music vs. film
                        Fact that classical recordings are
commonly slightly more expensive
than other genres
                          Universal's recent
price reductions
                          European prices
                        Relative spending on
types of performances
                          Opera, jazz, rock
                      Risks of pursuing
this approach
                        Heighten danger of
governmental discretion
                        Line-drawing
                          Only possible to do on the basis
of categories of works, not individual recordings
                          Determining the appropriate boxes and then arguing over proper classification of individual recordings would be costly
                        Forfeit one of the advantages of
consumption-based system:
avoid overvaluing preferences
of the wealthy
                5. Payment
                  Money initially allocated among categories in proportion to estimated injuries
                  Reallocation in response to changing injuries, costs, and entertainment culture
                  Payments to individual
copyright owners
                    Baseline: one consumption,
one payment
                    Adjusted for duration
                      Rough proxy for
value to consumers
                    Treatment of Derivate Works
                      Option #1: Revenue stream divided among contributors
                      Option #2: no effort to separate and compensate for contributions to composite works
                        give creators choice over ND or D
                6. Reform Copyright Law
                  Permit:
                    Reproduction of a musical composition,
sound recording, or motion picture for
noncommercial purposes
(i.e., consumption, not resale)
                    Preparation of a derivative work of a
sound recording or motion picture
registered pursuant to the new scheme,
provided that the derivative work is also
so registered in a timely fashion
                    Distribution of a sound recording
(including a musical composition embodied therein)
or motion picture via the Internet
                    Public performance of a sound recording
(including a musical composition embodied therein)
via a digital audio transmission
                    Public performance of a motion
picture via a digital video transmission
                  Digital Rights
Management?
                    1. Could one register a recording
subject to partial copy protection?
                      No, in the interest of
semiotic democracy
                    2. Could one register an unencrypted version
of a recording but also distribute to the public
encrypted versions of the same recording?
                      Yes, in part to reduce resistance
to adoption of the scheme and to
increase usage of it
                    3. Create an exception to DMCA 1201
for audio and video recordings?
                      No, let the system prove its merits
in competition with the self-help strategy
              Advantages
                For consumers
                  Large cost savings
                    they would pay less under this system than under the current combination of business models
                  Unlimited access to recorded media
                  The set of cultural products available to them would be larger and more diverse
                    reason: the diminished power of intermediaries would enable a larger and more diverse set of artists to reach consumers directly and thus earn sufficient revenue to cover costs
                  Increased opportunities for creative reuse of cultural products
                    semiotic democracy
                For creators
                  Opportunities to distribute
works directly to consumers
                    reduced dependence
on major intermediaries
                  Increased income
                For suppliers of
devices and services
                  Increased taxes offset
by increased demand
                For public
                  Decreased litigation
                  Decreased law-breaking
                    avoid prolonged, culturally corrosive
"war on piracy" closely analogous
to the current "war on drugs"
              Disadvantages
                Cross-subsidies
                  Result: distortions in consumer
behavior, deadweight losses,
and unfairness
                  Vary substantially with
the method of taxation
                  Mitigate with Ramsey
pricing (Benkler)
                Moral rights concerns:
                  Classic moral rights
                    Rights of Integrity
                    Rights of Attribution
                  Increased opportunities for creative reuse of digital copies threaten both
                  Possible responses:
                    a. Give artists the option to retain or relinquish rights of integrity
                      perhaps use financial incentives to increase their willingness to give up these rights
                      higher payout rate
                    b. Recognize that, with respect to cultural products distributed in multiple copies, rights of integrity are obsolete
                      by contrast, rights of attribution should enjoy increased protection
                        cf. Tushnet
                Discretionary Governmental
Power
                  Potential for inefficiency or corruption
                    cf. some collecting societies
                  Risk that officials would abuse their authority
                  Rent-seeking
                    lobbyists would seek to shape the distribution formula
                Leakage across
national boundaries
                  the more broadly this system were adopted, the less serious would be this concern
          Advantages
            Competition in the quest for the pot of gold fosters fast, focused research (same as Solution #5)
            Optional Reward System will maximize incentives for creativity
              Shavell & Ypersele (2001)
            Minimizes deadweight loss through income-tax funding
              Partially offset by another distortion: By decreasing the benefits of labor, each income tax increase will cause taxpayers to substitute leisure for work, causing economic losses
                Estimates of Magnitude
                  Dominant view: $.30 - $.50
for every $1 raised in tax revenue
                    Snow/Warren (1996)
                  Dissenting view: More than $1
for every $1 raised in tax revenue
                    Feldstein (1997)
              Adverse effect will not occur, however, if:
                (a) tax increase is used to finance production of a public good, and
                (b) incidence of the tax matches incidence of the benefits of the public good
                  Kaplow (1996; 1998; 2004)
            Enables correction of misalignment between market value of innovations and social value
              pharmaceutical research
          Disadvantages
            Administrative Costs
              Gallini/Scotchmer (2002) suggest costs of estimating social value would be incurred for every invention
              Shavell/Ypersele (2001) point to periodic payments based on sales
            Rent dissipation
              wasteful duplicative innovation
            Imperfections in the systems for estimating the value of inventions
              in copyright context, ballot-stuffing
                Liebowitz (2003)
            Leakage across national boundaries
              especially severe in copyright context
                Fisher (2004), chpt. 6
            Duplicative production and marketing?
