nyujipel_fall_2012

NEW YORK UNIVERSITY

JOURNAL OF INTELLECTUAL PROPERTY AND ENTERTAINMENT LAW VOLUME 2

FALL 2012

NUMBER 1

CONTENTS INVENTIONS MADE FOR HIRE Joshua L. Simmons

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POST-BOOKER JUDICIAL DISCRETION AND SENTENCING TRENDS IN CRIMINAL INTELLECTUAL PROPERTY CASES: EMPIRICAL ANALYSIS AND SOCIETAL IMPLICATIONS Aaron B. Rabinowitz

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CONCEPTION AND MISCONCEPTION IN JOINT INVENTORSHIP Aaron X. Fellmeth

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Sean M. Flaim

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Katelyn N. Andrews

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Ryan Kairalla

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COPYRIGHT CONSPIRACY: HOW THE NEW COPYRIGHT ALERT SYSTEM MAY VIOLATE THE SHERMAN ACT

THE MOST FASCINATING KIND OF ART: FASHION DESIGN PROTECTION AS A MORAL RIGHT

WORK AS WEAPON, AUTHOR AS TARGET: WHY PARODIES THAT TARGET AUTHORS (NOT JUST THEIR WORKS) SHOULD BE FAIR USES

http://jipel.law.nyu.edu

NEW YORK UNIVERSITY

JOURNAL OF INTELLECTUAL PROPERTY AND ENTERTAINMENT LAW VOLUME 2

FALL 2012

NUMBER 1

INVENTIONS MADE FOR HIRE JOSHUA L. SIMMONS *

Despite the continued reliance on the rhetorical device that modern invention is performed by individual inventors in their garages, few would disagree that today most patentable inventive activity occurs in corporate and university settings and that most individuals who would be labeled “inventors” in the twenty-first century are employees of a corporate entity. Yet, while copyright law’s work made for hire doctrine automatically vests employers with ownership of works made within their employees’ scope of employment, except in a few limited circumstances, patent law continues to require a written assignment of the rights to a patented invention.

This difference between copyright law and patent law can be explained by the differences between the needs of the two disciplines in the nineteenth century that led to their modern formulations. In particular, whereas copyrighted works in the nineteenth century were frequently created by multiple individuals working together, which necessitated the collecting of rights in order to make use of the resulting copyrightable work, patentable inventions were almost exclusively perceived to be invented by individuals. Moreover, patent law developed doctrines that provided some limited rights to inventors’ employers.

*

Mr. Simmons is an attorney in Kirkland & Ellis LLP’s New York office, specializing in intellectual property litigation, including copyright, patent and trademark. He received a B.A. from Brandeis University in 2006 and a J.D. from Columbia Law School in 2010, where he was awarded the Caroll G. Harper Prize for achievement in intellectual property. The author thanks Professor Harold Edgar, Henry Lebowitz and David Harris for their helpful suggestions for and reactions to this piece. The views, opinions, statements, analysis and information contained in this article are those of Mr. Simmons and do not reflect the views of Kirkland & Ellis LLP or any of its past, present or future clients.

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Yet, despite extensive change in the perception of the nature of inventive activity since the nineteenth century, patent law has remained stuck in the past. Patent law’s failure to modernize and develop an inventions made for hire doctrine has led to a string of significant court opinions holding that employers had not received adequate assignments to their employees’ patented inventions, despite the parties’ intentions to the contrary. In order to resolve these issues and bring patent law into the twenty-first century, the Patent Act should be amended to borrow from the Copyright Act and adopt a principle similar to the work made for hire doctrine that would grant employers the rights to their employees’ inventions made within the scope of their employment.

INTRODUCTION ............................................................................................................2 I. IP AND THE EMPLOYER-EMPLOYEE RELATIONSHIP .......................................... 6 A. Copyright Law ............................................................................................6 B. Patent Law ................................................................................................10 1. Employer Use and Shop Rights ...........................................................12 2. Commissioned Invention and the Hired-to-Invent Doctrine ............... 14 3. Employer Inventions and Employee Improvements ............................17 II. DEVELOPMENT OF THE WORK MADE FOR HIRE DOCTRINE ............................19 A. Antebellum ................................................................................................20 B. The Nineteenth Century Postbellum .........................................................21 C. Corporate Ownership and Codification ...................................................24 III. EMPLOYMENT IN PATENT LAW .......................................................................27 A. Antebellum ................................................................................................27 B. The Nineteenth Century Postbellum .........................................................34 IV. IS PATENT LAW STUCK IN THE PAST? .............................................................42 CONCLUSION .............................................................................................................49 INTRODUCTION Despite the persistent notion that modern invention is performed by individual inventors in their garages, few would disagree that today most patentable inventive activity occurs in corporate and university settings and that most individuals who would be labeled “inventors” in the twenty-first century are employees of corporate entities.1 In the corporate setting, if an employee creates a copyrightable work within the scope of his or her employment, the Copyright Act not only grants ownership of the work to the employer but actually considers the

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See infra Part IV.

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employer the “author” of the work.2 By contrast, under the Patent Act, one who creates an invention is its inventor, and ownership will only pass to another, including an employer, through a written assignment. 3 In other words, unless there is an agreement to the contrary, an employer does not have any rights in an invention “which is the original conception of the employee alone.” 4

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See Copyright Act of 1976, 17 U.S.C. § 201(b) (2006) (“In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.”).

3 See United States v. Dubilier Condenser Corp., 289 U.S. 178, 188 (1933) (noting that invention is “the product of original thought”); Solomons v. United States, 137 U.S. 342, 346 (1890) (“[W]hatever invention [an inventor] may thus conceive and perfect is his individual property.”); Gayler v. Wilder, 51 U.S. 477, 493 (1851) (“[T]he discoverer of a new and useful improvement is vested by law with an inchoate right to its exclusive use, which he may perfect and make absolute by proceeding in the manner which the law requires.”); 8 CHISUM ON PATENTS § 22.01 (2012) (“The presumptive owner of the property right in a patentable invention is the single human inventor . . . .”); see also Patent Act of 1952, 35 U.S.C. § 152 (2006) (“Patents may be granted to the assignee of the inventor of record in the Patent and Trademark Office, upon the application made and the specification sworn to by the inventor, except as otherwise provided in this title.”); id. § 261 (“Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing.”); Bd. of Trustees Trs. of Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 131 S. Ct. 2188, 2192 (2011) (“Since 1790, the patent law has operated on the premise that rights in an invention belong to the inventor.”); Dubilier Condenser, 289 U.S. at 187 (“A patent is property and title to it can pass only by assignment.”); 8 CHISUM ON PATENTS § 22.01 (2012) (“The inventor . . . [may] transfer ownership interests by written assignment to anyone . . . .”).

In fact, only the actual inventor is entitled to a patent, and only the inventor or someone he has assigned his patent rights to in writing may file a patent application, which in either case must be made on the inventor’s behalf. See 35 U.S.C. § 111(a)(2)(C) (“Such application shall include . . . an oath by the applicant as prescribed by section 115 of this title.”); id. § 115 (“The applicant shall make oath that he believes himself to be the original and first inventor of the process, machine, manufacture, or composition of matter, or improvement thereof, for which he solicits a patent . . . .”) (emphasis added); id. § 118 (“Whenever an inventor refuses to execute an application for patent, or cannot be found or reached after diligent effort, a person to whom the inventor has assigned or agreed in writing to assign the invention or who otherwise shows sufficient proprietary interest in the matter justifying such action, may make application for patent on behalf of and as agent for the inventor . . . and the Director may grant a patent to such inventor . . . .”) (emphasis added).

4 Dubilier Condenser, 289 U.S. at 189; see also Stanford, 131 S. Ct. at 2196 (“We have rejected the idea that mere employment is sufficient to vest title to an employee’s invention in the employer.”).

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Given the close relationship between copyright law and patent law, 5 it is puzzling that employees’ works and inventions would be treated so differently under the two disciplines. Yet, when one considers their historical foundation, it becomes clear that there were pivotal differences between the needs of the two disciplines in the nineteenth century that led to their modern formulations. 6 In particular, whereas the type of copyrightable works created in the nineteenth century transitioned from individual labors to collaborative labors among multiple individuals working together, which necessitated the collecting of rights in order to make use of the resulting copyrightable work, patentable inventions continued to be perceived during the nineteenth century as the work of individuals. Moreover, patent law developed other, more limited doctrines that provided some rights to inventors’ employers.

Today, however, most patentable inventions are invented by multiple inventors in a collaborative environment. 7 In fact between 1885 and 1950, the percentage of U.S. patents issued to corporations grew from 12% to at least 75%.8 These numbers have only continued to increase in the past decade. 9 Moreover, the recently passed Leahy-Smith America Invents Act partially recognizes this change by permitting an “applicant for patent” to file a “substitute statement” instead of an inventor’s oath or declaration in certain circumstances. 10 5

Certainly copyrights and patents share an affinity due to their finding support in the same clause of the Constitution. U.S. CONST. art. I, § 8, cl. 8 (“The Congress shall have Power . . . [t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries . . . .”).

6 As described below, in the nineteenth century, copyright law had a strong presumption of employee ownership, which slowly moved to an employer presumption that was finally codified in the twentieth century. See infra Part II. Patent law, on the other hand, developed various doctrines that permitted employers to be considered the owners of patent rights in certain circumstances, but not in others. See infra Part III. 7 See infra Part IV. 8 DAVID F. NOBLE, AMERICA BY DESIGN: SCIENCE, TECHNOLOGY, AND THE RISE OF CORPORATE CAPITALISM 87 (Alfred A. Knopf, Inc. 1977).

9 Dennis Crouch & Jason Rantanen, Assignment of US Patents, PATENT LAW BLOG (PATENTLY-O) (Dec. 18, 2011, 9:07 PM), http://www.patentlyo.com/patent/2011/12/assignment -of-us-patents.html.

10 Leahy-Smith American Invents Act, Pub. L. No. 112-29, § 4, 125 Stat. 284, 294 (2011) (“A substitute statement . . . is permitted with respect to any individual who—(A) is unable to file the oath or declaration . . . because the individual—(i) is deceased; (ii) is under legal incapacity; or (iii) cannot be found or reached after diligent effort; or (B) is under an obligation to assign the invention but has refused to make the oath or declaration required . . . .”) (emphasis added); see also Dennis Crouch, AIA Shifts USPTO Focus from Inventors to Patent owners, PATENT LAW BLOG (PATENTLY-O) (Aug. 14, 2012, 9:35 AM),

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Nevertheless, patent law remains stuck in the past. The failure to modernize how patent law handles employee invention has led to a string of significant court opinions, including from the Supreme Court and the Federal Circuit, holding that employers had not received adequate assignments to their employees’ patented inventions and thus could not bring suit based thereon.11 In order to resolve these issues and bring patent law into the twenty-first century, the Patent Act should be amended to borrow from the Copyright Act and adopt a principle similar to the work made for hire doctrine that would grant employers the rights to their employees’ inventions made within the scope of their employment.12 This article proceeds in four parts. Part I discusses the current state of copyright and patent law vis-à-vis employers’ rights in their employees’ intellectual labor. This part will compare copyright’s work made for hire doctrine to three patent law doctrines: the shop rights doctrine; the hired-to-invent doctrine, and the employee improvements doctrine. Part II describes the evolution of copyright law during the nineteenth century from the former regime, which vested employees with presumptive ownership of their work, to the current regime, which grants employers presumptive rights to their employees’ efforts. Part III describes patent law during the time that copyright law was changing so dramatically— including the development of the patent law doctrines described in Part I—and posits potential reasons that patent law did not make a similar move. In particular, (a) patent law’s development of the doctrines described in Part I provided similar benefits, although in the form of different rights, to those provided by copyright law’s work made for hire doctrine, and (b) the perceived nature of invention in the nineteenth century did not call for a unification and codification of those doctrines http://www.patentlyo.com/patent/2012/08/aia-shifts-usptos-focus-from-inventors-to-patentowners.html (describing the shift).

11 See Stanford, 131 S. Ct. 2188 (2011) (holding that Stanford did not hold the rights to a patent that was allegedly infringed by Roche’s HIV test kits); Abbott Point of Care Inc. v. Epocal Inc., 666 F.3d 1299 (Fed. Cir. 2012) (affirming the dismissal of Abbott complaint for lack of standing to bring suit based on blood sample testing patents).

12 Patent law and copyright law borrowing from each other is nothing new. The Supreme Court borrowed patent law’s construction of secondary liability to inform its copyright decision in Sony Corp. of America v. Universal City Studios. 464 U.S. 417, 439 (1984) (“There is no precedent in the law of copyright for the imposition of vicarious liability on such a theory. The closest analogy is provided by the patent law cases to which it is appropriate to refer because of the historic kinship between patent law and copyright law.”). That analysis was then expounded on in the copyright case of Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), and then the copyright focused construction was used as precedent in later patent cases.

See, e.g., Ricoh Co. v. Quanta Computer Inc., 550 F.3d 1325, 1336–40 (Fed. Cir. 2008) (citing Sony and Grokster to determine the standard for contributory infringement); DSU Med. Corp. v.

JMS Co., 471 F.3d 1293, 1303–04 (Fed. Cir. 2006) (same).

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the way copyright law’s did. Finally, Part IV argues that patent law should modernize and develop an “inventions made for hire” doctrine.

I IP AND THE EMPLOYER-EMPLOYEE RELATIONSHIP It is well settled in the United States that copyright law and patent law treat legal title in the intellectual labor of employees differently. 13 Section A discusses the copyright law doctrine of work made for hire and its benefits for employers.

Section B discusses doctrines that provide some of those benefits in patent law.

A. Copyright Law Under the Copyright Act, title in a copyrightable work initially vests in the author or authors of a work.14 However, “author” is a term of art with meaning beyond the creator of or “person who originates or gives existence” to a work. 15 In particular, where a “work made for hire”—another term of art—is concerned, the employer is “considered the author” unless the parties agree otherwise. 16 A work may be considered made for hire if (1) it was prepared within the scope of an employee’s employment, or (2) it is a certain type of commissioned work and the parties have so agreed previously. 17

13

3 R. CARL MOY, MOY’S WALKER ON PATENTS § 10:17 (4th ed. 2012).

Copyright Act of 1976, 17 U.S.C. § 201(a) (2006) (“Copyright in a work protected under this title vests initially in the author or authors of the work. The authors of a joint work are coowners of copyright in the work.”).

15 OXFORD ENGLISH DICTIONARY (2d ed. 1989).

16 17 U.S.C. § 201(b) (“In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.”).

17 Id. § 101 (“A ‘work made for hire’ is— (1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”).

For example, comic book authors generally are required to sign agreements establishing that their work is commissioned as a work made for hire. See Joshua L. Simmons, Catwoman or the Kingpin: Potential Reasons Comic Book Publishers Do Not Enforce Their Copyrights Against 14

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Whether the creator of a copyrightable work is an employee for purposes of the work made for hire doctrine is determined by looking to the common law doctrine of agency. 18 In Community for Creative Non-Violence v. Reid, the Supreme Court identified thirteen factors that it considered relevant to whether an individual was considered an employee as a matter of agency law. 19 The Supreme Court declared that “[n]o one of these factors [was] determinative,” 20 but at least one circuit has held that not all factors are created equal and some will be important in “virtually every situation” while others “will often have little or no significance.”21 The more important factors are to be given “more weight in the analysis.”22 Once a work is considered made for hire, the employing or commissioning party enjoys several benefits over a work that is not considered made for hire, but rather is transferred to the employing party. First, unlike in patent law, it immediately becomes the owner of a legal right to the work. 23 In patent law, an Comic Book Infringers, 33 COLUM. J.L. & ARTS 267, 272 (2010) (describing comic book work made for hire agreements and caselaw).

18 Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 750–51 (1989) (holding the sculpture at issue was not a work made for hire, because the sculptor was an independent contractor and CCNV could not satisfy Section 101(2)).

19 Id. at 751–52 (“In determining whether a hired party is an employee under the general common law of agency, we consider [1] the hiring party's right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are [2] the skill required; [3] the source of the instrumentalities and tools; [4] the location of the work; [5] the duration of the relationship between the parties; [6] whether the hiring party has the right to assign additional projects to the hired party; [7] the extent of the hired party's discretion over when and how long to work; [8] the method of payment; [9] the hired party's role in hiring and paying assistants; [10] whether the work is part of the regular business of the hiring party; [11] whether the hiring party is in business; [12] the provision of employee benefits; [13] and the tax treatment of the hired party.”) (citations omitted).

20 Id. at 752 (citing Ward v. Atl. Coast Line R.R., 362 US 396, 400 (1960); Hilton Int'l Co. v.

NLRB, 690 F.2d 318, 321 (2d Cir. 1982)).

21 Aymes v. Bonelli, 980 F.2d 857, 861 (2d Cir. 1992) (“Some factors, therefore, will often have little or no significance in determining whether a party is an independent contractor or an employee. In contrast, there are some factors that will be significant in virtually every situation.

These include: (1) the hiring party's right to control the manner and means of creation; (2) the skill required; (3) the provision of employee benefits; (4) the tax treatment of the hired party; and (5) whether the hiring party has the right to assign additional projects to the hired party.”).

