**Theories of IP** William Fisher 2020.01.14
obligation to let others share one's property in times of great need, so long as one's own survival is not impaired
Nozick, Gordon, Waldron
strong: laborer must leave enough in the commons to enable others to engage in appropriation in the same way
weak: laborer must not leave others net worse off
+ - normative foundations:
waste is inherently wrong, not just insofar as it results in harm to other people
sufficiency proviso, properly interpreted, only preserves other people’s access to the commons, defined as undeveloped nature; whereas spoilage proviso can preserve access to developed intangible goods — i.e., follow-on innovation
“I define Lockean waste in the following way: Waste occurs where a unit of a product of labor is not put to any use. … produced. The combination of nonconversion [i.e., refusal to sell] and nonuse constitutes a violation of the waste prohibition.”
+ - Major implication: supports recognition of a generous fair-use privilege in all fields of IP law
“The result of the laborer’s decision not to set the price at zero in order to effectuate total market substitution, reasonable though it may be, creates a fair use right. All those persons who value the good above zero but below the laborer’s price can justifiably copy the good without reimbursing the laborer, although these low-value users must make the copy at their own cost, not the cost of the laborer. Just as the laborer’s actions in producing the good create a moral, natural-law-based property right in the good, the laborer’s pricing actions may create a moral, natural-law-based fair use right in others.”
+ - Doctrinal reforms:
“[T]he current U.S. fair use right is more limited than the Lockean right. One example considered in this Note is that strong government support for anticircumvention measures may violate Lockean principles if the ability to police the waste prohibition is not protected.”
“An even larger difference is that there is no coherent *patent* fair use right in the United States, although such a right would be demanded under a Lockean regime.”
Each person deserves a share of the fruits of a collective project proportionate to the magnitude of his or her contribution to the venture
the theory of distributive justice to which most people (Westerners?) subscribe
+ - The crop analogy
+ - Debate among philosophers concerning the circumstances under which free riding is morally permissible
(as summarized by Kenneally): “when a group of people restrict their activities according to a set of rules, including legal rules, any person who benefits from their compliance with those rules owes it to them to comply with the same rules, regardless of whether he or she consented to the rules.”
if “a mutually beneficial and just scheme of social cooperation” imposes some costs on its intended beneficiaries, some of whom are tempted to obtain the benefits without bearing the costs, the “person who has accepted the benefits of the scheme is bound by a duty of fair play to do his part and not to take advantage of the free benefit by not cooperating.”
+ - “When the benefit-recipient has a decisive reason to obtain the benefit even at a cost to herself, independent of the opportunity to obtain the benefit by free-riding, and the benefit-provider seeks compensation for his or her own investment in making the benefit available, free-riding is impermissible.”
example: “a mariner who must navigate at night has decisive reason to support the construction and maintenance of lighthouses while the land-bound might not.”
“But if the benefit-recipient’s reasons for obtaining the benefit are largely based on the benefit-provider’s own actions and the recipient has done nothing to encourage the provider’s expectation of contribution, free-riding is unobjectionable.”
Stern (2004): biochemists accept 25% wage decrease from firms in return for opportunity to do more academic research
Sauermann (2008): taste for academic research correlated with innovative output
+ - General Description
“NASA Centennial Challenges were initiated in 2005 to directly engage the public in the process of advanced technology development. The program offers incentive prizes to generate revolutionary solutions to problems of interest to NASA and the nation. The program seeks innovations from diverse and non-traditional sources. Competitors are not supported by government funding and awards are only made to successful teams when the challenges are met.”
“In keeping with the spirit of the Wright Brothers and other American innovators, the Centennial Challenge prizes are offered to independent inventors including small businesses, student groups and individuals. These independent inventors are sought to generate innovative solutions for technical problems of interest to NASA and the nation and to provide them with the opportunity to stimulate or create new business ventures.”