        Solution #4: Legal Reinforcement of Self-help Strategies
          Examples
            Restrictions on Reverse Engineering
              Boat-hull protection laws
              Semiconductor Chip Protection Act of 1984
            Trade Secret Law
            Anti-Circumvention Rules
              DMCA 1201
            Technology Mandates
              CBDTPA (proposal)
                Consumer Broadband and Digital Television Promotion Act
                Forbid the sale or transportation in interstate commerce of any "digital media device" (defined broadly) that did not contain "standard security technologies" prescribed by the Federal Communications Commission.
                Standards formulated either by a consortium of "representatives of digital media device manufacturers, consumer groups, and copyright owners" or, if they fail, by the Commission itself
                Standards would prevent the machines in which they were embedded from reproducing and distributing copyrighted recordings - but would permit users to make "personal copies" of broadcast programming "for lawful use in the home" and would also "take into account the limitations on the exclusive rights of copyright owners, including the fair use doctrine."
              FCC Broadcast Flag Rules
          Advantages
            Legal Protections for Trade Secrets prevents wasteful private expenditures on secrecy
            Restrictions on Reverse Engineering may protect lead time and thus avoid need for other, more costly solutions
              Samuelson/Scotchmer (2002)
          Disadvantages
            secrecy deprives public of knowledge of the innovation, shields information that would be produced anyway, and impedes mobility of skilled labor
              Bone (1998)
            prohibition of reverse engineering fosters wasteful duplicative construction techniques and may frustrate interoperability
              Samuelson/Scotchmer (2002)
            rigidity of technology mandates inhibits innovation
            anti-circumvention rules and technology mandates have trouble accommodating public-regarding exceptions
              fair use
              experimental use
        Solution #5: Government protects producers against competition
          Examples
            Toll Roads in 19th century
              cf. Charles River Bridge case
          Intellectual Property
            Copyright
            Patent
          Advantages
            Relies upon the market to drive research toward areas of high social value
              undermined in some contexts by imperfect connection between "willingness and ability to pay" and social value
                e.g., bias in pharmaceutical research
            Relies upon private parties' knowledge of the costs of R&D, marketing, etc.