22 Id. (“These factors will almost always be relevant and should be given more weight in the analysis, because they will usually be highly probative of the true nature of the employment relationship.”).

23 Under the Copyright Act of 1976, copyright vests “initially in the author or authors of the work.” 17 U.S.C. § 201(a) (2006). As “the employer or other person for whom the work was

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inventor must first file an application with the United States Patent and Trademark Office (“PTO”), which is then examined by a PTO employee to determine if the alleged new invention is entitled to a patent. 24 Copyrights, on the other hand, vest immediately once an original work of authorship is fixed in a tangible medium of expression.25 For a company to gain an ownership interest in a copyrighted work not made for hire, the interest must be negotiated for and transferred in a signed written document. 26 When a work qualifying as a work made for hire is created, however, no negotiation or written instrument is required for that specific work because, for copyright purposes, as long as agency would hold that the work’s creator was an employee working within the scope of his employment, his employer is considered the work’s author. 27 There are two subsidiary benefits to the immediate grant to the employer of a work’s copyrights. First, no court intervention is required to transfer the rights.

As will be described below, in certain cases, patent law will grant employers rights in their employee’s patents, but to vest those rights the employee must still sign a document transferring ownership to his employer. If he refuses, a court order may substitute for the transfer. Second, the work made for hire doctrine allows a grant of rights without needing to define what is being granted. Whereas when a grant of rights is negotiated, the transferor may come back to the transferee to argue about which rights were actually transferred and the scope of the intended transfer. 28 Second, an employer holding the rights in a work made for hire may register the work in the Copyright Office in its own name. 29 This is an optional but prepared is considered the author” when a work made for hire is involved, however, a work made for hire initially invests in the employer or commissioning party. Id. § 201(b).

24 See Patent Act of 1952, 35 U.S.C. § 131 (2006).

25 See Copyright Act of 1976, 17 U.S.C. § 102(a) (2006).

26 See id. § 204(a).

27 As described above, even works that are not created within the scope of an employee’s employment may be considered works made for hire. See supra note 17. However, works that are specially ordered or commissioned and considered works made for hire under Subsection 2 are outside the scope of this article.

28 For example, in 2009, the founders of Skype, after selling the company to eBay, sued their former company and eBay for copyright infringement because, although eBay had purchased the good will in Skype, they had only licensed the source code to the program. See Complaint, Joltid Ltd. v. Skype Techs. S.A., 2009 WL 2958651 (N.D. Cal. Sept. 16, 2009) (No. 09 Civ. 4299); see also Brad Stone, Skype Founders File Copyright Suit Against eBay, N.Y. TIMES, Sept. 17, 2009, at B3, available at http://www.nytimes.com/2009/09/17/technology/companies/17skype.html.

29 See 17 U.S.C. § 408(a) (2006) (“[T]he owner of copyright or of any exclusive right in the work may obtain registration of the copyright claim . . . .”); id. at § 409 (“The application for

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important step, because without registration a copyright infringement action may not be initiated, 30 and generally, statutory damages are not available for infringements prior to registration.31 Third, the work made for hire doctrine grants employers all of the rights associated with copyright ownership. Thus, they can exclude others from using the work, and leverage that right to extract rents in exchange for a license authorizing someone else to use the work. 32 Further, employers using works made for hire are authorized to then transfer their ownership of the works’ copyrights to another party, either in whole or in part. 33 They can also, of course, exercise any of the rights authorized under the Copyright Act itself, including creating derivative works. 34 One set of rights an employer is not granted under the Copyright Act, however, is the right to attribution and integrity granted for works of visual art. 35 Fourth, the work made for hire doctrine also protects employers from future rights granted to authors. For example, the Copyright Act of 1976 granted authors the right to terminate transfers, but those new rights did not apply to creators of works made for hire because their employers were considered the author. 36 In addition, after the 1976 revisions, employers remained shielded from the exercise of the transfer termination provisions because no transfer is considered to have taken place under the work made for hire doctrine; 37 the employer was the work’s original “author.” copyright registration . . . shall include — (1) the name and address of the copyright claimant . . .

(4) in the case of a work made for hire, a statement to this effect . . . .”).

30 See id. § 411(a).

31 See id. § 412.

32 See id. § 106.

33 See id. § 201(d).

34 Id. 35 Section 106A grants certain rights to “the author of a work of visual art.” See id. § 106A(a). However, section 101 defines a “work of visual art” as not including “any work made for hire.” Id. at § 101. In addition, in Dastar Corp. v. Twentieth Century Fox Film Corp., the Supreme Court held that trademark law cannot be used to require attribution “to the author of any idea, concept, or communication embodied in [tangible] goods.” 539 U.S. 23, 37 (2003).

36 See 17 U.S.C. § 203(a) (stating that exclusive or nonexclusive transfers or licenses of copyrights to works created on or after January 1, 1978 and not works made for hire may be terminated); id. § 304(c) (noting that exclusive or nonexclusive transfers or licenses of the renewal copyrights to works within its first or renewal term on January 1, 1978 and not works made for hire may be terminated).

37 Id. § 203; see Simmons, supra note 17, at 274–75 (describing cases of termination involving comic book talent); cf. James Grimmelmann, The Worst Part of Copyright: Termination of Transfers, THE LABORATORIUM (Feb. 15, 2012, 10:23 AM),

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Fifth, the work made for hire doctrine grants employers certainty with regard to the duration of their copyrights. Works not made for hire subsist for the life of the author plus 70 years.38 This means that those to whom the original author transfers must know the duration of the original author’s lifetime in order to calculate the duration of the copyrighted work’s term. Works made for hire, however, are merely granted a term of 95 years from publication or 120 years from creation, whichever expires first.39 This time frame serves two functions. First, it simplifies the requirements of an employer to keep track of the duration of its copyrights. Second—grim though it may be—if the employee were to die within 25 years of publication or 50 years of creation, the employer would benefit from a longer copyright term than if the work were considered made for hire. 40 Finally, the work made for hire doctrine applies to all works universally, regardless of the type of work or the employee’s level of contribution. In other words, a work created and conceptualized entirely by only one employee is treated the same as a work created by hundreds of employees, each of whom contributed minor improvements and expression to the work.

B. Patent Law Some of the benefits described in the previous section are mirrored by certain patent law doctrines—or are irrelevant with regard to patents—but others have no patent law equivalent. Section A described eleven benefits associated with copyright law’s work made for hire doctrine: (1) grant of title without negotiation; 41 (2) grant of title without transfer/assignment; (3) grant of title http://laboratorium.net/archive/2012/02/15/the_worst_part_of_copyright_termination_of_transfe (arguing that the inalienability created by the termination transfer provisions of the Copyright Act is unsupported by moral intuitions or logic).

38 17 U.S.C. § 302(a). A potential infringer may seek a certified report from the Copyright Office after 95 years for a published work or 120 years for an unpublished work. If the certified report does not disclose that the author of a work is alive or died less than 70 years prior to the report, the infringer is entitled to a presumption that shields her from infringement liability. Id. § 302(e).

39 Id. § 302(c).

40 On the other hand, a long-lived author could result in a significantly longer period of protection.

41 By avoiding negotiation, parties also avoid the possibility that a court would interpret contract terms later in a way that the original parties to the agreement would not have anticipated. See, e.g., Marvel Characters, Inc. v. Simon, 310 F.3d 280 (2d Cir. 2002) (holding that although both parties had signed a settlement agreement stipulating that a work was made for hire, the provision was ineffective because it was signed subsequent to the work’s creation with purported retroactive effect).

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without court intervention; (4) registrability in the employer’s own name; (5) exclusion of others from using the work and licensing rights in the work to others; (6) use of the work; (7) transfer of title to others; (8) protection from future rights granted to work’s creator; (9) shield from transfer termination; (10) benefits with regard to copyright term duration; and (11) universal application regardless of level of contribution.42 Table 1: Work Made For Hire Benefits No Negotiation No Assignment from Employee No Court Intervention Registrability Exclusion and Licensing Use Transfer to Others Protection from Future Rights Termination Shield Duration Universal Application

It is immediately apparent that the benefits of the termination shield and duration are not relevant to patent law because patents are granted for a set term of years—whether the base of 20 years or an extended term due to regulatory or PTO review 43—not tied to the inventor’s lifetime. Therefore, there would be no special 42

An additional societal benefit might include the idea that the work made for hire doctrine may permit and even incentivize the creation of works that would be impossible to create if the employing company had to negotiate with each employed author.

43 Patent Act of 1952, 35 U.S.C. § 154(a)(2) (2006) (“[S]uch grant shall be for a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed in the United States . . . .”). The Patent Act contains provisions providing for extensions to the patent term in certain circumstances. See id. § 154(b)

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duration benefits should an inventor’s employer be considered an “inventor” for purposes of the Patent Act. In addition, unlike copyright transfers, which as discussed above may be terminated upon notice, patent assignments are not subject to termination.44 The other benefits, however, require additional consideration. The three following sections describe modern patent law doctrines that give employers some, but not all, of the benefits of copyright law’s work made for hire doctrine.

1. Employer Use and Shop Rights One of the benefits of the work made for hire doctrine is that an employer is guaranteed the right to make use of an employee’s creative work. Employers may receive a similar benefit from patent law’s shop rights doctrine.45 However, because patent law describes negative rights, it is a protection against infringement actions by the employee patent holder and her assigns, and not an affirmative grant of use of the patented invention.

Shop rights arise when an employee, “during his hours of employment, [and] working with his [employer’s] materials and appliances, conceives and perfects an invention for which he obtains a patent.”46 The courts have held that in such (describing patent term adjustment for PTO delays); id. § 155 (describing patent term extension for Food and Drug Administration approval); id. § 156 (describing patent term extensions for other regulatory review).

44 See id. § 261 (“Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing. The applicant, patentee, or his assigns or legal representatives may in like manner grant and convey an exclusive right under his application for patent, or patents, to the whole or any specified part of the United States.”).

45 Kurtzon v. Sterling Indus., Inc., 228 F. Supp. 696, 697 (E.D. Pa. 1964) (“[A] ‘shop right’ or license to use, manufacture and sell.”).

46 United States v. Dubilier Condenser Corp., 289 U.S. 178, 188 (1933) (holding that two employees of the radio section of the Bureau of Standards, who had received patents based on a “power amplifier” invention, were not required to assign their patents to the United States—their employer—instead the United States was entitled to a shop right, if anything); McClurg v.

Kingsland, 42 U.S. 202 (1843) (affirming the Circuit Court’s jury instruction that a license between the patent holder and the employer-defendants could be presumed allowing the employer to continue to use the patented invention without liability, even if the patent was valid); Lariscey v. United States, 949 F.2d 1137, 1144 (Fed. Cir. 1991) (“A common law doctrine founded on equitable principles, the shop right rule allows an employer to use, without payment to the employee, an employee's invention that was made using the employer's time and/or materials, facilities, or equipment.”); see also Terry B. McDaniel, Shop Rights, Rights in Copyrights, Supersession of Prior Agreements, Modification of Agreement, Right of Assignment and Other Contracts, 14 AIPLA Q.J. 35, 38 (1986) (“The concept of shop right developed as a form of equitable compensation for situations where the employer has financed the employee's

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circumstances, the employee by force of law must give his employer a nonexclusive, royalty-free right to practice the invention. 47 The doctrinal basis behind the shop right remains fuzzy, 48 as courts have described it being based on (a) a license implied in fact, 49 (b) estoppel,50 and (c) equity and fairness.51 Shop rights do not have the same scope as work made for hire, however. A shop right is not an ownership interest in the patent, which means that an employer does not have either the right to exclude others by threatening to sue for infringement or the right to file a patent application. 52 Similarly, a shop right is non-exclusive, which means that the employee patent holder is free to assign rights

invention, normally where the employee has used his employer's time, facilities, and materials.”) (citation omitted).

47 See McDaniel, supra note 46, at 36.

48 Lariscey, 949 F. 2d at 1144 (“The shop right has variously been described as a form of implied license, founded on estoppel or acquiescence.”).

49 See McClurg, 42 U.S. 202; see also CHISUM, supra note 3, at § 22.03[3][a] (“The actions of both the employee and the employer may warrant the assumption that the employee had consented to allow limited use of his invention in return for assistance in the development of the idea.”).

50 See Gill v. United States, 160 U.S. 426 (1896); see also CHISUM, supra note 3, at § 22.03[3][a] (“By participating in the installation of an embodiment of the invention in the employer’s business without demanding a royalty or other compensation, the employee is estopped from later demanding compensation or charging infringement after issuance of the patent.”).

51 See Dubilier Condenser, 289 U.S. at 188; Beecroft & Blackman, Inc. v. Rooney, 268 F. 545 (S.D.N.Y. 1920); see also CHISUM, supra note 3, at § 22.03[3][a] (“Because the employee has used employer resources to develop the invention, it is only fair and equitable that the employer have a limited right to use the invention. The party who invests in a project and risks the cost of failure should enjoy a return on his/her investment and should share in the benefits of success.”).

52 See Dubilier Condenser, 289 U.S. at 188 (“[W]here a servant, during his hours of employment, working with his master’s materials and appliances, conceives and perfects an invention for which he obtains a patent, he must accord his master a non-exclusive right to practice the invention.”); Kurtzon, 228 F. Supp. at 697 (“[The employer] has the right to use the plaintiff's invention but pays no royalties to the patentee. It has no property or title interest in the invention or the patent. [It] has no exclusive contract with the [employee] that others shall not practice the invention. At most [it] has a ‘shop right’ or license to use, manufacture and sell the [product] which is not an exclusive contract and amounts to a bare license protecting [the employer] from a claim of infringement by [the employee]. . . . Such a licensee may neither sue alone nor join with the licensor patentee in an infringement action.”) (citations omitted).

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to others by granting them a patent license. In addition, a shop right is not transferable other than with the sale of the entire appurtenant business. 53 Table 2: Work Made For Hire v. Shop Rights No Negotiation



No Assignment from Employee



No Court Intervention



Registrability Exclusion and Licensing Use



Transfer to Others Protection from Future Rights Termination Shield

n/a

Duration

n/a

Universal Application



2. Commissioned Invention and the Hired-to-Invent Doctrine As mentioned in section A, under copyright law a work will be considered for hire if it was made by an employee within the scope of his or her employment.

53

See Lane & Bodley Co. v. Locke, 150 U.S. 193 (1893) (holding that the Hapgood doctrine would not be extended to a company that “was organized upon the same basis as the [predecessor company]; that the business of the company was to be the same as that carried on by [the predecessor], and to be carried on in the same premises; that the entire property and assets of the firm and its liabilities and obligations were devolved upon the [successor] company”); Hapgood v. Hewitt, 119 U.S. 226 (1886) (holding that although after the original corporation entitled to a shop right dissolved, the stockholders had created a new corporation— its successor in interest—the shop right did not cover the new corporation).

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Similarly, patent law’s hired-to-invent doctrine grants an employer rights to the inventions of its employees if the employee was hired to invent them.

Under this doctrine, an employee hired to solve a particular problem or to invent in a certain field will forfeit his patent rights even without a written contract.54 Just as in the work made for hire context, courts have established a number of factors to indicate whether an inventor has been hired to invent. 55 However, unlike work made for hire, the hired-to-invent doctrine requires the employee to assign any patent obtained; it does not vest title immediately in the employer upon invention.56 Although, failure to assign after a court order to do so may result in the order having the same effect as an assignment. 57

54

See Standard Parts Co. v. Peck, 264 U.S. 52 (1924) (holding that the invention’s creator held the legal title to the patented invention in trust for his former employer, and ordering him to assign the title in the patent to him employer’s successor); see also Houghton v. United States, 23 F.2d 386 (4th Cir. 1928) (“An employ[ee], performing all the duties assigned to him in his department of service, may exercise his inventive faculties in any direction he chooses, with the assurance that whatever invention he may thus conceive and perfect is his individual property. . . . But this general rule is subject to these limitations. If one is employed to devise or perfect an instrument, or a means for accomplishing a prescribed result, he cannot, after successfully accomplishing the work for which he was employed, plead title thereto as against his employer. That which he has been employed and paid to accomplish becomes, when accomplished, the property of his employer. Whatever rights as an individual he may have had in and to his inventive powers, and that which they are able to accomplish, he has sold in advance to his employer.” (citing Solomons v. United States, 137 U.S. 342, 346 (1890)); Nat’l Dev. Co. v. Gray, 55 N.E.2d 783, 787 (Mass. 1944) (“If the employee fails to reach his goal the loss falls upon the employer, but if he succeeds in accomplishing the prescribed result then the invention belongs to the employer even though the terms of employment contain no express provision dealing with the ownership of whatever inventions may be developed.”).

55 CHISUM, supra note 3, at § 22.03[2] (“The primary factor . . . is the specificity of the task assigned to the employee. . . . Evidentiary factors that carry some weight include (1) previous assignments of patents on other inventions by the employee; (2) a customary practice within the company for other similarly situated employees to assign; (3) whether the invention was conceived during the period of employment; (4) who originally posed the problem solved by the invention; (5) the employee’s authority within the company to determine to whom to give a problem for solution; (6) the relative importance of the idea to the employer’s business; (7) a previous inconsistent position on inventorship by the employer; (8) an agreement by the employer to pay royalties to the employee; (9) payment of patent procurement expenses by the employer or employee; and (10) the absence of initial interest by the employer when the employee first exposed the idea.”).