“The President’s budget request includes $4 million per year for Centennial Challenges prizes to allow further growth in the scope and range of prize competitions and even greater opportunities for the citizen-inventor to participate in NASA’s research and development.”
see Shavell/Ypersele (2001)
Awarded to all inventors who meet creativity requirements and who apply
Inventors have no right to exclude competitors and thus no monopoly power
+ - Financial incentives derive from revenues distributed ex post by government on basis of sales data and surveys
Revenue raised from income taxation
Limited duration?
fair market value on date of purchase
Patent Buy-out system: Government holds auctions on patented inventions, then offers to buy out (most) patentees at the highest plus a markup (to reflect gap between private and social value)
+ - 28 USC 1498(a)
"Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner's remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture."
+ - Theory
Dominant Theory: Form of Eminent Domain; 5th amendment thus requires "just compensation"
Subordinate Theory: Prospective Implied Easement (since 1910); statutory interpretation requires "just compensation"
cf. Bayh-Dole Act reserves to federal government a nonexclusive, nontransferrable right to practice the patent arising out of federally funded research anywhere in the world
+ - Practice
Additional statutory authority might be necessary to empower the federal government to authorize third parties to make and sell embodiments of patents
1. Money should be collected from businesses that capitalize upon consumers' demand for digital movies, but currently pay no fees
2. The funds collected in this manner should then be distributed to creators
i.e., copyright owners receive shares proportional to the frequency with which their works are watched or listened to
3. Thereafter, online distribution of movies and recorded music should be legalized
Funds collected through levies on ISPs, manufacturers of media-related consumer electronic products, etc.
Funds distributed by national government agency
modification and enlargement of the public funding mechanisms already in place in Europe
Alter rules of secondary copyright liability to put pressure on ISPs, manufacturers to participate in the construction of a nongovernmental system
Funds collected and distributed by the resultant nonprofit organization
Distort larger system
of incentives
Expensive & politically
unpalatable
Psychic benefits of creativity mean
that full social value is not necessary
to sustain creativity at current levels
87 million households
pay taxes
Each American household
currently spends aprx. $470
per year on recorded
entertainment
Annual tax during first
year of operation: average
of $27 per household
Annual tax if the system
fully displaces existing
business models (using
"worst-case" assumptions):
average of $254 per household
Advantage
Disadvantage
Tax rate: 11.8% in 2004
Tax rate if the system fully displaces
existing business models (using
"worst-case" assumptions):
$16.84 per household per month
($202 per year) in taxes on Internet
access and all devices and services
Variations
Original problem: What pricing
scheme by a multiproduct monopolist
would maximize social welfare subject
to a profit constraint?
Answer: markup on MC of each
product should be inversely
proportional to price elasticity
of demand for that product
Adapted: tax rates on devices
and services should be inversely
proportional to elasticity of
demand for each
Danger: may have perverse
distributional effects
Large numbers of sampled
households, selected at random
Software
Automatic reporting, by registration
numbers, of all songs and films
played from beginning to end
Aggregation of data
Limit: Only count consumptions
using devices connected to -- or
capable of reporting to -- the Internet
So long as one can make reference to a parallel or recent market system, can use consumer spending patterns as a guide
Risks of pursuing
this approach
Heighten danger of
governmental discretion
Line-drawing
Only possible to do on the basis
of categories of works, not individual recordings
Determining the appropriate boxes and then arguing over proper classification of individual recordings would be costly
Forfeit one of the advantages of
consumption-based system:
avoid overvaluing preferences
of the wealthy
Reproduction of a musical composition,
sound recording, or motion picture for
noncommercial purposes
(i.e., consumption, not resale)
Preparation of a derivative work of a
sound recording or motion picture
registered pursuant to the new scheme,
provided that the derivative work is also
so registered in a timely fashion
Distribution of a sound recording
(including a musical composition embodied therein)
or motion picture via the Internet
Public performance of a sound recording
(including a musical composition embodied therein)
via a digital audio transmission
Public performance of a motion
picture via a digital video transmission
1. Could one register a recording
subject to partial copy protection?
2. Could one register an unencrypted version
of a recording but also distribute to the public
encrypted versions of the same recording?