              Gallini/Scotchmer (2002)
            Imposes costs of innovation upon (initial) users of the innovations
              avoids the distortions associated with cross subsidies
            Competition in the quest for the pot of gold fosters fast, focused research
          Disadvantages
            Deadweight Loss
              under appropriate market conditions, may be mitigated by price discrimination
                see discussion of PrIce Discrimination in "Applications," below
                Viscusi (1995)
                Sykes (2002)
              may be mitigated by delay and uncertainty in patent enforcement
                Ayres/Klemperer (1999)
            Administrative and Litigation Costs
            Impediments to
Cumulative Innovation
              mitigated by opportunities for licensing
                Green/Scotchmer (1995)
                Lemley (1997)
                Gallini/Scotchmer (2002)
              exacerbated by impediments to licensing
                imperfect registration systems
                  Sprigman (2004)
                multiple parties/ multiple patents
                  Heller/Eisenberg (1998)
                  Mazzolleni/Nelson (1998)
            Patent Thickets
              disagreement concerning the seriousness of the problem
                serious
                  Eisenberg, Rai
                not serious
                  Kieff 2001; Adelman 2005; Lei et al 2009
              may be mitigated by patent pools for complementary patents
                Bittlingmayer (1988)
                Gilbert/Shapiro (1997)
                Shapiro (2001)
                offsetting danger that pools may facilitate anticompetitive behavior, particularly with respect to substitute patents
                  Kaplow (1984)
                  Barton (1996)
                  Carlson (1999)
                possible sorting mechanism: requirement of independent licensing option would corrode (bad) substitute pools, without adversely affecting (good) complementary pools
                  Lerner/Tirole (2002)
                  cf. Lerner/Tirole/Strojwas (2003)
            Rent dissipation
              wasteful duplicative research at primary level
                Grady/Alexander (1992)
                Denicolo (2000)
              wasteful duplicative research at secondary (improvements) level
                may be mitigated by increased patent breadth (facilitating coordination)
                  compare Kitch (1977)
                    note tension between reforms that might
mitigate this type of inefficiency and reforms that might mitigate impediments to cumulative innovation (above)
                  with Merges and Nelson (1990)
              wasteful efforts to "invent around" patents or copyrights
                Gallini (1992)
                mitigated by licensing
                  Maurer/Scotchmer (1998)
              division of spoils through oligopoly, diminishing the share of profits that stimulate innovation
                Kaplow (1984)
            Ineffectiveness in digital environment
      Selected Applications
        IP = "Necessary Evil"
          IP protection should not extend to innovations that would be produced in optimal numbers without them
          possible examples
            copyright protection for advertisements
            copyright protection for scholarly articles
            copyright or design protection for innovations in fashion
              Examples of Copying
              Variety of Legal Regimes
                USA
                  Minimal copyright,
trademark, or design patent protection
                Europe
                  EU
                    25 years of protection for registered designs; 3 years for unregistered
                  France & Italy
                    Strong protection for both registered and unregistered designs
              When should designers donate IP?
            patent protection for business methods
            patent protection for taxation mitigation strategies
            the right of publicity for celebrities
              Michael Madow (1993)
        Disaggregation
          presumptive argument for tailoring IP rights to particular kinds of innovations
            e.g., criticism of uniform
duration of patents and copyrights
              better to adjust term to keep profits close to development costs
                Kaplow
          counterarguments
            increased administrative and litigation costs
            increased hazard of "industry capture"
              Mark Lemley & Dan Burk, "Policy Levers" (2003)
        Scope of Protection: Incentive/Loss Ratio
          Principle: when adjusting IP law, grant creators entitlements with high ratios and deny them entitlements with low ratios
            Kaplow, "Patent/Antitrust Intersection" (1984)
            Fisher, "Reconstructing Fair Use" (1988), Part IV
          e.g., right to prevent reproduction of excerpts in critical reviews
            small benefit to authors
            large social welfare losses
        Compulsory Licenses
        Bounded Rationality and IP
        "Monopolistic Competition"
          Yoo (2004)
          Abramowitz (2011)
        Justification for Novelty and Nonobviousness Requirements in Patent Law
          No need to incur social costs of patent in order to provide society the benefit of the invention
            Posner
        Criticism of Utility Requirement in Patent Law
          inventor may be in a better position than patent examiner to assess social value of an invention
          if the invention is truly lacking in social value, granting a patent will do no harm, because no one will seek access to it
          Shavell
        Duration
          long terms are bad, because the incentive effect of rights long into the future is weak
