Berkeley Technology Law Journal
Fall, 1998
13 Berkeley Tech. L.J. 1089
LENGTH: 31940 words
ARTICLE: Copyright and The Jurisprudence of Self-Help
By Julie E. Cohen*
© 1998 Julie E. Cohen.
* Visiting Assistant Professor, Georgetown University Law Center (Fall 1998); Visiting Assistant Professor, University of Michigan Law School (Spring 1999); Assistant Professor, University of Pittsburgh School of Law. Internet: <cohen@law.pitt.edu>. I thank Harry Flechtner, Steve Goldberg, Kate Heidt, Avery Katz, Mark Lemley, Larry Lessig, Jerry Reichman, M. Douglas Scott, and Bill Vukowich for their valuable comments and suggestions and Steven Serdikoff and Richard DeCristofaro for research assistance. I appreciate David Friedman's attention to my work.
SUMMARY:
... A new wind is blowing in copyright
law. ... The license need not disclose electronic regulation that
merely implements a stated temporal or quantitative restriction on use,
or enforces "informational rights which were not granted to the licensee."
... Nonetheless, both the Reporter's Notes and the prefatory memorandum
accompanying Article 2B make clear their belief that even mass market contracts
that are inconsistent with copyright are not necessarily invalid for that
reason. ... Such material could be repossessed or "depossessed" electronically
only if the licensor first gained physical possession of a copy (subject
to the "breach of the peace" limitation) or if the license authorized the
repossession and the licensor gave at least ten business days' notice.
... The Reporter's Notes state that the draft "takes no position
on whether self-help can be pursued through electronic means." ...
Deciding whether a consumer has failed to pay is relatively easy; for other
license provisions, however, the determination of breach may require resolution
of difficult questions of fact or law. ...
TEXT:
[*1090]
I. Introduction
A new wind is blowing in copyright law. For centuries, authors and their assignees have relied primarily on federal copyright law to define and protect their legal rights. Suddenly, that may be about to change. New developments in digital technology offer copyright owners the tantalizing possibility of near-absolute control of their creative and informational content, even after its delivery to end users, via self-enforcing digital contracts. Copyright owners, along with purveyors of other (noncopyrightable) informational content, envision using these contracts to secure - and redefine - their "informational rights." n1 Within this vision of private ordering and technological self-help, contract law rather than copyright law is paramount. Limits on information ownership set by the public law of copyright are conceived as optional restrictions that can be avoided using appropriate contractual language.
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n1. See U.C.C. 2B-102(a)(27) (Aug. 1, 1998 Draft).
As defined in Article 2B, "informational rights" encompass "all rights
in information created under laws governing patents, copyrights, mask works,
trade secrets, trademarks, publicity rights, or any other law that permits
a person, independently of contract, to control or preclude another person's
use of the information on the basis of the rights holder's interest in
the information." Id.
Unless otherwise noted, all citations to "Article
2B' or "proposed Article 2B' in this article refer to the July 24-31, 1998
Proposed Draft. Current and previous drafts of proposed Article 2B, together
with other official documents from the drafting process, are available
online via the National Council of Commissioners on Uniform State Laws'
Web page collection of draft uniform laws, maintained by the Biddle Law
Library at the University of Pennsylvania Law School. See National Council
of Commissioners on Uniform State Laws, Drafts of Uniform and Model Acts,
(last modified Oct. 21, 1998) <http://www.law.upenn.edu/library/ulc/ulc.htm#ucc2b>.
Correspondence and other documents submitted by interested parties during
the drafting process are also available on the Web. See Carol A. Kunze,
The 2B Guide (last modified Nov. 1, 1998) <http://www.2BGuide.com/>.
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Proposed Article 2B of the Uniform Commercial
Code (U.C.C.) is designed to play a central role in the restructuring of
information law along contract-based lines. Information providers hope
that Article 2B will establish, as background principles of commercial
law, rules that will enable them to implement their vision of self-enforcing
private ordering. n2 The
[*1091] drafters of Article 2B characterize
these rules as broadly consistent with the existing framework of commercial
law. n3 They suggest, further, that the private agreements reached under
such a regime can coexist with federal copyright law without disrupting
the balance it seeks to establish. n4 Information providers agree, and
argue that, in any case, such agreements lie beyond copyright's preemptive
reach. n5 This article examines those assertions. It concludes that the
provisions of Article 2B threaten a substantial departure from the existing
law of self-help, and that this departure cannot be justified by reference
either to doctrine or to theory. n6 Moreover, copyright law and policy
point the other way, toward affording self-help rights to users of copyrighted
works.
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n2. See U.C.C. 2B-208 (July 24-31, 1998 Draft)
(validating mass market standard-form license terms); id. 2B-310 (authorizing
licensors to implement electronic regulation of performance); id. 2B-715
(authorizing licensor self-help following cancellation of a covered agreement).
n3. See id. 2B-208, Reporter's Notes 3-4, 2B-310,
Reporter's Note 1, 2B-715, Reporter's Note 3; see also U.C.C. Article 2B,
Preface at 9 (July 24-31, 1998 Draft) ("Article 2B does not create contract
law here - it merely provides a more coherent base for contracting.");
Raymond T. Nimmer, The Relation Between Contract and Intellectual Property
Law, 13 Berkeley Tech. L.J. 827, 829 (1998).
n4. See U.C.C. 2B-105, Reporter's Notes 2-3;
see also id. 2B-105, Reporter's Notes 7-8; Nimmer, supra note 3, at 844.
For a different characterization of Article 2B's approach to the relationship
between contract and copyright, see David F. McGowan, Free Contracting,
Fair Competition, and Article 2B: Some Reflections on Federal Competition
Policy, Information Transactions, and "Aggressive Neutrality," 13 Berkeley
Tech. L.J. 1173 (1998).
n5. See, e.g., ProCD, Inc. v. Zeidenberg, 86
F.3d 1447, 1454 (7th Cir. 1996); Brief of Amicus Curiae Software Publishers
Association in Support of Plaintiff-Appellant, ProCD, Inc. v. Zeidenberg,
86 F.3d 1447 (7th Cir. 1996) (No. 96-1139); Information Indus. Ass'n, Comments
of the Information Industry Association on Article 2B and Prof. Charles
McManis' Proposed Amendment to Section 2B-308 (July 18, 1997) <http://www.infoindustry.org/ppgrc/doclib/grdoc010.htm>;
Copyright Comm., Ass'n of Am. Publishers, Contractual Licensing, Technological
Measures and Copyright Law (visited Nov. 11, 1998) <http://www.publishers.org/home/abouta/copy/licensing.htm>;
see also Robert W. Gomulkiewicz & Mary L. Williamson, A Brief Defense
of Mass Market Software License Agreements, 22 Rutgers Computer & Tech.
L.J. 335 (1996); Holly K. Towle, Electronic Transactions and Contracting,
in Second Annual Internet Law Institute 515 (PLI, 1998).
n6. Currently, self-help repossession is authorized
in certain circumstances by U.C.C. Articles 2A and 9, which govern leases
and secured transactions respectively. See U.C.C. 2A-525 (1990), U.C.C.
9-503 (1972). The standards that govern self-help repossession under Articles
2A and 9 are derived from the pre-U.C.C. common law. See infra text accompanying
notes 45-54.
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Part II of this article describes the emerging
digital "rights management" technologies and traces the history of the
provisions of Article 2B that are designed to authorize or facilitate their
implementation. Although the most recent draft of Article 2B appears to
moderate one of these provisions, issues that earlier drafts had resolved
in favor of electronic private ordering will now confront courts. Parts
III and IV explore, respectively,
[*1092] the doctrinal foundations
of self-help under the U.C.C. and more theoretical models advanced by legal
scholars, and conclude that none of the common justifications for commercial
private ordering supports according information providers the broad powers
of self-help that they claim as a matter of right. To the contrary, Article
2B's self-help provisions raise important problems that the drafters have
failed to address. In Parts V and VI, I evaluate the proposed law and emerging
practice of electronic self-help against the backdrop of copyright law
and policy. Part V examines the role of the public-private distinction
in mediating between copyright and contract, and argues that Article 2B
is not merely a neutral background for private bilateral agreements, but
a public act of social ordering that is flatly inconsistent with copyright
and First Amendment principles. Part VI argues that licensees, not licensors,
should be accorded rights of electronic self-help when necessary to preserve
the balance that the Copyright Act is intended to establish.
II. ELECTRONIC FENCING AND SELF-HELP UNDER ARTICLE
2B
For information providers, digital networks represent both a promise and a threat. Computer networks eliminate or minimize many of the costs associated with product distribution, and make it possible for small businesses to serve national or even global markets. However, digitized information is easily copied, and networks also minimize the costs of distributing unauthorized copies. Information providers have expressed fears that by making their products available in digital form, they may destroy their own markets. Scholars and industry commentators dispute these predictions of total disaster, and argue that the economic principles that determine profitability in markets in tangible commodities do not necessarily apply to markets in intangibles. n7 Nonetheless, information providers have stated a reluctance to experiment with digital distribution without additional legal and technological protection against unauthorized copying. n8
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n7. See, e.g., John Perry Barlow, The Economy
of Ideas: A Framework for Rethinking Patents and Copyrights in the Digital
Age, Wired, Mar. 1994, at 85; James Boyle, Shamans, Software, and Spleens:
Law and the Construction of the Information Society 35-41 (1995); Julie
E. Cohen, Lochner in Cyberspace: The New Economic Orthodoxy of "Rights
Management," 97 Mich. L. Rev. 301, 381-90 (1998); J. Bradford DeLong &
A. Michael Froomkin, The Next Economy?, in Internet Publishing and Beyond:
The Economics of Digital Information and Intellectual Property (Deborah
Hurley et al. eds., forthcoming 1998); Esther Dyson, Intellectual Value,
Wired, July 1995, at 136.
n8. See, e.g., WIPO Copyright Treaties Implementation
Act: Hearing on H.R. 2281 Before the Subcomm. on Telecommunications Trade
& Consumer Protection of the House Comm. on Com., 105th Cong. (1998)
[hereinafter H.R. 2281 Commerce Hearing] (statement of Robert W. Holleyman,
II, President, The Business Software Alliance); Copyright Legislation:
Hearings on H.R. 2281 Before the Subcomm. on Cts. and Intell. Prop. of
the House Comm. on the Judiciary, 105th Cong. (1997) [hereinafter H.R.
2281 Judiciary Hearings] (statements of Robert W. Holleyman, II, President,
The Business Software Alliance; Allee Willis, on behalf of Broadcast Music,
Inc.; Tom Ryan, CEO, SciTech Software, Inc., on behalf of the Software
Publishers' Ass'n; Gail Markels, General Counsel and Senior Vice President,
Interactive Digital Software Ass'n; and Allen R. Adler, Vice President
for Legal and Governmental Affairs, Association of Am. Publishers); National
Information Infrastructure: Hearing on S. 1284 Before the Senate Comm.
on the Judiciary, 104th Cong. (1996) [hereinafter S. 1284 Hearing] (testimony
of Kenneth R. Kay, Executive Director, Creative Incentive Coalition); Copyright
Protection on the Internet: Hearings on H.R. 2441 Before the Subcomm. on
Cts. and Intell. Prop. of the House Comm. on the Judiciary, 104th Cong.
(1996) [hereinafter H.R. 2441 Hearing] (statements of Barbara A. Munder,
Senior Vice President, The McGraw-Hill Companies, Inc.; Frances W. Preston,
President and CEO, Broadcast Music, Inc.; Jack Valenti, Chairman and CEO,
Motion Picture Ass'n of Am., Inc.; and the Association of Am. Publishers);
see also Working Group on Intellectual Property Rights, U.S. Dep't of Commerce,
Intellectual Property and the National Information Infrastructure: The
Report of the Working Group on Intellectual Property Rights 10-12 (1995)
[hereinafter NII White Paper].
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[*1093] Happily for information
providers, digital technologies also offer a solution to their perceived
problem. The same technologies that can be used to propagate information
can also build fences around it. Together with technology experts, information
providers are developing secure packaging and delivery software designed
to prevent purchasers and third parties from making unauthorized uses of
digital content. n9 As envisioned by the copyright and information industries,
these "rights management systems" will be "capable of detecting, preventing,
and counting" almost
[*1094] every conceivable use of
a digital work. n10 In addition, these industries lobbied heavily for nearly
three years for legislation that would prohibit tampering with or circumventing
these systems. n11
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n9. See Jon Bing, The Contribution of Technology
to the Identification of Rights, Especially in Sound and Audio-Visual Works:
An Overview, 4 Int'l J.L. & Info. Tech. 234 (1996); Christopher Burns,
Inc., Copyright Management and the NII: Report to the Enabling Technologies
Committee of the Association of American Publishers (1996); Charles Clark,
The Publisher in the Digital World, in Intellectual Property Rights and
New Technologies: Proceedings of the Knowright "95 Conference 85 (Klaus
Brunnstein & Peter Paul Sint eds., 1995; Daniel J. Gervais, Electronic
Rights Management Systems (ERMS): The Next Logical Step in the Evolution
of Rights Management (visited Nov. 13, 1998) <http://www.copyright.com/>;
Daniel J. Gervais, Electronic Copyright Management Systems (ECMS): From
Rights Trading to Electronic Publishing (visited Nov. 13, 1998) <http://www.copyright.com/>;
Mark Stefik, Shifting the Possible: How Digital Property Rights Challenge
Us to Rethink Digital Publishing, 12 Berkeley Tech. L.J. 138 (1997); Mark
Stefik, Letting Loose the Light: Igniting Commerce in Electronic Publication,
in Internet Dreams: Archetypes, Myths, and Metaphors 219 (1996); Peter
Wayner, Digital Copyright Protection (1997); Robert Weber, Digital Rights
Management Technologies, <http://www.ncri.com/articles/rights management/ifrro95.html>.
See generally Julie E. Cohen, A Right to Read Anonymously: A Closer Look
at "Copyright Management" in Cyberspace, 28 Conn. L. Rev. 981, 983-87 (1996)
(describing capabilities of digital rights management systems).
n10. See Weber, supranote 9, 3.1.1; see also
Christopher Burns, Inc., supra note 9, at 17-21, 31-35; Stefik, Shifting
the Possible, supra note 9, at 140-44; Stefik, Letting Loose the Light,
supra note 9, at 228-38.
n11. For information provider testimony in support
of legislation, see H.R. 2281 Commerce Hearing, supranote 8; H.R. 2281
Judiciary Hearings, supra note 8; S. 1284 Hearing, supra note 8; H.R. 2441
Hearing, supra note 8; see also NII White Paper, supra note 8. Legislation
designed to protect digital rights management systems was enacted this
year. See Digital Millennium Copyright Act, Pub. L. No. 105-304, 112 Stat.
2860 (1998). For discussion of its provisions, see infra note 201.
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Unhappily for consumers, however, digital rights
management regimes will enable information providers to appropriate far
more protection against copying and distribution than intellectual property
law now provides. Copyright law allows some reuse of protected expression
under a variety of exceptions designed to serve the public interest, and
allows any reuse after the term of copyright protection has expired. n12
Copyright also does not attach to facts, ideas, or functional principles;
instead, it treats these materials as public domain "building blocks" for
future works. n13 Many compilations of information consist largely of such
public domain material and are protected only minimally, if at all, by
copyright. n14 The common law tort of data misappropriation provides some
protection for uncopyrightable facts, but cannot protect against all copying,
since the Copyright Act expressly preempts state-created rights that are
"equivalent" to the rights afforded under copyright law. n15 Trade secrecy
law pro
[*1095] tects only information that
is not generally known or readily ascertainable, and allows discovery of
protected information by reverse engineering and other "proper means."
n16 In short, legal protection against unauthorized copying and distribution
is incomplete, and is so by design.
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n12. See, e.g., 17 U.S.C. 107 (1994) (fair use
doctrine, which allows, inter alia, reuse of protected expression for purposes
of criticism, classroom or research use, and parody), 108 (1994) (library
copying privileges), 109(a) (1994) (limitation of exclusive distribution
right to first sale of copy for most works), 110 (1994) (public performance
and display exemptions for nonprofit activities and organizations), 302
(1994) (duration of copyright protection).
n13. See 17 U.S.C. 102(b) (1994); Feist Publications,
Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 349-50 (1991); Jessica Litman,
The Public Domain, 39 Emory L.J. 965, 993 (1990).
n14. See Feist, 499 U.S. at 349-50. Even for
those compilations that incorporate original expression in the selection
or arrangement of the underlying data, copyright protection extends only
to those aspects and not to the data itself. 17 U.S.C. 103(b) (1994). See
generally 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright
3.04[B][2] (46th rel. 1998).
n15. See infra Part V.A. Compare International
News Serv. v. Associated Press, 248 U.S. 215 (1918) (recognizing a common
law cause of action for misappropriation of uncopyrightable news content),
with 17 U.S.C. 301(a) (1994) (preempting "equivalent" state-created rights
in subject matter of copyright). On the appropriate role of data misappropriation
law within the interstices of federal copyright law, see National Basketball
Ass'n v. Motorola, Inc., 105 F.3d 841, 852-54 (2d Cir. 1997); see also
United States Golf Ass'n v. St. Andrews Sys., 749 F.2d 1028, 1037-38 (3d
Cir. 1984) (articulating a narrow basis for the misappropriation tort).
There may soon exist federal protection for uncopyrightable
databases and their contents. Database protection bills were introduced
in both houses of Congress in 1998. See Collections of Information Antipiracy
Act, H.R. 2652, 105th Cong. (1997); Collections of Information Antipiracy
Act, S. 2291, 105th Cong. (1998). The House bill was incorporated into
the Digital Millenium Copyright Act, which passed the House on July 29,
1998. See Digital Millenium Copyright Act, H.R. 2281, 105th Cong., Title
V. However, the Senate-approved version of the Digital Millenium Copyright
Act did not include database protection. See Digital Millenium Copyright
Act, S. 2037, 105th Cong. Because the Senate has yet to hold hearings on
database protection, the database provisions were removed from the final
version of the bill. See Digital Millenium Copyright Act, Pub. L. No. 105-304,
112 Stat. 2860 (1998). Whether and to what extent such protection would
be inconsistent with the constitutional origins of and limits to federal
copyright protection are unresolved questions. Cf. infra Part V.A (discussing
constitutional preemption of state laws that confer property-like protection
on uncopyrightable material).
n16. See Unif. Trade Secrets Act 1 (1985); Restatement
(Third) of Unfair Competition 39, 43 (1995); Bonito Boats, Inc. v. Thunder
Craft Boats, Inc., 489 U.S. 141, 157 (1989); Kewanee Oil Co. v. Bicron
Corp., 416 U.S. 470, 476 (1974).