56 See Standard Parts, 264 U.S. at 56–57 (Upholding the district court’s formal decree that the patentee, “within ten days from the date of the decree, assign and transfer to the company the legal title to the letters patent, and also transfer to it all other patents or pending applications for patents for inventions made by him, in connection with the processes and machinery developed

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At first blush, this patent law doctrine would appear to accomplish much of what the copyright law work made for hire doctrine does. However, there are differences. First, work made for hire vests title in an employer immediately. The hired-to-invent doctrine merely obligates the inventor to assign the invention to his or her employer. True, no negotiation is required after the inventive activity occurs, but until an assignment is signed, the invention’s creator continues to hold the patent on the invention—albeit in trust for his employer. Furthermore, if the invention’s creator refuses to assign his patent rights, then a court order is required.

Second, the doctrine is only effective against employees who are actually hired to invent. Employees who create an invention within the scope of their employment but who were not specifically directed to do so retain their patent rights. 58 Third, unlike the work made for hire doctrine, which permits an employer to file a copyright registration in its own name, the hired-to-invent doctrine still requires the patent application to be filed in the inventor’s name, even if the employer, as assignee, files a patent application on his behalf. Finally, as the employee is still considered the “inventor” under the Patent Act, it is possible for future rights to be given to the “inventor” that would not be automatically vested in the inventor’s employer. For example, in the copyright context, when the right to terminate transfers of ownership was introduced as a right of “authors,” it did not apply to those whose works were made for hire, as their employers were considered the “authors.” Similar rights could be granted to “inventors” that would affect the assignees of the inventors’ patent rights.

in the performance of the agreement with the [company].” Furthermore, “if [the patentee] failed to perform the decree, ‘then and in that event’ the ‘decree [would] have the same force and effect as such assignments and transfers would have had if made.’”).

57 Id. But see Leon Jaroff, Intellectual Chain Gang, TIME Vol. 149, 64 (Feb. 10, 1997), available at http://www.time.com/time/magazine/article/0,9171,985892,00.html (describing employee that chose to go to jail rather than to comply with a court order to assign his invention to his employer).

58 See 1-5 MILGRIM ON TRADE SECRETS § 5.02[4][b] (“The general rule of law is that inventions made by an employee, although made during the hours of employment and with the use of his employer's materials, facilities and personnel, are the employee's property unless by the terms of his employment, or otherwise, he agreed to transfer the ownership (as distinguished from the use) of such inventions.”); see also United States v. Dubilier Condenser Corp., 289 U.S. 178, 187 (1933) (stating that inventions created by employees not hired to invent—even if the invention is within the same field as their employment—follow the general rule that title may only pass through negotiated assignments).

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Table 3: Work Made For Hire v. Hired-to-Invent No Negotiation



No Assignment from Employee No Court Intervention Registrability Exclusion and Licensing



Use



Transfer to Others



Protection from Future Rights Termination Shield

n/a

Duration

n/a

Universal Application



3. Employer Inventions and Employee Improvements In addition to the situation where an employer hires an employee to invent, an employer will also receive the benefit of insignificant improvements by his employees on inventions the employer has conceived of himself. 59 Under this doctrine, when an employer conceives of an invention, but receives ancillary suggestions or improvements from his employee, he retains all rights in the 59

Agawam Co. v. Jordan, 74 U.S. 583, 602 (1868) (“No one is entitled to a patent for that which he did not invent unless he can show a legal title to the same from the inventor or by operation of law; but where a person has discovered an improved principle in a machine, manufacture, or composition of matter, and employs other persons to assist him in carrying out that principle, and they, in the course of experiments arising from that employment, make valuable discoveries ancillary to the plan and preconceived design of the employer, such suggested improvements are in general to be regarded as the property of the party who discovered the original improved principle, and may be embodied in his patent as a part of his invention.”).

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invention, including any employee improvements. 60 To qualify under the employee improvements doctrine, the employer must have had a “plan and preconceived design,” 61 and the improver must be an employee. 62 The employee improvements doctrine provides a minimal step toward the work made for hire doctrine, but does not come anywhere close to providing a substitute. First, the doctrine still requires there to be an inventor. All the doctrine does is subsume improvements by another person into the inventive exercise of the employing inventor; it does not operate to grant an employing corporation rights.

In addition, the improvements that are granted must be ancillary, so any benefits from the doctrine will be minimal. Thus, if the employee creates a non-ancillary invention or improvement, the employer still needs to qualify under one of the previous doctrines or negotiate an assignment.

At base, the employee improvements doctrine determines whether an employee should be considered a joint inventor or not, which does not come close to achieving the same benefits of the work made for hire doctrine.

60

Id. at 602 (“[W]here a person has discovered an improved principle in a machine, manufacture, or composition of matter, and employs other persons to assist him in carrying out that principle, and they, in the course of experiments arising from that employment, make valuable discoveries ancillary to the plan and preconceived design of the employer, such suggested improvements are in general to be regarded as the property of the party who discovered the original improved principle, and may be embodied in his patent as a part of his invention.”).

61 Id.; see also Int’l Carrier Call & Television Corp. v. Radio Corp. of Am., 142 F.2d 493, 496 (2d Cir. 1944) (“An employer who seeks to patent the fruits of his employees’ labors must go further than merely to express a purpose to be realized.”).

62 Agawam, 74 U.S. at 603 (“Persons employed, as much as employers, are entitled to their own independent inventions, but where the employer has conceived the plan of an invention and is engaged in experiments to perfect it, no suggestions from an employee, not amounting to a new method or arrangement, which, in itself is a complete invention, is sufficient to deprive the employer of the exclusive property in the perfected improvement.”); Larson v. Crowther, 26 F.2d 780, 790 (8th Cir. 1928) (“Where a party has discovered an improved principle in a manufacture, and employs another to assist him in carrying out that principle, and the employee makes valuable additions to the preconceived design of the employer, such improvements are, in general, to be regarded as the property of the employer, and may be embodied in his patent as part of his invention.” (citations omitted)).

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Table 4: Work Made For Hire v. Employee Improvements No Negotiation



No Assignment from Employee



No Court Intervention



Registrability



Exclusion and Licensing



Use



Transfer to Others



Protection from Future Rights Termination Shield

n/a

Duration

n/a

Universal Application Given that patent law never developed a doctrine that defaulted patent rights to an employer the way copyright law did, one is left to wonder why. Why is it that copyright law in the nineteenth century began to apply an employer presumption? And why did the courts not feel the need to apply a similar presumption in patent cases? Part II discusses the development of the work made for hire doctrine in the nineteenth century, and Part III discusses potential reasons that a similar doctrine was not developed in patent law.

II DEVELOPMENT OF THE WORK MADE FOR HIRE DOCTRINE The work made for hire doctrine predated the Copyright Act of 1976. In fact, although it was first codified in the Copyright Act of 1909,63 Professor Catherine L. Fisk has claimed that the doctrine “neither was invented by the 63

See Copyright Act of 1909, ch. 320, § 62, 35 Stat. 1075 (amended 1976) (“[T]he word “author” shall include an employer in the case of works made for hire.”).

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drafters of the 1909 Act, nor was it well recognized in the cases before 1909.” 64 Instead, between the American Civil War and the passage of the Copyright Act of 1909 the default rule in copyright cases quietly switched from employee ownership to employer ownership. Professor Fisk argues that this move was justified by “cloaking” artists in an “aura of . . . romantic genius” to argue for greater legal protection, while simultaneously “downplaying or ignoring individual creative genius so as to assert corporate ownership over those copyrighted works.” 65 A. Antebellum Prior to the American Civil War, the default—and essentially the rule—was that the employee author was the owner of his works. 66 In the early days of copyright, protection was of limited application. The first copyright act—the Copyright Act of 1790—only protected maps, charts, and books. 67 Among the books that received copyright protection were the books in which court decisions were reported. Thus, it was only natural for the first copyright cases concerning employment to involve books containing those decisions and the authors that authored them. In the first case involving an employed author, the author of twelve volumes reporting the caselaw of the United States Supreme Court assigned his copyrights to a publisher. The publisher then sued a subsequent case reporter for copyright infringement because he had produced a volume titled “Condensed Reports of Cases in the Supreme Court of the United States,” which included the work of the prior reporter. 68 The Supreme Court, noting that the original reporter had failed to satisfy the formality requirements, held that it could not confer common law copyright on the initial reporter. However, what is telling about the opinion is that it appears to assume that the original reporter—and not the 64

Catherine L. Fisk, Authors At Work: The Origins of the Work-For-Hire Doctrine, 15 YALE J.L. & HUM. 1, 5 (2003).

65 Id. at 7 (“[S]ome courts did focus on the employer’s contribution or the employer’s right to control. But over time many came to rely simply on the legal fiction that employment renders the employer the author. The ‘crude legal fiction’ was not that the employer’s right to control made it the author; it was that the employer was the author.”).

66 But see id. at 15 (discussing that despite courts’ statements to the contrary, studies have shown that “between forty-four and forty-nine percent of copyright registration between 1790 and 1800 were by a person other than the actual author.”) (citation omitted).

67 Copyright Act of 1790, ch. 15 §1, 1 Stat. 124 (amended 1976). The first thing you notice in this group of works is that while books can certainly be created by an individual author, the most useful maps require coordinated effort by multiple individuals.

68 See Wheaton v. Peters, 33 U.S. 591 (1834) (holding that the author of twelve volumes reporting the cases of the United States Supreme Court held copyright in his original elements added to the reports, although not the work of the justices themselves).

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publisher—would be entitled to the copyrights in his work, even though his status as an employee was uncertain at best. 69 Later cases in the antebellum era involved school books, 70 theatrical works, 71 and cartography. 72 What is particularly interesting about this period of time is the courts’ clear pro-employee stance. In later decades, courts’ rhetoric would be inconsistent with the holdings of their decisions. While courts would claim to celebrate the genius and romanticism of the independent author, they would simultaneously grant first publishing houses and later employers the rights to that labor. During the antebellum nineteenth century, however, courts’ rhetoric praising the individual was consistent with the holdings of their decisions, which largely gave employees ownership of the copyrights in their works. The only cases where employers were held to have been granted copyrights in their employees’ works involved expressed contracts and cartography which, by its very nature, requires coordination among various individuals. True, smaller scale maps could be created by one person on their own, but for anything of a greater scale, coordination among various parties would be required.

B. The Nineteenth Century Postbellum In the period during and after the American Civil War, courts began to hold that employers had been granted copyrights in their employees’ works, not by operation of contract, but based on the employment relationship. Particularly important to the discussion in Part III is that while cases originally held that the 69

See Fisk, supra note 64, at 16–18 (discussing early American legal publishing and the status of legal reporters, who were hired by the courts as independent contractors—although not called that—and encouraged to find publishers for their work by selling their copyrights). Fisk believes that the fact that early cases involved case reporters who, like Wheaton vis-à-vis the United States Supreme Court, had relationships with the judges likely deciding these cases, likely influenced their outcome. See id. at 21. The reporters were not traditional employees, but rather important and well-educated men who had agreed to perform a function that that was essential to the profession. See id.

70 See Pierpont v. Fowle, 19 F. Cas. 652 (C.C.D. Mass. 1846) (holding that the renewal rights in a copyrighted work are not included in an assignment of the initial copyrights).

71 See Atwill v. Ferrett, 2 F. Cas. 195 (1846) (holding that an author commissioned to create an opera remained the author of the work, but that an involved theater manager retained copyright in the version performed in his theater).

72 See Pennsylvania v. Desilver, 3 Phila. 31 (C.P. 1858) (holding that the state employing a coordinating cartographer held the copyrights in his work); Heine v. Appleton, 11 F. Cas. 1031 (C.C.S.D.N.Y. 1857) (holding that an artist that had participated in a government funded expedition could not enjoin publication of books containing his illustrations, because he had expressly agreed otherwise and he had been paid to alter the images for that very purpose).

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employment relationship granted an employer rights in his employees’ work by virtue of the involvement of a corporate president, later cases created the legal fiction of the company as author.73 In the postbellum period, like the antebellum period, the relevant cases generally involved legal publications, 74 as well as theatrical works.75 One of the theatrical work cases is particularly important for the purposes of this article. In Keene v. Wheatley, the court ruled against the plaintiff-employer on many of her arguments, but with regard to ownership of one of her employee’s works, the court stated: Here, [the employee], while in the general theatrical employment of the [employer], engaged in the particular office of assisting in the adaptation of this play; and made the additions in question in the course of his willing performance of this duty. [The employer]

73

See Fisk, supra note 64, at 32 (“[C]ourts came to understand that a corporation—the quintessential “corporate” (as in collective) author—should own the rights to the work created by all the persons who worked for the corporation.”); see also infra Part II.C. 74 See Lawrence v. Dana, 15 F. Cas. 26 (C.C.D. Mass. 1869) (holding that an employer’s use of an employee’s work on a legal treatise, which she had contracted not to make use of in future editions, is an infringement). In Lawrence, the court in dicta noted that the employee had not acquired “any right to demand a copyright” in his work, but rather his employer held that right.

Id. at 51.

75 In both Roberts v. Myers and Boucicault v. Fox, the author of a commissioned play sued the theater manager who commissioned the piece for having it performed after the author, who was Figure 1: also acting in the piece, had quit. Roberts v.

Our American Cousin Playbill Myers, 20 F. Cas. 898 (C.C.D. Mass. 1860) (finding the author was entitled to the copyright in the work, despite being commissioned to write the play); Boucicault v. Fox, 3 F. Cas. 977 (C.C.S.D.N.Y. 1862) (finding that only an express agreement to assign copyright in the work would be sufficient to transfer copyright ownership). In Keene v. Wheatley, the proprietor of a New York theater had been given the rights to perform Our American Cousin, and in the process, she and her company adapted the play.

14 F. Cas. 180 (C.C.E.D. Pa. 1861).

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consequently became the proprietor of them as products of his intellectual exertion in a particular service in her employment.76 For this proposition, the court did not rely on copyright law. Instead, the court looked to patent law, and determined that since “[w]here an inventor, in the course of his experimental essays, employs an assistant who suggests, and adapts, a subordinate improvement, it is, in law, an incident, or part, of the employer's main invention,” the plaintiff in Keene was entitled to the “literary proprietorship” of her employee’s work.77 In the eyes of the Keene court, the employee was merely adding minor enhancements akin to the patent doctrine of employee improvement. Yet, over time the doctrine of work made for hire found increasing judicial support and eventually became a default rule in favor of employers. 78 Over the next several years, this new doctrine was mentioned in dicta, but in no case did a court rule that an employer possessed rights over its employee by virtue of the default rule. 79 Instead, the presumption was switched surreptitiously. In Callaghan v.

Myers, for example, while holding that a court reporter-employee held the copyrights in his work instead of his government employer, the Supreme Court determined that this was the case only due to “a tacit assent by the government to his exercising such privilege.” 80 This shift in emphasis made employer ownership a presumption that was only rebutted by tacit agreements and expressed contracts.

Why did the courts make this shift? Professor Fisk posits three potential factors: [1] Courts might have felt that a default rule of employer ownership was more likely to reflect the intent of most parties and wanted to 76

Keene, 14 F. Cas. at 187.

Id. Although the court ultimately held that the employee’s work was not copyrightable, the court did determine that equitable principles permitted the plaintiff to recover based on the employee’s giving his work to the defendants to add to their production. Id. at 188.

78 Professor Fisk makes much of the fact that the doctrine “slipped into the cases without the usual adversary process,” because in both Keene and Lawrence, the employees did not lose the rights to their work. Fisk, supra note 64, at 43–44. In Keene, the employee had already assigned whatever he had to the theater producer defendants; if anyone was going to lose out it would have been them. Keene v. Wheatley, 14 F. Cas. 180 (C.C.E.D. Pa. 1861). In Lawrence, despite the court acknowledging a copyright interest in the employer, the parties’ express contract protected the employee. Lawrence v. Dana, 15 F. Cas. 26 (C.C.D. Mass. 1869).

79 See Callaghan v. Myers, 128 U.S. 617 (1888); Sarony v. Burrow-Giles Lithographic Co., 17 F. 591 (C.C.S.D.N.Y. 1883); In re Gould & Co., 2 A. 886 (Conn. 1885).

80 Callaghan, 128 U.S. at 647.

77

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save the parties the trouble of negotiating for employer ownership. . . .

[2] [C]ourts might have begun to see employers as possessing a stronger moral claim and believed that any employee who planned to assert copyright ownership ought to be forced to disclose that intent and negotiate for it. . . . [3] [A]s changing assumptions about the nature of authorship strengthened the rhetorical force of the employer’s claim, a default rule of employer ownership might have seemed more intrinsically appealing, irrespective of whether the parties might negotiate around it.81 In response to the shifting sands of copyright law doctrine of the nineteenth century, one might expect that parties would have begun contracting around the default rules, but two factors may have made contracting prohibitively difficult: First, the costs of transacting might be high when the parties have to discuss something as touchy as authorship. Employers might have been afraid to alienate employees by demanding assignment of the copyright, preferring to run the risk of litigation later. Employees may have lacked legal sophistication to realize that it was necessary to contract for copyright ownership. Second, the instability of the law may have made enforcement of any contract they did reach highly uncertain.82 In any case, by the nineteenth century, the work made for hire doctrine was in the wind, whether because of changes in the parties themselves, or merely the impressions of those sitting on the bench.

