Intellectual Property
Renting Space on the Shoulders of Giants: Madey and the Future of the Experimental Use Doctrine
113 Yale L.J. 261 (2003) The experimental use doctrine in patent law protects alleged infringers who use patented inventions solely for experimental purposes, such as testing whether a device functions as claimed or re-creating a process to observe its effects from a scientific perspective. The judicially created exception traces its lineage back nearly two hundred years. Although the exception has always been construed narrowly, it grew narrower still in October 2002 when the Federal Circuit issued its opinion in Madey v. Duke University. Madey reformulated the experimental use doctrine and cast considerable doubt on its continued viability as a defense in patent infringement cases involving universities. As a result, university researchers accustomed to standing on the shoulders of giants by studying patented technologies freely may now be forced to rent space on those shoulders instead. This Comment argues that the Madey court erred when it characterized university research as driven by a business interest in competing for prestige, students, and research grants. Not only does this view oversimplify experimental use defense by causing it to turn on the status of the defendant rather than the nature of the contested use, but it also undermines the balance between innovation and access that lies at the heart of the Patent Act. The Federal Circuit should have instead crafted a more nuanced experimental use exception that protects educational experimentation on patented inventions. Such a rule might not help Duke in its dispute with Professor Madey, especially if the record on remand confirms that Duke was experimenting with rather than experimenting on Madey's invention, but it would allow future researchers to continue testing and teaching about patented inventions without fear of being sued.
Eldred and Lochner: Copyright Term Extensionand Intellectual Property as Constitutional Property
112 Yale L.J. 2331 (2003) As intellectual property has become increasingly important to the national economy, a consensus has emerged among academics that courts should scrutinize congressional legislation closely under the Constitution's Copyright Clause. This Essay has challenged the academic consensus about the Copyright Clause and sought to offer a more robust defense of the result reached in Eldred than is reflected in the Court's opinion itself. In so doing, it has drawn on lessons gleaned from Lochner. Defenders of Lochner-era jurisprudence, like the IP Restrictors, claimed that their position was consistent with originalism, and the two movements' conceptions of the original understanding are quite similar. The IP Restrictors and the champions of Lochnerism both portray the Founders as constitutionalizing their opposition to special-interest legislation and monopolies. Subsequent historical research challenged Lochner-era originalism as inconsistent with the original conception of judicial review and as misconceiving the Founding generation's attitude toward economic regulation. This Essay drew on precisely these two lines of argument to challenge the IP Restrictors' originalism, and we have argued that the IP Restrictors' originalism is as flawed as the Lochner-era originalism that it echoes. The second lesson concerns the constitutionalization of a vision of the economy. Lochner is widely regarded as having constitutionalized a policy view. We argue that the IP Restrictors are trying to do precisely the same thing. In Lochner, that attempt proved unsuccessful in the long run, as the Court reversed itself and adopted deferential scrutiny of economic legislation under the Due Process Clause. We suggest that this episode is simply the most familiar manifestation of a larger historical pattern. At times of economic change, the Court has repeatedly tried to constitutionalize an economic vision, and it has repeatedly retreated and adopted deferential scrutiny. The reasons for deferential scrutiny of economic legislation--reasons sounding in judicial competence and process theory--are equally applicable here. Moreover, a holistic reading of the Constitution suggests that the deferential scrutiny that courts now employ in reviewing economic legislation under clauses of the Constitution other than the Copyright Clause should be applied in interpreting that Clause as well. The purpose of this Essay is not to refute the IP Restrictors' policy vision. And we certainly are not writing in defense of rent-seeking. Our judgment is that the IP Restrictors' vision is not the constitutional vision of the Founders. Moreover, we believe that concerns about judicial competence, respect for the majoritarian process, and the dictates of constitutional interpretation mean that the Eldred Court was wise not to constitutionalize the IP Restrictors' vision. When courts exercise the power of judicial review under the Copyright Clause, the proper attitude is one of deference. The approach the Court now typically applies when reviewing legislation affecting property rights should apply, as well, in the intellectual property realm.