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Information providers conceive digital rights
management systems as self-enforcing contracts, and argue that copyright
law does not displace private bargains that alter the distribution of rights
and privileges as between the parties. n17 However, courts have differed
on the validity, as a
[*1096] matter of contract law,
of "shrinkwrap" licenses that purport to restrict the uses of information
products based on terms packaged with the product and revealed to the customer
after purchase. n18 Accordingly, many information providers have supported
efforts to draft a new Article 2B of the Uniform Commercial Code to establish
different ground rules for transactions in software, information, and other
intangible intellectual products. n19 Among other things, proposed Article
2B is intended to validate self-enforcing shrinkwrap (or "clickwrap") licenses
- including mass market standard forms - implemented via digital rights
management regimes. n20
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n17. See, e.g., ProCD, Inc. v. Zeidenberg, 86
F.3d 1447, 1454 (7th Cir. 1996); Brief of Amicus Curiae Software Publishers
Association in Support of Plaintiff-Appellant, ProCD, Inc. v. Zeidenberg,
86 F.3d 1447 (7th Cir. 1996) (No. 96-1139); Information Indus. Ass'n, supra
note 5; Copyright Comm., Ass'n of Am. Publishers, supra note 5; see also
Tom W. Bell, Fair Use vs. Fared Use: The Impact of Automated Rights Management
on Copyright's Fair Use Doctrine, 76 N.C. L. Rev. 557, 609-11 (1998). Many
other commentators disagree, and argue that copyright does and should displace
at least some types of contract restrictions. See, e.g., Cohen, supra note
7, at 322-28; Julie E. Cohen, Some Reflections on Copyright Management
Systems and Laws Designed to Protect Them, 12 Berkeley Tech. L.J. 161,
181-82 (1997); Niva Elkin-Koren, Copyright Policy and the Limits of Freedom
of Contract, 12 Berkeley Tech. L.J. 93, 107-10 (1997); Dennis S. Karjala,
Federal Preemption of Shrinkwrap and On-Line Licenses, 22 U. Dayton L.
Rev. 512, 525-33 (1997); Robert A. Kreiss, Accessibility and Commercialization
in Copyright Theory, 43 U.C.L.A. L. Rev. 1, (1995); Mark A. Lemley, Beyond
Preemption: The Federal Law and Policy of Intellectual Property Licensing,
87 Calif. L. Rev. 111 (forthcoming 1999); Mark A. Lemley, Intellectual
Property and Shrinkwrap Licenses, 68 S. Cal. L. Rev. 1239 (1995); 1 Nimmer
& Nimmer, supra note 14, 3.04[B][3]; David A. Rice, Public Goods, Private
Contract, and Public Policy: Federal Preemption of Software License Provisions
Against Reverse Engineering, 53 U. Pitt. L. Rev. 543 (1992); see also infra
Part V.
n18. Compare, e.g., ProCD, 86 F.3d at 1451-53
(holding shrinkwrap license valid and enforceable because consumer could
have returned the product before using it if he did not wish to accept
the terms), with, e.g., Step-Saver Data Sys., Inc. v. Wyse Tech., 939 F.2d
91 (3d Cir. 1991) (holding that shrinkwrap license terms disclosed after
product had been exchanged for payment did not become part of the bargain
between the parties). It is worth noting that despite the enormous amount
of attention and discussion devoted to the ProCD decision, far more courts
have held later-disclosed license terms unenforceable. See Lemley, Beyond
Preemption, supra note 17, at 120, n.20 (collecting cases).
n19. See, e.g., Business Software Alliance, Software
Publishers Ass'n & Info. Indus. Ass'n, Article 2B (July 15, 1998) <http://www.2BGuide.com/docs/amemo981.html>;
Information Indus. Ass'n, supra note 5; Business Software Alliance, Information
Indus. Ass'n & Silicon Valley Software Indus. Coalition, Article 2B
(July 14, 1998) <http://www.2BGuide.com/docs/amtng98.html>; see also
Business Software Alliance, Policy Issues: Response to Comments on Draft
of UCC Article 2B by Consumers Union (July 17, 1997) <http://www.2BGuide.com/docs/bsacun.html
>; Software Publishers Ass'n, Article 2B, Uniform Commercial Code: Exploding
the Myth that the Draft is Unbalanced (July 15, 1997) <http://www.2BGuide.com/docs/span.html
>. See generally Cem Kaner, Restricting Competition in the Software Industry:
Impact of the Pending Revisions to the Uniform Commercial Code (last modified
Nov. 11, 1998) <http://www.badsoftware.com/nader.htm> (describing information
provider involvement in Article 2B drafting process). Although the more
"traditional" copyright industries have supported digital rights management
vociferously in other contexts, see supra notes 8, 11, they have not all
been as enthusiastic about Article 2B as a whole. See, e.g., Letter from
Simon Barsky, Senior Vice President and General Counsel, Motion Picture
Ass'n, to Carlyle Ring, Jr., Chair, Article 2B Drafting Committee (Apr.
29, 1998) <http://www.2BGuide.com/docs/conn0429.html> (expressing reservations
about Article 2B and suggesting that the scope of the project be narrowed
to include only computer software and electronic information products).
But see Association of Am. Publishers, supranote 5 (expressing support
for the Article 2B project).
n20. See U.C.C. 2B-208, 2B-310 (July 24-31, 1998
Draft). On the significance of the "license" characterization, see David
A. Rice, Digital Information as Property and Product: U.C.C. Article 2B,
22 U. Dayton L. Rev. 621, 624-26, 632-34 (1997).
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Proposed Article 2B implements this regime of
electronic private ordering primarily through two provisions. Section 2B-310,
which applies to performance of the contract, allows "electronic regulation
of performance" by either party in specified circumstances. n21 First,
section 2B-310 permits
[*1097] electronic regulation if
expressly authorized by a term in the license agreement. n22 However, section
2B-310 goes on to create a list of exceptions that virtually swallows this
express disclosure rule. The license need not disclose electronic regulation
that merely implements a stated temporal or quantitative restriction on
use, or enforces "informational rights which were not granted to the licensee."
n23 Nor must it disclose electronic regulation that "prevents uses of the
information which are inconsistent
[*1098] with the agreement" - apparently,
even if copyright law or other applicable "informational rights" law would
allow such uses. n24
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n21. Section 2B-310 provides:
Section 2B-310. Electronic Regulation of Performance.
(a) In this section, "restraint" means a program,
code, device, or similar electronic or physical limitation that restricts
the use of information.
(b) A party entitled to enforce a limitation
on use of information which does not depend on a breach of contract by
the other party may include a restraint in the information or a copy of
the information and use that restraint if:
(1) a term of the agreement authorizes use of
the restraint;
(2) the restraint prevents uses of the information
which are inconsistent with the agreement or with informational rights
which were not granted to the licensee;
(3) the restraint prevents uses of the information
after expiration of the stated duration of the contract or a stated number
of uses; or
(4) the restraint prevents use when the contract
terminates, other than on expiration of a stated duration or number of
uses, and the licensor gives reasonable notice to the licensee before further
use is prevented.
(c) Unless authorized by a term of the agreement,
this section does not permit a restraint that affirmatively prevents or
makes impracticable a licensee's access to its own information in the licensee's
possession by means other than by use of the licensor's information or
informational rights.
(d) A party that includes or uses a restraint
pursuant to subsection (b) or (c) is not liable for any loss caused by
its authorized use of the restraint.
(e) This section does not preclude electronic
replacement or disabling of an earlier copy of information by the licensor
in connection with delivery of a new copy or version under an agreement
to electronically replace or disable the earlier copy with an upgrade or
other new information.
U.C.C. 2B-310 (July 24-31, 1998 Draft).
n22. Id. 2B-310(b)(1). On its face, this provision
is unremarkable. However, when read in conjunction with section2B-208,
which validates standard-form terms that consumers have had the opportunity
to review (whether or not they actually did so), it raises troubling questions.
Whether mass market licensees should be deemed to have consented to provisions
for automatic, self-enforcing electronic regulation is discussed infra
Part IV.
n23. U.C.C. 2B-310(b)(2)-(3) & Reporter's
Note 5 (July 24-31, 1998 Draft).
n24. Id. 2B-310(b)(2).
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Effectively, section 2B-310 would allow information
providers to contract around copyright law without disclosing that fact
to users. The Reporter's Notes to section 2B-310 make only oblique mention
of copyright preemption. They assert that the provision simply represents
"the basic principle <elip> that a contract can be enforced." n25 Proposed
Article 2B does contain another provision, section 2B-105, that acknowledges
the possibility of copyright preemption of particular contract terms; in
the accompanying Reporter's Notes, the drafters disclaim jurisdiction to
make specific recommendations about preemption. n26 Nonetheless, both the
Reporter's Notes and the prefatory memorandum accompanying Article 2B make
clear their belief that even mass market contracts that are inconsistent
with copyright are not necessarily invalid for that reason. n27 The drafters
describe Article 2B's approach to the question of federal preemption as
one of "neutrality"; under this vision, it appears, contract may extend
wherever it is not expressly prohibited by Congress or the federal courts.
n28
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n25. Id. 2B-310, Reporter's Note 2.
n26. Id. 2B-105(a) ("A provision of this article
which is preempted by federal law is unenforceable to the extent of that
provision."); Id. 2B-105, Reporter's Note 1 ("When or whether federal law
controls is not an issue of state law. State law, including the U.C.C.,
cannot alter federal policy and the balance it may entail. Article 2B does
not intend to do so.").
n27. Id. at 10-12; id. 2B-105, Reporter's Notes
3-4. It is difficult to imagine that the drafters would have included detailed
provisions authorizing electronic private ordering if they believed that
such agreements would be preempted. See also Nimmer, supra note 3, at 845-51.
n28. See U.C.C. 2B-105, Reporter's Note 3 (July
24-31, 1998 Draft); McGowan, supra note 4, at 1195-1214 (explicating the
drafters' vision of "neutrality"); David Nimmer et al., The Metamorphosis
of Contract into Expand, 87 Calif. L. Rev. 17, 41-42 (forthcoming 1999)
(analyzing Article 2B's "neutrality myth").
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Section 2B-715, which applies in the event of
a breach by the licensee justifying cancellation of the agreement, governs
"self-help repossession" by the licensor. n29 Unlike section 2B-310, which
has no analogue in the
[*1099] current U.C.C., section
2B-715 is expressly modeled after section 2A-525, which authorizes self-help
repossession of leased property by the lessor, and section 9-503, which
authorizes self-help repossession of secured collateral by the holder of
the security interest. n30 Like sections 2A-525 and 9-503, section 2B-715
allows self-help repossession following cancellation if possible "without
a breach of the peace." n31 Cancellation, in turn, requires a material
breach or express contractual authorization. n32 In addition, section 2B-715
adds the express requirement that the repossession not create "a foreseeable
risk of personal injury or significant damage to information or property
other than the licensed information." n33
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n29. Section 2B-715 provides:
Section 2B-715. Right to Possession and to Prevent
Use.
(a) Upon cancellation of a license, the licensor
has the right:
(1) to possession of all copies of the licensed
information in the possession or control of the licensee and any other
materials pertaining to that information which by contract were to be returned
or delivered by the licensee to the licensor; and
(2) to prevent the continued exercise of contractual
and informational rights in the licensed information.
(b) Except as otherwise provided in Section 2B-714,
a licensor may exercise its rights under subsection (a) without judicial
process only if this can be done:
(1) without a breach of the peace; and
(2) without a foreseeable risk of personal injury
or significant damage to information or property other than the licensed
information.
(c) In a judicial proceeding, a court may enjoin
a licensee in breach of contract from continued use of the information
and the informational rights and may order that the licensor or an officer
of the court take the steps described in Section 2B-627.
(d) A party has the right to an expedited judicial
hearing on prejudgment relief to enforce or protect its rights under this
section.
(e) The right to possession under this section
is not available to the extent that the information, before breach of the
license and in the ordinary course of performance under the license, was
so altered or commingled that the information is no longer identifiable
or separable.
(f) A licensee that provides information to a
licensor subject to contractual use restrictions has the rights and is
subject to the limitations of a licensor under this section with respect
to the information it provides.
U.C.C. 2B-715 (July 24-31, 1998 Draft).
Section 2B-714 permits an access contract provider to discontinue access
in the event of a material breach. Id. 2B-714.
n30. U.C.C. 2A-525 (1990); U.C.C. 9-503 (1972).
For discussion of the legal standards governing self-help repossession,
as developed in the contexts of Articles 2A and 9, see infra Part III.A-B.
n31. U.C.C. 2B-715(b)(1) (July 24-31, 1998 Draft).
n32. See id. 2B-702(a).
n33. Id. 2B-715(b)(2). Because the "breach of
the peace" standard has been applied to prohibit injury to persons or property,
the Reporter's Notes to previous drafts correctly characterized these additional
restrictions as a mere "clarifying step." See, e.g., U.C.C. 2B-716, Reporter's
Note 1 (Apr. 15, 1998 Draft). The most recent version of the Reporter's
Notes represents, instead, that this language places "more restrictions"
on self-help than under sections 2A-525 and 9-503. U.C.C. 2B-715, Reporter's
Note 3 (July 24-31, 1998 Draft).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
The most recent draft of Article 2B is silent
on the question of electronic self-help repossession - or, more precisely,
since nothing physical
[*1100] need be reclaimed, electronic
self-help deactivation or depossession - of licensed information products.
This was not always so. In previous drafts, Article 2B contained a special
provision expressly authorizing electronic self-help repossession. n34
Section 2B-716 (now omitted) established additional procedural requirements
for electronic self-help in cases involving licensed software "material
to the licensee's business." n35 Such material could be repossessed or
"depossessed" electronically only if the licensor first gained physical
possession of a copy (subject to the "breach of the peace" limitation)
or if the license authorized the repossession and the licensor gave at
least ten business days' notice. n36 By implication, licensed information
consisting of "informational content," or used for personal rather than
business purposes, was subject to electronic repossession without physical
possession and without notice of any kind, as long as no "breach of the
peace" occurred. n37
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n34. See, e.g., U.C.C. 2B-716 (Apr. 1, 1998 Draft).
n35. Id. 2B-716(a).
n36. Id.
n37. Id. 2B-715(b), 2B-716(a). On the question
whether the "breach of the peace" standard that limits physical repossession
is an appropriate measure of the harms threatened by electronic regulation
and repossession, see infra Part III.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
During its short life, proposed section 2B-716
was enormously controversial. The drafting committee itself was deeply
divided on the question of electronic self-help, so much so that for a
time section 2B-716 existed in two versions, a majority version allowing
electronic self-help and a minority version prohibiting it except to the
extent expressly authorized by other law. n38 The new section 2B-715 simply
steers clear of the entire controversy without resolving any of the issues
that former section 2B-716 raised. The Reporter's Notes state that the
draft "takes no position on whether self-help can be pursued through electronic
means." n39 This abrupt retrenchment leaves to the courts the task of interpreting
the "breach of the peace" and "material breach" limitations in the context
of digitally-mediated transactions in creative and informational works.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n38. See, e.g., U.C.C. 2B-716 (Feb. 1998 Draft).
n39. U.C.C. 2B-715, Reporter's Note 3 (Aug. 1,
1998 Draft).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Together with other provisions of Article 2B
that validate mass market "licenses," n40 sections 2B-310 and 2B-715 would
give information provid
[*1101] ers enormous power to alter
the balance of creator rights and user privileges established by the Copyright
Act. n41 This is true even though section 2B-715 now leaves unanswered
the question of electronic self-help following cancellation. As Professor
Friedman correctly recognizes, the most effective electronic self-help
is the kind covered by section 2B-310 - so-called "electronic regulation
of performance" that simply forecloses potential breach at the outset.
n42 As the technologies of electronic regulation become more sophisticated,
a separate right of electronic "repossession" is of less moment. As I have
noted, the drafters of Article 2B nonetheless characterize sections 2B-310
and 2B-715 as entirely consistent with the existing framework of commercial
law, and indicate their belief that the regimes of private ordering authorized
by Article 2B would not violate copyright law or other law or policy. n43
The remainder of this article evaluates those contentions.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n40. See id. 2B-208. Under section 2B-208, the
terms of a mass market license are valid and enforceable if the license
manifests assent to the license prior to use of the licensed information,
whether or not the licensee actually reviewed the license terms. Id. 2B-208(a).
If the first opportunity to review the terms occurs after payment and the
licensee does not wish to manifest assent, the licensee is entitled to
rescission and a refund. Id. 2B-208(b).
n41. At the same time, the drafters have eliminated
defenses that might have been raised by licensees, such as section2-403's
provision for the unenforceability of property rights against a bona fide
purchaser for value, on the ground that they are inconsistent with licensors'
federal intellectual property rights. Id. at 15.
n42. See David D. Friedman, In Defense of Private
Orderings, 13 Berkeley Tech. L.J. 1151, 1153-54 (1998). For example, the
license for a work might allow only one user at a time, and the software
in which the work is encoded might enforce this restriction by preventing
a second user from opening the work if it detects that the work is already
in use. As long as the second user cannot defeat the restriction by tampering
with the encoding software - a possibility discussed further in Part VI
- the circumstances that would constitute a breach cannot occur.
n43. See U.C.C. Article 2B, Preface at 10-12
(July 24-31, 1998 Draft); id. 2B-105, Reporter's Notes 3-4; Nimmer, supra
note 3, at 840-50, 858-70, 877-84.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
III. DOCTRINE: SELF-HELP, TRESPASS, AND THE RIGHTS
OF PERSONS
Both the common law and the U.C.C. have
traditionally afforded rights of self-help to vendors and creditors. However,
both bodies of law limit the right to enter private property to repossess
goods, allowing such entry only when the circumstances indicate consent,
or at least acquiescence. Judged against these limits, Article 2B sanctions
a degree of intrusion into private homes and offices that is unprecedented.
It also authorizes self-help in a much broader range of circumstances,
including those in which licensee conduct, although defined as breach,
is privileged by the public law of copyright. To a far greater extent than
existing law, Article 2B elevates the rights of mass market vendors over
those of consumers and rights in "informational property" over the rights
of persons to secu
[*1102] rity and autonomy within
private spaces. n44 Whether and to what extent this approach is warranted
depends on how "intrusion" is conceived and on the purposes that self-help
and the legal standards governing it are thought to serve.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n44. As used in this essay, "consumers" includes
both individuals and other entities that purchase (or "license") creative
and informational works through the retail mass market. Although Article
2B defines "consumers" to include individuals only, this broader definition
is consistent with Article 2B's distinction between mass market and non-mass
market transactions:
In the retail mass market, and in many non-retail transactions, most modern transactions are standardized. An information provider defines the terms under which its information products are made available to the retail marketplace and end users in that marketplace elect to either acquire or not acquire [sic] the information on these terms. The transactions are anonymous in that the information provider does not restrict those to whom the information is given except based on the licensee's willingness to agree to terms and to pay the applicable license fee.
U.C.C. 2B-208, Reporter's Note 2 (July 24-31, 1998 Draft).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Before digital technologies made remote or prospective
self-help possible, self-help repossession necessarily entailed physical
recovery of disputed goods following an alleged breach of contract. The
law of self-help thus has been, until now, the law of physical, ex post
repossession of chattels, which in turn has focused heavily on the likelihood
of physical violence. Courts considering these cases have not explained,
because they have not needed to, whether the judicially-developed "breach
of the peace" standard is only designed to minimize the likelihood of physical
violence and harm to persons and property, or is (or should be) more broadly
concerned with preventing nonconsensual intrusion - and if so, what kinds
of nonconsensual intrusion count. Because the universe of possible transgressions
with respect to leased and secured chattels is relatively narrow, they
also have not explored whether in other circumstances the law might or
should impose substantive limits on the sorts of dereliction that justify
self-help behavior. Finally, they have not considered whether standards
developed to govern self-help following cancellation should apply to self-enforcing
"regulation of performance" ex ante. Article 2B's proposed extension of
self-help privileges to encompass electronic repossession and prospective
self-help requires answers to all three sets of questions.