C. Corporate Ownership and Codification The work made for hire doctrine was codified by Congress in 1909, but its foundations had existed prior to that time. As described in section B, the concept of authorship and ownership of copyright were shifting over the last half of the nineteenth century. However, it was not until 1885 that a court held that a

81

Fisk, supra note 64, at 45 (emphasis added).

Id. at 50 (citing Rochelle Cooper Dreyfuss, Collaborative Research: Conflicts on Authorship, Ownership, and Accountability, 53 VAND. L. REV. 1161, 1172–79 (2000)). But see Press Publishing Co. v. Monroe, 73 F. 196 (2d Cir. 1896) (holding that a contract provided copyright to the author); Mallory v. Mackaye, 86 F. 122 (C.C.N.Y. 1898) (holding that a contract allocated copyright in a theater manager over the playwright); Carte v. Evans, 27 F. 861 (C.C.D. Mass. 1886).

82

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corporation, and not an individual employer, held the copyrights in a work. 83 It was at this time that the legal fiction arose that a corporation could be an author.

This idea makes sense when viewed one way: corporations are merely collections of individuals working toward, generally, hierarchically determined joint goals.

However, it flies in the face of the entire notion of the individual romantic author.

The concept behind the expression embodied in a copyrightable work can be created by any number of different people as it moves through the corporate process. This is particularly clear today when one looks at the large corporations behind music, television, and film. 84 These corporations are made up of hundreds of thousands of employees, and even more independent contractors. To produce one blockbuster film may require hiring and coordinating thousands of individuals, each of whom may contribute to a portion of the film. Without the work made for hire doctrine, these companies would have to rely on a messy web of contracts and the employee improvements doctrine, and even then, it is unlikely that they would be assured that all the relevant rights had been secured.

By 1899, however, the courts had come to realize the need for a doctrine that allowed corporate employers to control the copyrights in the works of their employees by default. In Collier Engineer Co. v. United Correspondence Schools, a salaried employee hired “to compile, prepare, and revise . . . instruction and question papers” had moved to a new employer and prepared similar materials.85 His former employer made a motion for a preliminary injunction, which the court denied, but in so doing determined that the employer was entitled to any copyright in the original materials.86 This idea of protecting employers when their 83

Schumacher v. Schwencke, 25 F. 466 (C.C.S.D.N.Y. 1885). But see Edward Thompson Co. v. Am. Law Book Co., 119 F. 217, 219 (C.C.S.D.N.Y. 1902) (“It is conceded that the question whether a corporation can be an author within the meaning of the copyright laws has never been decided.”).

84 In Aalmuhammed v. Lee, the plaintiff was hired to work on, without a written agreement, and made “very extensive” contributions to the film Malcolm X. 202 F.3d 1227, 1229 (9th Cir. 2000). However, the Ninth Circuit held that in the same way that the person who controlled the film’s hue was not a joint author of the film, the plaintiff would not be considered one either. Id. at 1233. Instead, the “superintended” or “master mind” of the whole work—in this case Spike Lee, who had signed a work for hire agreement—would be considered the work’s author. Id. at 1233, 1235. To have held otherwise would have opened authors to claims by “research assistants, editors, and former spouses, lovers and friends,” not to mention dramaturgies, actors, cinematographers, film editors, art directors, and costume, makeup, set and sound designers. See id. at 1235–36.

85 94 F. 152, 153 (C.C.S.D.N.Y. 1899).

86 Id. at 153 (“[U]nder his contract . . . the literary product of [the employee’s] work became the property of the [employer], which it was entitled to copyright, and which, when copyrighted,

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employees move to other employers will resurface in Part III as a justification for employer ownership of patent rights.

Later cases embraced the idea that when an employer hired individuals to produce copyrightable works, the copyrights in those works were granted to the employer. 87 In this way, by the turn of the century, copyright law and patent law had developed fairly parallel doctrines with regard to employee works and inventions. In 1909, however, the Copyright Act was revised to codify the work made for hire doctrine by adding the following language: [T]he word ‘author’ shall include an employer in the case of works made for hire. 88 By including employers of those that create works made for hire within the definition of the term “author,” Congress continued in the direction the courts had been heading, but went farther by creating an explicit employer presumption.

Professor Fisk identifies three reasons for this change: (1) an ease in drafting the Act, (2) avoiding constitutionality challenges, and (3) ensuring that copyright ownership would vest initially in employers so they could benefit from copyright renewals.89 And that, ladies and gentlemen, was history. Since 1909, work made for hire has remained a mainstay of American copyright law.

Yet, despite over one hundred years of the work made for hire doctrine in copyright law, patent law remains based on the rule that only the individuals that create an invention can be considered inventors. Moreover, for an employer to claim patent rights, he must either negotiate an assignment, or rely on one of the [the employee] would have no more right than any stranger to copy or reproduce.”). The court denied the motion because it was unclear whether the newly created pamphlets infringed because both sets of pamphlets were compilations. Id. 87 See Edward Thompson, 119 F. at 219 (In response to the defendant’s demurrer that the plaintiff corporation was not the copyright holder, the court stated, “It sufficiently appears that complainant's publication is the result of the intellectual labor of the editors and compilers employed by complainant. It is unnecessary, as it might be impracticable, to set forth the names of the persons engaged in the preparation of the work.”); 88 Copyright Act of 1909, ch. 320, § 62, 35 Stat. 1075 (amended 1976).

89 Fisk, supra note 64, at 62 (“First, it was a matter of ease in statutory drafting (“author” is a term of art used throughout the statute). Second, it avoided constitutional doubts about a default rule of employer ownership stemming from the constitutional provision that Congress may give “authors” a copyright. Third, and most importantly, the drafters of the revision wanted to be sure that the employer would be the initial copyright owner rather than an assignee, because only the initial owner is entitled to obtain a renewal.”) (citations omitted).

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doctrines discussed in Part I.B.: shop rights, hired-to-invent, or employee improvements. Barring one of these options, an employer holds no rights in a patent absent a written assignment. Part III will explore the patent cases of the late nineteenth century, and posit potential reasons that patent law did not take a similar route.

III EMPLOYMENT IN PATENT LAW As previously described, patent law never developed a doctrine that provided all of the benefits of copyright law’s now well-established work made for hire doctrine. This divergence between the two disciplines can be explained by two factors. First, inventive activity in the nineteenth century was perceived to be individualized and not to require significant coordination among individuals.

Second, patent law developed the three doctrines described in Part I.B., which provided satisfactory protection to employers who wanted to continue using their employees’ inventions.

A. Antebellum In order to understand the nature of inventive activity during the nineteenth century, one must understand that fundamental shifts were occurring in society at the time that changed both who the inventors were and what they were inventing.

The United States has always been a country of inventors. In fact, both George Washington and Thomas Jefferson are credited with numerous inventions, including plows, adjustable writing desks and swivel chairs.90 However, at the end of eighteenth century, there were “probably no more than 300 people who we would now class as scientists in the entire world.” 91 By 1800, there were about a thousand, and by 1900 there were approximately 100,000. 92 Due to the growth in the number of scientists, science began to shift from “a gentlemanly hobby, where the interests and abilities of a single individual [could] have a profound impact, to

90

JON NOONAN, NINETEENTH-CENTURY INVENTORS, at ix (Facts on File 1992).

JOHN GRIBBIN, THE SCIENTISTS: A HISTORY OF SCIENCE TOLD THROUGH THE LIVES OF ITS GREATEST INVENTORS 359–61 (Random House 2002) (citing FRANK GREENAWAY, JOHN DALTON AND THE ATOM (Heinermann, London, 1966)).

92 Id. “But remember that the whole population of Europe doubled, from about 100 million to about 200 million, between 1750 and 1850, and the population of Britain alone doubled between 1800 and 1850, from roughly 9 million to roughly 18 million. The number of scientists did increase as a proportion of the population, but not as dramatically as the figures for scientists alone suggested at first sight.” Id. 91

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a well-populated profession, where progress depend[ed] on the work of many individuals who [were], to some extent, interchangeable.” 93 Similarly, the number of non-scientist inventors blossomed throughout the nineteenth century leading to an increased ability to appreciate the “interplay between science and technology, particularly in the fields of electricity and engine building,” which “led to a host of new practical machines that changed communications, transportation, the home, the workplace, and the farm.” 94 For example, at the beginning of the nineteenth century, America remained a nation of farmers who used the same hand implements that had been used for centuries to harvest their crops and who would travel primarily by horse or boat.95 In the time before the Civil War, however, non-scientist inventors made many advances, including the invention of the steamboat, farming machinery, the telegraph, and synthetic materials.96 Such advances were only possible due to the increased interplay between science and technology that continued to grow throughout the nineteenth century. 97 These developments also led to societal changes, including increased prosperity and the end of slavery as new equipment was developed that could perform the work better and more cheaply. 98 Despite the democratization of science and invention in the nineteenth century, however, inventive activity continued to be considered the work of individuals. In fact, there are “no reported cases before 1843 in which an employer claimed, as against an employee, ownership of a patent because the inventor had been working for him at the time of the invention.” 99 Thus, in the nineteenth century, the general perception was that inventorship was the work of certain 93

Id. at 359.

RODNEY P. CARLISLE, INVENTIONS AND DISCOVERIES, SCIENTIFIC AMERICAN 224 (John Wiley & Sons, Inc. 2004).

95 NOONAN, supra note 90, at xi.

96 Id. (“In 1830, there were only 23 miles of usable track in the United States, but that was soon to change. By 1850, there were 5,000 miles of track and 20 years later, 75,000 miles.

Steamboats increased in size and number; new farming equipment filled the country with food; the telegraph lines grew alongside the expanding railroads; and a thousand uses were found for vulcanized rubber and other new materials.”).

97 CARLISLE, supra note 94, at 223 (“The machines were built first; then the principles that governed them were thought through. With the newly discovered principles in place, it was possible to build better machines.”).

98 NOONAN, supra note 90, at x–xi.

99 Catherine L. Fisk, Removing the ‘Fuel of Interest’ from the ‘Fire of Genius’: Law and the Employee-Inventor, 1830–1930, 65 U. CHI. L. REV. 1127, 1138 (1998); see also id. 1138 n.33 (explaining that it is “implausible that there were no such cases before 1843,” but there were fewer opinions written and reported at that time).

94

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individuals, who were considered the great men of the time. One visual example of this mentality is Christian Schussele’s 1857 painting titled Men of Progress, which depicts Benjamin Franklin overlooking nineteen nineteenth century inventors: 100 Figure 2: Men of Progress

Despite this public perception, however, the reality was that even these great men had assistance in creating their famous inventions. Among those depicted in Schussele’s painting is Charles Goodyear, who is remembered for his invention of vulcanized rubber in 1839. 101 He received a patent on his process in 1844,102 and

100

Depicted left to right: William Morton; James Bogardus; Samuel Colt; Cyrus Hall McCormick; Joseph Saxton; Charles Goodyear; Peter Cooper; Jordan Mott; Joseph Henry; Eliphalet Nott; John Ericsson; Frederick Sickels; Samuel F. B. Morse; Henry Burden; Richard Hoe; Erastus Bigelow; Isaiah Jennings; Thomas Blanchard; Elias Howe.

101 NOONAN, supra note 90, at 33–34, 39 (“A sample of his rubber, composed of his most recent chemical formula, came in contact with a hot stove. The natural gum always softened in summer heat. With the extreme heat of the stove, the gum should have melted. Instead of softening, however, Goodyear’s newest rubber charred like leather. It could still stretch but it wasn’t soft or sticky! Goodyear noticed that the edge of his sample was perfectly cured and not charred. If he could find the correct temperature, he could make fully cured rubber.”).

102 Id. at 36.

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almost immediately became embroiled in patent litigation. 103 Not only was Goodyear forced to litigate against his competitors, however, but also against his own employees, one of whom attempted to patent one of Goodyear’s inventions.104 Fortunately for Goodyear, despite recognizing a presumption in favor of the employee—who actually made the machine—the courts considered Goodyear’s employee’s activities to have been at Goodyear’s direction, and thus, they determined that it was Goodyear, and not his employee, that was the true inventor.105 Despite the favorable result for Goodyear, the case only underscored the presumption that employees owned their inventions, as the court continued to articulate employee-ownership as the general presumption in such cases. Thus, time and time again, courts were required to find exceptions in order to protect employers from the presumption’s consequences. For example, in 1843 the Supreme Court, in McClurg v. Kingsland, determined that a license or grant from the employee to the employer may be presumed by virtue of the fact that the employee:

103

Id. (“Several companies honored licenses from Goodyear to make rubber products using his methods. Some did not. These other companies copied Goodyear’s process without paying royalty fees. Goodyear had to get involved in lawsuits to protect his rights.”).

104 In Warner v. Goodyear, Charles Goodyear patented an invention and then Solomon C. Warner, who had been employed as a machinist for Goodyear, attempted to patent the same invention. 29 F. Cas. 256, 256 (C.C.D.C. 1846). The invention at issue was a combination for “manufacturing corrugated or shirred India-rubber goods” using “metallic calendar rollers an elastic endless apron and a stretching-frame.” Id. 105 The patent commissioner refused Warner’s patent, and when he appealed, the court found that although an inference could be drawn for Warner because he made the machine, it was rebutted by his employment and that while still employed he “stood by and saw Mr. Goodyear apply for and obtain a patent for it without objection.” Id. at 257. Moreover, the court found a presumption in Goodyear’s favor: from the fact that Warner made the machine for Goodyear at his request, for his benefit, and at his expense, [the presumption] is that it was made according to his directions; and the burden of proof is then on Warner to show that the machine was not according to his directions.

Id. The court went on to find that Goodyear had conducted a number of experiments and that Warner had merely reduced to practice Goodyear’s combination. Id. Furthermore, the court may have been swayed by some evidence of bad faith, as Wilson did not apply for a patent for 18 months, six months after Goodyear had obtained his patent, and had reached an agreement with another company to pay for the costs in getting the patent. Id. Cf. Collier Eng’r Co. v. United Correspondence Sch., 94 F. 152 (C.C.S.D.N.Y. 1899), discussed supra notes 85–86 and accompanying text.

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was employed by the defendants . . . receiving wages from them by the week; while so employed, he claimed to have invented the improvement patented, and after unsuccessful experiments made a successful one . . . the experiments were made in the [employer’s] foundry, and wholly at their expense, while [the employee] was receiving his wages, which were increased on account of the useful result. 106 This implied license, or shop right, prevented the assignees of the employee’s patent from bringing suit against the former employer for infringement when all the employer was doing was continuing to use the process it had been using prior to the employee’s departure. 107 The Court reached this result without requiring an assignment of the patent. Rather, the Court held that the plaintiffs took their assignment from the employee subject to his license to his former employer. 108 As such, McClurg is generally thought of as the first shop rights case. 109 It can also be 106

42 U.S. 202, 205 (1843). Furthermore, the employee continued to work at the foundry making rollers, and although his employer declined his proposal to apply for a patent and have the employer purchase his rights, he made no demand on theme for any compensation for using his improvement, nor gave them any notice not to use it, till, on some misunderstanding on another subject, he gave them such notice, about the time of his leaving their foundry, and after making the agreement with the plaintiffs, who owned [another] foundry . . . for an assignment to them of his right.

Id. 107 Id. at 204. The patent had been granted on an “improvement in the mode of casting chilled rollers and other metallic cylinders and cones . . . [so that] iron rollers or cylinders could be so cast that when the metal was introduced into the mould it should cause a sw[i]rl or rotary motion, by which the flog or dross would be thrown into the centre instead of the surface of the cylinder.” Id. The improvement was to change the direction of a tube exiting a furnace and entering the cylindrical mold from a perpendicular position to an angular one. Id. at 204–05 (“The tube or tubes, or passages called gates, through which the metal to be conveyed into the moulds shall not enter the mould perpendicularly at the bottom, but slanting, or in a direction approaching to a tangent of the cylinder, or if the gates enter the moulds horizontally or nearly so, shall not enter in the direction of the axis of the cylinder, but in a tangent form, or inclining towards a tangent of the cylinder.”).