3. Create an exception to DMCA 1201
for audio and video recordings?
reason: the diminished power of intermediaries would enable a larger and more diverse set of artists to reach consumers directly and thus earn sufficient revenue to cover costs
avoid prolonged, culturally corrosive
"war on piracy" closely analogous
to the current "war on drugs"
a. Give artists the option to retain or relinquish rights of integrity
b. Recognize that, with respect to cultural products distributed in multiple copies, rights of integrity are obsolete
Consumer Broadband and Digital Television Promotion Act
Forbid the sale or transportation in interstate commerce of any "digital media device" (defined broadly) that did not contain "standard security technologies" prescribed by the Federal Communications Commission.
Standards formulated either by a consortium of "representatives of digital media device manufacturers, consumer groups, and copyright owners" or, if they fail, by the Commission itself
Standards would prevent the machines in which they were embedded from reproducing and distributing copyrighted recordings - but would permit users to make "personal copies" of broadcast programming "for lawful use in the home" and would also "take into account the limitations on the exclusive rights of copyright owners, including the fair use doctrine."
+ - Industries vary widely in the extent to which firms rely on patents to appropriate the benefits of innovation
+ - When firms rely on patents, their reasons vary
+ - Countries vary in the degree to which their industries rely on patents
In all industries, the value of some innovations is increased through patenting
+ - Reliance on patents appears to be increasing
Contrast the pattern of innovation that would result from exclusive reliance on intrinsic motivations
Pigou: “ The patent laws aim, in effect, at bringing marginal private net product and
marginal social net product more closely together. By offering the prospect of
reward for certain types of invention they do not, indeed, appreciably stimulate
inventive activity, which is for the most part, spontaneous, but they do direct it
into channels of general usefulness.”
1. Decrease consumer access to the fruits of innovation
2. Decrease complementarity benefits of knowledge spillovers
3. Impede cumulative innovation
+ - 4. Induce wasteful R&D
Arguably, patent races can draw inefficiently large numbers of firms into research on particular problems
Efforts to “invent around” patents are (at least partially) socially wasteful
5. Welfare loss associated with misalignment between social value and aggregate consumer willingness to pay for goods and services
6. Administrative costs
Principle: IP protection should not extend to innovations that would be produced in optimal numbers without them
+ - (contested) illustrations
+ - Justification for Novelty and Nonobviousness Requirements in Patent Law
+ - Justification for Utility Requirement
inventor may be in a better position than patent examiner to assess social value of an invention
+ - if the invention is truly lacking in social value, granting a patent will do no harm, because no one will seek access to it
+ - retroactive extensions of terms make no sense
+ - Principle: when adjusting IP law, grant creators entitlements with high ratios and deny them entitlements with low ratios
+ - e.g., right to prevent reproduction of excerpts in critical reviews
+ - e.g., right to prevent parodies
Medium benefit to some authors
large social welfare losses
parodists will not be able to recoup from the public at large sufficient revenue to persuade authors to grant licenses
+ - e.g., long copyright terms are bad, because the incentive effect of rights long into the future is very weak
+ - Optimal Levels of Protection
+ - Sources
+ -
For millennia, goods were exchanged
primarily through individualized and
usually face-to-face transactions.
+ - emergence of commodities markets reduced differential pricing
reinforced by law: doctrines that
cast doubt on the validity of contracts
for prices much higher or lower
than the market price
+ - Exceptions
firms with market power and ability
to prevent arbitrage charge different
consumers different prices for
standardized goods or services
Transportation industry
charging different consumers
different prices for access to
the same good or service
charging different consumers different prices for different versions of a good or service when the variation cannot be explained by differences in the costs of the versions
the seller does not know how much different
potential buyers are able and willing to pay,
but induces them to reveal their resources or
preferences
+ - Examples
depends on the mobility of customers, likelihood of responding to price differences by traveling further
this system gives studios the option of whether to "lock" their DVDs -- or to release them region-free
~ list of films in each category available on Blu-Ray Region Code Database List
but multi-region players, though uncommon, are available
+ -
rough guideline: welfare is
enhanced iff PD results in
increase in output, which is
more likely to occur where:
redistribution of wealth through PD may increase general welfare
+ -
depends upon
(a) general principle of diminishing
marginal utility of wealth; and
(b) random distribution of utility curves
2004 police issued a fine of $216,900
to Jussi Salonoja, for exceeding 25 mph
speed limit in downtown Helsinki
+ -
strong positive network
externalities in the "weak"
market my cause PD to
promote welfare even
when total output does
not increase
+ - applications:
educational discounts
for software may promote
welfare
PD that makes vaccines available
cheaply in developing countries
will have strong positive externalities
+ - whether permitting seller to engage in PD (of a particular sort) will promote welfare depends on how she will behave if prevented
evidence from anecdotes,
surveys, and experiments
+ -
feelings are very strong; consumers
frequently have intense reactions;
but point in different directions
+ -
unpopularity of "charging
what the market will bear":
"gouging"
+ - unpopularity of "versioning"
Deliberately reducing the quality of a good in order to make it available cheaply to poorer customers without undermining the demand by the more wealthy for a full-featured version is commonly denounced, in Emile Dupuit’s words – as “cruel and mean.”