A. Self-Help and Private Spaces
The physical self-help tactics employed
at the dawn of the consumer credit era created risks of physical violence
and raised questions about
[*1103] debtors' rights to security
against trespass and other intrusions. To minimize these concerns, courts
developed rules that allowed self-help repossession only if it could be
accomplished without a breach of the peace. n45 Although courts created
exceptions to the law of trespass to accommodate a perceived need for self-help
repossession of chattels kept on private property, they used the "breach
of the peace" standard and the concept of noncoerced consent to cabin these
exceptions. Thus, creditors could enter private property to recover chattels
sitting in plain view in a yard or driveway, if the debtor offered no resistance.
n46 They could not, however, break into a debtor's home or business premises,
or use or threaten force to gain entry if permission to enter was refused.
n47 Only the state could enter a private home or office against the owner's
will, and then only within the limits established by due process principles.
n48
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n45. See James J. White & Robert S. Summers,
Uniform Commercial Code 912-13 (4th ed. 1995) (characterizing "breach of
the peace" standard as based on whether the creditor sought to enter peaceably
or threatened force, and whether the debtor consented to entry or opposed
it).
n46. See id. at 913 & n.5.
n47. See id. at 913 & n.4.
n48. See U.S. Const. amends. IV, XIV; Wolf v.
Colorado, 338 U.S. 25, 28 (1949) (characterizing Fourth Amendment guarantee
of privacy as "implicit in "the concept of ordered liberty'" established
by Fourteenth Amendment's due process clause, but holding that exclusionary
rule is not constitutionally-mandated as to states) (quoting Palko v. Connecticut,
302 U.S. 319, 325 (1937)), overruled by Mapp v. Ohio, 367 U.S. 643, 654-57
(1961) (expanding due process-based guarantee to include exclusionary rule).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
The rules governing self-help repossession under
Articles 9 and 2A of the U.C.C., which expressly incorporate the "breach
of the peace" standard, mirror those developed under the common law. n49
Creditors may en
[*1104] ter upon private property,
but their ability to do so is severely restricted. ""The two primary factors
considered in making the determination are the potential for immediate
violence and the nature of the premises intruded upon.'" n50 Although many
contracts expressly authorize creditors to enter private premises to effectuate
repossession, courts have read the breach of the peace limitation into
these clauses, as well. n51 In the eleven states that have adopted the
Uniform Consumer Credit Code ("U3C") as a modification to Article 9, moreover,
the creditor may not enter a dwelling "unless the consumer voluntarily
surrenders possession of the collateral to the creditor." n52 Courts in
non-U3C jurisdictions have not specified what
[*1105] constitutes permissible
entry, and why, in situations not involving overt force or threats of force.
n53 Generally speaking, courts in non-trespassory repossession cases have
allowed some forms of deceit and trickery and prohibited others, and have
justified both kinds of results by reference to the relationship between
force, consent, and the likelihood of harm. n54
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n49. U.C.C. 2A-525 (1990); U.C.C. 9-503 (1972);
see White & Summers, supra note 45, at 912 ("The drafters knowingly
chose this well-worn phrase, and did not define it anew. Accordingly the
numerous pre-Code cases are still good law."); see also Barkley Clark,
The Law of Secured Transactions Under the Uniform Commercial Code P 4.05[2][b][i]
(3d ed. 1993 & Supp. 1998). Compare, e.g., Chrysler Credit Corp. v.
Koontz, 661 N.E.2d 1171, 1173-74 (Ill. App. Ct. 1996) (upholding repossession
of car parked in debtor's front yard), and Wade v. Ford Motor Credit Co.,
668 P.2d 183, 187 (Kan. Ct. App. 1983) (upholding repossession of car parked
in debtor's driveway), with Laurel Coal Co. v. Walter E. Heller & Co.,
539 F. Supp. 1006, 1007 (W.D. Pa. 1982) (holding repossession unlawful
where repossessors cut chain used to lock debtor's premises), and Morris
v. First Nat'l Bank & Trust Co., 254 N.E.2d 683, 686 (Ohio 1970) (holding
repossession unlawful where debtor's son confronted repossessors and stopped
protesting only when he was physically surrounded).
Similar balancing principles exist in landlord-tenant
law, another area in which both parties may be said to have "property"-like
interests in the subject matter of the dispute. Cf. Margaret Jane Radin,
Property and Personhood, 34 Stan. L. Rev. 957, 993 (1982) (delineating
a theory of property rights based on "personhood" interests and arguing
that rental tenants should be recognized as having property interests in
their homes); Margaret Jane Radin, Contested Commodities 108-12 (1996)
(incorporating housing-related interests into a broader theory of "human
flourishing"). Early English common and statutory law accorded landlords
broad rights to eject tenants and distrain their personal property to satisfy
unpaid rent obligations. See Special Project, Self-Help: Extrajudicial
Rights, Privileges and Remedies in Contemporary American Society, 37 Vand.
L. Rev. 845, 938-41, 946-49 (1984). However, later courts and legislators
gradually restricted the permissible scope of landlord self-help. See id.
at 940-41, 947-49. Contemporary American landlord-tenant law is increasingly
hostile to self-help eviction of any kind. Many states prohibit self-help
repossession outright, and most that allow it impose a strict "breach of
the peace" standard. See id. at 950-53; Roger A. Cunningham et al., The
Law of Property 6.80, at 403-04 (2d ed. 1993). Instead, all states have
created summary eviction procedures designed to afford tenants notice and
an opportunity to appear before a judge. See Restatement (Second) of Property:
Landlord and Tenant 14.1-.3 (1977); Cunningham et al., supra, 6.79, at
400-01; see, e.g., Berg v. Wiley, 264 N.W.2d 145, 150-51 (Minn. 1978).
In addition, recognizing that tenants who fail to make rent payments may
have justification, most states allow tenants to raise defenses, such as
the implied warranty of habitability, for consideration by the court. See
Cunningham et al., supra, 6.79, at 401.
n50. Salisbury Livestock Co. v. Colorado Cent.
Credit Union, 793 P.2d 470, 474 (Wyo. 1990) (quoting Cottam v. Heppner,
777 P.2d 468, 472 (Utah 1989)); cf. Stone Mach. Co. v. Kessler, 463 P.2d
651, 654 (Wash. Ct. App. 1970) ("To constitute a "breach of the peace'
it is not necessary that the peace be actually broken <elip>nor is actual
personal violence an essential element of the offense."). See generally
Jean Braucher, The Repo Code: A Study of Adjustment to Uncertainty in Commercial
Law, 75 Wash. U. L.Q. 549, 572-91 (1997) (summarizing case law on self-help
repossession); Clark, supra note 49, P 4.05[2][b][i] (same).
n51. See Clark, supra note 49, P 4.05[2][b][i],
at 4-82 ("A security agreement that purports to waive breach of the peace
in advance is not worth the paper it is written on."). As Clark explains,
courts have implied this limitation even though Article 9 does not forbid
waiver of the right against breach of the peace. See id. Arguably, this
restricts the parties' freedom to contract for terms of their own choosing.
For discussion of the theoretical and practical difficulty of applying
notions of "consent" to mass market, standard-form contract terms, see
infra Part IV.
n52. Unif. Consumer Credit Code art. 5, 5-112
& cmt. 1 (1974) ("It is necessary <elip> to make it clear that dwellings
cannot be entered absent the consent of the occupants except under the
supervision of the court."); see Am. Jur. 2d Desk Book Item No. 282 (1992)
(summarizing adoption of uniform laws by jurisdiction).
The U3C is not an isolated instance of pro-consumer
liberalization. In particular, a number of states have exempted, completely
or partially, consumer sales from Article 2's provisions allowing disclaimers
of warranty. See, e.g., Conn. Gen. Stat. Ann. 42a-2-316 (West 1990 &
Supp. 1998); Mass. Gen. Laws Ann. ch. 106, 2-316(a) (West 1990); Minn.
Stat. Ann. 325.954 (West 1966 & Supp. 1998); Wash. Rev. Code Ann. 62A-2-316
(West 1995); see also Magnuson-Moss Warranty Act, 15 U.S.C. 2301-2310 (1994)
(establishing federal minimum standards for warranty protection of tangible
consumer products).
n53. In a U3C jurisdiction, this question would
exist as to private property other than dwellings.
n54. Compare, e.g., K.B. Oil Co. v. Ford Motor
Credit Co., 811 F.2d 310, 315 (6th Cir. 1987) (upholding repossession of
truck being serviced by used truck dealer after misrepresenting to dealer
that debtor had consented), Thompson v. Ford Motor Credit Co., 550 F.2d
256, 258 (5th Cir. 1977) (upholding repossession from garage after misrepresenting
to garage employees that debtor had consented), and Cox v. Galigher Motor
Sales Co., 213 S.E.2d 475, 479 (W. Va. 1975) (upholding repossession made
after telling the debtor that truck was being taken to have repairs performed),
with, e.g., Chrysler Credit Corp. v. McKinney, 38 U.C.C. Rep. Serv. (CBC)
1409 (Ala. 1984) (invalidating repossession made after luring debtor to
leave car with dealership for repairs), rev'd on reh'g and remanded on
other grounds, 456 So. 2d 1069 (Ala. 1984) and Ford Motor Credit Corp.
v. Byrd, 351 So. 2d 557 (Ala. 1977) (invalidating repossession made by
luring debtor to a meeting to continue good-faith settlement discussions).
See generally Braucher, supra note 50, at 587-91 (discussing cases and
concluding that they "leave confusion about what sorts of tricks are impermissible");
Clark, supra note 49, P 4.05[2][b], at 4-85 to 4-86, 4-88 to 4-89 (observing
that "a little stealth is all in the game of repossession," but describing
some cases finding impermissible "chicanery"); Alphonse M. Souillante &
John R. Fonseca, The Modern Law of Commercial Practices 1368-69 (Supp.
1997) (observing that consent gained by trickery is not meaningful, but
that "the majority of cases liberally interpret what "breach of the peace'
means in favor of the creditor").
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
How should the ancient "breach of the peace"
standard and its associated concern with protecting private spaces be understood
in connection with virtual, nonrepossessory self-help? Is the touchstone
nonconsensual intrusion, or is the objection to nonconsensual intrusion
simply that it threatens violence? Plainly, the nonviolent nature of electronic
self-help - not to mention electronic "regulation" of performance - does
not negate its invasiveness from the consumer's perspective. The widespread
outrage that greeted rumors of a "registration wizard" in Microsoft's Windows
software, which purportedly reported back to Microsoft via the Internet
on
[*1106] the contents of users' hard
drives, suggests that individuals also assess intrusion in other ways.
n55 (Imagine, for example, that a team of high-tech repo men had just used
a transporter device to "beam" your sofa out of your living room and back
to the furniture store. It would be difficult for the creditor to convince
you that no intrusion had occurred.) The law of privacy agrees that intrusion
need not be violent to be actionable; nonconsensual "intrusion upon seclusion"
is actionable without regard to the intruder's use of force. n56 Assessing
the degree of intrusion allowable as a matter of commercial law, therefore,
requires us to do more than simply weigh the risk of physical injury to
persons or property against the licensor's countervailing proprietary rights.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n55. See Peter H. Lewis, Conspiracy Buffs See
Things to Worry About in Microsoft's Electronic Software Registry, N.Y.
Times, June 19, 1995, at D3.
n56. See Restatement (Second) of Torts, 652B
(1977); id. 652B (listing decisions recognizing this tort theory from 31
states and the District of Columbia). See generally Anita L. Allen, Uneasy
Access: Privacy for Women in a Free Society 57-61 (1988) (discussing the
sources and rationales for the concept of privacy rights in one's home).
Similarly, the U3C represents a judgment that nonconsensual intrusion into
a private home, whether or not violent, is objectionable in its own right.
See supra note 52 and accompanying text.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
The fact that section 2B-715 also prohibits self-help
repossession in situations presenting a risk of injury to information,
independent of any injury to persons or tangible property, indicates some
recognition that physical harm is not the only kind of harm threatened
by unilateral acts of private enforcement. n57 Article 2B makes clear,
however, that the drafters are far more concerned with intangible harms
to commercial interests than with intangible harms to individuals. Thus,
section 2B-715 includes special protections for the licensee whose trade
secrets become entangled with information "belonging to" the licensor,
but includes no such protections for the licensee whose diary or great
American novel meets a similar fate. n58 The Reporter's Notes to sections
2B-310 and 2B-715 do not even
[*1107] acknowledge that the law
of privacy exists, or that "privacy" is a state or characteristic that
has independent value for individuals and for society.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n57. See U.C.C. 2B-715(b)(2) (July 24-31, 1998
Draft).
n58. See id. 2B-715(e) (prohibiting repossession
if licensor's information is so commingled with licensee's information
that separation is infeasible), 2B-715(f) (according repossession rights
to licensee who provides information to licensor subject to use restrictions).
Neither restriction would appear to apply to word processing files containing
documents created by licensees. Cf. U.C.C. 2B-310(c) (July 24-31, 1998
Draft) (excluding from the definition of authorized "electronic regulation
of performance" restrictions that interfere with a licensee's access to
his or her own information "by means other than by use of the licensor's
information or informational rights"). By contrast, a creditor who takes
personal property of the debtor during a repossession - such as tools or
other belongings left in the trunk of a car - must return the property
quickly or pay conversion damages for loss of use. See Clark, supra note
49, P 12.05[3][b].
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Determining whether and how privacy concerns
should influence the law of electronic self-help requires defining the
interests that "privacy" protects and the senses in which it is subject
to invasion. Volumes have been written on this subject, and the exact provenance
of privacy is still unsettled. For purposes of this article, however, it
is sufficient to note that privacy is broadly acknowledged as having decisional,
informational, and spatial dimensions. n59 Plainly, the self-help rights
provided by Article 2B do not directly implicate privacy concerns related
to intimate personal decision-making. n60 Self-help might entail collection
and revelation of information about an individual licensee's activities.
The privacy implications of such monitoring are clear, and are thoroughly
treated elsewhere; I will not repeat that analysis here. n61 My concern
here is with the new kind of self-help that digital technologies allow
- self-help that consists solely of "dumb," hard-wired prevention of unauthorized
conduct. Although this kind of self-help does not appear to raise informational
privacy concerns, that does not end the inquiry. n62 Whether such self-help
implicates privacy in the spatial sense remains to be considered.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n59. See, e.g., Sheldon W. Halpern, Rethinking
the Right of Privacy: Dignity, Decency, and the Law's Limitations, 43 Rutgers
L. Rev. 539, 541 n.12 (1991); Julie C. Inness, Privacy, Intimacy, and Isolation
56-69 (1992); Jerry Kang, Information Privacy in Cyberspace Transactions,
50 Stan. L. Rev. 1193, 1202-03 (1998).
n60. They might do so indirectly - if, for example,
a licensor attempted to prevent use of its products to inform or facilitate
such decisions. However, this type of privacy violation probably could
not be accomplished without a concurrent invasion of informational or spatial
privacy interests.
n61. For discussion of the privacy concerns and
other concerns raised by monitoring intellectual activities, see Cohen,
supra note 9, at 994-1019. For more general discussion of informational
privacy issues, see Kang, supra note 59; see also Friedman, supra note
42 at 1153, 1163-64.
n62. See Friedman, supra note 42, at 1153, 1163-64.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
The common law of privacy protects only those
expectations of privacy that are "reasonable." n63 One possible understanding
of "reasonableness" in the context of assertedly private spaces is that
the state of the art of self-help technology determines (and limits) the
expectations of privacy that consumers can reasonably have. This is not
entirely far-fetched; technology plays an important role in shaping privacy-related
rules and norms. n64 Yet if reasonable expectations are defined solely
by the limits of
[*1108] technological possibility,
privacy has a bleak future. Individuals' legal entitlement to privacy will
simply recede as the technologies of intrusion advance. This approach also
rests on an important, and misguided, assumption concerning the unidirectional
nature of technological progress. Technology can evolve in privacy-destroying
or privacy-protecting ways. The actual path of technological evolution
will depend on many factors, including the priorities of stakeholders and
the processes by which stakeholders are identified and consulted. n65 To
say that electronic self-help is legitimate because it is possible ignores
the degree to which both "privacy" and "technology" are normative as well
as positive constructs - functions of the laws and mores of society as
well as the laws of physics.
- - - - - - - - - - - - - - - - - -Footnotes-
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n63. See Restatement (Second) of Torts 652B cmts.
c-d (1977).
n64. Cf. Jeffrey Reiman, Driving to the Panopticon,
11 Santa Clara Computer & High Tech. L.J. 27, 32 (describing the level
of privacy enjoyed by individuals as a function of both formal (legal)
and material (physical) conditions).
n65. Cf. Cohen, supra note 7, at 398-402 (arguing
that technology both constitutes and is constituted by social values and
institutions); Lawrence Lessig, Governance 5-9 (Aug. 23, 1998 Draft) (arguing
that choices about the technical architectures of cyberspace are, inevitably,
also choices about the regularity of cyberspace behavior) <http://cyber.law.harvard.edu/works/lessig/NY
q d2.pdf>.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Another possible interpretation of "reasonableness,"
suggested by cases involving alleged intrusion upon seclusion via remote
listening and viewing devices, is that an intrusion into private space
is actionable only if it renders the space accessible, or potentially so,
to a human observer. n66 This answer also is unsatisfactory, however, because
it depends, ultimately, on informational privacy concerns. Privacy protects
certain spaces not only to shield personal behaviors from observation by
others, but also to preserve a zone of autonomy from interference by others.
n67 Freedom
[*1109] from observation means little
without freedom from outside control. Because autonomy interests may be
violated even if informational interests are not, whether a human observer
gleans any direct information from an autonomy-destroying intrusion is
irrelevant. It is worth noting, too, that "dumb" intrusions are not divorced
from human agency, but only separated from it in time. In a sense, the
intrusion (or at least its but-for cause) occurred much earlier, when the
licensor determined that consumers in their private homes and offices would
be allowed to take certain actions but not others. n68
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n66. Compare, e.g., Marks v. Bell Tel. Co., 331
A.2d 424, 431 (Pa. 1975) (holding that secret taping of conversations in
police station holding room not actionable as invasion of privacy because
recordings were not actually replayed and were routinely erased several
weeks after being made), with, e.g., Amati v. City of Woodstock, 829 F.