108 Id. at 206.

109 Interestingly, McClurg has reasserted itself in modern copyright law to establish the idea that legislative expansion of intellectual property rights does not conflict with the constitution’s requirement that copyrights and patents be only for “limited times.” See Golan v. Holder, 132 S. Ct. 873, 886–87 (2012). (“This Court again upheld Congress' restoration of an invention to protected status in McClurg v. Kingsland . . . . There we enforced an 1839 amendment that recognized a patent on an invention despite its prior use by the inventor's employer. Absent such dispensation, the employer's use would have rendered the invention unpatentable, and therefore

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seen as a fairly pro-employee case, for the employer received no rights to the invention other than the right to use it despite the fact that the employee would not have been able to make his improvement but for his employer’s time, money and equipment. 110 During this same time period, other inventors were creating major innovations in both science and industry. For example, in 1844 Samuel Morse— also depicted in Men of Progress—connected the first intercity line between Washington and Baltimore and sent the message, “What hath God wrought!”111 Moreover, scientists were making significant advances in electric theory, evolution, and thermodynamics. 112 Similarly, in the decade that followed, solo inventors continued to be credited with major breakthroughs in both science and industry. For example, during the 1850s, Heinrich Geissler is credited with the leaps forward that resulted in the invention of the vacuum tube. 113 Further, the 1850s saw huge advances in telecommunications technology, including Morse’s testing of the first transatlantic telegraph cable. 114 Even Abraham Lincoln took the open to exploitation without the inventor's leave.”) (citations omitted); Eldred v. Ashcroft, 537 U.S. 186, 187–88 (2003); Golan v. Ashcroft, 310 F. Supp. 2d 1215, 1219 (D. Colo. 2004) (“As explained in Eldred, the McClurg court determined that [the employee] was ‘unprotected under the law in force when the patent issued because he had allowed his [ex-]employer briefly to practice the invention before he obtained the patent. Only upon enactment, two years later, of an exemption for such allowances did the patent become valid, retroactive to the time it issued.’

The McClurg Court upheld retroactive application of the new amended laws ‘for though they may be retrospective in their operation, that is not a sound objection to their validity.’”) (citations omitted).

110 Cf. Fuller & Johnson Mfg. Co. v. Bartlett, 31 N.W. 747, 752 (Wis. 1887) (“The mere fact that, in making the invention, an employe [sic] uses the materials of his employer, and is aided by the services and suggestions of his co-employes [sic] and employer in perfecting and bringing the same into successful use, is insufficient to preclude him from all right thereto as an inventor.”)

111 NOONAN, supra note 90, at 26.

112 In 1841, James Joule produced papers on the relationship between electricity and head for the Philosophical Magazine and the Manchester Literary and Philosophical Society. GRIBBIN, supra note 91, at 384. Between 1839 and 1845, Darwin made significant advances in developing his theory of evolution. Id. at 349. In 1848 and 1849 respectively, Julius Robert von Mayer developed ideas about heat and energy into a discussion of the age of the Earth and the Sun, and William Thomson coined the term thermodynamics. Id. at 381, 383.

113 First, Geissler invented a better kind of vacuum tube that used mercury to make airtight contact. Id. at 487. Then, he pushed the invention further and “sealed two electrodes into the evacuated glass vessel, creating a tube in which there was a permanent vacuum.” Id. at 488.

114 NOONAN, supra note 90, at 14–15, 26. In 1851, over 50 telegraph companies “started stretching wires,” and within 15 years, “almost half a million miles of lines in America, Europe, and Asia would be connected.” Id. at 23–24.

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time to consider the discoveries, inventions and improvements that resulted from America’s willingness to observe, reflect and experiment. 115 Despite the attribution of these major advances to individual inventors, the reality was that even in the 1840s, teams of workers were working together to develop new technologies, which “somewhat undermine[s] the heroic mythology surrounding the great individualistic and entrepreneurial American inventors.”116 The dichotomy between the myth of the sole inventor and the reality that inventive activity was being carried out by groups of individuals in many ways mirrors the shift that was occurring in copyright law at that time. However, instead of acknowledging that multiple individuals were involved in the inventive process, courts turned a blind eye to the significant contributions employees were making to their employers’ inventions and dismissed those contributions as small modifications.117 In King v. Gedney, for example, the court disregarded the following evidence as “vague and equivocal,” and instead determined that the employer “might have” given the employee—a draftsmen and general foreman— general directions about the improvement: [The employee] was the foreman, and directed the making the alterations in the factory. [The employer] gave him no directions in relation to those alterations; [another employee] asked him for directions during the time that he was making alternations, and his answer was, ‘I do not know anything about it; go to [the employee].’

He said it was [the employee’s] improvement, and he knew nothing about it; if it did not work it was [the employee’s] fault; [the other 115

Abraham Lincoln, Sole Hope of the Future (Feb. 11, 1859), in MARIO M. CUOMO & HAROLD HOLZER, LINCOLN ON DEMOCRACY 148, 150 (Fordham Univ. Press 2004).

116 GRIBBIN, supra note 91, at 224.

117 For example, in Wellman v. Blood, an employer attempted to patent an invention, and an interference party argued that he was not the inventor, but rather the inventor was a man who had created a drawing of the invention with a modification of his own. 29 F. Cas. 628, 629–31 (C.C.D.C. 1856) (involving improved machinery for “cleaning top cards of carding machines”).

The court determined, however, that [i]f the employer conceives the result embraced in the invention, or the general idea of a machine upon a particular principle, and in order to carry his conception into effect, it is necessary to employ manual dexterity, or even inventive skill, in the mechanical details and arrangements requisite for carrying out the original conception; in such cases the employer will be the inventor, and the servant will be a mere instrument through which he realizes his idea.

Id. at 631. It went on to decide that Wellman had conceived of the improvement first and “practically reduced it,” even though the final invention included the employee’s small modification. Id.

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employee] must go to him for all instructions. [The other employee] did not hear [the employer] give directions to any of the workmen in the shop. He has seen [the employer] and [the employee] conversing together at the factory, when chalk marks were made upon the floor by [the employee] to convey to [the employer] the manner in which he was going to prosecute the work. 118 The court determined that if the general idea was the employing inventor’s, then the employee “could only be considered as acting as [his] servant,” and held the employer to be the original and sole inventor. 119 Thus, by crediting employers with being sole inventors, courts were able to continue to articulate the presumption that those who do the actual inventing will own the rights to their inventions. However, as employees became more and more involved with the inventive process, courts would find it increasingly difficult to rely on the employee improvements doctrine to rebut the presumption of employee ownership. 120 B. The Nineteenth Century Postbellum American invention did not stop during the American Civil War. In fact, the war spurred increased invention, particularly in agriculture. For example, Cyrus McCormick—another famed inventor depicted in Men of Progress—developed a reaper in 1861, which allowed northerners to increase food production “to the highest levels of surplus ever known” even though they had fewer farm hands due to the war.121 Similarly, in the mid-1860s, scientists were making major advances 118

King v. Gedney, 14 F. Cas. 526, 530 (C.C.D.C 1856) (involving improvement on washing machinery that included a four-way valve at the breach end of the tub). In King, the employer sought a patent on an improvement to a previously patented machine, his employee also sought a patent, and an interference was declared. Id. at 526. The patent commissioner decided invention priority in favor of the employee, and the employer appealed. Id. at 527.

119 Id. at 530–31; see also Dental Vulcanite Co. v. Wetherbee, 7 F. Cas. 498, 502–03 (C.C.D. Mass. 1866); Goodyear v. Day, 10 F. Cas. 677, 677 (C.C.D.N.J. 1852); Sparkman v. Higgins, 22 F. Cas. 879, 880 (C.C.S.D.N.Y. 1846); Alden v. Dewey, 1 F. Cas. 329, 330 (C.C.D. Mass. 1840); Dixon v. Moyer, 7 F. Cas. 758, 759 (C.C.D. Pa. 1821). The court also repeated the rule stated in Wellman, supra note 117, but attributed it to Curtis on Patents. King, 14 F. Cas. at 530.

120 Dwight B. Cheever, The Rights of Employer and Employee to Inventions Made by Either During the Relationship, 1 MICH. L. REV. 384, 385 (1902–1903) (“[T]here is . . . no question for the courts where the employer does all the inventing and the employee does only work requiring ‘mechanical skill.” As soon, however, as the employee begins to think that his ‘mechanical skill’ has turned to inventive skill the trouble begins . . . .”).

121 NOONAN, supra note 90, at 48–49.

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in chemistry and thermodynamics. 122 Then, in 1865, George Westinghouse received his first patent for a rotary steam engine, followed by patents for railroad frogs and air brakes.123 A few years later, a “self-taught practical innovator” by the name of Thomas Alva Edison would apply for his first patent. 124 Edison is a particularly interesting example of a nineteenth century inventor, because it is well documented that he “regularly employed not only mechanics and craftsmen but also college-trained chemists and engineers in his invention workshop.”125

122

GRIBBIN, supra note 91, at 382, 376–77. Moreover, in 1864, James Maxwell published his “tour de force paper, ‘A Dynamic Theory of the Electromagnetic Field,’ which summed up everything that it is possible to say about classical electricity and magnetism in a set of four equations, now known as Maxwell’s equations.” Id. at 431. These equations would be the basis for Albert Einstein’s work on the special theory of relativity. Id. at 435.

123 NOONAN, supra note 90, at 57–58, 65; see also Improvements in Rotary Steam-Engines, U.S. Patent No. 50,759 Figure 3: U.S. Patent No. 50,759 (issued Oct. 31, 1865) (see Figure 3). Railroad frogs are “used for keeping cars on the correct rails at intersections and track switches.”

NOONAN, supra note 90, at 57. Westinghouse’s invention was to use reversible cast steel frogs to prevent them from wearing out. Id. 124

125

CARLISLE, supra note 94, at 224; see also Improvement in Electrographic Vote- Recorder, U.S. Patent No. 90,646 (issued Jun. 1, Figure 4: 1869) (see Figure 4).

U.S. Patent No. 90, 646

CARLISLE, supra note 94, at 224. Cf. Fisk, supra note 99, at 1139 (“In the late nineteenth century, research laboratories dedicated to invention and technological innovation—like Thomas Edison’s famed laboratory enclave at Menlo Park, New Jersey—were unusual”).

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In some ways, then, it is not surprising that the Supreme Court first recognized the employee improvements doctrine in its 1868 Agawam Co. v. Jordan opinion. In Agawam, an inventor named John Goulding hired a blacksmith, Edward Winslow, to help in his machine shop.126 Goulding had been working on his invention and was at the point of experimentation when Winslow, having visited another factory, made a suggestion of replacing a piece of Goulding’s invention with a spool and drum. 127 Goulding went back and forth about the value of the suggestion, but after making another modification to make the change practicable, he adopted Winslow’s suggestion.128 The new invention was patented and eventually assigned to the plaintiff who then sued the Agawam Woolen Company for infringement. 129 Agawam defended, in part, by arguing that it was Winslow, and not Goulding, that invented the improvements for which the patent was granted.130 The Court held that Goulding’s claim to invention of the patent was sustained, because all that Agawam could prove was that Winslow suggested the spool and drum—an “auxiliary” part of the invention.131 In handing another victory to an employer, however, the Court

126

74 U.S. 583, 586 (1868). The invention in Agawam was a new mechanical combination for manufacturing wool and other fibrous materials using a carding machine that was fed a continuous roll. Id. at 584–86, 599–602.

127 Id. at 587.

128 Id. 129 Id. at 588, 593. Interestingly, Goulding actually failed to apply for a renewal of his patent right due to “erroneous information given him by the Commissioner of Patents,” and the patent expired. Id. at 588, 594. Twenty-one years after the patent expired, Goulding persuaded Congress to pass a special act, authorizing the patents commissioner to entertain an application for extension, and the patent reissued. Id. at 588, 594; see also An Act for the Relief of John Goulding, ch. 88, 12 Stat. 904 (1862). In a previous case involving Goulding’s patent, the constitutionality of the grant was questioned, but the circuit court rejected the argument. Jordan v. Donson, 13 F. Cas. 1092, 1095–96 (C.C.E.D. Pa. 1870).

130 Agawam, 74 U.S. at 589, 595.

131 Agawam, 74 U.S. at 605–07. In so holding, the Court repeated over and over that while only the inventor is entitled to a patent, if he employed other persons to help and they made “valuable discoveries ancillary” to the employer’s plan, the employer who invented the original idea is regarded as the owner of them. Id. at 602–03. Rather, the employee’s contribution would need to meet the derivation requirements to preempt the employer’s rights from vesting. Id. (citing various derivation cases, including Pitts v. Hall, 19 F. Cas. 754 (C.C.N.D.N.Y. 1851); Reed v. Cutter, 20 F. Cas. 435 (C.C.D. Mass. 1841); Alden v. Dewey, 1 F. Cas. 329 (C.C.D. Mass. 1840)).

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continued to recite that the general presumption is that employees hold rights to their inventions. 132 Similarly, as discussed above, during this time employers in copyright cases began to see the presumption switch from employee ownership to employer ownership. For example, five years prior to Agawam, the influential case of Kenne v. Wheatley was decided in favor of the employer relying on an employee improvements-type argument to grant a theater proprietor the copyrights to a play adapted by her and her theatrical company. 133 Whereas in theater it was undeniable that multiple individuals were required to develop new materials and produce it for the stage, invention in the 1870s continued to be perceived as the work of individuals with minimal help from employees instructed to carryout manual labor.

Significant changes, however, were on the horizon for those industries that employed workers to design and construct their products. The “United States began to develop a single price and market system,” which led to capital intensive industries that “employed workers who owned no tools and had few skills, leading to social inequalities that created new political crises.” 134 Those inequities led to the formation of labor unions, which employed a variety of tactics to effect the status of workers in this country. “The decades from the 1870s through the early 20th century saw one disruptive strike after another and the beginning of the appeal of ideologies and reform strategies that would characterize the labor movement— agrarian reform, populism, socialism, anarchism, and progressive reformism.” 135 Despite these changes, inventive activity in the United States soldiered on.

For example, Edison—who, as discussed above, employed a variety of workers in his invention workshop 136—had filed for patents on 21 inventions by 1871.137 As inventive activity began to involve more complex technology, the proportion of

132

Agawam, 74 U.S. at 603 (“Persons employed . . . are entitled to their own independent inventions.”).

133 See supra notes 75–79 and accompanying text.

134 CARLISLE, supra note 94, at 225.

135 Id. at 226–27.

136 See supra note 125 and accompanying text.

137 NOONAN, supra note 90, at 74. By 1872, “Edison had filed patents for 52 inventions, most of them on printing-telegraph improvements. In the next three years, Edison created inventions such as the electric pen and mimeograph for making copies of letters and the quadruplex telegraph. The quadruplex handled two messages simultaneously to and from each end of the telegraph line, making a total of four messages on a single wire.” Id.

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inventions devised by solo inventors continued to decline. 138 Perhaps in recognition of these changes, the Supreme Court began to hint at a willingness to recognize employers’ ownership of patented inventions that they hired employees to create. 139 Nevertheless, there were limits to the Court’s willingness to grant patent rights to one who employed another to invent. In Collar Co. v. Van Dusen, for example, the Supreme Court determined that the plaintiff, despite employing a set of paper-makers to create a paper collar that would be perceived as a real starched linen collar, was not entitled to a patent because only the paper-makers had invented something patentable. 140 The plaintiff had argued that the paper-makers had received inspiration and direction, but the Court determined that the papermarkers had provided the whole improvement and therefore the plaintiff had no rights to their invention under Agawam’s ancillary discoveries rule.141 138

Fisk, supra note 99, at 1141 (citing B. Zorina Khan & Kenneth L. Sokoloff, “Schemes of Practical Utility”: Entrepreneurship and Innovation Among “Great Inventors” in the United States, 1790–1865, 53 J. ECON. HIST. 289, 295–301 (1993) and Naomi R. Lamoreaux & Kenneth L. Sokoloff, Inventors, Firms, and the Market for Technology in the Late Nineteenth and Early Twentieth Century United States, in Naomi R. Lamoreaux, et al., LEARNING BY DOING IN FIRMS, MARKETS, AND NATIONS (University of Chicago Press 1999)).

139 See United States v. Burns, 79 U.S. 246, 252 (1871) (hinting at the hired-to-invent doctrine in dicta).

140 90 U.S. 530, 536, 564 (1874). Andrew Evans had previously received a patent for an improvement in the creation of shirt collars, which turned out to be a flop. Id. The shirt collars were “made of parchment-paper and coated with varnish of bleached shellac,” which—according to the reporter—evidently did not look like linen, much less starched linen, became discolored over time, emitted an odor when wearers sweated, and was not amenable to the new fashion of turned down collars. Id. at 537.

So Evans employed Crane & Co. to create “something which while it was paper and could be produced cheaply should yet have such a thickness, tenacity, pliability united with strength, and have moreover that polish of surface, and that exact bluish tint which is found in the best starched linen—as distinguished from yellowness and from dead white—which would deceive even critical observers who had no opportunity of judging otherwise than by eye.” Id. Crane & Co. after laborious effort were able to create just such a collar, and after it was created, Evans assigned his patent rights to the Union Paper Collar Company and they applied for and received a reissue of the patent. Id. at 537, 539. Collar Co. then brought suit against Van Dusen.