e.g., laser printers
+ -
consumers like transparency,
dislike hidden pricing strategies
+ - consumers like choices
+ -
consumers accept 3rd-degree
PD if they think the categories
are fair
+ - framing matters
Doug Ivester: "In a final summer championship game when people meet in a stadium to enjoy themselves, the utility of a chilled Coca-Cola is
very high. So it is fair it should be more expensive. The machine will simply make this process automatic."
answer will depend on whether dynamic
benefits of higher profits are sufficient to
offset other disadvantages
Bittlingmayer (1988)
Gilbert/Shapiro (1997)
Shapiro (2001)
+ - offsetting danger that pools may facilitate anticompetitive behavior, particularly with respect to substitute patents
+ - possible sorting mechanism: requirement of independent licensing option would corrode (bad) substitute pools, without adversely affecting (good) complementary pools
a) The patent at issue is socially pernicious
b) The patentee is socially pernicious
c) voluntary licenses provoked by an injunction will be excessive, from a social-welfare standpoint, because of:
+ - IP Rights (especially patents) may generate both private and social value if they facilitate efficient communication of information to potential investors
Rate of patenting may be treated as a proxy for innovativeness, R&D expenditures, orproductivity of those expenditures
Net result may be to increase (a) firms’ incentives to engage in research and/or (b) the efficiency of the capital markets as a whole
+ - Offsetting factors
+ - Empirical Evidence
Some evidence that firms do indeed patent for signaling purposes in start-up phase -- and that investors respond to those signals
But for the most part investors seem to rely more on other indicators of firms’ promise
+ - Economic functions of trademarks
+ - Economic hazards of trademarks
+ - Guideline: doctrines of trademark law should be shaped so as (a) to protect and reinforce TMs’ economic functions and (b) to avoid or mitigate their hazards
+ - Criticisms
+ - 1. cultural account of trademarks shows this theory of their functions to be simplistic
2. recognition of the preference shaping power of trademarks and advertising casts doubt on premise of the economic theory: exogenously determined preferences
cf. Coase and Merges on the potential of contracts and private institutions to provide superior substitutes for government regulation
+ - extensive empirical support for the claim that many authors, artists, and perhaps inventors feel this way gathered by Jeannie Fromer (2010 & 2011)
e.g., Anne Lamott: “I understood immediately
the thrill of seeing oneself in print. It provides some sort of primalverification: you are in print; therefore you exist.”
~ Cast doubt on IP terms that extend beyond (or are shorter than) the life of the author
+ - Cast doubt on defensibility of work-for-hire doctrine and pre-employment invention assignment agreements
+ - Need to protect artists more against their own folly or ignorance?
Expanded interpretation of fair use for transformative works
+ - Does equality of opportunity require an adjustment of moral rights?
The Empirical Exploration of Intrinsic Motivational Processes, in 13 Advances in Experimental Social Psychology 39 (Leonard Berkowitz ed., 1980)
"Intrinsic Motivation and Self-Determination in Human Behavior" (1985)
"A Motivational Approach to Self-Integration in Personality," 38 Persp. on Motivation 237 (1990)
"Self-Determination Theory and the Facilitation of Intrinsic Motivation, Social Development, and Well-Being," 55 Am. Psychol. 68 (2000)
"The 'What' and 'Why' of Goal Pursuits: Human Needs and the Self-Determination of Behavior," 11 Psychol. Inquiry 227 (2000)
"Living Well: A Self-Determination Theory Perspective on Eudaimonia," 9 Journal of Happiness Studies 139-170 (2008)
There exists such a thing as human nature, which is mysterious and complex but nevertheless stable and discoverable
People's nature causes them to flourish more under some conditions than others
Social and political institutions should be organized to facilitate that flourishing
“Being able to live to the end of a human life of normal length; not dying prematurely, or before one’s life is so reduced as to be not worth living.”