Supp. 998, 1010-11 (N.D. Ill. 1993) (holding that secret taping of conversations
actionable as invasion of privacy whether or not anyone actually listened
to the recordings, because "one would never obtain the full benefits accorded
to a private place if he or she reasonably believed someone would or could
be listening"), Harkey v. Abate, 346 N.W.2d 74, 76 (Mich. Ct. App. 1983)
(holding that see-through panels above stalls in women's bathroom at roller
skating rink constituted invasion of privacy whether or not panels actually
were used to view plaintiffs), and Hamberger v. Eastman, 206 A.2d 239,
243 (N.H. 1965) (holding that listening device installed by landlord in
tenants' bedroom constituted invasion of privacy whether or not landlord
ever used it).
n67. See, e.g., Marks, 331 A.2d at 433 (Pomeroy,
J., concurring in the result) ("The tort of intrusion is designed to protect
an individual, not against what other human beings think of him, but rather
against the very act of interference with his seclusion."); Edward J. Bloustein,
Privacy as an Aspect of Human Dignity: An Answer to Dean Prosser, in Philosophical
Dimensions of Privacy: An Anthology 156, 165 (Ferdinand David Schoeman,
ed. 1984) ("The fundamental fact is that our Western culture defines individuality
as including the right to be free from certain types of intrusions. This
measure of personal isolation and personal control over the conditions
of its abandonment is of the very essence of personal freedom and dignity
<elip>."); Thomas Scanlon, Thomson on Privacy, 4 Phil. & Pub. Aff.
315, 317 (1975) ("The interests to which an account of privacy must refer
thus include, in addition to specific interests in not being seen, overheard,
etc., broader interests in having a zone of privacy in which we can carry
out our activities without the necessity of being continually alert for
possible observers, listeners, etc."); cf. Stanley v. Georgia, 394 U.S.
557, 565-66 (1969) (holding that the First Amendment protects "the right
to satisfy [one's] intellectual and emotional needs in the privacy of [one's]
own home"); Margaret Jane Radin, Reinterpreting Property 56-63 (1982) (arguing
that property rights in the home are a necessary constituent of individual
personhood); Claudia W. Tuchman, Note, Does Privacy Have Four Walls? Salvaging
Stanley v. Georgia, 94 Colum. L. Rev. 2267, 2283-84 (1994) (characterizing
constitutionally-protected privacy as "the right of an individual to conduct
a private life free from state interference").
Fourth Amendment protection against unreasonable
searches and seizures serves similar values. See, e.g., Boyd v. United
States, 116 U.S. 616, 630 (1885) ("It is not the breaking of his doors,
and the rummaging of his drawers, that constitutes the essence of the offence;
but it is the invasion of his indefeasible right of personal security,
personal liberty, and private property <elip>."); see also Michael Adler,
Cyberspace General Searches, and Digital Contraband: The Fourth Amendment
and the Net-Wide Search, 105 Yale L.J. 1093, 1108-13 (1996) (emphasizing
importance of the home as a zone of autonomy).
n68. Technically, of course, the licensor and
the consumer "agreed" to the restrictions; for discussion of whether it
makes sense to treat these restrictions as the subject of genuine mutual
consent, and why it might not, see infra Part IV.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
It is true that "dumb" self-help is a different
kind of intrusion than that caused by human perception. Yet to characterize
it as "merely" a communication surely would go too far. A dinnertime telemarketing
phone call may annoy, but a spurned telemarketer cannot turn off software
that happens to be running on a personal computer in one's study, or deny
access to copies of digital works stored there. Electronic self-help is
a communication that suspends or restricts preexisting access to stored
digital information; as such, it is qualitatively different than an unwanted
telephone call that has no further effect. n69
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n69. According to the Restatement view, even
telephone calls may constitute intrusion upon seclusion, depending on the
circumstances. See Restatement (Second) of Torts, 652B cmt. b, illus. 5
(1977).
- - - - - - - - - - - - - - - - -End Footnotes-
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[*1110] Telephone, electric, and
gas companies supply a somewhat closer parallel. These entities have the
undisputed power to disconnect service to private homes and offices. However,
they do not have the power to reach inside the home or office and disable
lawfully acquired products, such as lamps, stoves, and telephones, merely
because they require electricity, gas, or telephone wire to function. In
addition, public utilities' power to exercise self-help is limited in other
ways. The telephone company may not disconnect a consumer for making fun
of the company, nor for taking apart the telephone to try to build a better
one; it may do so only for nonpayment, and only after providing notice
and a grace period. n70 In contrast, section 2B-310 and (depending on judicial
interpretation) possibly section 2B-715 authorize intrusion into private
individuals' homes, offices and computer systems for a wide variety of
misconduct, without prior notice, as a matter of routine business practice.
Thus, to decide whether the intrusions-by-communication authorized by Article
2B are reasonable based on a public utility analogy, we also must consider
whether their subject matter justifies their scope.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n70. See, e.g., Cal. Pub. Util. Code 779, 779.1
(West Supp. 1998); Conn. Gen. Stat. Ann. 16-262d (West 1988 & Supp.
1998); N.H. Rev. Stat. Ann. 363-B:1 (1995); N.Y. Pub. Serv. Law 47-32 (McKinney
1989). Public utilities in general are heavily regulated. Thus, taking
seriously an argument that information providers are "like" public utilities
is unlikely to lead us to a model law that emphasizes "freedom of contract."
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
B. Self-Help, Notice and "Materiality"
Self-help historically has been understood,
and rightly so, as a drastic remedy. For this reason, existing commercial
law requires that the range of conduct that will trigger self-help behavior
be clearly defined. For leases, the language of Article 2A sets these initial
limits. A lessor of tangible property may engage in self-help only if the
lessee "wrongfully rejects or revokes acceptance of goods or fails to make
a payment when due or repudiates" all or part of the contract, or otherwise
"substantially impairs" its value. n71 The language of Article 9, in contrast,
is relatively open-ended; it allows self-help repossession by the holder
of a security interest upon the debtor's "default." n72 Because Article
9 does not define "default," courts have required that the events alleged
as default be defined as such in the security agreement. n73 Moreover,
courts in a number of states have
[*1111] cabined contractual events
of default by imposing objective limits on "catchall" belief-in-insecurity
clauses; n74 by restricting the use of insecurity-acceleration clauses
and requiring clear notice of acceleration in all relevant documents; n75
by limiting the use of demand clauses if the contract also contains enumerated
events of default; n76 and by applying principles of estoppel to bar repossession
or acceleration by creditors in some circumstances notwithstanding the
contract language. n77 In U3C jurisdictions, these restrictions are codified;
a creditor may not accelerate the debt, but instead must afford both notice
and an opportunity to cure the deficient installment(s), and may proceed
with self-help repossession only upon objective evidence of "significant
impairment of the prospect for payment or realization on the collateral."
n78 These restrictions are designed to mitigate the severity of the self-help
remedy by ensuring that self-help will not follow minor or debatable infractions,
and by alerting consumers to the kinds of conduct that create risk.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n71. U.C.C. 2A-523(1), (3)(a) (emphasis added),
2A-525(2), (3) (1990).
n72. U.C.C. 9-503 (1972).
n73. See Clark, supra note 49, P 4.02[1]; 9 William
D. Hawkland et al., Uniform Commercial Code Series 9-503:1, at 667-69 (1997);
White & Summers, supra note 45, 25-2, at 902. When events of default
are not specifically defined, courts will require failure of payment or
other clearly "material" breach to justify repossession. See, e.g., Bankwest,
N.A. v. Groseclose, 535 N.W.2d 86 (S.D. 1995); Stillwell Welding Co. v.
Colt Trucking, 741 P.2d 598 (Wyo. 1987); Clark, supra note 49, P 4.02[1].
n74. See Clark, supra note 49, P 4.02[2][a],
at 4-9.
n75. See id. at 4-8 to 4-9, 4-13.
n76. See id. P 4.02[2][a], at 4-12.
n77. See id. PP 4.02[3], 12.05[1][b]-[c]. Each
of the above judicially-developed limitations is informed by the general
duty of good faith required by U.C.C. section 1-203. In general, however,
"1-203 does not support a cause of action where no other basis exists under
the U.C.C." Clark, supra note 49, P 4.02[4], at S4-18; see also id. P4.02[2][b],
at 4-11 (citing U.C.C. 1-208 (1995)) (noting that 1-203 does not limit
the use of demand notes, which by definition may be called for any reason
or no reason). Article 2B appears to follow the same approach.
n78. Unif. Consumer Credit Code art. 5, 5-109,
-110, -111(a) (1974); see Clark, supranote 49, P 12.05[1][a].
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Measured against existing law and practice, the
self-help provisions of proposed Article 2B require much less advance notice,
and authorize self-help in an even broader range of circumstances. Section
2B-310, in particular, allows electronic regulation of any behavior considered
inconsistent with the contract, without contractual notice in many cases.
n79 In contrast, although the Article 2B drafting committee had previously
approved post-cancellation self-help provisions without any materiality
restriction, the new version of section 2B-715 requires either that the
breach be "material" or that the license expressly define it as grounds
to cancel. n80 Even
[*1112] these restrictions, however,
do very little to bring Article 2B in line with the existing law of self-help
repossession.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n79. See U.C.C. 2B-310 & Reporter's Note
3 (July 24-31, 1998 Draft). Arguably, Article 2B's provision for the unenforceability
of unconscionable terms offers a way out of this difficulty. See id. 2B-110.
It is unlikely, however, that this is the result the drafters intended.
n80. See U.C.C. 2B-702, 2B-715 (July 24-31, 1998
Draft).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
First, as described above, existing law requires
written notice of the possibility of electronic self-help in all cases,
not just some. This is true for electronic self-help as well. Every court
that has considered a challenge to electronic self-help repossession of
licensed software has indicated that in view of its drastic nature, electronic
self-help requires prior contractual authorization. n81 The Reporter's
Notes to sections 2B-310 and 2B-715 do not mention these decisions at all.
n82 The omission is hard to fathom. Given the severity of the consequences
and the inability of most consumers to evade them, lack of written notice
of the possibility of electronic self-help is simply unfair. (If a creditor
considered itself entitled to "beam" your sofa out of your living room,
or to prevent you from installing new cushion covers, you almost certainly
would prefer to know this up front.) It is worth noting, too, that none
of the cases concerning electronic self-help has involved a non-negotiated,
mass market contract; thus, no court was required to consider whether the
"notice" afforded consumers by standard-form provisions is enough to validate
electronic self-help. It is
[*1113] at least an open question
whether the severity of the remedy justifies heightened notice requirements.
n83
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n81. See American Computer Trust Leasing v. Jack
Farrell Implement Co., 763 F. Supp. 1473 (D. Minn. 1991) (rejecting tort
claims for electronic deactivation because plaintiff's contract with software
vendor gave vendor the right to deactivate software if plaintiff failed
to make payments), aff'd on other grounds sub nom. American Computer Trust
Leasing v. Boerboom Int'l, Inc., 967 F.2d 1208 (8th Cir. 1992); Clayton
X-Ray Co. v. Professional Sys. Corp., 812 S.W.2d 565 (Mo. Ct. App. 1991)
(affirming award of punitive damages against software vendor that deactivated
software, even though plaintiff was liable to vendor for failing to pay
vendor's bill, because vendor had no "legal right" to deactivate software);
Franks & Son, Inc. v. Information Solutions, No. 88-C-1474E (N.D. Okla.
Dec. 23, 1989), 1989 Cptr. Indus. Litig. Rep. (Andrews) 8927-35 (Jan. 23,
1989) (rejecting software vendor's argument that U.C.C. Article 9 authorized
deactivation of software because, inter alia, contract did not disclose
deactivation code's existence); see also Werner, Zaroff, Slotnick, Stern
& Askenazy v. Lewis, 588 N.Y.S.2d 960 (N.Y. Civ. Ct. 1992) (affirming
punitive damages award against software consultant who secretly included
code that caused plaintiff's software to shut down, in the hope that plaintiff
would offer him a service contract to fix the problem, and noting that
consultant had "no right" to include the deactivation code); Art Stone
Theatrical Corp. v. Technical Programming & Sys. Support, Inc., 549
N.Y.S.2d 789 (N.Y. App. Div. 1990) (holding that vendor that removed essential
software code from plaintiff's system pending resolution of contract dispute
could not claim benefit of general release agreement negotiated while code
was being withheld if plaintiff could prove duress). Perhaps the most well-known
case involving electronic self-help repossession, Revlon v. Logisticon,
Inc., No. 70533 (Cal. App. Dep't Super. Ct. filed Oct. 22, 1990), settled
before the court could rule on plaintiff's contract and tort claims. See
Gary J. Edwards, Self-Help Repossession of Software: Should Repossession
Be Available Under Article 2B of the U.C.C.?, 58 U. Pitt. L. Rev. 763,
778-79 (1997).
n82. U.C.C. 2B-310, Reporter's Notes; id. 2B-715,
Reporter's Notes.
n83. See supra note 40. As discussed infra Part
V.C., the Supreme Court has held that private self-help repossession activity
does not implicate constitutional due process protection. Even if that
rule holds for the self-help authorized by Article 2B, a threshold level
of notice to the consumer might be required as a matter of sound commercial
policy.
- - - - - - - - - - - - - - - - -End Footnotes-
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Second, even apart from the issue of notice,
the self-help rights afforded by Article 2B are extremely broad. In part,
this is the result of specific drafting decisions; even section 2B-715's
materiality restriction is virtually meaningless because Article 2B's definition
of "material" breach is so broad that it encompasses almost any breach.
n84 In part, however, it is a consequence of the open-ended nature of "informational
rights" as conceived by licensors and the Article 2B drafting committee.
Both Article 2A and Article 9 inherently concern a narrower range of potential
transgressions than Article 2B. The typical Article 2A lease or Article
9 security agreement is concerned only with behaviors that bear on the
debtor's financial soundness or on the availability of the collateral to
satisfy the debt. n85 In practice, a default most often will consist of
failure to make required payments. Article 2B, in contrast, contemplates
a seemingly limitless range of restrictions on the uses that licensors
may make of creative and informational works, and appears to contemplate
electronic enforcement of most such restrictions - which, in turn, exacerbates
the notice problem still further. An expansive conception of breach need
not, however, automatically translate into an expanded scope for self-help.
At minimum, before adopting this robust conception of private ordering,
we should weigh its merits and demerits and consider other possible approaches.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n84. See U.C.C. 2B-109(b)-(c) (July 24-31, 1998
Draft) (defining "material" breach to include any conduct likely to cause
substantial harm; any conduct substantially likely to cause substantial
deprivation of an expected benefit; failure to perform an "essential element"
of the contract; the cumulative effect of nonmaterial breaches; and anything
else defined in the contract as material).
n85. See U.C.C. 9-102 (1972).
- - - - - - - - - - - - - - - - -End Footnotes-
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Affording licensors such broad powers of self-help
is enormously problematic, for several reasons. First, the determination
of breach (or, as in section 2B-310, behavior "inconsistent with" the license)
is not always as clear-cut as sections 2B-310 and 2B-715 imply. Deciding
whether a consumer has failed to pay is relatively easy; for other license
provisions, however, the determination of breach may require resolution
of difficult questions of fact or law. n86 Appointing the licensor judge,
jury, and execu
[*1114] tioner on these questions
seems singularly unwise. Second, the alleged inconsistency or breach may
consist of conduct that copyright law permits. A licensee might trigger
digital policing mechanisms while trying to fix bugs in licensed software,
or using the licensed information to create a classroom handout or critical
commentary. n87 In such a case, the licensee has a defense - copyright
preemption - that is unavailable to the person who simply has failed to
pay for goods received, and the outcome may turn - as the drafters themselves
note - on the resolution of difficult questions of federal law. n88
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n86. Consider, for example, a license authorizing
the customer to adapt and debug, but not materially alter, a copyrighted
software program.
n87. See 17 U.S.C. 107, 117 (1994); Acuff-Rose
Music, Inc. v. Campbell, 510 U.S. 569 (1994).
n88. The licensee may have a First Amendment
defense as well. See infra Part V.B.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
One obvious solution to the overbreadth problems
in sections 2B-310 and 2B-715 is to authorize self-help only for the same
kinds of misconduct that have traditionally warranted it: failure to pay
and other conduct that substantially impairs the value of the covered property
based on an objective standard. n89 In the case of section 2B-715, courts
could simply interpret "materiality" this way. Neither approach appears
to have occurred to the drafters, for reasons that also are self-evident:
such restrictions would diminish Article 2B's utility as a vehicle for
private ordering of rights in information. Yet at the same time, the drafters'
decision to impose some sort of materiality restriction, however vague,
on self-help under section 2B-715 suggests a recognition, however murky,
that wholly unrestrained private ordering might be bad policy. A narrow
understanding of "materiality" makes the most sense, both in terms of fairness
to consumers and in terms of broader societal concerns about the rule of
law. Section 2B-310, however, contains no express materiality restriction,
and as we have seen, there are other significant differences between the
self-help powers conferred by section 2B-310 and those conferred by 2B-715.
Thus, to finish the project undertaken in this Part, we must consider the
drafters' implicit assumption that "regulation of performance" ex ante
is fundamentally different than "self-help" ex post.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n89. Thus, for example, self-help might be reasonable
in the case of a licensee who makes and distributes multiple copies of
a covered work outside an academic or research setting, but unreasonable
in the case of a licensee who makes one or two copies, or who distributes
multiple copies within an academic or research setting. Cf. 17 U.S.C. 107
(1994) (listing education and research among uses of copyrighted works
that are likely to be fair); Sony Corp. of Am. v. Universal City Studios,
464 U.S. 417 (1985) (holding home videotaping of broadcast programming
for personal viewing purposes to be a fair use).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
[*1115]
C. Self-Help in Time
Sections 2B-715 and 2B-310 diverge markedly with regard to materiality and notice; this suggests that the drafters see an important difference between the two types of self-help. This difference follows fairly straightforwardly from the libertarian notion of freedom of contract. From this perspective, it is conceivable that wholly unfettered rights of "repossession," or post-breach self-help, might unacceptably blur the line between the rule of law and the state of nature. A central purpose of the social contract, after all, is to eliminate the chaos and uncertainty that would arise in a society without formal systems of dispute resolution. Electronic regulation, however (or so the argument goes), invokes the law of the market, not the law of the jungle. "Regulation of performance" is simply a high-tech way of describing the licensor's right to determine the features of its product. The restrictions become part of the product, which consumers can take or leave. n90
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n90. See ProCD, Inc. v. Zeidenberg, 86 F.3d 1447,
1453 (7th Cir. 1996) ("Terms of use are no less a part of "the product'
than are the size of the database and the speed with which the software
compiles listings. Competition among vendors, not judicial revision of
a package's contents, is how consumers are protected in a market economy.");
Friedman, supra note 42, at 1163-64; Nimmer, supra note 3, at 838-54.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
The freedom of contract argument for unfettered
electronic regulation of performance is simple and elegant - and breathtakingly
sophomoric. First, it conflates choice with submission and product capabilities
with control of behavior. Your vacuum cleaner cannot fly, or clean your
oven, and you have no particular right to one that can. However, except
in special cases governed by the patent laws, within private spaces you
may use or modify a lawfully-acquired vacuum cleaner in any way you see
fit. There might be questions about liability for injuries arising from
unintended uses, but that is a separate matter well within the scope of
existing contract and tort law concerning warranties, warnings, and disclaimers.