Limiting Locke: A Natural Law Justification for the Fair Use Doctrine
112 Yale L.J. 1179 (2003) Focusing a discussion of intellectual property on a 300-year-old text may seem unusual, but John Locke's Two Treatises of Government has an uncommon place in American intellectual property theory. Historically, Lockean natural rights informed the Framers' understanding of intellectual property law. Courts also have a long history of using natural law justifications in intellectual property cases. The Lockean perspective has been particularly appealing to theorists because of its ability to justify widely varying property systems, ranging from expansive communitarianism to subsistence-worker-based capitalism. Although modern intellectual property doctrine has attempted to disavow its association with natural law justifications, some debate the ability of courts to adjudicate intellectual property claims without consulting natural law principles. Revisiting Locke for a theory of intellectual property has become vital because of two important recent shifts in doctrine and scholarship. First, statutory and doctrinal innovations have continued to expand private intellectual property rights. Second, academics have increasingly advocated the importance of the public domain as a way of limiting the expansion of private property rights. One recent example of the conflict between private intellectual property rights and the public domain is Eldred v. Ashcroft, upholding the Sonny Bono Copyright Term Extension Act, which extended the duration of a copyright to the life of the author plus seventy years. While the government's brief advocating for the copyright extension emphasized the need for fairness to authors, the petitioners' brief highlighted that "[p]etitioners are various individuals and businesses that rely upon speech in the public domain for their creative work and livelihood." These arguments were mirrored by amici, including the Recording Industry Association of America (RIAA) on the government's side, which emphasized the importance of "fair compensation of authors," and a group of fifty-three law professors, who stated that "[a]mici are in particular concerned about the recent, rapid expansion of copyright scope and duration, at the expense of the public domain." Scholars have seen Lockean theory as an essential tool in reconciling these arguments because the main thrust of Locke's theory is the reconciliation of strong private property rights with a common of materials available to all. Locke argues that laborers have a private property right in the products of their labor because individuals mix their labor with materials from the common that are free for all to use. The private property right in an individual's labor is mixed into the product of labor, and thus the private property right also attaches to the product of labor. He supports this argument by adding natural law principles that must be followed to maintain exclusive property rights. The natural law principle that has been most commonly considered by scholars is the sufficiency proviso, which requires that the laborer not take too many materials out of the common. Two substantial criticisms are often directed at Lockean theory. First, scholars argue that even though Locke claims to reconcile a robust common with strong private property rights, his property rights swallow the common. Thus, the object of Lockean theorists, as mirrored in the title of this Note, is often concerned with limiting the scope of the Lockean property right. Second, scholars argue that the sufficiency proviso cannot be fulfilled in a morally compelling way because the common of tangible goods is inherently scarce. Previous scholarship concerning Lockean theories of property rights in intangible goods has focused on the ability of the nonrivalrous characteristic of intangible goods to eliminate the scarcity problem. This scholarship began with the publication of two influential articles, one by Justin Hughes in 1988 and another by Wendy Gordon in 1993, and has been refined in the last decade. A fundamental difference between tangible goods and intangible goods, however, is that intangible goods are nonrivalrous, which means that they can be used by an infinite number of people in an infinite number of ways without harming the use value of any other person, including the initial producer. Previous scholarship has persuasively argued that because intangible goods are nonrivalrous, the common of intangible goods contains materials that are not subject to a scarcity problem and thus that Lockean theory does not fail when it is applied to intangible goods. Scholars have tended to overemphasize the importance of this claim, however, by conflating the Lockean common with a public domain. The Lockean common contains undeveloped materials, whereas a public domain is composed of developed goods. Although the Lockean common is quite useful for independent production, the nonrivalrous nature of intangible goods means that a public domain can be used to foster incremental innovation, which is much more valuable. This Note takes a different direction than previous scholarship by focusing on another of Locke's natural law principles, the waste prohibition. The waste prohibition forbids a laborer from wasting products of labor or portions of such products, with the violation resulting in the loss of private property rights in the portion of the product wasted. I define Lockean waste in the following way: Waste occurs where a unit of a product of labor is not put to any use. When scholars have considered the application of the waste prohibition to intangible goods previously, they have arrived at polar conclusions, with some asserting that waste rarely occurs and others claiming that waste always occurs. The waste prohibition is of negligible importance for tangible