“Being able to have good health, including reproductive health; to be adequately nourished; to have adequate shelter.”
"One's dignity resides in being, to some important degree, a person of one's own creating, making, choosing, rather than being merely a creature or a socially manufactured, conditioned,manipulated, thing: half-animal and half mechanical and therefore wholly socialized."
"The human faculties of perception, judgment, discriminative feeling, mental activity, and even moral preference, are exercised only in making a choice. He who does anything because it is the custom, makes no choice. He gains no practice either in discerning or in desiring what is best. The mental and moral, like the muscular powers, are improved only by being used."
"Meaningful work requires skill and concentration, presents the laborer with challenges and problems he can overcome only through the exercise of initiative and creativity, and is part of a larger project he considers socially valuable and must take into account in making his decisions"
Plan Jefes
guarantee of public employment for heads of households
unexpectedly, most of the participants proved to be female heads of households
public opposition grew, because the program appeared to be compelling women with children to be entering the workforce
active participation in politics
altruistic, deliberative, genuinely committed to the welfare of the polity as a whole, not to the advancement of self-interest or factional interest
We feel better, and we do better, when we have the sense that we are capable of performing the tasks we address.
psychology
+ - economics
+ - Helliwell, J. F., Putnam, R. D. (2005). "The social context of well-being," Philosophical Transactions of the Royal Society of London
"Our new evidence confirms that social capital is strongly linked to subjective well-being through many independent channels and in several different forms. Marriage and family, ties to friends and neighbours, workplace ties, civic engagement (both individually and collectively), trustworthiness and trust: all appear independently and robustly related to happiness and life satisfaction, both directly and through their impact on health."
+ - philosophy: "affiliation"
+ - psychology: "relatedness"
political theory: communitarianism
+ - economics: persistent correlation of "sociability" with happiness
+ - Helliwell, J. F., Putnam, R. D. (2005). The social context of well-being. Philosophical Transactions of the Royal Society of London
"Our new evidence confirms that social capital is strongly linked to subjective well-being through many independent channels and in several different forms. Marriage and family, ties to friends and neighbours, workplace ties, civic engagement (both individually and collectively), trustworthiness and trust: all appear independently and robustly related to happiness and life satisfaction, both directly and through their impact on health."
+ - Examples
+ - exceptions
+ - general life-satisfaction measures are strongly correlated with marriage -- and inversely correlated with divorce
but life satisfaction associated with marriage arguably exhibits adaptation
absence of correlation of happiness or life satisfaction above a moderate level of income or wealth argues for redistribution of wealth and opportunity
The more multifarious the life-styles and ideas on public display in a society, the more each of its members must decide for herself what to think and how to act, thereby developing her own "mental and moral faculties" and rendering the culture as a whole even more "rich, diversified, and animating."
The more complex and "resonant" the "shared language" of a culture -- the richer it is in the raw materials of representation, metaphor, and allusion -- the more opportunities for creativity and subtlety in communication and thought it affords the members of the culture.
+ - adjust incentive/loss ratios associated with potential entitlements to reflect impact on:
+ - increase opportunities for commentary and criticism
+ - increase opportunities for creative reuse of copyrighted works
decrease privileges for consumptive uses
most broadly, construe the 4 statutory factors in section 107 in light of the normative beacon of the good life and good society
+ - increased reliance on liability rules, rather than property rules, particularly with respect to violations of 17 USC 106(2)
+ - lower rates for socially beneficial activities
particularly those that capitalize on and reinforce the sources of distortion to which consumers are already subject
modify patent law and other incentive systems to increase the development and distribution of drugs that prevent or address contagious diseases in developing countries