Second, the freedom-of-contract argument conflates digital code with "contract,"
and calls the result a purely private form of ordering exempt from public
policy limits - although "contract" is not and never has been exempt from
such limits. n91 Section 2B-310 sanctions the control of people, not products;
it negates agency, and calls the result freedom.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n91. See Lawrence Lessig, The Law of the Horse:
What Cyberlaw Might Teach (Sept. 20, 1998 Draft) <http://cyber.harvard.edu/works/lessig/LNC
Q D2.PDF>. On the remedial significance of this distinction, see infra
Part VI. As the existence of tort law demonstrates, product design also
has never been exempt from public policy limits.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Theory aside, consider (again) your living room
sofa. Suppose, first, that the purchase agreement states that no more than
three people may sit
[*1116] on the sofa at a time. When
a fourth person (say, perhaps, the small child of an adult sofa-sitter)
attempts to join the others, the sofa vanishes, dumping its erstwhile occupants
onto the floor. This is repossession, swift and (largely) bloodless. n92
Now suppose, instead, that the child's approach activates an invisible
force field, such that the child may not sit while all three adults remain.
There is no repossession (the sofa remains) and no loss of "use" (as defined
by the licensor), but only regulation of use. There is little risk of physical
injury, and little need for invasion of privacy in the informational sense.
Yet I suspect most readers will feel that from the standpoint of personal
autonomy within a space hitherto conceived as private, there is not much
difference between the two scenarios. n93 Article 2B stands for the proposition
that intellectual property is different enough from sofas that licensors
can, with straight faces, propound and demand acceptance of precisely the
latter sort of regime. n94
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n92. Section 2B-715 would authorize suit for
any personal injury that might result. See U.C.C. 2B-715 (July 24-31, 1998
Draft).
n93. I am indebted to James Davis of the Xerox
Palo Alto Research Center for inspiring this train of thought.
n94. Or, still more frighteningly, that electronic
regulation of sofa use would be wholly legitimate.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Is there any consideration that might justify
broader rights of private ordering and self-help repossession, and a correspondingly
restricted sense of individual autonomy, as to information products than
as to tangible articles of commerce? The answer, according to the drafters
of Article 2B, seems to be that unauthorized use is reconceived as an invasion
of the information provider's "property" interests in the work, as distinct
from the particular copy the licensee happens to possess. n95 It is true
that intellectual property and sofas are not entirely the same - sofas
are not public goods, and cannot be costlessly copied - but the need to
prevent market-destroying appropriation is a very different sort of argument,
and it is far from clear that it justifies the full range of autonomy-destroying
practices that section 2B-310 would allow. n96 Moreover, the fact that
the licensor may have "informational rights" in the licensed subject matter
also cuts the other way, because "informational rights" are limited by
law in ways that rights in chattels are not. A copyrighted work is not
"property" in the same sense as land or consumer goods, because the public
has protectable
[*1117] interests in certain public-domain
aspects of copyrighted works at the outset. n97
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n95. Cf. Trotter Hardy, The Ancient Doctrine
of Trespass to Web Sites, 1996 J. Online L. art. 7 (1996); Trotter Hardy,
Property (and Copyright) in Cyberspace, 1996 U. Chi. Legal F. 217 (1996).
n96. This argument is considered further infra
Part IV.
n97. See supra text accompanying notes 13-14
(discussing public-domain status of facts, ideas, and functional principles).
"Informational rights" in noncopyrightable works are even narrower. See
supra text accompanying notes 14-16 (discussing data misappropriation law
and copyright preemption).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Even the common law of property historically
has recognized certain public rights of access to or across the property
of another. n98 Most closely analogous is the public trust doctrine, which
preserves a right of access across privately-owned land when necessary
to reach beaches and other areas that the law considers to be commonly-owned.
n99 Similarly, the exceptions and exclusions in copyright law preserve
public access to the linguistic, cultural, and scientific commons. The
common law of property also recognizes public rights of privacy while on
the property of another; for example, landlords may not use listening devices
or trick mirrors to spy on their tenants, or install viewing devices in
public restroom stalls. n100 In short, the fact that something is "property"
does not, without more, confer on its owner rights of absolute, unqualified
control. n101 The scope of permissible private ordering of others' behavior
within private spaces should be a subject of conversation for society generally,
not a unilateral decision for information providers.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n98. Common law rights against trespassers are
not and never have been absolute. One may not, for example, use deadly
force against a trespasser unless one's own life is threatened. See, e.g.,
Katko v. Briney, 183 N.W.2d 657 (Iowa 1971). And one may trespass on another's
property to save one's own life. See, e.g., Vincent v. Lake Erie Transp.
Co., 124 N.W. 221 (Minn. 1910). (A trespasser under these circumstances
will be held responsible for damages, if any, but that is a separate question.
See id. at 222.)
n99. See Phillips Petroleum Co. v. Mississippi,
484 U.S. 469 (1988); Jack H. Archer et al., The Public Trust Doctrine and
the Management of America's Coasts (1994); Kathryn R. Heidt, Cleaning Up
Your Act: Efficiency Considerations in the Battle for the Debtor's Assets
in Toxic Waste Bankruptcies, 40 Rutgers L. Rev. 819, 860 (1988) ("The concept
here is that there are certain rights in the public that cannot be conveyed
by the state."); cf. Carol Rose, The Comedy of the Commons: Custom, Commerce,
and Inherently Public Property, 53 U. Chi. L. Rev. 711 (1986) (describing
the origins of and justifications for common law doctrines that vest collective
property rights in the "unorganized" public). I am indebted to Dan Burk
for suggesting this analogy.
n100. See, e.g., Mas v. Perry, 489 F.2d 1396
(5th Cir. 1974); Hamberger v. Eastman, 206 A.2d 239 (N.H. 1965); Harkey
v. Abate, 346 N.W.2d 74 (Mich. Ct. App. 1983).
n101. For further discussion of the origins and
errors of this "control theory" of property, see Cohen, supra note 7, at
343-53.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
In sum, Article 2B proposes to arrogate to private
information providers the power to reach into customers' homes and offices
and literally shape their behavior - in many cases without even the courtesy
of express
[*1118] contractual notice. Even
if self-enforcing digital contracts did not implicate federal copyright
law, these new technological methods for regulating the use of information
products and effectuating self-help repossession would raise important
questions about the permissible scope of private enforcement activity.
Ultimately, Article 2B requires us to decide whether "self-help" as a legal
construct exists solely for the narrow purpose of protecting vendors and
consumers from avoidable financial harm, or also for the broader purpose
of allowing vendors to shape the behavior, even within private spaces,
of those with whom they deal. That such self-help concerns intellectual
property makes it more, not less, troubling, because private ownership
of intellectual property traditionally has been conceived as less complete
than private ownership of chattels. These questions deserve far more careful
consideration than they appear to have received. Platitudes about the need
for enforcement of contracts are simply inadequate to justify such a radical
reallocation of authority to monitor and control individual conduct.
IV. THEORY: CONSENT, EFFICIENCY, AND NORMS
The electronic regulation and self-help
provisions of Article 2B also cannot be justified under any of the prevailing
scholarly accounts of self-help and its role in the fabric of commercial
exchange. Although these theories run the gamut from freedom of contract
to economic efficiency, they share a common failing. All of the theories
ignore or assume away the structural peculiarities of the consumer mass
market, and thus fail to recognize that neither consent nor efficiency
can be judged in the abstract. In addition, theoretical approaches that
privilege allocative efficiency to the exclusion of all other considerations
are inappropriate given the public good nature of creative and informational
works. When mass market transactions in information products are considered
in context, theoretical justifications for unfettered private electronic
ordering become difficult to sustain.
Several legal scholars and at least one court
have sought to justify enforcing contract terms governing use of creative
and informational works by reference to individual freedom of contract.
Consumers, the theory posits, are free to accept or reject the terms offered
in the market. If they consent to license agreements that abrogate the
user privileges established by copyright law, it must be because they find
such agreements desirable. n102
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n102. See ProCD, Inc. v. Zeidenberg, 86 F.3d
1447, 1454 (7th Cir. 1996); Bell, supra note 17, at 588-89 n.142; Friedman,
supra note 42, at 1155-57; Maureen O'Rourke, Copyright Preemption After
the ProCD Case: A Market-Based Approach, 12 Berkeley Tech. L.J. 53, 83-87
(1997).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
[*1119] In the mass market context,
however, the argument from consent is far too simple. The market system
established by the U.C.C. bears little resemblance to the atomistic market
of the neoclassical, libertarian paradigm, which presumes perfect information
and fully-informed consent as to every term of the deal. n103 The U.C.C.
was designed to allow commercial transactions to proceed without exact
specification of every term, and in particular to obviate the need for
bargaining over the allocation of product-related risks. n104 Article 2B's
mass market license provisions continue this approach; they are designed
(among other things) to facilitate market exchange in the absence of complete
information. Particularly for complex products (or "ordinary" products
that have been subjected to complex contract terms) the argument that the
structure of the typical mass market transaction enables voluntary, informed
exchanges with respect to most terms other than price is sheer fantasy.
n105 This is especially true for implicit contract terms, such as the electronic
"regulation" of behavior "inconsistent with the agreement" authorized by
section 2B-310. n106 This is not to say (yet) anything about the legitimacy
of particular mass market terms expressly or implicitly authorizing self-help,
but only that a meaningful justification for broad powers of self-help
must proceed without reliance on a hypothetical state of affairs that bears
no resemblance to reality.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n103. See Robert Cooter & Thomas Ulen, Law
and Economics 186-93 (2d ed. 1997) (describing requirements for a perfectly-functioning
market); cf. DeLong & Froomkin, supra note 7 ("Today's purchaser of,
say, a suite of software programs is faced with needs and constraints that
a metric designed to explain the market for pins may leave us poorly prepared
to understand.").
n104. See Cohen, supra note 7 at 322-28; Rice,
supra note 17, at 564-65.
n105. See Cohen, supra note 7 at 322-28; Victor
P. Goldberg, Institutional Change and the Quasi-Invisible Hand, 17 J.L.
& Econ. 461, 483-85 (1974); William T. Vukowich, Lawyers and the Standard
Form Contract System: A Model Rule That Should Have Been, 6 Geo. J. Legal
Ethics 799, 800-11 (1993); cf. Goldberg, supra note 15, at 484-91 (characterizing
the legal institution of the standard form as a societal decision to delegate
most commercial rulemaking to private firms). To the contrary, as Vukowich
notes, purveyors of standard forms often simply refuse to allow consumers
to review the fine print before concluding the transaction. Vukowich, supra,
at 806-07. Article 2B would validate this practice, creating obvious practical
difficulties for even the most determined comparison shoppers. See U.C.C.
2B-111, 2B-112(b)-(c) & Reporter's Notes 2, 5 (July 24-31, 1998 Draft)
(allowing disclosure of terms after purchase but prior to use of the product).
n106. See supra text accompanying notes 21-24.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
[*1120] At the other end of the
epistemological spectrum lie efficiency-based arguments of varying degrees
of sophistication. n107 The simplest economic rationale for allowing self-help
repossession turns on the seller's opportunity cost. Creditors seeking
expanded self-help powers typically have argued that requiring them to
incur litigation costs, or to charge off as losses items of collateral
too small to justify litigation, will raise the price of credit for other,
law-abiding consumers. n108
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n107. In a sense, the notion of a spectrum of
theoretical argument is inapposite; as I and others have demonstrated,
there is substantial overlap between the two "endpoints." See Cohen, supra
note 7, at 322-34, 343-53 (arguing that libertarianism and neoclassical
economic theory proceed from the same set of normative premises); Gillian
K. Hadfield, The Economics of Copyright: An Historical Perspective, 38
Copyright L. Symp. (ASCAP) 1, 41-45 (1988) (same); Mark A. Lemley, Romantic
Authorship and the Rhetoric of Property, 75 Tex. L. Rev. 873, 896-98 (1997)
(same); Neil Weinstock Netanel, Copyright and a Democratic Civil Society,
106 Yale L.J. 283, 310 n.109 (1996) (same). See generally C. Edwin Baker,
The Ideology of the Economic Analysis of Law, 5 Phil. & Pub. Aff. 3,
33 (1975) (discussing the convergence of Chicago-style utilitarian and
libertarian justifications for market ordering).
n108. See, e.g., Fuentes v. Shevin, 407 U.S.
67, 102-03 (1972) (White, J., dissenting).
- - - - - - - - - - - - - - - - -End Footnotes-
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This "lost-value" justification for self-help
does not apply as neatly to intangible intellectual property, however,
both because of the public good nature of creative and informational works
and because of the broad scope of self-help contemplated under Article
2B. First, the "lost value" attributable to a product whose value lies
chiefly in its public good aspect is inherently speculative. Failure to
recover a car after the buyer defaults precludes the secured creditor from
recovering a portion of its investment; failure to recover a copy of a
creative or informational work does not preclude the information provider
from realizing a profit on the work. n109 Particularly in the case of digital
works, the supply of copies is infinite and virtually costless, and there
is no necessary or inevitable relationship between the price charged to
consumers and the value invested in each copy. The point is not that information
providers have no claim to remuneration
[*1121] for copies of works - plainly,
they do and should - but only that "lost value" arguments are less compelling
in this context; thus, it seems odd that information providers should demand
greater powers of self-help than are available to purveyors of tangible
goods. n110
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n109. See Edwards, supra note 81, at 786; Henry
Gitter, Self-Help Remedies for Software Vendors, 9 Santa Clara Computer
& High Tech. L.J. 413 (1993); Esther C. Roditti, Is Self-Help a Lawful
Contractual Remedy?, 21 Rutgers Computer & Tech. L.J. 341 (1995); Pamela
Samuelson, Embedding Technical Self-Help in Licensed Software, 40 Comm.
ACM 13, 16 (Oct. 1997) ("Licensors of software or other information <elip>
will generally invoke self-help to destroy the licensed property rather
than to preserve its value for resale to another customer.").
In a relative sense, some consumers may end up
subsidizing others' uses, in that the prices charged them may be greater
than they otherwise would have been. It is appropriate to consider whether
these relative subsidies, or quasi-subsidies, represent good policy in
a system intended to promote the production and distribution of this particular
type of public good. But that is a very different question. See infra text
accompanying notes 142-47.
n110. The routinely-invoked threat of piracy
following loss of control of digital works is overstated, as it is far
from clear that every pirated copy represents a lost sale. See, e.g., David
M. Hornik, Combating Software Piracy: The Softlifting Problem, 7 Harv.
J.L. & Tech. 377, 390 (1994). Moreover, other sanctions (in particular,
social norms) work to constrain the kinds of unauthorized distribution
that represent significant market threats. Cf. Michael J. Madison, "Legal-Ware":
Contract and Copyright in the Digital Age, Fordham L. Rev. (forthcoming
1999) (discussing the importance of social norms, or "conventions," in
determining the practices of copyright users); Michael J. Meurer, Price
Discrimination, Personal Use and Piracy: Copyright Protection of Digital
Works, 45 Buffalo L. Rev. 845 (1997) (treating the "markets" for piracy
and unauthorized personal use as factually and conceptually distinct).
- - - - - - - - - - - - - - - - -End Footnotes-
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Second and more important, Article 2B authorizes
self-help in a wide variety of circumstances unconnected to failure of
payment or financial insecurity - for example, unauthorized modification
of software or copying of content for educational purposes. n111 Even if
lost profits warrant electronic self-help when consumers fail to pay, that
does not justify using lost profits to bootstrap electronic self-help rights
in other cases. Here again there is a gray area, though: if the information
provider wishes to charge a fee for every use of a work, or to charge different
users different types of fees, may not any case be converted into one of
failure to pay? The answer is complicated. In a recent essay, Terry Fisher
argues that allowing information providers the freedom to price discriminate
may benefit society - except when ceding greater control to information
providers threatens other important social values. n112 Plainly, price
discrimination will benefit marginal consumers; plainly too, there will
be difficult cases involving marginal sellers for whom the extra profit
would make the difference. n113 But the need to consider other social policies
- discussed at greater length below - means that information providers
cannot be the ones to decide when certain uses may be restricted, or when
electronic self-help may follow. Decisions about privatizing information
policy must be based on more than the licensor's desire for additional
profit.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n111. See supra Part III.B.
n112. William W. Fisher III, Property and Contract
on the Internet, 74 Chi.-Kent L. Rev. (forthcoming 1998); see also Meurer,
supranote 110, at 869-80.
n113. For examples of both cases, see ProCD v.
Zeidenberg, 86 F.3d 1447, 1449-51 (7th Cir. 1996).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Other economic theorists focus on the general
deterrence value of self-help rules and practices. Robert Scott argues
that the threat of self-help plays an important role in inducing non-defaulting
consumers to pay their
[*1122] debts. n114 He characterizes
the right of self-help repossession as an economic hostage offered by the
debtor in a game-theoretic bargaining environment to signal the debtor's
commitment to pay. n115 In turn, the creditor signals its commitment to
enforce the debtor's promise by precommitting to "a sequence of discrete
steps <elip> each act escalating incrementally." n116 Scott contends
that self-help remedies as a class are important to a creditor's ability
to maintain a reputation as an enforcer of promises. The challenge, then,
is to "design a pattern of reciprocal commitments that effectively constrains
the debtor without unduly tempting the creditor." n117
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n114. See Robert E. Scott, Rethinking the Regulation
of Coercive Creditor Remedies, 89 Colum. L. Rev. 730 (1989). Scott's work
addresses the economic justifications for self-help generally; as far as
I am aware, he has not written about self-help in the particular context
of Article 2B.
n115. See id. at 744-49.
n116. Id. at 750-51.
n117. Id. at 763-64.
- - - - - - - - - - - - - - - - -End Footnotes-
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If we accept Scott's argument as sufficient in
principle to justify some self-help practices, the question still remains
how Article 2B's electronic regulation and self-help provisions fare under
his "unduly tempting" standard, which acknowledges that some forms of self-help
may create unacceptably high risks of abuse. n118 There are good reasons
to think that electronic self-help would create such risks. As Part I discussed,
section 2B-310 would authorize intrusion at the licensor's sole discretion;
in this, it resembles the "confession of judgment" clauses that Scott condemns
as offering too great a temptation "to evade contractual risks." n119 Once
again, this concern is especially great for self-help unconnected to payment,
and intended solely to regulate unacceptable behavior as defined by the
licensor. In addition, Scott notes that distributional concerns might justify
some regulation of otherwise efficient creditor self-help practices. n120
To the extent that copyright's user privileges reflect such concerns, as
this article
[*1123] argues they do, they might
well justify a ban on licensor self-help that takes the form of direct
electronic control of user behavior. n121
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n118. See id. at 764-65. In fact, I am not willing
to accept Scott's argument in its entirety, but that is a subject for another
occasion.
n119. Id. at 765; see supra text accompanying
notes 21-24.
n120. See Scott, supranote 114, at 782-86. Ultimately,
Scott concludes that fairness-based justifications for prohibiting creditor
self-help are illusory because consumers who pay their debts bear the costs.
Id. At most (and again), this argument might support electronic self-help
rights in cases of nonpayment. With regard to behavioral restrictions,
particularly those aimed at copyright user privileges, it is unpersuasive.