goods, but is immensely important when constructing a Lockean theory of intangible goods. The waste prohibition is largely a nonissue for tangible goods because one can exchange money--by definition a nonwasting good--for units of a product of labor that may be prone to waste. Laborers will thus have incentives to sell all the units they possess that they will not use and violations of the waste prohibition will be rare. The nonrivalrous nature of intangible goods can be characterized as the production of an unlimited number of "intangible units" at the initial creation of any intangible good. Although the limited number of units of a tangible good can usually be converted into nonwasting money, the unlimited number of intangible units suggests that the laborer will not be able or willing to convert all of the intangible units into money whenever any intangible good is produced. The combination of nonconversion and nonuse constitutes a violation of the waste prohibition. As the waste prohibition is enforced through the loss of property rights in the wasted intangible units, the waste prohibition creates what I call a Lockean fair use right. Price discrimination allows greater conversion of intangible units into money but is an imperfect solution due to practical difficulties in attaining perfect price discrimination. This Note also examines the implications of government regulation on Lockean intellectual property rights and compares a Lockean regime with current U.S. intellectual property doctrine and theory. The establishment of a government allows much more variety in the scope of private property rights under Lockean theory, but the Lockean fair use right binds civil governments in much the same way that it binds individuals in the state of nature. Although the theory and doctrine of copyright fair use shares many characteristics with Lockean fair use, the 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. This argument will be fleshed out in the remainder of this Note. Part I introduces general Lockean concepts, focusing on the impacts of the nonrivalry of intangible goods on the common and the waste prohibition. Part II applies Lockean concepts in an economic framework, demonstrating a fair use right in a Lockean state of nature. Part III considers the transition of society into a civil government, with its attendant changes in the scope of property rights in intangible goods. Part III also applies the Lockean analysis of this Note to two areas of current intellectual property debate--the anticircumvention provisions in the Digital Millennium Copyright Act (DMCA) and the enforcement of drug patents in developing countries. Part IV concludes.
The Freedom of Imagination: Copyright's Constitutionality
112 Yale L.J. 1 (2002) In some parts of the world, you can go to jail for reciting a poem in public without permission from state-licensed authorities. Where is this true? One place is the United States of America. Copyright law is a kind of giant First Amendment duty-free zone. It flouts basic free speech obligations and standards of review. It routinely produces results that, outside copyright's domain, would be viewed as gross First Amendment violations. Outside of copyright, for example, a court order suppressing a book (especially in the form of a preliminary injunction) is called a "prior restraint," "the most serious and the least tolerable infringement on First Amendment rights." In copyright law, however, such orders are routine. Just last year, in a much-publicized case, a federal district court enjoined publication of The Wind Done Gone, the novel about a slave born on Gone with the Wind's Tara plantation. (Disclosure: I was counsel to Alice Randall, author of The Wind Done Gone, in this litigation.) Or again, in 1995, a former member of the Church of Scientology posted on the Internet portions of the Church's "spiritual healing technology" materials, with the intention of exposing the Church as a "fraud." For this offense, police searched the individual's home for seven hours, seized books, and went through his personal computer files, copying some and erasing others, with the help of a "computer expert" provided by the Church. In the ensuing litigation, did the district court express concern about police officers assisting a "church" to suppress dissent? On the contrary, the court held that the defendant was likely guilty of copyright infringement and therefore issued a prior restraint "prohibiting any further copying" of Church materials. What is particularly disturbing about these cases is that both district courts expressly declined to consider the defendants' First Amendment arguments. In this respect, the two cases were typical. Courts consistently hold that copyright does not have to answer to First Amendment scrutiny. "[C]opyrights," as the District of Columbia Circuit recently put it, "are categorically immune from challenges under the First Amendment." It is time to put copyright on trial. The familiar explanations of copyright's insulation from the First Amendment are wholly inadequate. A new First Amendment analysis of copyright is needed. This means, however, that we also need an account of the First Amendment status of art and entertainment. Art and entertainment are central to (although not exhaustive of) the business of copyright; how central are they to the First Amendment? A painting by Pollock is "unquestionably shielded" by current free speech law, but what makes it so is less clear. Are video games--typical subjects of copyright law--similarly protected? What does their protectedness depend on, and would the level of protection change if they qualified as "art"? Thinking through copyright's constitutionality requires answers to these questions. Contemporary First Amendment scholarship offers two principal accounts of art's protection: one