          retroactive extensions of terms make no sense
        Price Discrimination
          slides
        Optimal Levels of Protection
          patent slides
          copyright slides
    Source Identification
      Economic functions of trademarks
        1. reduce consumer search costs
        2. encourage businesses to invest in and maintain quality
      Economic hazards of trademarks
        confer market power on the owners of scarce or powerful marks
        as a result, cause an increase in prices and a reduction of consumer welfare
      Guideline: doctrines of trademark law should be shaped so as to reinforce economic functions, while mitigating hazards
        e.g., disfavor descriptive marks
        e.g., no protection for generic marks
        e.g., skepticism concerning doctrine of dilution
      Criticisms
        1. cultural account of trademarks shows this theory of their functions to be simplistic
        2. recognition of the preference shaping power of trademarks and advertising casts doubt on premise of the economic theory: exogenously determined preferences
        3. other techniques or institutions might perform the economically beneficial roles of trademarks as well (or better) with fewer side effects
  Fairness
    Classic form: Locke
      Each person has a natural right to the fruits of his or her (intellectual) labor
      Root: Locke, Second Treatise, Chpt. 5
        generative vignette
          labor upon land held in common
        provisos
          sufficiency
          spoilage
            largely mooted by tacit agreement to use of money as medium of exchange
          duty of charity
            obligation to let others share one's property in times of great need, so long as one's own survival is not impaired
        The state has an obligation to enforce those rights
          duty of the state to "determine," "settle," and respect natural property rights
      Presumptively strong application to IP
        public domain provides a plausible analogue to Locke's "commons"
        labor is ordinarily the largest input
        provisos offer ways to balance creators's rights with users' interests
          spoilage proviso seems irrelevant
          but sufficiency and charity provisos are suggestive
      Difficulties
        unclear whether Lockean theory properly applies to intellectual labor (Shiffrin)
          formal rationales:
            1. necessary to effectuate right to means of subsistence
            2. religious obligation to subdue the earth and cultivate it for benefit of life
            3. intuitions regarding self-ownership
            4. moral value of work
            5. intuitions regarding proportionality
            6. imagery of transformation
              wild to domestic
              raw to cultivated
              chaotic to ordered
              unproductive to productive
          relevance to IP:
            1 & 2 seem irrelevant
            4 & 5 seem relevant
            3 & 6 seem unclear
        Ambiguity in the meanings of key concepts
          "labor"
            time and effort
            something you'd rather avoid
              Hughes
            something that creates social value
              Gordon; Hughes
            premium for creativity
              Becker
          proportionality
            Nozick
            Merges
          "the commons"
            facts
            language
            cultural heritage
            scientific knowledge
            ideas
              known and unowned
              known
              reachable
              possible
          the "provisos"
            sufficiency
              strong vs. weak versions
                Nozick, Gordon, Waldron
              removal of ideas from "the commons"
                Hughes, Shiffrin, Yen
              addiction to intellectual products
                Gordon
                Shiffrin
            spoilage
              Damstedt 2003
            charity
              Gordon
              Merges
        Solutions?
          effort to derive answers from Locke is unpromising
          answers require reflection on meaning of "fairness" in contemporary environment
    Modified form: equity theory
      Each person deserves a share of the fruits of a collective project proportionate to the magnitude of his or her contribution to the venture
      the theory of distributive justice to which most people (Westerners?) subscribe
    Possible
Implications
      copyright in poetry
      fair compensation of contributors to composite works?
        contracts + work-for-hire doctrine in copyright
        treatment of pre-employment patent assignment agreements
        rights for creators of "traditional knowledge"
        Merges, "Locke for the Masses"
      temper copyrights to reflect contributions of materials from the public domain?
        e.g., Disney animated versions of folk tales
          Shiffrin 2006
        Chander & Sunder 2004
      rights to factual works?
        maps
        databases
        histories
        autobiographies
          e.g., Hodgson (England 2011)
        "hot news"
          residue of misappropriation doctrine
      possible justification for prizes, liability rules, and compulsory licenses
        because desert arguably generates rights to compensation, not necessarily ownership
          Becker
          but see Merges
      temper right of publicity?
        luck
        contributions to celebrity status by the public
      "shop right" or independent-invention defense in patent law?
        Nozick's reading of Lockean proviso
        Meurer and Vermont
      defense and interpretation of utility requirement in patent law
        tied to different conceptions of labor
      potential justification for nonobviousness doctrine
        premium on creative labor
        sufficiency proviso (Nozick)
    Bibliography