Wednesday, September 12, 2012

Why So Much IP?

By Mike Dorf

My latest Verdict column discusses the recent 2d Circuit decision in Louboutin v. Yves Saint Laurent, in which the court (more or less) upheld trademark protection for Louboutin's red-soled high-heeled shoes.  I criticize the core holding as over-protecting intellectual property, connecting the case to others, including Apple's recent victory over Samsung.  It's only a small over-simplification to say that I come down on the "the law should protect less" side of the ongoing debate over intellectual property.

Suppose you agree with me that the law over-protects IP.  You might be inclined to lobby for less protection.  Or you might be inclined to engage in guerrilla action by downloading pirated software, music or movies (a course of action that DOL strongly condemns)!  But whatever your normative views, you also might be interested in knowing why our law over-protects IP.  Here I'll name a couple of explanations and then offer a hypothesis of my own.

Two complementary accounts focus on the Patent & Trademark Office (PTO).  In one, the PTO simply lacks the resources to spend enough time investigating the novelty and creativity of patent applications, and thus tends to grant patents it should not grant.  In the second and related account, the PTO's fee-based funding mechanism creates incentives for the PTO to grant rather than reject patent applications.  A nifty new paper by my colleague Michael Frakes and Univ of Illinois law prof Melissa Wasserman shows that the PTO is in fact responsive to the incentives that the fee/funding structure creates.

I think there is much to the accounts of over-protection by the PTO--and not just because the PTO granted a patent for a peanut-butter-and-jelly-sandwich-with-the-crusts-cut-off (although it later revoked that patent).  But even assuming that the PTO bears some of the blame, there appears to be more to the story.  After all, we can find examples of other actors over-protecting.  The 2d Circuit decision in Louboutin shows judges over-protecting; the Apple/Samsung verdict shows a jury over-protecting (at least with respect to Apple's claims to have invented the rectangle with rounded edges); and the 1998 Copyright Term Extension Act (upheld by the Supreme Court in the Eldred case), shows Congress over-protecting.  What gives?

Over the past couple of decades, technology has made copying easier.  This is obvious for digital media like music, movies and software, but it's also true for physical stuff.  The spread of Japanese-style just-in-time production methods and the rise of nimble Chinese factories have shortened the time it takes to go from deciding to copy a competitor's product to being able to have a copy on the market.  As a result of these overlapping trends, there is now much less "natural" or "automatic" protection conferred by the first mover advantage than there was a generation ago.

So here is my hypothesis: The over-protection we see coming from Congress, courts, agencies, and even ordinary citizens when sitting on juries is a crude effort to give some advantage back to the first movers.  It's crude because the core issue is not simply more or less IP; there's a distributional piece here too.  The fact that Apple can patent the rectangle or that Louboutin can trademark the color red doesn't do anything for musicians who lose out on royalties as a result of file-sharing.  But if I'm right, the zeitgeist has absorbed a general sense that creators of intellectual property are getting ripped off more these days, and that translates into a general willingness to provide more IP protection whenever the issue arises.

To be clear, this is only a hypothesis.  I haven't tested it, nor have I looked into whether anyone else has.  I haven't even verified my underlying assumption that we are seeing more IP protection lately than in earlier periods.  Hey, rank speculation is the reason why blogs were invented (but not patented, thankfully)!


Paul Scott said...

Patents are different from other IP and I think this fundamental has been lost.

Patent rights exist solely as incentive to publish. They are not intended to protect inventors qua inventors, but only inventors qua publishers. This distinction is important because patents are supposed to be, first and foremost, a means of disseminating information to the general public and thereby improve the knowledge and welfare of the public at large.

The primary means of ensuring this is the concept of prior art. The primary enforcer of this (in the US) is the USPTO, though, obviously courts are a secondary enforcer.

"A rectangle with rounded corners" obviously in no way adds to the public knowledge and just should never have been given patent protection in the first instance. My own opinion is that the entirety of the classification of "design patent" is a policy mistake. Such things should be left entirely in CR and TM. But that boat has long sailed and I think at a minimum the USPTO has to do a better job as a gatekeeper here.

Whether its failings are institutional incompetence or responsiveness to financial incentives in many ways does not matter.

Patrick S. O'Donnell said...

There certainly has been an “unprecedented and unwarranted expansion of the range of ‘things’ that qualify to be patented (e.g., and most dramatically, biological organisms and mathematical algorithms)” as well as growth in IP more generally but in particular with patents, which have “become more and more lucrative as investment vehicles over the last few decades” (enhanced with the lengthening of the time of patent protection). As Philip Mirowski further notes, this entire

“process had become so profitable by the that the 1990s saw the rise of the ‘patent troll,’ and individual or firm who accumulates patent portfolios solely for the purpose of pursuing infringement suits, without having any intention to actually ‘work’ any of the patents or produce anything. Neoliberals actually promote this phenomenon as one more instantiation of their precept that any apparent ‘market failure’ can be rectified by instituting another meta-market: In this case, venture capital flows to start-up firms to serve as patent retailers and even introduce derivatives.”

Mirowski also points out the fact that passage of the Bayh-Dole Act was serendipitous in this regard, encouraging universities to claim IP discoveries made by their faculties in the course of research funded by federal grants. Most scientists have labored under the illusion that there is some inherent “research exemption” from patent infringement, but this was never true in a robust legal sense and it is even less true in our day. The hegemonic neoliberal “knowledge economy” was imposed on the less- and considerably-less-than-affluent nations with the trade-related aspects of intellectual property rights (TRIPs) concluded during the Uruguay Round of the GATT and soon incorporated into the WTO. In sum: “’twelve corporations made public law for the world,’ alongside some neoliberal economists and lawyers.” All of this should be examined within the context of the political economy associated with the regime of globalized privatization of science.

There’s a symposium going on over at Concurring Opinions on Madhavi Sunder’s book, From Goods to a Good Life: Intellectual Property and Global Justice (2012) that should be of interest to your readers.

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