Best of 2014: IP’s Ancien Régime

Originally posted 2014-12-24 04:08:30. Republished by Blog Post Promoter

First posted on April 2, 2014.

L'Droit, c'est moi
L’Droit, c’est moi

Instapundit linked to an abstract of a law journal article called “IP in a World Without Scarcity” by Mark Lemley at Stanford.  Fun fact from Lemley’s Stanford bio page:  “His works have been cited 140 times by courts, including seven United States Supreme Court opinions, and over 9,500 times in books and law review articles.”  Well, Mark, that’s all very nice, but now you’ve made the big time!

Here’s an excerpt of the excerpt:

Things are valuable because they are scarce. The more abundant they become, they cheaper they become. But a series of technological changes is underway that promises to end scarcity as we know it for a wide variety of goods. The Internet is the most obvious example, because the change there is furthest along. The Internet has reduced the cost of production and distribution of informational content effectively to zero. In many cases it has also dramatically reduced the cost of producing that content. And it has changed the way in which information is distributed, separating the creators of content from the distributors. . . .

The role of IP in such a world is both controverted and critically important. IP rights are designed to artificially replicate scarcity where it would not otherwise exist. In its simplest form, IP law takes public goods that would otherwise be available to all and artificially restricts their distribution. It makes ideas scarce, because then we can bring them into the economy and charge for them, and economics knows how to deal with scarce things. So on one view – the classical view of IP law – a world in which all the value resides in information is a world in which we need IP everywhere, controlling rights over everything, or no one will get paid to create. That has been the response of IP law to the Internet so far. . . .

But that response is problematic for a couple of reasons. First, it doesn’t seem to be working. . . . Second, even if we could use IP to rein in all this low-cost production and distribution of stuff, we may not want to. The point of IP has always been, not to raise prices and reduce consumption for its own sake, but to encourage people to create things when they otherwise wouldn’t. More and more evidence casts doubt on the link between IP and creation, however. Empirical evidence suggests that offering money may actually stifle rather than drive creativity among individuals. Economic evidence suggests that quite often it is competition, not the lure of monopoly, that drives corporate innovation. The Internet may have spawned unprecedented piracy, but it has also given rise to the creation of more works of all types than ever before in history, often by multiple orders of magnitude. . . .

Far from necessitating more IP protection, then, the development of cost-reducing technologies may actually weaken the case for IP. If people are intrinsically motivated to create, as they seem to be, the easier it is to create and distribute content, the more content is likely to be available even in the absence of IP. And if the point of IP is to encourage either the creation or the distribution of that content, cost-reducing technologies may actually mean we have less, not more, need for IP.

If you’ve been with me — and certainly if you’ve been with me for long — much of this will sound familiar.  I’m not saying I was the first one to say it, which would be preposterous.  In fact, I used to believe very strongly in the moral rectitude of IP “enforcement,” or, rather, anything someone who owned IP asserted was enforcement of that IP.

I have since come to understand how many false premises that formulation contains.

I learned, from my professional experience, that parties — sometimes my clients, sometimes the other guy — don’t only want to protect their IP rights, they want to expand them in the guise of protection.  More generously, you could call that expansion a buffer zone, as I did in this article about trademark bullying: It’s not that the NFL technically believes it has the right to prevent fair use of its SUPER BOWL trademark, but rather that good brand management practice is to destroy the “enemy” well before it approaches your gates.  In that article I explain why, in the case of SUPER BOWL, that strategy works so well.  I also explain, in this blog post, why I am not offended by the employment of a similar approach by Louis Vuitton.

I learned, still, to question whether the word I put in scare quotes in the last paragraph, “enemy,” is really an appropriate characterization of anyone who uses an IP “owner”‘s IP without authorization.  Often it’s not, as discussed in this post about the Pez Museum.  It does seems that the strategy of hurting the ones you love (i.e., your most enthusiastic customers) must, at some point, begin to have a negative effect on brand equity.  By and large however the preferred approach, and the one most often recommended by more than a little biased “IP enforcement” and “brand management” lawyers representing clients with infinitely deep pocketbooks, no matter how economically senseless, is scorched earth.

And yes, I put “owner” in scare quotes.  I’m not saying you can’t own a trademark or a copyright, but certainly when it comes to trademark, that concept of “ownership” is misleading, isnt’ it?  You can’t buy or sell — or, in fact, establish — a trademark without the goodwill with which it is associated.  Something makes me want to say you never really do own a trademark; rather, the brand of goods (let’s say) that you make or sell really owns it.  You can own the factory, or the widgets themselves, and you are entitled to the more or less exclusive benefit of the goodwill and the trademark rights… but the widgets, really, own the trademark, don’t they?

Well, okay, that’s why Mark Lemley is in all those case footnotes and I’m, um….

And as to the word “enforcement,” there’s no question that a scorched-earth, no-amount-is-too-much-to-spend policy can and does reach levels where it strains even the most generous definition of the word, one aspect of which is addressed in this article about criminal prosecutions for IP infringement (also via Instapundit). I also tackled it in this brief through which I sought, unsuccessfully, to convince the Second Circuit that maybe there should be limits on this sort of thing.

Not free, but worth every penny

Lemley notes the open secret that apart from the straightforward issue of protecting brand equity, the distortions caused by the IP “enforcement” business of our time results from efforts to preserve outmoded distribution networks.  Eric Goldman has noted this many times as well, of course.  The thesis of Lemley’s full article, which I have not read yet, seems to be the now-familiar suggestion that IP law is becoming obsolete, whether Congress or the courts or major IP stakeholders admit it or not, because technology is just making the whole idea look silly.

That may be an overstatement, but my judgment on that, if you care, will have to abide reading the whole article.  As if to prove his point that “If people are intrinsically motivated to create, as they seem to be, the easier it is to create and distribute content, the more content is likely to be available even in the absence of IP,” Lemley’s article (a draft, anyway) can be downloaded for free at the same link. But his point hardly needs proving, does it?  Fine works, after all, such as the website predecessor to (have I mentioned this lately?) Jane Coleman and Griff Price’s Secondary Trademark Liability have also been available for free … as is, of course, LIKELIHOOD OF CONFUSION®.

The difference is, as I said, he’s Lemley (and Eric is Goldman).  I have heard it said and probably read it somewhere too, that IP skepticism is the rule, rather than the exception, in academia these days.  But while judges are not mindlessly signing off on the claims of IP claimants in 2014 the way they did ten years ago, or even five — and while it’s not their job to invalidate the rump statutes which still, of course, do govern IP law — IP skepticism is a long way from affecting practical lawyering.

Unless you’re one of those IP lawyers who thinks about what he’s doing.  Which, if you’ve read this far, you may very well be!  I don’t mean that as a moral judgment, but rather because this theoretical stuff is born of the real world — real cases decided, real cases settled, real cases that were never filed.  Good IP lawyers should keep at least one eye on the real world, not the fantasy worlds of the RIAA and  [the] INTA.  No, I’m not saying the law professor world is the real world (though if I did, none of them would know).

But I am, as they say, just saying:  In revolutionary times, even IP lawyers need to keep an eye on what’s going on in the streets.  It’s not as safe as you might think behind the walls of the Bastille.

By Ron Coleman

I write this blog.