based on art's contribution to democracy, the other based on art's contribution to individual self-realization. Both approaches are driven by preconceptions of First Amendment theory; neither is satisfactory. The first paints art too politically, the second too narcissistically. It is no coincidence that a free speech jurisprudence lacking a good account of art's protection also lacks an appropriate framework within which to evaluate copyright. I will suggest that the constitutional protection of art is best understood through a principle I will call the freedom of imagination. Under this freedom, no one can be penalized for imagining or for communicating what he imagines. Nor can a person be required to obtain permission from anyone in order to exercise his imagination. Copyright, I will argue, must answer to this freedom. Part I of this Article describes copyright's conflicts with the First Amendment and shows how, notwithstanding these conflicts, courts refuse to subject copyright to independent First Amendment review. Part II addresses the most common explanations of copyright's First Amendment immunity. These explanations are, for the most part, standard fare in the literature. None of them, however, is remotely adequate. Part III elaborates the freedom of imagination, defining, defending, and delimiting it. This freedom, I will suggest, not only best captures the First Amendment's protection of art, but also underlies a number of other paradigmatic First Amendment protections as well. Part IV measures copyright against this freedom. I argue that copyright's core prohibition against piracy is consistent with the freedom of imagination, but that a good deal of copyright law outside this core is not. In particular, the freedom of imagination calls into question the enormous and growing set of prohibitions imposed by modern copyright law on so-called "derivative" works. I conclude that copyright's prohibition of unauthorized derivative works is unconstitutional, but that it could be saved if its regime of injunctions and damages were replaced by an action for profit allocation.
The Law and Economics of Reverse Engineering
111 Yale L.J. 1575 (2002) Reverse engineering has a long history as an accepted practice. What it means, broadly speaking, is the process of extracting know-how or knowledge from a human-made artifact. Lawyers and economists have endorsed reverse engineering as an appropriate way to obtain such information, even if the intention is to make a product that will draw customers away from the maker of the reverse-engineered product. Given this acceptance, it may be surprising that reverse engineering has been under siege in the past few decades. While some encroachments on the right to reverse-engineer have been explicit in legal rulemaking, others seem implicit in new legal rules that are altogether silent on reverse engineering, including the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the Economic Espionage Act of 1996 (EEA). TRIPS is an international treaty that, among other things, obligates member states of the World Trade Organization to protect trade secrets, yet it neither requires nor sanctions a reverse engineering privilege. The EEA created the first federal cause of action for trade secrecy misappropriation. Its lack of a reverse engineering defense has troubled some commentators because rights granted under the EEA arguably implicate certain reverse engineering activities previously thought to be lawful. Among the explicit legal challenges to reverse engineering are these: In the 1970s and 1980s some states forbade the use of a direct molding process to reverse-engineer boat hulls. In the late 1970s and early 1980s, the semiconductor industry sought and obtained legislation to protect chip layouts from reverse engineering to make clone chips. In the mid-1980s and early 1990s, a controversy broke out about whether decompilation, a common form of reverse engineering of computer programs, was legal as a matter of copyright law. Even after U.S. courts ruled that decompilation was acceptable for purposes such as achieving interoperability, a related controversy broke out over the enforceability of licenses forbidding reverse engineering of software and other digital information. More recently, questions have arisen about whether the decompilation of computer programs infringes upon patent rights in software components. In 1998, Congress outlawed the reverse engineering of technical protections for digital versions of copyrighted works and prohibited both the creation and distribution of tools for such reverse engineering (except in very limited circumstances) as well as the disclosure of information obtained in the course of lawful reverse engineering. Our objectives in this Article are, first, to review legal developments regarding the right to reverse-engineer, and second, to understand their economic consequences. We start in Part II with a discussion of the well-established legal right to reverse-engineer manufactured goods. In our view, the legal rule favoring reverse engineering in the traditional manufacturing economy has been economically sound because reverse engineering is generally costly, time-consuming, or both. Either costliness or delay can protect the first comer enough to recoup his initial research and development (R&D) expenditures. If reverse engineering (and importantly, the consequent reimplementation) of manufactured goods becomes too cheap or easy, as with plug-molding of boat hulls, it may be economically sound to restrict this activity to some degree. In Parts III, IV, and V, we consider the law and economics of reverse engineering in three information-based industries: the semiconductor chip industry, the computer software industry, and the emerging market in technically protected entertainment products, such as DVD