In the context of copyright, arguments from redistribution ignore the possibility
that the decision to accord user privileges, with the understanding that
these privileges may affect prices, represents a societal judgment that
a regime of limited author-owner control is best-suited to promoting creative
progress and public access to creative and informational works. See Cohen,
supra note 7, at 383-90. Without more information, the fact that consumers
"bear the costs" of copyright's user privileges does not tell us which
regime is better.
n121. See infra text accompanying notes 142-147.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
A different sort of justification for creditor
self-help remedies is supplied by theories that marry consent and efficiency
rationales for commercial rules. Starting from essentially libertarian
premises, Randy Barnett argues that rules about contract enforcement must
be premised on individual consent. n122 To avoid the pitfalls of subjectivism,
however, Barnett contends that consent should be presumed when legal rules
mirror social conventions. n123 Barnett's "conventionalist" analysis resonates
with the norm-based approach to commercial law, which emphasizes the interplay
between law and extra-legal social ordering among groups. To these theorists,
the "new law merchant" should reflect a decentralized, bottom-up approach
to lawmaking that seeks to affirm existing commercial practices. n124
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n122. Randy E. Barnett, The Sound of Silence:
Default Rules and Contractual Consent, 78 Va. L. Rev. 821, 831-55, 860-73
(1992).
n123. See id. at 855-59, 875-97.
n124. See, e.g., Robert D. Cooter, Decentralized
Law for a Complex Economy: The Structural Approach to Adjudicating the
New Law Merchant, 144 U. Pa. L. Rev. 1643 (1996). But see Eric A. Posner,
Law, Economics, and Inefficient Norms, 144 U. Pa. L. Rev. 1697 (1996) (arguing
that the norms developed by close-knit communities may also be inefficient).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
An initial problem that confronts the use of
norm theory to justify electronic self-help is that such self-help is not,
as a factual matter, the ordinary practice - yet. Whether it becomes the
norm will depend, in part, on how the law chooses to treat it; norms and
law constitute each other in important and complex ways. n125 More fundamentally,
however, the notion that commercial law should be premised on market norms
is deeply problematic when applied to the consumer mass market. Norms presuppose
communities, and analysis of contracting behavior in the consumer mass
market suggests that the community that drives the evolution of mass market
norms is the community of providers. Norms also presuppose a sense of shared
benefit, and community satisfaction is not necessarily the most appropriate
measure for rules that affect relationships between community members and
outsiders. n126 Certainly, such norms cannot be said to
[*1124] be freely chosen by the
outsiders whom they affect. n127 In addition, they may be inefficient when
assessed in terms of their effect on the larger society within which the
community exists. n128 The fact of the larger community also should cause
us to question our initial identification of provider practice as the relevant
norm; if, instead, we chose the community of consumers as the baseline,
we probably would discover that existing social norms militate in favor
of copyright user privileges. n129
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n125. See Madison, supra note 110. See generally
Lawrence Lessig, The Regulation of Social Meaning, 62 U. Chi. L. Rev. 943
(1995) (exploring the complex interrelation of norms and law); Cass R.
Sunstein, Social Norms and Social Roles, 96 Colum. L. Rev. 903 (1996) (same).
n126. See Robert C. Ellickson, Order Without
Law: How Neighbors Settle Disputes 169 (1991); Lewis A. Kornhauser, Are
There Cracks in the Foundations of Spontaneous Order?, 67 N.Y.U. L. Rev.
647, 652-55 (1992); Kerry Lynn Macintosh, Liberty, Trade, and the Uniform
Commercial Code: When Should Default Rules Be Based on Business Practices?,
38 Wm. & Mary L. Rev. 1465 (1997); see also Cooter, supra note 124,
at 1684-85.
n127. Cf. Macintosh, supra note 126, at 1534-40.
n128. See, e.g., Edward Rubin, Efficiency, Equity,
and the Proposed Revision of Articles 3 and 4, 42 Ala. L. Rev. 551, 562-69
(1991) (arguing that the provisions of Articles 3 and 4 of the U.C.C. that
allocate the entire loss from forged checks to consumers, consistent with
banking industry practice, are inefficient because banks are in the best
position to develop procedures for reducing the risk of loss); Macintosh,
supra note 126, at 1525-34 (same).
n129. See Jessica Litman, The Exclusive Right
to Read, 13 Cardozo Arts & Ent. L.J. 29 (1996); Madison, supra note
110; Lloyd L. Weinreb, Fair's Fair: A Comment on the Fair Use Doctrine,
103 Harv. L. Rev. 1137, 1152-53 (1990). See generally Cooter, supra note
124, at 1664-65 (discussing methodological issues that attend the identification
of norms).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Historical evidence suggests that Karl Llewellyn,
who first conceived the Uniform Commercial Code, sought to establish the
Article 2's merchant-nonmerchant distinction precisely so that the rules
governing merchants could be regularized without placing individual consumers
at a disadvantage or constraining courts' equitable powers in merchant-consumer
disputes involving sales of goods. n130 For similar reasons, Article 9
contains provisions that afford heightened protection for individual consumers
in the context of secured transactions. n131 Arguably, Article 2B's distinc
[*1125] tion between negotiated
and mass market licenses is more appropriate for information markets; many
small businesses that Llewellyn might consider "merchants" are nonetheless
consumers of mass marketed information products. n132 However, Article
2B turns Llewellyn's point on its head by according less protection to
mass market licensees than to parties to negotiated agreements, and the
least protection to individuals who use licensed information products for
personal, non-business purposes. n133 This approach is consistent with
the hypothesis that Article 2B reflects provider norms. That information
providers as a group feel Article 2B would put them at an advantage in
their dealings with consumers hardly constitutes a compelling case for
its adoption. n134
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n130. See U.C.C. 2-104(1) (1994) (defining "merchant");
Ingrid Michelsen Hillinger, The Article 2 Merchant Rules: Karl Llewellyn's
Attempt to Achieve the Good, the True, the Beautiful in Commercial Law,
73 Geo. L.J. 1141 (1985); Zipporah Batshaw Wiseman, The Limits of Vision:
Karl Llewellyn and the Merchant Rules, 100 Harv. L. Rev. 465 (1987).
n131. See, e.g., U.C.C. 9-307(2) (1972) (providing
that a buyer for value of consumer goods for personal, family, or household
use takes the goods free of any security interest, even if perfected, as
long as the buyer is unaware of the security interest); id. 9-505(1) (providing
that if a secured party repossesses consumer goods from a debtor who has
paid at least 60% of the price or loan amount, the secured party must resell
the goods within 90 days or be liable to the debtor for conversion); see
also supra note 52 and accompanying text (discussing additional protections
afforded in some states by the Uniform Consumer Credit Code, as well as
state and federal modifications to Article 2's rules governing warranties
for tangible consumer products). And, as one might expect, a debate has
raged over whether such protections are economically efficient, and whether
there might be other reasons for retaining them even if they are not. See
Elizabeth Warren, Making Policy with Imperfect Information: The Article
9 Full Priority Debates, 82 Cornell L. Rev. 1371 (1997).
n132. See U.C.C. 2B-208, Reporter's Note 2 (July
24-31, 1998 Draft); supra note 44; see also Braucher, supra note 50, at
558 ("Consumer protection appropriately also applies to what I call "quasi
consumers' - sole proprietorships and small businesses without the sophistication
and resources to use legal counsel regularly."); Hillinger, supra note
130, at 1184 (suggesting that a consumer-nonconsumer distinction would
be more appropriate for Article 2); Wiseman, supranote 130, at 471, 522-24
(same).
n133. See supra text accompanying note 58.
n134. Cf. Goldberg, supra note 105, at 476-81
(observing that it is only logical for participants in markets to seek
to enhance their profits by altering existing institutions to their advantage).
- - - - - - - - - - - - - - - - -End Footnotes-
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Still needed, then, is a standard by which to
evaluate the desirability of the particular self-help regime embodied in
Article 2B. Economic analysis of commercial law posits that the law of
commercial transactions should focus primarily on establishing default
rules that are "efficient." For some legal scholars, this means that legal
rules for resolving disputes should reflect the ex ante bargains that a
majority of the parties would have reached. n135 Others contend that the
law should sometimes set default rules differently, to encourage one or
both parties to reveal information in the course of bargaining around them.
n136 Once again, however, the notion that a rule should mirror or encourage
"bargaining" is less than useful in the mass market context, where bargaining
typically does not occur on a term-by-term basis. In the mass market, consumers
are contract takers; they can refuse to buy, or hold out for a lower price,
but they generally cannot de
[*1126] mand a particular package
of contract terms or product characteristics. n137 Thus, if the default
rule under Article 2B allows electronic regulation and self-help, we would
not expect to see consumers bargain around that rule in most cases - even
if the rule were structured as a "penalty default" requiring actual disclosure
to consumers. n138 The opposite rule, disallowing electronic self-help
unless authorized in a separately-negotiated agreement, probably would
encourage more "bargaining," in that information providers most likely
would offer lower prices to consumers willing to agree to electronic monitoring.
But information providers also might offer non-monitored products at such
high prices that most consumers could not or would not purchase them. n139
Thus, under either rule, electronic regulation might become the prevailing
approach without consumers having any real say in the matter. The problem
here is not lack of "bargaining" per se, or even lack of knowledge, but
rather lack of consent and inability to affect the options on the table.
n140 One may say many things about the results of such a system - that
they reduce transaction costs, or that they promote
[*1127] freedom of contract for
information providers - but one cannot say that they are reliable measure
of what consumers want.
- - - - - - - - - - - - - - - - - -Footnotes-
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n135. See, e.g., Frank H. Easterbrook & Daniel
R. Fischel, The Corporate Contract, 89 Colum. L. Rev. 1416 (1989); Friedman,
supra note 42, at 1157-58. See generally Ian Ayres & Robert Gertner,
Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules,
99 Yale L.J. 87, 89-90 (1989) (collecting sources).
n136. See Ayres & Gertner, supra note 135.
n137. See, e.g., Daniel W. Bromley, Economic
Interests and Institutions: The Conceptual Foundations of Public Policy
65-66 (1989); Samuel Bowles & Herbert Gintis, The Political Economy
of Contested Exchange, in Rethinking Power 196, 221 (Thomas Wartenburg
ed., 1992); Cohen, supra note 7, at 362-70.
n138. See O'Rourke, supra note 102, at 83-87
(suggesting this approach for contract terms that alter the copyright balance).
Ayres and Gertner term this a "penalty default" approach because it penalizes
the more informed party (here, the licensor) for failure to disclose information
by applying a default rule that is undesirable from that party's perspective.
See Ayres & Gertner, supra note 135, at 97-98. This is the model chosen,
for example, for U.C.C. 2-316, which requires express disclaimer of the
implied warranty of merchantability. As noted above, a number of states
and the federal government have concluded that the penalty default model
for 2-316 provides inadequate consumer protection. See supra note 52.
n139. See ProCD, Inc. v. Zeidenberg, 86 F.3d
1447, 1449-50 (7th Cir. 1996) (outlining a similar strategy); O'Rourke,
supra note 102, at 62-63 (discussing the efficiencies available to information
providers as a result of price discrimination). Since most consumers in
the real world operate under budget constraints, this would not necessarily
mean that consumers did not value the absence of electronic monitoring
and self-help.
n140. It is for this reason that leading scholars
have for decades described this regime as one of "private legislation."
See Goldberg, supra note 105, at 468 n.15, 484-91; Friedrich Kessler, Contracts
of Adhesion - Some Thoughts About Freedom of Contract, 43 Colum. L. Rev.
629 (1943); Todd D. Rakoff, Contracts of Adhesion: An Essay in Reconstruction,
96 Harv. L. Rev. 1173 (1984); W. David Slawson, Standard Form Contracts
and Democratic Control of Law-Making Power, 84 Harv. L. Rev. 529, 538-42
(1971); Vukowich, supra note 105, at 800-11; cf. Robert P. Merges, Intellectual
Property and the Costs of Commercial Exchange: A Review Essay, 93 Mich.
L. Rev. 1570, 1611-13 (1995) (offering a narrower definition based on antitrust-style
market power). For a more detailed discussion of the distribution and exercise
of "bargaining power" in the mass market for creative and informational
works, see Cohen, supranote 7, at 356-77.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Another way to approach the question of private
ordering of rights in creative and informational works is by asking whether
such private ordering creates unacceptable costs, either for consumers
or for society generally. If so, we might decide that a prohibition on
the use of electronic regulation and self-help - or on their use in certain
categories of disputes - should be an immutable rule. n141 The answer to
the question depends largely on how overall or social welfare is defined.
From a purely allocative standpoint, the mass market behavior predicted
above suggests that banning electronic private ordering would be inefficient.
If most consumers would submit to self-help that negates their copyright
privileges, that would mean that they do not value these privileges as
highly as licensors value their absence. Allocative efficiency is a poor
measure of social welfare, however. Social welfare is in part a function
of nonmonetizable values, external effects, and distributional concerns,
all of which the allocative criterion ignores. n142 To decide whether the
law should permit or forbid contractual exit from copyright, we must consider
the particular social goals that copyright is intended to promote, and
whether market transactions in private-law "usage rights" will promote
them as effectively.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n141. See Ayres & Gertner, supra note 135,
at 88-89 (discussing economic justifications for immutable rules).
n142. See, e.g., Baker, supra note 107, at 32-41;
Bromley, supranote 137, at 75-83 (demonstrating that different initial
distributions of entitlements will generate different market equilibria,
and arguing that it is incoherent to speak of the "efficient" outcome while
ignoring policy considerations that affect the initial distribution); Andreas
A. Papandreou, Externality and Institutions 200-04, 225 (1994).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
As I have demonstrated elsewhere, the copyright
system promotes the social goals of creative progress and public access
to creative works in important ways that the market cannot measure. n143
Because it is difficult to assess creative potential ex ante, because there
is no necessary relationship between creative potential and ability to
pay, and because current information providers may perceive some works
by second-comers (for example, parodies) as detrimental to their interests,
there is no reason to think that giving information providers control over
all uses of their information products would result in more or better creative
progress. n144 Even under a well-functioning regime of contractual usage
rights, moreover, second-
[*1128] comers whose works produce
substantial shared social benefits would be unable to appropriate the full
value of their contributions, and would be unwilling to pay the prices
demanded by existing content owners. n145 In this respect, the enhanced
accessibility of creative and informational works under copyright law produces
important external benefits that most likely would be underproduced by
a private-law, market-based regime. n146 Copyright's access and use privileges,
which distribute the "costs" of uncompensated uses broadly among all consumers,
attempt to correct for this market failure - or, more accurately, for this
failure of markets. n147
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n143. See Cohen, supranote 7, at 382-98 (describing
the shared external benefits conferred by the public law of copyright and
the nonmarket values implicated in decisions about the appropriate regime
of rights in creative and informational works).
n144. See id. at 335-44; see also Mark A. Lemley,
The Economics of Improvement in Intellecutual Property Law, 75 Tex. L.
Rev. 989, 1048-68 (1997).
n145. See Cohen, supra note 7, at 384-87; see
also Lemley, supra note 144, at 1056-58.
n146. See Cohen, supra note 7, at 384-90. User
privileges that increase the accessibility of creative and informational
works also contribute to the creation of a shared basis for social discourse
and the development of a rich and robust public sphere independent from
government contol. See id. at 384-87, 394-98; Neil Weinstock Netanel, Copyright
and a Democratic Civil Society, 106 Yale L.J. 283, 347-64 (1996); cf. C.
Edwin Baker, Giving the Audience What It Wants, 58 Ohio St. L.J. 311, 350-66
(1997) (describing shared external benefits and costs produced by mass
media products). These shared social benefits also must be included in
any assessment of the total value generated by creative and informational
works.
n147. See Cohen, supra note 7, at 387-90.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
In short, the copyright regime of limited rights
and user privileges not only serves nonmonetizable and distributional concerns,
but those concerns also are central to a particular understanding of creative
and social "progress." This suggests that overall or social efficiency
may well require an immutable rule prohibiting electronic regulation and
self-help in at least some circumstances where private ordering threatens
to disrupt the copyright balance. At the very least, the case for unfettered
electronic private ordering is resoundingly inconclusive.
V. THE U.C.C., COPYRIGHT, AND THE PUBLIC-PRIVATE
DISTINCTION
We turn now from Article 2B's doctrinal
and theoretical antecedents to the question of its validity as a matter
of federal copyright law and policy. Whether the self-help provisions of
Article 2B implicate copyright law, or the limits imposed on copyright
law by the First Amendment, turns on interpretation of the public-private
distinction in the particular context of the laws that govern ownership
of creative and informational works. For Article 2B's electronic rights
management and self-help provisions to be valid, Article 2B must be seen
to establish merely a neutral background or framework for private exchange.
Indeed Article 2B is intended to establish a background framework; however,
the framework is not neutral. To the
[*1129] extent that Article 2B is
intended to give information providers the tools and the authority to contract
around their limited entitlements under copyright law and into more robust
entitlements of their own design, its adoption threatens to subvert completely
the statutory and constitutional underpinnings of federal intellectual
property law. Moreover, the process that produced Article 2B has been dominated
by information provider interests to such a degree that the public-private
distinction cannot credibly be invoked to shield their conduct.
A. Preemption and the "Dormant Intellectual Property
Clause"
The public-private distinction mediates the relationship between copyright and contract in several different ways. First, as discussed in Part II, it helps to define the scope of preemption under section 301 of the Copyright Act. Section 301 preempts state-created rights in the subject matter of copyright that are "equivalent" to the rights afforded by copyright. n148 It is fairly clear that Congress did not intend section 301 to preempt many private contracts relating to works falling within the subject matter of copyright - for example, agreements authorizing book publication and distribution, or authorizing the public display of copyrighted films. n149 That does not end the matter, however. Some "contracts" closely resemble universally-applicable proprietary rights. In particular, standard-form, mass market "licenses" for creative and informational works elide the boundary between property and contract. n150 Any state that adopts the electronic regulation and self-help provisions of Article 2B should recognize that it is authorizing the implementation of quasi-proprietary regimes that will affect thousands and even millions of consumers.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n148. 17 U.S.C. 301(a) (1994); see supra notes
15-17 and accompanying text.
n149. See Rice, supra note 17, at 602-04.
n150. See, e.g., Cohen, supra note 7, at 322-28;
Cohen, Some Reflections, supra note 17, at 181-82; Elkin-Koren, supra note
17, at 107-10; Dennis S. Karjala, Federal Preemption of Shrinkwrap and
On-Line Licenses, 22 U. Dayton L. Rev. 511, 528-33 (1997); Robert P. Merges,
Intellectual Property and the Costs of Commercial Exchange: A Review Essay,
93 Mich. L. Rev. 1570, 1611-13 (1995); see also Jane C. Ginsburg, Copyright,
Common Law, and Sui Generis Protection of Databases in the United States
and Abroad, 66 U. Cin. L. Rev. 151, 166-70 (1997) (agreeing that the rights
created by mass market contracts approach property rights, but suggesting
that copyright policy supports allowing such contracts in the case of uncopyrightable
databases).