141 Id. at 550, 564 (“[P]ersons employed, as much as employers, are entitled to their own independent inventions, and if the suggestions communicated constitute the whole substance of the improvement the rule is otherwise, and the patent, if granted to the employer, is invalid, because the real invention or discovery belongs to the person who made the suggestions.”). The court first noted that Evans likely knew nothing about the process of manufacturing paper and that the original patent did not describe the process added in the reissue. Id. at 561. It then found that Evans “did not communicate any information to [Crane & Co.] respecting the process

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Despite its use of the terms “employer” and “employee,” however, the Collar case is better understood as concerning, using our modern parlance, independent contractors, who, even if Collar was a modern copyright case, would be unlikely to fall within the work made for hire doctrine. Rather than inspiring and directing the paper-makers’ improvement, the patentee derived all of the improvements he attempted to patent from the paper-makers. Similarly, other courts in the 1870s held that if an employee’s invention was outside the employee’s inventive arena, the employer would receive no more than a shop right to the invention. 142 By the 1880s, “farmers and industrial workers represented a force for political insurgency that began to coalesce into new movements that threatened to change the nature of society.” 143 These movements reflected a general antimonopoly and big business sentiment at the turn of the century, as they began to lead to discussions of new government regulations “to control railroad rates and other large enterprises . . . to address the growing power of bankers and railroad magnates.”144 At the same time, entrepreneur inventors, like Westinghouse, were beginning to build empires of their own from their own companies and inventions, as well as those of others. 145 These companies employed various individuals who developed patentable inventions during their employment. by which such paper could be produced, nor did he give [them] any directions upon the subject,” because without knowledge of making paper he was unable to do so. Id. at 562.

142 See Whiting v. Graves, 3 Ban. & A. 222 (C.C.D. Mass. 1878). In Whiting, an employer hired a machinist to maintain the machines in his new dry goods factors and to make any other machinery that would be necessary, but did not include a provision in his service contract related to patents. Id. at 223. Instead, the employer would have the machinist assign his inventions prior to application for patents on them, which worked fine for the employer’s dry goods machines, but then the machinist made an improvement on sewing-machines. Id. The court determined that while the employer would be afforded a shop right in the machinist’s inventions by virtue of his original contract, an additional assignment would be required for the employer to take legal title. Id. at 224. The court went on to hold, based on various testimony, that the employer was only entitled to a one-half interest in the patents, by virtue of an agreement to pay the patent expenses for one-half of the profits from the manufacture of the invention, and that the machinist was entitled to assign his interests to the defendants, which meant they could not infringe. Id. at 1061; see also Niagara Radiator Co. v.

Meyers, 40 N.Y.S. 572, 573–76 (N.Y.S. Ct. 1896) (finding machine shop foreman not hired to invent); Connelly Mfg. Co v. Wattles, 23 A. 123, 124 (1891) (finding a shop foreman would not be hired to invent).

143 CARLISLE, supra note 94, at 226.

144 Id. 145 NOONAN, supra note 90, at 60 (“By the 1880s, Westinghouse was involved in several enterprises. As well as companies and patents he originated on his own, he also started

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During the remainder of the nineteenth century, disputes over employees’ inventions became more frequent and led to cases that further developed the shop right 146 and employee improvements doctrines. 147 The courts, however, failed to purchasing the companies and patents of others, too. He seemed to find opportunities everywhere.”).

146 See Clark v. Fernoline Chem. Co., 5 N.Y.S. 190, 191 (N.Y. Sup. Ct. 1889) (In a case primarily concerned with a dispute over unpaid wages, the New York Superior Court held that although an employee had been hired as a chemical expert and chemist, his employer was only entitled to a shop right and not an assignment of any patents granted to the employee.); see also Gill v. United States, 160 U.S. 426 (1896) (holding that the patentee had acquiesced to the government’s use of his invention—a shop right); McAleer v. United States, 150 U.S. 424, 432 (1893) (finding an expressed contract permitting government use); Lane & Brodley Co. v.

Locke, 150 U.S. 193, 196, 198–99 (1893) (finding implied license—or shop right—from inventor to partnership, which was incorporated while he was still working there); Solomons v.

United States, 137 U.S. 342, 346–48 (1890) (finding an implied license permitting government use—a shop right).

In Dalzell v. Dueber Watch Case Manufacturing Co., an individual, who had been employed at various times within a company as an electroplater, slider and toolmaker, invented various things and applied for and was granted patents on them. 149 U.S. 315, 315–19 (1893) (the inventions involved improvement in the making of watch case cores). The employee sued the employer fro infringement, and the employer responded by seeking specific performance of an oral agreement to assign the right to obtain patents on them. Id. at 317–20. The Court held that an oral agreement for the “assignment of the right to obtain a patent for an invention” was neither within the statute of frauds nor covered by the requirements that all patent assignments be in writing. Id. at 320. However, the Court determined that the testimony was in hopeless conflict and therefore refused to afford specific performance; thus, allowing the infringement action to proceed. Id. at 326. The Court did, however, leave open the possibility that a shop right had been granted. Id. (“It is proper to add that the question whether the [employer], by virtue of the relations and transactions between it and [the employee], had the right, as by an implied license, to use [the employee’s] patents in its establishment is not presented by either of these records, but may be raised in the further proceedings upon the bill against the [employer] for an infringement.”).

147 See Eclipse Mfg. Co. v. Adkins, 44 F. 280, 281–82 (C.C.N.D. Ill. 1890) (determining that employer who came up with the idea of putting ornamenting on radiator pipes, but had his employees create the design and build the pipes, was entitled to his patent, as the patent was on the idea, not the specific ornamentation); Streat v. White, 35 F. 426, 426, 428 (C.C.S.D.N.Y. 1888) (involving a design patent for textiles intended to be employed to create imitation “seersucker” fabrics, the court determined that because the plaintiff only had the idea of imitation seersucker, which did not constitute a novel idea, and employed a cotton goods factory manager to produce it by whatever means were necessary, he could not patent the resulting design). In Streat, the factory manager and the designer “were furnished a sample of a seersucker, and with a photographic copy of the sample, and where told to imitate it, and that the way in which the imitation was to be effected was left with the designer, who was solely responsible for a successful result, and to whom the task of finding an idea or conception of the method of imitating the crinkle was solely committed.” Id. at 428; see also Streat v. Simpson, 53

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develop a mechanism for dealing with employees that were explicitly hired to invent,148 until the hired-to-invent doctrine was formally recognized by the Supreme Court in 1924. 149 Also, the rise of the corporate form introduced additional complications, 150 such as whether a shop right could be assigned.151 F. 358, 359 (C.C.S.D.N.Y. 1893) (finding in a subsequent infringement suit that the plaintiff “had nothing to do about designing or engraving the tools for printing the imitation, but through [the factory manager]; and that the designer and engraver were controlled by anything but the sample and photograph given to them by [the factory manager] is not made to appear”).

148 Compare Dalzell, 149 U.S. at 320 (“[A] manufacturing corporation which has employed a skilled workman, for a state compensation, to take charge of its works, and to devote his time and services to devising and making improvements in articles there manufactured, is not entitled to a conveyance of patents obtained for inventions made by him while so employed, in the absence of express agreement to that effect.”) with Solomons, 137 U.S. at 346 (1890) (stating in dicta that “[i]f one is employed to devise or perfect an instrument, or a means for accomplishing a prescribed result, he cannot, after successfully accomplishing the work for which he was employed, plead title thereto as against his employer. That which he has been employed and paid to accomplish becomes, when accomplished, the property of his employer. Whatever rights as an individual he may have had in and to his inventive powers, and that which they are able to accomplish, he has sold in advance to his employer.”); Annin v. Wren, 44 Hun. 352, 353 (N. Y. Sup. Ct. 2d Dept. 1887) (holding that equity required a skilled draughtsman—hired by an iron truck and wheelbarrow manufacturer to develop his business—to assign his patents on improvements to the manufacturer’s wheelbarrows and trucks to the manufacturer if they were based on their joint development, because it would be unreasonable to prevent an employer from using improvements made during the course of the draughtsman’s employment). The court’s decision in Annin may have been colored by the fact that the draughtsman assigned his patent application to his brother in order to deprive the manufacturer of it. Id. at 354.

149 See Standard Parts Co. v. Peck, 264 U.S. 52, 58–60 (1924).

150 See LAWRENCE M. FRIEDMAN, A HISTORY OF AMERICAN LAW 446–59 (Simon & Schuster 1973) (discussing the right of the corporate form at the end of the nineteenth century); see also CHRISTOPHER L. TOMLINS, LAW, LABOR, AND IDEOLOGY IN THE EARLY AMERICAN REPUBLIC 259 (Cambridge Univ. Press 1993) (“By midcentury, on and off the farm, it seems likely that the proportion of productively engaged Americans employed by others—about one-third in 1820— had increased to about one-half.”).

151 It cannot. See Hapgood v. Hewitt, 119 U.S. 226 (1886). In Hapgood, a mechanical expert had been hired by a corporation as vice president, and later superintendent, to create plows and other goods, and to supervise generally the manufacturing department. Id. at 229.

While in the corporation’s employ, the expert was asked with creating an iron plow similar to the company’s existing wooden ones, and he did so within the corporation’s employ, during working hours, using employees and corporate materials. Id. at 230. While he was inventing these plows, he never claimed a property ownership, but when he left he made his own, patented the improvements, and sought money from the corporation for its use of the improvements. Id. at 232. The Court held that he was not required to assign his patent to the corporation, but the corporation had received a “naked license to make and sell the patented improvement.” Id. at 233. However, the corporation had, in the meantime, dissolved and the stockholders had created

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Despite these developments, however, in not one of these cases was an employing company considered an “inventor” by virtue of its employees’ activity.

Rather, for a company to receive patent ownership, an employee needed to assign it his or her rights.

By the turn of the century, each and every person in the United States had been affected by the inventions of the nineteenth century. In particular, the poor were being put to work in factories using newly invented machinery and tools.

Even the middle classes indirectly benefited from the benefits of the day: For the middle classes, such as physicians, attorneys, engineers, academics, journalists, and managers, whose employment was less dependent on machinery and tools than on their education, the new technologies provided new sources of entertainment, comfort, and opportunities. By 1890, a person who worked in such a profession could come home, switch on the electric light, make a phone call, go to the refrigerator and take out a cold beer, light a factory-made cigarette with a safety match, then sit down to listen to a phonograph record while reading a newspaper with news of the day from all over the planet. It was a new world, for none of those experiences had been possible 40 years earlier, even to the wealthy. 152 IV IS PATENT LAW STUCK IN THE PAST? For inventors in the twentieth century, more and more inventive activity would occur within corporate settings. However, patentable inventive activity would continue to be credited to individuals, not groups, until late into the century.

In fact, the average number of inventors per patent would not begin to change dramatically until the 1970s, when a “dramatic increase in the proportion of ‘highly collaborative’ inventions” would drive the average up: 153

a new corporation, which was its successor in interest; the Court held that the new corporation did not benefit from the shop right. Id. at 232–34.

Nevertheless, in Lane & Bodley Co. v. Locke, the Supreme Court determined that a shop right created during a partnership carried over after incorporation, because of the close affinity between the two corporate entities and because the inventor had ratified the transfer by acknowledging the incorporated entity was the successor to the partnership. 150 U.S. at 196.

152 CARLISLE, supra note 94, at 227.

153 Dennis Crouch, The Changing Nature Inventing: Collaborative Inventing, PATENT LAW BLOG (PATENTLY-O) (Jul. 9, 2009, 9:28 AM), http://www.patentlyo.com/patent/2009/07/thechanging-nature-inventing-collaborative-inventing.html (“This data is derived from a sample of

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Chart 1: Average Number of Inventors per Patent Grouped by Decade of Issuance 3 2

2.5 2.2 1.9 1.6

1 0

1970s

1980s

1990s

2000s

Yet, despite the fact that today the “ordinary inventor is . . . a joint inventor who invents as part of a team,” 154 patent law continues to require that corporate employers receive assignments from their employees in order to effect a transfer of the ownership of the employees’ patent rights.

In Part II, several reasons behind copyright law’s move toward the work made for hire doctrine were posited: (1) courts were attempting to reflect the intent 750,000 patents issued from August 1971 through February 2009. All reported results are significant at the 99% confidence level.”); see also Dennis Crouch, Person(s) Skilled in the Art: Should the Now Established Model of Team-Based Inventing Impact the Obviousness Analysis?, PATENT LAW BLOG (PATENTLY-O) (May 17, 2011, 5:24 PM), http://www.patentlyo.com/patent/ 2011/05/persons-skilled-in-the-art-should-the-now-established-model-of-team-based-inventingimpact-the-obviousness-analysis.html [hereinafter Team-Based Inventing] (“In [1852], 82% of patents listed only one inventor and a mere 3% listed three or more inventors. By 2011, the statistics had inverted. Less than one-third (32%) of patents issued so far this year list just a single inventor and 43% identify three or more inventors. During this 60-year period, the average number of inventors per patent has more than doubled.”); Dennis Crouch, Cross-Border Inventors, PATENT LAW BLOG (PATENTLY-O) (Nov. 21, 2010, 8:06 PM), http://www.patentlyo.com/patent/2010/11/cross-border-inventors.html (“The number of inventors per patent has been steadily increasing over the past forty years. Patents issued during the past six months, have an average of 2.7 inventors per patent. In all, 68% of these patents list multiple inventors with 13% listing five or more inventors. Prior to 1990, most patents listed only one inventor.”).

154 Team-Based Inventing, supra note 153.

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of the parties; (2) courts felt that employees were in the best position to determine ex ante whether they intended to assert copyright ownership; (3) changing notions of the nature of authorship; (4) ease of statutory drafting; (5) avoiding constitutional concerns; and (6) concern about renewal terms.

Three of these reasons simply do not apply to patent law. First, patents in the United States do not have renewal terms. Second, the copyright statute was being revised in 1909 for reasons beyond the codification of the work made for hire doctrine. The patent statute, by contrast, was not significantly revised until 1952. Without an independent push to redraft the Patent Act, the need to ease statutory drafting was absent, and constitutional concerns in granting patent rights to non-“inventors” would not need to be addressed. As for the remaining reasons for the shift in copyright law, patent law simply did not share those factors.

First, the perceived nature of inventive activity in the nineteenth century did not lend itself to an argument for the need of a doctrine like work made for hire.

As discussed in Part II, copyrighted works grew in complexity over the course of the nineteenth century. While copyrighted works were originally only embodied in single author books, they steadily grew to include complicated works involving the input of the multiple creative individuals. In particular, the creation of maps and theatrical works required coordination among multiple parties to insure that works could be exploited. Once the 1909 Act was passed, that complication grew exponentially as additional works were brought under the copyright statute.

The perception of inventive activity in the nineteenth century, on the other hand, did not appear to require significant coordination among parties. Rather, credit for advances was given to individual inventors, whether or not they, like Edison, employed others in their invention workshops. Moreover, even in the nineteenth century, most patents were on incremental improvements of existing technologies, which made it even more likely that the number of individuals involved in each inventive push forward would be small. Further, even if an invention required multiple individuals to reduce it to practice, the individual credited with the invention could subsume any other inventive activity into his invention under the employee improvements doctrine. In fact, in 1916, threequarters of U.S. patents were issued to individuals. 155 Thus, the need to coordinate

155

See Louis Galambes, The American Economy and the Reorganization of the Sources of Knowledge, in THE ORGANIZATION OF KNOWLEDGE IN MODERN AMERICA, 1860–1920 269, 277 (Alexandra Oleson and John Voss eds., Johns Hopkins Univ. Press 1979).

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among multiple individuals that existed in copyright law in the nineteenth century did not exist in patent law. 156 Second, the existing doctrines that had developed, including the hired-toinvent doctrine, provided sufficient ex ante protection to employers. The shop rights doctrine, which was well established in the early part of the century, provided employers with a way of ensuring that their expectations were met.

Unlike today where many organizations that own patent rights merely license those rights to others to use, in the nineteenth century, most companies used patent rights merely to exclude competitors while they themselves developed products to sell to consumers. Without the need to license, companies merely needed the right to use, which the shop rights doctrine provided. Moreover, as described above, when an inventor did use assistance in the process of developing his invention, the employee improvements doctrine protected him from needing to secure rights from each assistant in his workshop. As long as the inventor couldn’t be seen as deriving his invention from someone else, he could be fairly content that his rights in the invention would be secure.

Finally, by the end of the nineteenth century, employers were securing contracts with their employees that included provisions requiring the assignment of any patented inventions later developed. 157 In 1885, only 12% of U.S. patents were issued to corporations.158 By 1950, it had grown to 75%, and by the 1980s, 84% of U.S. patents were assigned to corporations, “usually the employer of the actual inventor.” 159 In the past decade, those efforts have become increasingly successful.160

156

See Aalmuhammed v. Lee, 202 F. 3d 1227 (9th Cir. 2000), discussed supra note 84.

Littlefield v. Perry, 88 U.S. 205 (1875) (finding agreement to assign future inventions enforceable); Hulse v. Bonsack Mach. Co., 65 F. 864, 867–68 (4th Cir. 1895) (finding preinvention assignment contract enforceable); cf. Fisk, supra note 99, at 1191 (“At the end of the nineteenth century, the number of reported decisions enforcing employee patent assignments began steadily to increase.”). But cf. Aspinwall Mfg. Co. v. Gill, 32 F. 697, 700 (C.C.D.N.J. 1887) (“A naked assignment or agreement to assign, in gross, a man's future labors as an author or inventor—in other words, a mortgage on a man's brain, to bind all its future products—does not address itself favorably to our consideration.”); Eustis Mfg. Co. v. Eustis, 27 A. 439, 442–43 (N.J. Ch. 1893) (finding despite agreement that employee would give employing company “the benefit of any and all patents for cooking utensils made by or issued to him during the term of his office and employment,” company held only an exclusive license of the patents, not ownership).