movies. In all three contexts, rules restricting reverse engineering have been adopted or proposed. We think it is no coincidence that proposals to restrict reverse engineering have been so common in information-based industries. Products of the information economy differ from traditional manufactured products in the cost and time imposed on a reverse engineer. With manufactured goods, much of the know-how required to make the goods remains within the factory when the products go to market, so that reverse engineering can capture only some of the know-how required to make the product. The information-rich products of the digital economy, in contrast, bear a higher quantum of applied know-how within the product distributed in the market. For so-called digital content (movies, sound recordings, and the like), the relevant knowledge is entirely on the surface of the product, at least in the absence of technical protections such as encryption. Technical protections create costs for reverse engineers. When computer programs are distributed in object code form, a difficult analytical process is required to ascertain information embedded in the program, but it is there for the taking if a reverse engineer is willing to spend the time to study it. For computer chips, the relevant knowledge is circuit design, which is not only embodied within the chip, but also readily accessible using technologies discussed below. The challenge is to design legal rules that protect information-rich products against market-destructive cloning while providing enough breathing room for reverse engineering to enable new entrants to compete and innovate in a competitively healthy way. Part III focuses on the semiconductor chip industry. When the competitive reverse engineering and copying of semiconductor chip designs became too easy and too rapid to enable innovators to recoup their R&D costs, Congress responded by enacting the Semiconductor Chip Protection Act of 1984 (SCPA) to protect chip makers from market-destructive cloning while affirming a limited right to reverse-engineer chips. The SCPA allows reverse engineers to copy circuit design to study it as well as to reuse information learned thereby in a new chip, but it imposes a forward engineering requirement that inevitably increases a second comer's development time and increases its costs. In the context of the chip industry, we think this restriction on reverse engineering is economically sound. Part IV focuses on the software industry. Reverse engineering is undertaken in the software industry for reasons different from those in other industrial contexts. The most economically significant reason to reverse-engineer software, as reflected in the case law, is to learn information necessary to make a compatible program. The legal controversy over whether copies made of a program during the decompilation process infringe copyrights has been resolved in favor of reverse engineers. But as Part IV explains, the economics of interoperability are more complex than legal commentators have acknowledged. On balance, however, we think that a legal rule in favor of reverse-engineering computer programs for purposes of interoperability is economically sound. Part V discusses the emerging market for technically protected digital content. Because technical protection measures may be defeated by countermeasures, copyright industry groups persuaded Congress to enact the Digital Millennium Copyright Act (DMCA), which creates new legal rules reinforcing technical measures used by copyright owners to protect their works. It protects them against most acts of circumvention, against the manufacture and distribution of circumvention technologies, and against dissemination of information resulting from privileged acts of circumvention. In our view, these new rules overly restrict reverse engineering, although the core idea of regulating trafficking in circumvention technologies may be justifiable. Part VI steps back from particular industrial contexts and considers reverse engineering as one of the important policy levers of intellectual property law, along with rules governing the term and scope of protection. The most obvious settings for the reverse engineering policy lever are "on" (reverse engineering is permissible) and "off" (reverse engineering is impermissible). However, our study reveals five additional strategies for regulating reverse engineering in the four industrial contexts studied: regulating a particular means of reverse engineering, adopting a "breadth" requirement for subsequent products, permitting reverse engineering for some purposes but not others, regulating tools used for reverse engineering, and restricting the dissemination of information discerned from reverse engineering. In this discussion, we distinguish between regulations affecting the act of reverse engineering and those affecting what the reverse engineer can do with the resulting information. Some restrictions on reverse engineering and on post-reverse-engineering activities may be economically sound, although we caution against overuse of restrictions on reverse engineering because such restrictions implicate competition and innovation in important ways. Part VI also considers policy responses when innovators seek to thwart reverse engineering rights by contract or by technical obfuscation. Intellectual property law in the United States has an important economic purpose of creating incentives to innovate as a means of advancing consumer welfare. The design of intellectual property rules, including those affecting reverse engineering, should be tailored to achieve these utilitarian goals and should extend no further than necessary to protect incentives to innovate. Intellectual property rights, if made too strong, may impede innovation and conflict with other economic and policy objectives.