- - - - - - - - - - - - - - - - -End Footnotes-
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Even if contracts as a class are outside the
scope of section 301, though, the electronic regulation and self-help provisions
of Article 2B fall afoul of the general principle, embodied in the Supremacy
Clause, that a
[*1130] state-created regulatory
regime cannot undermine federal law. n151 Here, the federal law in question
is both statutory and constitutional.
- - - - - - - - - - - - - - - - - -Footnotes-
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n151. See U.S. Const. art. VI, cl. 2; Gade v.
National Solid Waste Management Ass'n, 505 U.S. 88, 108 (1992); Felder
v. Casey, 487 U.S. 131, 138 (1988).
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The Supreme Court has issued conflicting pronouncements
as to whether it will find implied preemption when the federal statute
in question contains an express preemption provision that does not cover
the challenged action. n152 Most recently, however, it has suggested that
a narrow preemption provision merely establishes a rebuttable presumption
of Congress' intent not to preempt. n153 The conflict between Article 2B
and the Copyright Act presents a strong case for finding such a presumption
rebutted. It is clear that when Congress enacted section 301 as part of
the Copyright Act of 1976, it did not consider the possibility of state
legislation designed to enable self-enforcing digital contracts that would
enable the wholesale displacement of copyright. n154 And, as discussed
above, authorizing information providers to define the scope of their entitlements
would materially undermine the social objectives that the Copyright Act
is intended to promote. The Court's preemption decisions establish as much.
Although the Court has held that states may grant protection to potentially
copyrightable works that Congress has not chosen to protect, n155 it has
also held that they may not grant property-like rights in unprotectable
inventions, although they may afford a lesser level of protection. n156
On the same
[*1131] reasoning, nor may they
confer property-like rights in unprotectable (as opposed to merely unprotected)
works, or in unprotectable aspects or components of otherwise copyrightable
works.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n152. Compare Freightliner Corp. v. Myrick, 514
U.S. 280, 288 (1995) ("The fact that an express definition of the pre-emptive
reach of a statute "implies' <elip> that Congress did not intend to
pre-empt other matters does not mean that the express clause entirely forecloses
any possibility of implied pre-emption."), with Cipollone v. Liggett Group,
Inc., 505 U.S. 504, 517 (1992) ("When Congress has considered the issue
of pre-emption and has included in the enacted legislation a provision
explicitly addressing that issue, and when that provision provides a "reliable
indicium of congressional intent with respect to state authority,' <elip>
"there is no need to infer congressional intent to pre-empt state laws
from the substantive provisions' of the legislation.") (citations omitted).
n153. See Myrick, 514 U.S. at 288.
n154. Indeed, Congress' codification of the first
sale doctrine, under which the initial sale of an object embodying a copyrighted
work exhausts the copyright owner's right to control the further disposition
of that object, suggests just the opposite. See 17 U.S.C. 109(a) (1994).
n155. See Goldstein v. California, 412 U.S. 546,
560 (1973).
n156. Compare Aronson v. Quick Point Pencil Co.,
440 U.S. 257, 262 (1979) (allowing enforcement of a contract requiring
ongoing royalty payments for the right to use a trade secret that had subsequently
fallen into the public domain, but noting that the two-party agreement
did not prevent others from copying the technology) and Kewanee Oil Co.
v. Bicron Corp., 416 U.S. 470, 475-76 (1974) (allowing state law protection
of trade secrets, but noting that the protection afforded by trade secrecy
laws is substantially less complete), with Bonito Boats, Inc. v. Thunder
Craft Boats, Inc., 489 U.S. 141 (1989) (striking down state statute that
prohibited a commonly-used method of reverse engineering unpatented boat
hulls), Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 230 (1964)
(holding that states may not use their unfair competition laws to confer
perpetual protection on functional but unpatentable product features),
and Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 237 (1964)
(same). See generally Howard B. Abrams, Copyright, Misappropriation, and
Preemption: Constitutional and Statutory Limits of State Law Protection,
1983 Sup. Ct. Rev. 509.
- - - - - - - - - - - - - - - - -End Footnotes-
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Ultimately, however, the determination of conflict
is not Congress' to make. Neither the copyright objectives nor the limitations
on copyright ownership designed to promote them are legislatively-determined.
Both are required by the language of the Intellectual Property Clause of
the Constitution, which authorizes Congress to grant "exclusive Rights"
only to "Authors and Inventors" for "their respective Writings and Discoveries,"
and only for "limited Times." n157 To qualify as a patentable invention
under this standard, an innovation must represent a nonobvious advance
over the prior art; to qualify as a copyrightable "writing," an expression
must attain a minimal level of originality. n158 Consistent with these
requirements, the Intellectual Property Clause prohibits copyright protection
for facts, ideas, methods of operation, and other elements of "writings"
that do not in themselves constitute original expression. n159
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n157. U.S. Const. art. I, 8, cl. 8.
n158. See Graham v. John Deere Co., 383 U.S.
1, 6 (1966) (holding that Intellectual Property Clause prohibits Congress
from "enlarging the patent monopoly without regard to the innovation, advancement,
or social benefit gained thereby," and from "issuing patents whose effects
are to remove existent knowledge from the public domain, or to restrict
free access to materials already available"); Feist Publications, Inc.
v. Rural Tel. Serv. Co., 499 U.S. 340, 349-50 (1991) (holding that Intellectual
Property Clause requires originality as a prerequisite for copyright, and
therefore bars protection for facts and ideas).
n159. See Feist, 499 U.S. at 349-50 (holding
denial of copyright protection for facts constitutionally compelled); Baker
v. Selden, 101 U.S. 99, 103-104 (1879) (holding methods of operation protectable,
if at all, only under the patent system, and indicating that the Intellectual
Property Clause informs this result); The Trade-Mark Cases, 100 U.S. 82,
93-94 (1879) (holding that Intellectual Property Clause does not authorize
grant of exclusive rights in trademarks).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Congress, of course, has other sources of power.
In particular, it may use its commerce power to grant certain types of
rights in intellectual creations; the Lanham Act is one such example. n160
However, the com
[*1132] merce power is plenary only
up to a point; it may not be exercised in a manner that ignores other,
more specific constitutional constraints. n161 Thus, Congress may not invoke
the commerce power to do what the Intellectual Property Clause bars it
from doing: granting "exclusive Rights" in unpatentable or uncopyrightable
subject matter. n162 Nor may it invoke the commerce power to authorize
the states to grant such rights. n163 Congress, in short, could neither
enact nor authorize the provisions of Article 2B that allow information
providers to grant themselves exclusive rights in uncopyrightable content,
and to extend their exclusive rights in copyrightable expression for unlimited
times.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n160. See U.S. Const. art. I, 8, cl. 3 (Commerce
Clause); 15 U.S.C. 1051, 1058, 1125 (1994) (authorizing federal registration
of and/or protection for trademarks, trade dress, and other designators
of product origin used in connection with goods or services in interstate
commerce).
n161. See, e.g., Railway Labor Executives Ass'n
v. Gibbons, 455 U.S. 457, 468-69 (1982) (holding that Congress may not
invoke the commerce power to enact bankruptcy legislation that violates
the Bankruptcy Clause's uniformity requirement).
n162. See Marci A. Hamilton, The Dormant Copyright
Clause, 66-70 (1998) (draft unpublished manuscript, on file with author);
David L. Lange, The Intellectual Property Clause in Contemporary Trademark
Law: An Appreciation of Two Recent Essays and Some Thoughts About Why We
Ought to Care, 59 Law & Contemp. Probs. 213, 225-44 (Spring 1996);
Malla Pollack, Unconstitutional Incontestability? The Intersection of the
Intellectual Property and Commerce Clauses of the Constitution: Beyond
a Critique of Shakespeare Co. v. Silstar Corp., 18 Seattle U. L. Rev. 259,
313-20 (1995).
n163. Thus, the rule of Prudential Ins. Co. v.
Benjamin, 328 U.S. 408 (1946), does not apply here. See id. at 419-27 (holding
that commerce power encompasses congressional authorization for states
to discriminate against interstate commerce).
- - - - - - - - - - - - - - - - -End Footnotes-
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Where Article 2B is concerned, the relevant question
is how these limits on Congress' power bear on what the states may do on
their own. Here the plot thickens, for the Court has held that the Intellectual
Property Clause does not bar states from enacting their own forms of intellectual
property protection, even for works otherwise patentable or copyrightable.
n164 But it has never held that the states may offer protection that conflicts
with the constitutional scheme, and indeed, on the terms of its own preemption
decisions, it could not. The statutory limits that required preemption
in those cases are positive constitutional mandates as well. The Intellectual
Property Clause denies protection to certain subject matter precisely so
that it may remain in the public domain, available to all comers. n165
It follows that where unpatentable know-how and uncopyrightable
[*1133] facts or principles are
concerned, the same restrictions that bind Congress also bind the states.
n166 Any state adopting Article 2B should recognize that it effectively
allows information providers to opt out of those restrictions, thereby
frustrating constitutional policy.
- - - - - - - - - - - - - - - - - -Footnotes-
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n164. See Goldstein v. California, 412 U.S. 546,
560 (1973); Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 482-83 (1974)
(citing Goldstein). For criticism of the Goldstein decision, see Abrams,
supra note 156, at 527-30.
n165. See Feist Publications, Inc. v. Rural Tel.
Serv. Co., 499 U.S. 340, 349-50 (1991) (reasoning that the constitutionally-granted
copyright power requires that facts, ideas, and the like remain in the
public domain as building blocks for subsequent creators to use); Graham
v. John Deere Co., 383 U.S. 1, 9 (1966) (reasoning that constitutionally-granted
patent power requires that insufficiently innovative advances remain in
the public domain, because of the high social cost of monopoly when weighed
against "the inherent free nature of disclosed ideas"); Abrams, supra note
156, at 579; Lange, supra note 162, at 225-44; David Lange, Copyright and
the Constitution in the Age of Intellectual Property, 1 J. Intell. Prop.
L. 119, 130-34 (1993); L. Ray Patterson, Copyright Overextended: A Preliminary
Inquiry into the Need for a Federal Statute of Unfair Competition, 22 U.
Dayton L. Rev. 385, 394-95 (1992); cf. Pollack, supra note 162, at 313-20.
n166. In allowing states to afford their own
forms of protection for potentially protectable works, the Court noted
that states may have special interests in particular innovations, and that
the framers granted intellectual property powers to Congress because they
believed that a state-by-state patchwork of protection would be ineffective.
See Goldstein, 412 U.S. at 556-58. Abrams, in particular, has raised serious
objections to this reasoning. See Abrams, supra note 156, at 527-30. Even
taken at face value, however, it does not justify allowing state-level
protection that applies (via choice-of-law clauses) extraterritorially,
and is so effective that it frustrates the federal scheme. Cf. Paul J.
Heald, Comment, Unfair Competition and Federal Law: Constitutional Restraints
on the Scope of State Law, 54 U. Chi. L. Rev. 1411 (1987) (arguing that
federal trademark and unfair competition law should preempt extraterritorial
application of state unfair competition law via multistate injunctions).
Just as the states have not reserved the power to frustrate Congress' commerce
authority, they also have not reserved the power to frustrate its intellectual
property authority, but only the right to adopt limited forms of protection
that supplement federal incentives to innovate.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
B. Speech Harms and the First Amendment
The public-private distinction also demarcates
the boundary between private disputes about infringement and public regulation
of speech. This observation is commonplace as to tort law. Private parties
may sue for defamation, but the state may not structure its law of defamation
to chill speech on matters of public concern. n167 Because copyright also
implicates First Amendment concerns, the same analysis applies. Private
parties may sue for infringement, but neither Congress nor the courts may
define the law of infringement in a way that tramples on speech. In particular,
the Court has indicated that the idea-expression distinction and the fair
use doctrine - and the public domain that these limitations on copyright
own
[*1134] ership guarantee - are necessary
adjuncts of a statute that creates proprietary rights in expression. n168
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- - - - - - - - - - - - - - - - -
n167. See New York Times Co. v. Sullivan, 376
U.S. 254, 264-65 (1964) (holding that Alabama libel law violated First
and Fourteenth Amendments as applied to critics of a public official's
conduct); Cohen, supra note 9, at 1020-21; cf. Cohen v. Cowles Media Co.,
501 U.S. 663, 668 (1991) (holding that enforcement of promissory estoppel
claim constituted state action).
n168. See Harper & Row, Publishers, Inc.
v. Nation Enters., 471 U.S. 539, 555-60 (1985); Lange, supra note 162,
at 239-40; see also Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 575-76
(1994).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Even if the Intellectual Property Clause did
not constrain Congress' power to grant "exclusive rights" in intellectual
creations, Congress could not erase these First Amendment-based limitations
on copyright's reach. Similarly, even if no "dormant Intellectual Property
Clause" binds the states, no state could establish a regime of proprietary
rights in information that ignored First Amendment boundaries. Sections
2B-310 and 2B-715, in contrast, appear to stand for the proposition that
private information providers may use non-negotiated, digital standard
forms to enforce prohibitions on a broad range of speech activity, ranging
from the traditional (criticism, educational discussion, and commentary
on the news of the day) to the less so (reverse engineering of software).
n169 Any state adopting Article 2B should recognize that widespread adoption
of these practices would significantly undermine the First Amendment's
guarantees. n170
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n169. Cf. Bernstein v. United States Dep't of
State, 922 F. Supp. 1426, 1429 (N.D. Cal. 1996) (holding that computer
source code is speech protected by the First Amendment).
n170. As a facially content-neutral law that
burdens speech, Article 2B would need to undergo "heightened" or "intermediate"
scrutiny. See Turner Broad. Sys. v. FCC, 114 U.S. 2445, 2469 (1994); see
also Denver Area Educ. Telecomm. Consortium, Inc. v. FCC, 518 U.S. 727,
740-53 (1996) (applying Turner scrutiny to content-based legislation allowing
private cable operators to prohibit "patently offensive" programming on
leased channels). For an idea of how the analysis might go, see Cohen,
supranote 9, at 1024-28. Briefly, it is difficult to imagine a government
interest "substantial" enough to justify wholesale contractual displacement
of core First Amendment rights of comment and criticism, and easy to imagine
ways in which Article 2B might be tailored to prevent that result.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
C. Private Enforcement and Due Process
Finally, the public-private distinction
determines what procedures may be used to enforce contract rights. The
Supreme Court's procedural due process decisions make clear that a state-aided
seizure of licensed information products, as authorized under section 2B-715
of Article 2B, would require certain pre-deprivation safeguards. n171 Yet
in Flagg Brothers, Inc.
[*1135] v. Brooks, n172 the Court
held that a private warehouse that had been storing the plaintiff's household
goods was not required to provide a hearing before selling the goods to
satisfy her account, even though a provision of the U.C.C. adopted by the
state authorized the sale. Private self-help repossession, in short, does
not involve "state action" and thus is subject to fewer procedural constraints
than enforcement via judicial process.
- - - - - - - - - - - - - - - - - -Footnotes-
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n171. See Connecticut v. Doehr, 509 U.S. 1 (1991);
Mitchell v. W.T. Grant & Co., 416 U.S. 600, 615-20 (1974); Fuentes
v. Shevin, 407 U.S. 67, 96 (1972); see also Mathews v. Eldridge, 424 U.S.
319, 339-49 (1976) (setting forth a three-part balancing test for determining
the level of procedural protection to be afforded prior to a state-ordered
deprivation of property). The exact amount of "process" that should be
required before a court-ordered seizure of information products is a matter
for debate. Doehr suggests that due process requires a hearing when the
facts alleged to support the seizure are not readily susceptible of documentary
proof. See Doehr, 509 U.S. at 13-15. This is likely to be the case when
fair use is claimed, since the challenged use must be considered in light
of the totality of the circumstances. Doehr also suggests that exigent
circumstances might justify granting a seizure based only on an ex parte
judicial hearing, and affording the debtor a post-deprivation hearing.
See id. at 16-18. As discussed above, intangible collateral generally does
not raise the same exigency concerns as physical, rivalrous collateral.
See supra notes 107-10 and accompanying text. Finally, the Doehr Court
did not reach the question whether the Due Process Clause requires that
the party seeking the seizure post a bond. See id. at 18. But see id. at
18-21 (plurality) (arguing that a bond is constitutionally required).
n172. 436 U.S. 149 (1978).
- - - - - - - - - - - - - - - - -End Footnotes-
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As Flagg Brothers suggests, the argument that
Article 2B merely will establish neutral background rules for private exchange
comports with a well-established (though much-criticized) understanding
of the public-private distinction. n173 However, sections 2B-310 and 2B-715
do far more than simply reshape the private law of contract to accommodate
the unique characteristics of information products. Any state adopting
Article 2B should recognize that the proprietary regimes Article 2B authorizes
likely will rely heavily on electronic self-enforcement, and even more
heavily on electronic "regulation of performance" ex ante. As a result,
the definition of "informational rights" - which, until now, has occurred
largely via the judicial enforcement process - will be insulated from public
oversight. Article 2B does not merely provide default rules for the private
sector; rather, it works a radical reconceptualization of what "private"
encompasses.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n173. See, e.g., Paul Brest, State Action and
Liberal Theory: A Casenote on Flagg Brothers v. Brooks, 130 U. Pa. L. Rev.
1296 (1982).
- - - - - - - - - - - - - - - - -End Footnotes-
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D. Private Interests and Public Acts
Finally, it is worth noting that Article
2B in fact constitutes a hybrid species of action, both public and private,
that the conventional understanding of the public-private distinction does
not contemplate. Article 2B is (or will be, if enacted) public action at
the behest - and, some would argue, the direction - of particular private
interests. n174 Public-choice
[*1136] analysis of Article 2B is
complicated by the involvement of the National Council of Commissioners
on Uniform State Laws and the American Law Institute in the U.C.C. drafting
and approval process. However, pioneering efforts to model the decision-making
patterns of "private legislatures" such as the NCCUSL and the ALI suggest
that their involvement makes the U.C.C. process more, not less, subject
to capture. n175
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n174. The capture of the Article 2B drafting
process has been alleged by numerous observers. See, e.g., Gail Hillebrand,
The Uniform Commercial Code Drafting Process: Will Articles 2, 2B and 9
Be Fair to Consumers?, 75 Wash. U. L.Q. 69 (1997) (arguing that the U.C.C.
drafting process systematically disadvantages consumer interests); Kaner,
supra note 19 (describing information providers' role in the Article 2B
drafting process); Consumer Project on Technology, Protest Page on: Uniform
Commercial Code Article 2B (visited Nov. 7, 1998) <http://www.cptech.org/ucc/ucc.html>.
n175. See Larry E. Ribstein & Bruce H. Kobayashi,
An Economic Analysis of Uniform State Laws, 25 J. Legal Stud. 131 (1996);
Alan Schwartz & Robert E. Scott, The Political Economy of Private Legislatures,
143 U. Pa. L. Rev. 595 (1995); Robert E. Scott, The Politics of Article
9, 80 Va. L. Rev. 1783 (1994).