158 NOBLE, supra note 8.

159 See id.; Rights of Employed Inventors: Hearing on H.R. 4732 and H.R. 6635 Before the H. Subcomm. on Courts, Civil Liberties, and the Administration of Justice, 97th Cong. 1 (1982) 157

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Chart 2: Percent of U.S. Patents Unassigned at Issuance, Grouped

by Issue Year 16% 14% 12% 10%

8% 6% 4% 2% 0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

In fact, it will come as no surprise that the Intellectual Property Owners Association’s list of top patent owners does not include the name of a single individual. 161 Further, by the turn of the century, when an employer hired an inventor, the hired-to-invent doctrine would require the inventor to assign their rights to the employer.

Despite the protection of the existing patent law doctrines that give employers some of the benefits of the work made for hire doctrine, it is clear from Table 5 that not one doctrine captures all of the benefits from that doctrine: 162

(remarks of Rep. Robert Kastenmeier quoting U.S. Patent Office report); see also William P. Hovell, Note, Patent Ownership: An Employer’s Rights to His Employee’s Inventions, 58 NOTRE DAME L. REV. 863, 864 (1983); Robert L. Gullette, State Legislation Governing Ownership Rights in Inventions Under Employee Invention Agreements, 62 J. PAT. OFF. SOC’Y 732, 738–39 (1980).

160 Crouch & Rantanen, supra note 9.

161 Intellectual Property Owners Association, Top 300 Organizations Granted U.S. Patents in 2010, THE IP RECORD, at 9–17 (2011).

162 See supra Part I.B.

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Table 5: Work Made For Hire Benefits v. Patent Doctrines

No Negotiation

Shop Rights

Hired-toInvent

Employee Improv.







No Assignment  From Employee



No Court Intervention







Registrability Exclusion and Licensing Use













n/a

n/a

n/a

n/a

n/a

n/a







Transfer to Others Protection from Future Rights Termination Shield Duration Universal Application

Moreover, as recent cases make clear, companies cannot rely on the patent law doctrines and contracts with their employees to ensure ownership of the rights to their employees’ inventions.163 For example, the Supreme Court recently held 163

See Stanford, 131 S. Ct. at 2192 (2011) (holding that Stanford did not hold the rights to a patent that was allegedly infringed by Roche’s HIV test kits); Abbott Point of Care Inc. v. Epocal

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that although an inventor working as a research fellow at Stanford University signed a Copyright and Patent Agreement that stated that he “‘agree[d] to assign’ to Stanford his ‘right, title and interest in’ inventions resulting from his employment at the University’” and written assignments of rights, which Stanford used to file several patent applications, Stanford did not receive the inventor’s patent rights because he signed a Visitor’s Confidentiality Agreement that provided that he “‘will assign and do[es] hereby assign’ to Cetus his ‘right, title and interest in each of the ideas, inventions and improvements’ made ‘as a consequence of [his] access’ to Cetus” between signing the CPA and the assignments. 164 Further, many modern employers intend to license, rather than use, their employees’ inventions, which a shop right would not permit.

Similarly, in Abbott Point of Care Inc. v. Epocal Inc., Abbott filed a patent infringement suit against Epocal, a competitor in the diagnostic field, alleging infringement of patents that “cover systems and devices for testing blood samples.”165 Epocal, however, was founded by Dr. Imants Lauks, the named inventor of the patents at issue and a former employee of Abbott’s predecessors. 166 Despite the fact that Dr. Lauks had entered into two employment agreements, one of which contained a provision requiring him to assign all of his rights to any inventions that he might conceive, the Federal Circuit determined that Abbot did not hold rights to the patents and, thus, lacked standing to bring the lawsuit. 167 The court determined that Dr. Lauks had resigned from his previous employment in 1999, and that while the consulting agreement that he entered into after his resignation stated that various provisions of Dr. Lauks’ employment agreement

Inc., 666 F.3d 1299, 1304 (Fed. Cir. 2012) (affirming the dismissal of Abbott complaint for lack of standing to bring suit based on blood sample testing patents); see also Banks v. Unisys Corp., 228 F.3d 1357, 1359 (Fed. Cir. 2000) (as employee did not sign employer’s “standard form for assignment of inventive rights,” fact issues precluded summary judgment determination of whether the hired-to-invent doctrine applied); Mallinckrodt Inc. v. Masimo Corp., 293 F. Supp.

2d 1102, 1106 (C.D. Cal. 2003) (employee’s release of ownership claims to product did not include release of ownership of ideas later patented by employee); cf. Teets v. Chromalloy Gas Turbine Corp., 83 F.3d 403, 409 (Fed. Cir. 1996) (reversing district court finding of employee ownership due to implied-in-fact contract to assign rights to employer). But see Preston v.

Marathon Oil Co., 684 F.3d 1276, 1288–89 (Fed. Cir. 2012) (holding post-employment employee agreement that included automatic patent assignment provision with only continued employment as consideration was valid and enforceable).

164 Stanford, 131 S. Ct. at 2192, 2199. The Supreme Court expressly did not address Roche’s “shop right” or license arguments. Id. at 2193 n.1.

165 Abbott, 666 F.3d at 1300.

166 Id. 167 Id. at 1300, 1303–04.

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remained in effect, it did not address invention assignments or obligations.168 Thus, the two patent applications Dr. Lauks filed after entering into the consulting agreement did not belong to Abbot.169 Additionally, despite the high assignment rate discussed above, when a patent assignment is found to be ineffective, the consequences can be extreme.

This is particularly true where the employer acts on its belief that an assignment is effective and incurs costs associated with the patented technology, only to learn that they do not, in fact, hold any patent rights.

As such, it is time for patent law to come to terms with the fact that it is stuck in the past and adopt an inventions made for hire doctrine. To do so, Congress need only pass an act amending two sections of the Patent Act. First, Congress would add a subsection (c) to 35 U.S.C. § 111 as follows: (c) In the case of an invention made for hire, the employer is considered the inventor for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all patents rights to the invention.

Second, Congress would add a subsection (f) to 35 U.S.C. § 100 as follows: (f) An “invention made for hire” is an invention invented or discovered by an employee within the scope of his or her employment.

Whether an individual is an employee for purposes of the invention made for hire doctrine will be determined by looking to the same common law doctrine of agency that the Supreme Court identified in Community for Creative Non-Violence v. Reid.170 Moreover, there is over two decades of caselaw interpreting agency doctrine in light of the Copyright Act and over a century of caselaw interpreting the work made for hire doctrine for courts to rely on in implementing this new provision.171 CONCLUSION As this article has suggested, patent law remains stuck in the past by continuing to rely on the rhetorical device that modern invention is performed by 168

Id. at 1300.

Id. at 1303.

170 Cmty. For Creative Non-Violence v. Reid, 490 U.S. 730, 751–52 (1989).

171 See supra Part I.A. 169

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individual inventors in their garages, when, in fact, most patentable inventive activity occurs in corporate and university settings. Moreover, contrary to popular perception, most individuals who would be labeled “inventors” in the twenty-first century are employees of a corporate entity and assign their patent rights to their employer. Nevertheless, patent law continues to require written assignments to give employers ownership of their employees’ inventions. While that formulation may have made sense when invention was credited to individuals and required little coordination among inventors, it no longer does. Rather, employers should be able to feel secure in the knowledge that any inventions invented or discovered by their employees within the scope of their employment are owned by the party that financed and supported them (i.e., their employers). As such, it is time for the Patent Act to be amended to borrow from the Copyright Act and adopt an inventions made for hire doctrine.

POST-BOOKER JUDICIAL DISCRETION AND SENTENCING TRENDS IN CRIMINAL INTELLECTUAL PROPERTY CASES: EMPIRICAL ANALYSIS AND SOCIETAL IMPLICATIONS AARON B. RABINOWITZ*

As a result of the Supreme Court’s 2005 decision in Booker v. United States that rendered the United States Sentencing Commission’s Sentencing Guidelines advisory only and no longer mandatory, district courts now enjoy significant discretion in determining the appropriate sentence for convicted offenders.

Because Booker was decided seven years ago, the numbers of pre- and postBooker cases are now large enough that one can assess Booker’s specific impact on sentencing for intellectual property offenses. A full understanding of how judges impose sentences for intellectual property crimes is critical, as (1) the number of defendants sentenced for intellectual property crimes has grown 50% faster in the past several years than the number of overall defendants sentenced during that same period; and (2) individuals and corporations derive everincreasing value from their own intellectual property.

By analyzing federal sentencing data for sentences imposed between 1997 and 2011, this article presents an empirical analysis of how Booker has impacted the ways in which district courts impose sentences on offenders convicted of intellectual property crimes. This analysis reveals, inter alia, that (1) sentences imposed on intellectual property offenders deviate from Guidelines-recommended sentences in two out of every three cases; (2) prosecutors seek and judges impose reduced sentences for intellectual property crimes more frequently than for other comparable crimes; and (3) judge-initiated downward deviations from the Guidelines occur after Booker about seven times as frequently for intellectual property offenders than for other offenders, whereas such judge-initiated deviations before Booker occurred less frequently than for crimes in general or for other economic crimes.

Using the foregoing empirical analysis as a jumping-off point, this article also explores how sentences imposed on intellectual property offenders may reflect societal views of intellectual property crimes in general. The data suggest that prosecutors’ and judges’ views of intellectual property crimes may not align with *

Adjunct Professor, Temple University School of Law, Philadelphia, PA; Attorney, Woodcock Washburn LLP, Philadelphia, PA. The views expressed in this article are the author’s only and do not necessarily reflect the views of the author’s present or past employers.

Special thanks to Aliza Rabinowitz for her patience and to Ronen and Orli Rabinowitz for keeping the author on schedule.

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the sentences that the Guidelines prescribe for intellectual property crimes. This article accordingly proposes solutions for harmonizing the advisory Guidelines sentences for intellectual property offenses with the sentences that are actually imposed based on prosecutors’ recommendations and judges’ discretion.

I.

II.

III.

IV.

V.

INTRODUCTION ...............................................................................................52 A. Background...............................................................................................52 B. Overview of Findings ...............................................................................54 FEDERAL SENTENCING PRACTICE AND BOOKER ..............................................55 A. Pre-Booker Sentencing Procedures and Practice ...................................55 B. Post-Booker Sentencing Procedures and Practice ..................................56 ANALYSIS OF SENTENCING TRENDS FOR INTELLECTUAL PROPERTY CRIMES..57 A. Methodology .............................................................................................57 B. Findings and Analysis ..............................................................................59 1. Growth in Intellectual Property Offenders Sentenced ........................59 2. Proportion of Non-Guidelines Sentences Imposed on Intellectual Property Offenders ..............................................................................59 3. Frequency of Post-Booker Deviation from Sentencing Guidelines ....61 4. Proportion of Cases with Downward Deviations ...............................63 5. Judicial Actors Responsible for Downward Deviations .....................64 i. Government-Sponsored Downward Deviations ............................64 ii. Judge-Initiated Downward Deviations...........................................65 6. Downward Deviations Based on Judicial Application of Booker ......66 IMPLICATIONS OF POST-BOOKER SENTENCING TRENDS ..................................67 A. Prospective Causes for Trends in Intellectual Property Sentences .........68 B. Implications for the Sentencing Guidelines .............................................69 CONCLUSION...................................................................................................71 I INTRODUCTION A. Background

In the wake of the Supreme Court’s 2005 watershed decision in Booker v.

United States,1 federal judges now exercise newfound discretion in imposing sentences on criminal defendants. Before Booker, judges imposed sentences according to the sentence ranges set forth in the United States Sentencing 1

See Booker v. United States, 543 U.S. 220 (2005).

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Guidelines (the “Guidelines”), 2 with outside-Guidelines sentences being imposed in only a few rare cases. 3 Under the Guidelines, a judge would apply a crossreference table that suggested a sentence range based on the severity of the offender’s actions and the offender’s own criminal history and then, absent any special circumstances, impose a sentence within that suggested range. 4 The Booker decision, however, brought a significant change5 in sentencing practice by rendering the Guidelines advisory only. 6 By making the Guidelines advisory only, Booker granted sentencing judges significant control over the magnitude of sentences, 7 as judges were no longer bound to sentence according to the ranges that the Guidelines suggested.

Coincident with the Booker-catalyzed changes in federal sentencing, society has seen a significant increase in intellectual property crimes – the number of defendants sentenced under the intellectual property sentencing guidelines grew steadily by an average of 6.8% per year from 1997 to 2007. This growth in intellectual property offenders was, however, 50% faster than the overall growth rate for the total number of offenders sentenced under the Guidelines during those years. Given that individuals and corporations derive great value from their own intellectual property, a full understanding of how judges impose sentences for intellectual property crimes is critical.8 2

U.S. SENTENCING GUIDELINES MANUAL. An online edition of the Guidelines may be conveniently accessed at http://www.ussc.gov/Guidelines/2011_Guidelines/index.cfm (last visited May 13, 2012).

3 See, e.g., Koon v. United States, 518 U.S. 81, 98 (1996) (observing, pre-Booker, that before departure was permitted, the case had to be “unusual enough for it to fall outside the heartland of cases in the Guidelines”).

4 18 U.S.C. § 3553(b).

5 See, e.g., United States v. Gonzalez-Huerta, 402 F.3d 727, 737 (10th Cir. 2005) (en banc) (noting that Booker “drastically changed federal sentencing procedure”).

6 Booker, 543 U.S. at 245.

7 See, e.g., United States v. Mohamed, 459 F.3d 979, 987 (9th Cir. 2006) (post-Booker sentences reviewed only for reasonableness).

8 Intellectual property crimes are unique for several reasons. First, infringement of an owner’s intellectual property (e.g., producing fake brand-name goods) may dilute the owner’s brand and render the owner’s brand less exclusive. Additional harm may result from intellectual property infringement if a user unknowingly buys an infringing good that does not meet the quality standard of the brand-name good, as the user may have a negative experience with the counterfeit good and elect not to purchase the brand-name good in the future. In another situation, a defendant may engage in pre-release piracy, where the defendant obtains and then disseminates (e.g., via the Internet) a pre-release copy of a movie before the movie is released in theaters. See United States v. Gonzalez, Criminal No. 03-153 (S.D.N.Y. Apr. 20, 2004)

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To better understand the judiciary’s and society’s views of intellectual property offenses, and whether the sentences actually imposed for these offenses are consistent with these views, this article presents an empirical analysis of data obtained from the United States Sentencing Commission to identify trends in sentencing for intellectual property crimes. Because Booker was decided six years ago, the number of pre- and post-Booker cases is now large enough that one can now properly assess the impact of Booker on intellectual property sentencing. The data sets included 425,597 pre-Booker and 435,415 post-Booker cases. This article extracts from the empirical analysis a number of critical hypotheses concerning judges’ views of intellectual property crimes and of the Guidelines in general.

B. Overview of Findings As described below in more detail, this article’s empirical analysis reveals that the Booker decision has affected sentences in intellectual property crimes in a significantly different way than the decision affected sentencing decisions for general and other comparable economic crimes. These findings include: (1) sentences imposed on intellectual property offenders deviate from the advisory Guidelines in two out of every three cases; (2) prosecutors seek and judges reduce sentences for intellectual property crimes more frequently than for other comparable crimes; and (3) following the Booker decision, judges reduce sentences for intellectual property crimes seven times more frequently than they did before Booker, the frequency of which far outstrips the rate at which judges reduce sentences for other comparable crimes.

The fact that two-thirds of intellectual property crime sentences are below the Guidelines sentencing range suggests that the Guidelines range is not in harmony with the sentences that prosecutors and judges deem appropriate for these crimes. Second, the fact that judges and prosecutors reduce sentences for intellectual property crimes more frequently than they do for crimes in general or for other comparable economic crimes suggests that judicial actors believe the Guidelines sentences for intellectual property crimes are too stringent.

This article also considers changes to the current sentencing process so as to align the process more closely with the way sentences are imposed in practice.

Booker-empowered judges very frequently use their discretion to impose sentences on intellectual property crimes that are outside the Guidelines. This suggests that

(defendant convicted for posting pre-release copy of The Hulk movie on the Internet).

Additional information available at: http://www.justice.gov/usao/nys/pressreleases/June03/ hulkplearelease.pdf.

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the Guidelines scheme should be reconfigured to more accurately reflect the ways in which sentences for intellectual property crimes are imposed in practice.

II FEDERAL SENTENCING PRACTICE AND BOOKER To frame the issues that this article explores, this section provides a brief overview of federal sentencing practice and of the Booker decision.