It is perhaps unsurprising that initial efforts
to integrate the insights of public choice theory and the legal understanding
of the public-private distinction have been in the area of antitrust. See
Mark A. Lemley & David McGowan, Antitrust Immunity: State Action and
Federalism, Petitioning and the First Amendment, 17 Harv. J.L. & Pub.
Pol'y 293 (1994); John S. Wiley, Jr., A Capture Theory of Antitrust Federalism,
99 Harv. L. Rev. 713, (1986). Under the antitrust laws, the NCCUSL probably
would be considered analogous to a private standard-setting organization,
with the result that the state-action immunity doctrine would not shield
from judicial scrutiny efforts to coopt the standard-setting process. See,
e.g., Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492
(1988); Lemley & McGowan, supra note 175, at 308-13.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Systematic exploration of whether and how the
phenomenon of legislative capture should affect judicial characterization
of state laws modifying traditionally private-law regimes is well beyond
the scope of this article. Nonetheless, one of the primary rationales for
the public-private distinction - that laws governing private transactions
merely establish a neutral, background framework for private bargaining
- is significantly weakened when public power is coopted to serve a private
agenda. The resulting law is neither "neutral" nor "background;" it is
a partisan instrument undertaken to serve a specific purpose. The realist-inspired
challenge to the conventional understanding of the public-private distinction
holds that the state always chooses. n176 One need not accept that conclusion
to see that when the state enters a private dispute as captive or agent
of an affected interest, rather than as "neutral" arbiter, there is a much
stronger argument that it should bear responsibility for the result.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n176. See, e.g., Brest, supra note 173; Morton
J. Horwitz, The History of the Public/Private Distinction, 130 U. Pa. L.
Rev. 1423 (1982); Duncan Kennedy, The Stages of the Decline of the Public/Private
Distinction, 130 U. Pa. L. Rev. 1349 (1982).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
The question that Article 2B poses is this: May
the states reshape their law of contract to allow automatic, self-enforcing
foreclosure of conduct
[*1137] privileged by copyright
law and, ultimately, by the Intellectual Property Clause and First Amendment,
given that they may not reshape their tort law or their trade secrecy law
to produce a similar result? I have suggested that the answer must be no.
Whatever the force of arguments that private enforcement of private contracts
does not constitute state action, the same arguments cannot apply to state
legislation designed largely to authorize private information providers
to opt out of the framework of proprietary rights and exceptions established
by federal copyright law and mandated (in broad brush) by the Constitution.
Put differently, the states should not be able to set default rules that
invite information providers to override exceptions that lie at the core
of the federal copyright balance. n177 By conferring on information providers
the authority to displace federal copyright law, sections 2B-310 and 2B-715
of Article 2B constitute a deliberate usurpation of Congress' role in defining
and enforcing the scope of protection in creative and informational works.
By any standard - and certainly if the limitations on copyright ownership
are to continue to have any meaning in the market for digital works - this
is a public act that the Intellectual Property Clause and the First Amendment
should not permit. Part VI contends, instead, that copyright law and policy
require quite a different approach to electronic self-help in information
markets.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n177. See Cohen, supra note 9, at 1022-23; cf.
Flagg Bros., 436 U.S. at 162 n.12 ("This is not to say that dispute resolution
between creditors and debtors involves a category of human affairs that
is never subject to constitutional constraints."). This is doubly so for
mass market information providers, whose boilerplate "agreements" operate
as quasi-legislative regimes. See supra note 140 and accompanying text.
- - - - - - - - - - - - - - - - -End Footnotes-
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VI. RESTORING THE BALANCE: THE CASE FOR LICENSEE
SELF-HELP
Courts may, and should, apply principles
of preemption and freedom of speech to invalidate license terms authorized
by Article 2B that are inconsistent with copyright limitations. n178 Because
of the self-enforcing nature of digital rights management technologies,
however, relying exclusively on these principles to cure Article 2B's excesses
would be unwise. The restrictions authorized by sections 2B-310 and 2B-715
are intended to operate automatically, and in many cases without advance
disclosure. n179 These provisions shift the burden of initiating litigation
to the licensee,
[*1138] who in many cases will be
poorly equipped to bear it. It is not clear, moreover, what copyright-based
cause of action a licensee could assert. n180 Restoring the copyright balance
requires procedural as well as substantive measures. Specifically, it requires
that rights of self-help be extended to licensees. n181
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n178. See supra notes 151-173 and accompanying
text. Ordinarily, these will be mass market license terms, for the reasons
suggested supra notes 111-126 and accompanying text; however, I do not
intend to suggest that terms in negotiated licenses may never be subject
to preemption.
n179. See supra Part II.
n180. Fair use, the idea-expression distinction,
and preemption traditionally have been raised (and conceived) as defenses
to claims of infringement. See, e.g., 4 Melville B. Nimmer & David
Nimmer, Nimmer on Copyright, 13.03[B][2]-[4], 13.05, p. 13-149 (46th rel.
1998).
n181. The simplest and best way to restore the
balance that copyright law was designed to establish would be to set better
ground rules - including some immutable rules, see supra text accompanying
note 141 - for digitally-mediated transactions in creative and informational
works. The Article 2B drafting committee could acknowledge the implications
of electronic private ordering of "informational rights" and exercise its
power more responsibly. See, e.g., J.H. Reichman & Jonathan A. Franklin,
Privately Legislated Intellectual Property Rights: The Limits of Article
2B of the U.C.C. 26-45 (Apr. 10, 1998) (draft unpublished manuscript, on
file with author) (advocating the inclusion of a "public interest unconscionability"
provision to protect "the public interest in education, science, research,
technological development and the preservation of competition"); see also
U.C.C. 2B-105(b) & Reporter's Note 3 (July 24-31, 1998 Draft) (noting
the introduction and adoption of a similar motion at the NCCUSL's July
1998 Annual Meeting, but implementing the public policy limitation in substantially
watered-down form). Instead, the drafters have elected an empty and disingenuous
formalism that pleads lack of jurisdiction to address the preemption issue
even as it assiduously undermines federal interests. See U.C.C. 2B-105,
Reporter's Note 3 (July 24-31, 1998 Draft); id. at 10-12. Alternatively,
Congress could impose limits on techno-contractual displacement of copyright.
See, e.g., Digital Era Copyright Enhancement Act, H.R. 3048, 105th Cong.
(1997) (rendering unenforceable "non-negotiable license terms" that abrogate
fundamental copyright policy, as expressed in statutory limitations on
copyright protection). Thus far, however, Congress has failed to do so;
instead, it too has deferred substantially to private ordering, electing
not to confront the conflict brewing between digital standard forms and
traditional (and constitutionally-mandated) copyright principles. See Digital
Millennium Copyright Act, Pub. L. No. 105-304, 3, 112 Stat. 2860 (1998);
infra note 200. Even if Congress were to act to restore the balance, however,
the new rules still would need to be interpreted and enforced. Thus, the
procedural considerations discussed in the text would remain vitally important.
- - - - - - - - - - - - - - - - -End Footnotes-
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Of course, Article 2B does not leave information
consumers wholly without recourse to challenge information providers' electronic
regulation and self-help practices. Electronic regulation of performance
"that prevents use permitted by the agreement" constitutes a breach, as
does electronic self-help repossession in violation of the restrictions
imposed by section 2B-715. n182 If a consumer wishes to file suit, Article
2B provides the usual assortment of contract remedies. n183 In addition,
in any case in
[*1139] volving electronic self-help
repossession, section 2B-715 affords the licensee the right to an expedited
post-seizure hearing. n184
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n182. U.C.C. 2B-310(d) (July 24-31, 1998 Draft);
see id. 2B-715.
n183. See U.C.C. 2B-706 (July 24-31, 1998 Draft)
(fraud), 2B-709 (damages), 2B-711 (specific performance), 2B-713 (right
to continue use), 2B-714 (right to discontinue use); see also id. 2B-208(b)
(right to refund if mass market license terms are unacceptable), 2B-616
(same right extended to licensees who acquire information products from
a distributor). Article 2B also provides, however, that the license agreement
may limit the available remedies "to return of, or delivery to the other
party [of] all copies of the information and refund of the contract fee."
Id. 2B-703(a).
n184. See U.C.C. 2B-715 (July 24-31, 1998 Draft).
- - - - - - - - - - - - - - - - -End Footnotes-
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Nonetheless, Article 2B is not a consumer protection
statute, and plainly, the drafters do not intend it to be one. Edward Rubin
has criticized the U.C.C. for establishing remedial processes that systematically
disadvantage consumers. n185 Rubin decries the U.C.C.'s use of a common-law
institutional model for enforcement of consumer remedies as inappropriate
given the expense and complexity of litigation, and given the incentives
created for merchants, as repeat players in the litigation process, to
litigate disputes aggressively for strategic reasons. n186 In a similar
vein, Jean Braucher suggests that the uncertainty that surrounds judicial
application of the "breach of the peace" standard and the minimal damages
typically awarded to successful debtor plaintiffs deter lawyers from agreeing
to represent debtors in wrongful repossession suits. n187 Both Rubin and
Braucher argue that effective consumer protection requires inexpensive,
accessible procedures and incentive-shifting remedies such as statutory
damages and attorneys' fees. n188
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n185. See Edward L. Rubin, The Code, the Consumer,
and the Institutional Structure of the Common Law, 75 Wash. U. L.Q. 11
(1997); see also Braucher, supra note 51, at 557-60.
n186. See Rubin, supra note 185, at 21-42.
n187. See Braucher, supra note 51, at 557-60.
n188. See Rubin, supra note 185, at 58-60 (recommending
public enforcement of consumer claims); id. at 33 ("For the last twenty
years, federal legislation involving commercial relationships between merchants
and consumers has routinely provided for attorney's fee and court cost
awards to prevailing consumer plaintiffs."); id. at 41 ("A statutorily
liquidated amount, or a mechanical rule by which damages can be calculated
without proving actual loss, will lower litigation costs significantly
in cases of this nature."); Braucher, supra note 51, at 559 (advocating
statutory "specificity concerning what acts are prohibited" and "a remedy
that provides a prize worth the trouble and expense of pursuing a lawsuit");
id. at 613-14 (recommending conversion damages as a "minimum statutory
penalty" for wrongful repossession that would not be offset against the
debt still owing).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
One avenue of recourse for consumers of mass
marketed information products might be the Federal Trade Commission, which
has broad jurisdiction over "unfair or deceptive acts or practices in or
affecting commerce." n189 Licenses for information products, which implicate
federal
[*1140] copyright interests as well
as interstate commerce, fall squarely within the class of transactions
with which the FTC is properly concerned. Thus, for example, we might expect
the FTC to take an interest in Article 2B's provisions and information
providers' practices relating to disclosure and disclaimer of warranties
- and, if necessary, to request that Congress extend the specific protections
afforded under the federal Magnuson-Moss Warranty Act to information products.
n190 In the case of electronic self-help, we would expect the FTC to take
an interest in licensor practices relating to disclosure of terms, and
to care whether consumers are given adequate notice of the possibility
of electronic self-help and the conduct that will trigger it. n191
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n189. 15 U.S.C. 45(a)(1) (1994). See generally
Edwin S. Rockefeller, Desk Book of FTC Practice and Procedure 53-58 (3d
ed. 1979) (delineating sources of and limits on FTC jurisdiction).
n190. Currently, the Magnuson-Moss Warranty Act
covers only warranties relating to "tangible personal property." 15 U.S.C.
2301(1) (1994). The Act and its associated FTC regulations establish requirements
for the contents of warranties, including clear and comprehensible disclosure
of terms and procedures for asserting claims, and mandate minimum substantive
standards for warranty protection. See id. 2301-10; 16 C.F.R. 700 et seq.
n191. See supra Part III.B (discussing notice
and overbreadth issues).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
The FTC, however, has neither the jurisdiction
nor the expertise to preserve the substantive balance mandated by federal
copyright law. Here, Rubin's analysis hints at another option for consumers.
Rubin suggests that the law might partially "correct[ ] the imbalance"
inherent in the civil litigation process by allowing consumers to use certain
self-help remedies, thereby shifting to merchants the burden of initiating
litigation. n192 His analysis applies with even more force to Article 2B,
because the addition of self-enforcing technological restraints to information
providers' arsenal of enforcement measures produces an even greater imbalance.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n192. Rubin, supra note 185, at 54.
- - - - - - - - - - - - - - - - -End Footnotes-
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In the case of sections 2B-310 and 2B-715, the
greater worry is not that information providers will breach their "contracts"
with licensees, but that they will honor them, thereby stripping licensees
of the privileges they enjoy, and have come to expect, under the public
law of copyright. Jane Ginsburg has suggested that in some circumstances
the law might afford licensees who engage in contractually-prohibited conduct
that is permitted by copyright a "right of fair breach." n193 That is fine
as far as it goes, but an abstract right of breach may count for little
in the face of self-enforcing technological protection. I propose to extend
Ginsburg's suggestion even
[*1141] further: If the user privileges
established by copyright, and necessary to ensure that proprietary rights
in expression do not frustrate First Amendment freedoms, are to mean anything,
users must be afforded affirmative rights to protect themselves. A "right
of fair breach" is meaningless unless it includes a right to effectuate
the breach - a right to hack the digital code that implements and enforces
the challenged restriction.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n193. Jane C. Ginsburg, Copyright Without Walls:
Speculations on Literary Property in the Library of the Future, 42 Representations
53, 63-64 (1993). Ginsburg appears to believe, however, that these occasions
should be rare. See id. at 63-65.
It is worth noting that patent licensees have
similar rights. See Lear, Inc. v. Adkins, 395 U.S. 653, 676 (1969) (invalidating
contract terms purporting to estop licensee from challenging patent validity).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Larry Lessig has characterized digital code as
"privatized law" - "law that need not fit with, or respect, public law,"
but instead may undermine values that public law has attempted to protect.
n194 With respect to rights management code, at least, this is both true
and false. Code constitutes itself as an inexorable arbiter of permissible
conduct. n195 In this, as Lessig observes, it is not really "contract"
at all; rights denominated "contract" are themselves subject to public
policy limits. n196 Yet rights management code is, at the same time, simply
the physical instantiation of desired contract restrictions. n197 If information
providers may not contract around copyright- and First Amendment-based
limits on information ownership, it follows they also may not invoke code
as an independent legal basis for avoiding those limits. n198 To the extent
that copyright overrides inconsistent contract provisions, it supplies
a defense for licensees who disable the protective code in order to commit
electronic breach. The corollary to Les
[*1142] sig's observation, in short,
is that public law need not respect inconsistent code. n199
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n194. Electronic mail from Larry Lessig, Professor,
Harvard Law School, to recipients of list CO-E-CONF (Nov. 8, 1996) (on
file with author) (proceedings of 25-person online focus group convened
by the United States Copyright Office, as part of its "Project Looking
Forward," to discuss the future course of Internet technology and its implications
for copyright); see also Lawrence Lessig, The Law of the Horse: What Cyberlaw
Might Teach (Sept. 20, 1998 Draft) <http://cyber.law.harvard.edu/works/lessig/LNC
Q D2.PDF>; Lawrence Lessig, The Zones of Cyberspace, 48 Stan. L. Rev. 1403
(1996).
n195. See Lessig, Zones, supranote 194, at 1408
("One obeys these laws as code not because one should; one obeys these
laws as code because one can do nothing else <elip>. In the well implemented
system, there is no civil disobedience.").
n196. See Lessig, The Law of the Horse, supra
note 194, at 25-27.
n197. Indeed, section 2B-310 says as much. See
U.C.C. 2B-310(b)(2) & Reporter's Note 2 (July 24-31, 1998 Draft) ("This
Section distinguishes between active and passive electronic devices <elip>.
[A] passive device merely precludes acts that constitute a breach.").
n198. Even if the federal courts were to conclude
that Article 2B does not conflict with federal copyright law, for that
matter, consumers would still have other legitimate First Amendment and
privacy-based grounds for objecting to some of its more intrusive remedies.
For discussion of these grounds, see Cohen supra note 9. It appears that
Congress agrees with this analysis. See Digital Millennium Copyright Act,
Pub. L. No. 105-304, 3, 112 Stat. 2860 (1998) (enacting new section 1201
of the Copyright Act, but specifying in section 1201(i) that individuals
may tamper with rights management systems to prevent the collection of
personally-identifying information).
n199. This argument was first set forth in an
online discussion group convened by the United States Copyright Office
in November 1996. See Electronic mail from Professor Julie Cohen, University
of Pittsburgh School of Law, to recipients of list CO-E-CONF (Nov. 8, 1996)
(on file with author). I am indebted to Larry Lessig for naming it the
"Cohen Theorem." Electronic mail from Professor Lawrence Lessig, Harvard
Law School, to recipients of list CO-E-CONF (Nov. 11, 1996) (on file with
author); Lawrence Lessig, Tyranny in the Infrastructure, Wired, May 1997,
at 96.
- - - - - - - - - - - - - - - - -End Footnotes-
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Licensees who hack, of course, face the prospect
that they will be sued and their actions judged infringing. n200 But this
is the ordinary rule; the right to challenge a rule of law by violating
it is sacred, but the individual disobeys the law at his or her peril.
In the case of digital rights management systems, recognizing a right of
self-help for licensees simply reaffirms the balance between authors and
users, and between information ownership and the public domain - a balance
that Article 2B threatens to distort beyond recognition. n201
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n200. I would be remiss not to note that there
will soon be additional risks. Congress recently enacted legislation prohibiting
this particular form of civil disobedience. See Digital Millenium Copyright
Act, Pub. L. No. 105-304, 3, 112 Stat. 2860 (1998). The anti-tampering
provisions are subject to a two-year moratorium while the Librarian of
Congress assesses their impact on fair use, and to ongoing oversight thereafter.
See id. Efforts to amend the bill to make fair use an outright defense
to a charge of tampering with or circumventing digital rights management
systems were unsuccessful. The analysis in this article suggests, however,
that such a defense may be constitutionally mandated. See supra Part V.A-B.
n201. It is true that most individuals lack the
skills needed to hack rights management code. If such hacking is lawful,
though, skilled individuals will be able to sell their services to others.
Cf. Cohen, supra note 9, at 1029-30 (arguing that individuals who hack
rights management code to preserve constitutionally-protected rights of
anonymity will have standing to assert their customers' rights). If the
consequences of this "universal private ordering" are unacceptable, other
avenues for preserving the copyright balance remain available. See supra
note 181.
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VII. CONCLUSION
The electronic rights management provisions
of Article 2B represent bad policy, bad theory, and bad law. Allowing electronic
intrusion into private homes and offices, and into private computer systems
maintained there, would grossly violate established principles of privacy;
would empower private information providers to decide a dangerously broad
range of factual and legal disputes; and would enable complete displacement
of the copyright framework of limited entitlements and user privileges.
There is no tenable theoretical justification for according information
providers
[*1143] such sweeping authority.
To the contrary, copyright's user privileges are constitutionally mandated.
A state law that seeks to enable information providers to opt out, en masse,
from the copyright system cannot, and should not, be saved by ritual invocation
of the public-private distinction. For the same reasons, the technologies
that implement this exit cannot, and should not, be protected against private
acts of resistance designed to preserve the copyright balance.