A. Pre-Booker Sentencing Procedures and Practice Under the Sentencing Reform Act, 9 Congress restricted district courts’ sentencing authority. The Act directed courts to consider a broad variety of purposes and factors before imposing sentences, including the sentencing guidelines and other “policy statements” promulgated by the United States Sentencing Commission.10 Although the Sentencing Reform Act directed judges to consider a broad set of sentencing considerations, the Act did not grant judges much discretion in sentencing, as sentences were restricted to the ranges set forth in the Guidelines sentencing grids, and sentences were subject to a variety of standards of review on appeal.11 In particular, 18 U.SC. § 3553(b) constrained a court’s sentencing discretion unless the court found valid reasons for departing from the Guidelines sentence.12 Departures were authorized only when a court found “an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described.” 13 Because of these constraints, before Booker, “[a] court's authority to depart from the applicable range [was] circumscribed.”14 Thus, before a departure was permitted, “certain aspects of the case [had to be] unusual enough for it to fall outside the heartland of cases in the Guidelines.” 15 9

Sentencing Reform Act of 1984, Pub. L. No. 98-473, 98 Stat. 1987 (codified as amended at 18 U.S.C. §§ 3551-3586 (1985)).

10 18 U.S.C. § 3553(a)(4)(A), (a)(5); see also 28 U.S.C. § 994(a)(1), (a)(2).

11 18 U.S.C. § 3742(e).

12 18 U.S.C. § 3553(b)(1), (b)(2).

13 18 U.S.C. § 3553(b)(1); cf. U.S. SENTENCING GUIDELINES MANUAL § 1B1.1 cmt. n.1(E) (2000) (defining “departure”).

14 United States v. Butler, 954 F.2d 114, 121 (2d Cir. 1992).

15 United States v. Thorn, 317 F.3d 107, 125 (2d Cir. 2003) (quoting Koon v. United States, 518 U.S. 81, 98 (1996)).

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B. Post-Booker Sentencing Procedures and Practice Booker fundamentally changed the law of federal criminal sentencing and gave district courts newfound discretion over sentencing decisions. 16 In Booker, a five-Justice majority concluded that the system of mandatory Guidelines was unconstitutional because that system violated the Sixth Amendment’s requirement that “[o]ther than the fact of a prior conviction, any fact that increases the [maximum penalty to which a defendant may be subjected] must be submitted to a jury, and proved beyond a reasonable doubt.” 17 A different five-Justice majority concluded that the proper remedy was not to eliminate the Guidelines entirely, or to eliminate any fact-finding related to sentencing, but to make the Guidelines “effectively advisory.” 18 Having eliminated those portions of the Sentencing Reform Act 19 that made the Guidelines mandatory, the Booker court determined that (1) district courts “must consult”20 the now-advisory Guidelines and (2) appellate review of sentences for reasonableness would be made in light of the “numerous factors” set forth in 18 U.S.C. § 3553(a), including the applicable advisory guidelines range. 21 Although Booker rendered the Guidelines advisory, 22 the Supreme Court later clarified that “[i]f the sentence is within the Guidelines range, the appellate court may, but is not required to, apply a presumption of reasonableness.”23 Underscoring the importance of careful judicial fact-finding in a Guidelinesadvisory system, the Supreme Court also observed that the greater a sentence deviates from the applicable guidelines, the greater the justification the judge must place on the record: “We find it uncontroversial that a major departure should be supported by a more significant justification than a minor one. After settling on the appropriate sentence, [the sentencing judge] must adequately explain the

16

E.g., United States v. Gonzalez-Huerta, 403 F.3d 727, 737 (10th Cir. 2005) (en banc) (describing Booker as having “drastically changed federal sentencing procedure”).

17 Booker v. United States, 543 U.S. 220, 231 (2005) (quoting Apprendi v. New Jersey, 530 U.S. 466, 490 (2000).

18 Id. at 245.

19 P.L. No. 98-473, 98 Stat. 1987.

20 Booker, 543 U.S. at 264.

21 Id. at 261.

22 Id. at 245.

23 Gall v. United States, 552 U.S. 38, 51 (2007); see also, Rita v. United States, 551 U.S. 338, 347 (2007).

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chosen sentence to allow for meaningful appellate review and to promote the perception of fair sentencing.” 24,25 Some have suggested that Booker’s emphasis on judges providing specific explanations for their sentences renders federal sentencing more balanced, transparent, and proportional by (1) improving the balance between the application of structured sentencing rules and judicial discretion; (2) improving the balance between the impact of judicial and prosecutorial discretion at sentencing; (3) improving the opportunities for district judges to exercise reasoned sentencing judgment to tailor sentences to individual case circumstances; [and] (4) reordering sentencing outcomes (at least slightly) so that those defendants most deserving of reduced (or increased) sentences are getting the benefits (or detriments) of expanded judicial authority to sentence outside the Guidelines. 26 III ANALYSIS OF SENTENCING TRENDS FOR INTELLECTUAL PROPERTY CRIMES A. Methodology To identify and investigate trends specific to sentencing for intellectual property offenders, this article analyzes comprehensive, publicly available data sets from the United States Sentencing Commission covering sentences imposed from 1997 to 2011 for all crimes generally, for intellectual property crimes, 27 and for 24

Gall, 552 U.S. at 50.

The Booker decision and its imposition of a deferential, “reasonableness” standard of review for sentences places a premium on careful, thorough sentencing proceedings: “[a] major undercurrent of the Supreme Court's post-Booker sentencing jurisprudence is that, in an advisory guidelines system, the defendant is entitled to an interactive sentencing in which the judge listens and explains rather than merely pronouncing a sentence from on high after having done a little Guidelines math.” United States v. Wilson, 614 F.3d 219, 227 (6th Cir. 2010) (Martin, J. concurring).

26 Douglas A. Berman, Tweaking Booker: Advisory Guidelines In The Federal System, 43 HOUS. L. REV. 341, 352 (2006); see also James G. Carr, Some Thoughts on Sentencing PostBooker, 17 FED. SENTENCING REP. 295, 297 (2005) (observing that from the viewpoint of sentencing judges, “[s]ince Booker, we have balance and control. Before, we had neither.”).

27 Federal criminal law punishes only infringements of copyright and trademark rights; infringement of patent rights is not subject to criminal penalties. For an in-depth analysis of the issues associated with imposition of criminal sanctions for patent infringement, see Irina D. Manta, The Puzzle of Criminal Sanctions for Intellectual Property Infringement, 24 HARV. J. L. & TECH. 469 (2011). Professor Manta notes that imposition of criminal sanctions for patent 25

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selected comparable economic crimes. 28 The economic crimes selected as comparators to intellectual property crimes 29 were (1) “Larceny, Embezzlement, and Other Forms of Theft; Offenses Involving Stolen Property; Property Damage or Destruction; Fraud and Deceit; Forgery; Offenses Involving Altered or Counterfeit Instruments Other than Counterfeit Bearer Obligations of the United States 30,” and (2) “Offenses Involving Counterfeit Bearer Obligations of the United States.”31 These comparator economic crimes were chosen because they, like intellectual property crimes, involve one or more elements of forgery, deceit, fraud, or counterfeiting. Forgery and counterfeiting are particularly suitable analogs to infringement of copyright or trademarks, as forgery, counterfeiting, and infringement all involve a party attempting to pass off a good or a work as having been produced by another party. Also, like intellectual property crimes, the comparator crimes do not involve an element of physical force. Although these crimes may not be precisely comparable to intellectual property crimes in all ways, they serve to illustrate the unique treatment that intellectual property offenders receive in comparison to offenders in general, and in comparison to other economic crime offenders.

infringement would indicate that society prizes patent rights as much as other forms of intellectual property. Id. at 494. The clear corollary is that the lack of such sanctions implies that patent rights are not as valued by society as are other forms of intellectual property.

28 Data is available from the data and statistics section of the United States Sentencing Commission’s website, see UNITED STATES SENTENCING COMMISSION DATA AND STATISTICS, http://www.ussc.gov/Data_and_Statistics/index.cfm.

29 U.S. SENTENCING GUIDELINES MANUAL § 2B5.3 citing 17 U.S.C. §§ 506(a), 1201, 1204; 18 U.S.C. §§ 2318-2320, 2511 (setting forth sentencing guidelines for IP crimes, including criminal copyright infringement, circumvention of copyright systems, and trafficking counterfeit copyrighted goods).

30 U.S. SENTENCING GUIDELINES MANUAL § 2B1.1 citing 7 U.S.C. §§ 6, 6b, 6c, 6h, 6o, 13, 23; 15 U.S.C. §§ 50, 77e, 77q, 77x, 78j, 78ff, 80b-6, 1644, 6821; 18 U.S.C. §§ 38, 225, 285-289, 471-473, 500, 510, 553(a)(1), 641, 656, 657, 659, 662, 664, 1001-1008, 1010-1014, 1016-1022, 1025, 1026, 1028, 1029, 1030(a)(4)-(5), 1031, 1037, 1040, 1341-1344, 1348, 1350, 1361, 1363, 1369, 1702, 1703 (if vandalism or malicious mischief, including destruction of mail, is involved), 1708, 1831, 1832, 1992(a)(1), (a)(5), 2113(b), 2282A, 2282B, 2291, 2312-2317, 2332b(a)(1), 2701; 19 U.S.C. § 2401f; 29 U.S.C. § 501(c); 42 U.S.C. § 1011; 49 U.S.C. §§ 14915, 30170, 46317(a), 60123(b) (setting forth sentencing guidelines for fraud and forgery crimes).

31 U.S. SENTENCING GUIDELINES MANUAL § 2B5.1 citing 18 U.S.C. §§ 470-474A, 476, 477, 500, 501, 1003 (setting forth sentencing guidelines for counterfeit crimes involving U.S. bearer obligations).

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B. Findings and Analysis An analysis of sentencing trends for intellectual property crime offenders reveals several critical differences between the ways in which judges impose sentences on intellectual property offenders as compared to other offenders, including economic crime offenders.

1. Growth in Intellectual Property Offenders Sentenced The number of defendants sentenced under an intellectual property guideline has grown 50% faster since 1997 than the number of defendants sentenced overall.32 There are several possible explanations for this trend. First, committing an intellectual property crime, particularly copyright infringement, is not very capital-intensive, and may thus be easier to perpetrate than other crimes that require capital investment. 33 Also, unlike theft, fraud, or embezzlement, committing an intellectual property crime does not require person-to-person contact; all that is necessary to commit an intellectual property crime is to obtain a protected work or item, replicate the work or item, and then disseminate the replica. Second, as actors, both individual and corporate, find that more and more of their value is bound up in their intellectual property, 34 the owners of that intellectual property may be more keen on enforcing their rights. Whatever the cause or causes of this growth, the growth in intellectual property crimes necessitates careful review and understanding of the ways in which intellectual property offenders are punished.

2. Proportion of Non-Guidelines Sentences Imposed on Intellectual Property Offenders A second trend that emerges from the sentencing data is that the proportion of outside-Guidelines sentences imposed for intellectual property crimes is far

32

U.S. SENTENCING GUIDELINES statistics materials 1997-2011, available at http://www.ussc.gov/Research_and_Statistics/index.cfm.

33 See DAVID G. POST, IN SEARCH OF JEFFERSON’S MOOSE: NOTES ON THE STATE OF CYBERSPACE 202 (2009) (noting “the remarkable facility with which Internet users have been able to reproduce and redistribute information of all kinds—music, text, video, etc.—whether ostensibly protected by some nation’s copyright law or now, in quantities that truly stagger the mind”) (emphasis added).

34 According to one study, in 1978, 80% of corporate assets were tangible assets (e.g., physical assets) and the remaining 20% were intangible assets. By 1997, these had reversed, such that 73% of corporate assets were intangible assets. Kenneth E. Krosin, Management of IP Assets, AIPLA BULL. (Am. Intell. Prop. L. Ass’n), 2000 Mid-Winter Meeting Issue, at 176.

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greater than the proportion of outside-Guidelines sentences imposed for crimes in general and for other economic crimes. The chart below illustrates this trend:

As shown in the figure above,35 the Booker decision brought significant changes to the way intellectual property sentences are imposed. Before Booker, intellectual property offenders received outside-Guidelines sentences only about 30% of the time, which was less frequent than the 33% average for all offenders.

After Booker, however, intellectual property defendants receiving outsideGuidelines sentences increased to nearly 65%. Put another way, although nearly 65% of intellectual property offenders after Booker received below-Guidelines

35

The change in the proportion of outside-Guidelines sentences before Booker and after Booker was statistically significant (p < 0.01) for all cases, for IP crimes, for fraud/forgery crimes, and for counterfeiting crimes. The difference between the proportion of outsideGuidelines sentences imposed after Booker for IP crimes and the proportion of post-Booker outside-Guidelines sentences for all crimes was statistically significant (p < 0.01). The differences between outside-Guidelines sentences imposed after Booker for IP crimes and the proportion of post-Booker outside-Guidelines sentences for fraud/forgery crimes and for counterfeit crimes were also statistically significant (p < 0.01 in both cases), further underscoring that IP crimes are treated differently after Booker than are comparable economic crimes.

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sentences,36 less than 40% of all offenders and of economic crime offenders received outside-Guidelines sentences after Booker.

The fact that two out of every three intellectual property offenders receives an outside-Guidelines sentence demonstrates the disconnect between the Guidelines and the way discretionary sentences are imposed. There would not be nearly so many outside-Guidelines sentences if the Guidelines were congruent with judges’ views of intellectual property crimes. Indeed, with two out of every three intellectual property offenders receiving an outside-Guidelines sentence, it appears that departing from the Guidelines has become the rule, rather than the exception.

The fact that intellectual property offenders receive an outside-Guidelines sentence so much more frequently than offenders in general or economic crime offenders suggests that judges believe that intellectual property crimes are less harmful than other types of economic crimes.

While the Supreme Court in Booker was concerned with the question of the Guidelines’ constitutionality and not with whether the Guidelines were actually reflective of what judges believe the “correct” sentence should be for an intellectual property offender, the above chart illustrates that two-thirds of the time, judges do not believe that the Guidelines sentences for intellectual property offenders are appropriate. If judges are representative of the population at large, the Supreme Court was correct from a sociological perspective to render the Guidelines advisory. Mandatory Guidelines sentences would, based on the data shown above, result in two-thirds of all intellectual property defendants receiving sentences that, at least in the view of judges, are too high.

3. Frequency of Post-Booker Deviation from Sentencing Guidelines Another trend that emerges is the different frequency with which sentencing judges apply Booker to adjust sentences in intellectual property cases relative to the frequency with which judges apply Booker in other cases. The chart below illustrates this trend:

36

Less than 1% of all defendants received above-Guidelines sentences.

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As shown in the chart above, Booker is applied in intellectual property cases about 27% of the time. 37 This figure is significantly greater than the frequency with which judges apply Booker in all criminal cases (13%), in fraud and forgery cases (17%), and in counterfeiting cases (15%). Expressed another way, judges apply Booker to adjust sentences in intellectual property cases twice as often as they apply Booker to adjust sentences in cases in general and about 60% more frequently than they apply Booker to adjust sentences in fraud and forgery cases.

This too suggests that, as compared to other types of crimes, judges believe that the Guidelines sentences for intellectual property offenders are not in alignment with the severity of the offenses.

37

The difference between the frequency of Booker application in IP crimes and the frequency of Booker application for all crimes, or for fraud/forgery crimes, or for counterfeit crimes, was statistically significant (p < 0.01). Interestingly, the difference between the frequency of Booker application for counterfeiting crimes and for all crimes in general was not as statistically significant (p < 0.30).

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4. Proportion of Cases with Downward Deviations The chart below illustrates the proportion of cases from 1997 to 2011 that involved a downward deviation: 38

As the above chart shows, 39 nearly two-thirds (i.e., well over half) of postBooker intellectual property cases involve a downward deviation from the advisory Guidelines range.40 This is a much larger proportion than the proportion of all cases that involve a downward deviation from the advisory Guidelines range and also much larger than the proportion of other comparable crimes cases that involve 38

This chart is similar to the previous chart illustrating the proportion of cases with outsideGuidelines sentences, as more than 99% of outside-Guidelines cases involve sentences that are below the advisory Guidelines range.

39 The difference between the pre- and post-Booker frequency of downward deviations was statistically significant (p < 0.01) for all crimes, IP crimes, fraud/forgery crimes, and counterfeiting crimes. The difference between the frequency of post-Booker downward deviations for IP crimes as compared to the frequency of post-Booker downward deviations for all crimes, fraud/forgery crimes, and counterfeiting crimes was also statistically significant (p < 0.01).

40 As explained above, because less than 1% of all defendants received above-Guidelines sentences, the vast majority of outside-Guidelines sentences are below the advisory Guidelines range.

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a downward deviation from the advisory Guidelines range. This trend is significant, as a sentencing regime in which two-thirds of defendants receive sentences that are below the advisory Guidelines range suggests that the judicial actors who exert influence over the sentence believe that the Guidelines-suggested sentences are unsuitable.

5. Judicial Actors Responsible for Downward Deviations The chart above, however, presents the question of whether the increase in downward deviations after Booker is due to (1) prosecutors sponsoring more downward deviations or (2) judges initiating more downward deviations on their own. To address this question, one must compare the proportion of downward deviations due to government-sponsored deviations with the proportion of downward deviations that are based on judges exercising their post-Booker discretion. i. Government-Sponsored Downward Deviations The following chart shows the proportion of cases that include a government-sponsored deviation from the advisory Guidelines sentencing range:

As shown above, the proportion of cases that included a governmentsponsored downward deviation changed with the 2005 Booker decision for cases in general, for intellectual property offenders, for fraud/forgery offenders, but not for

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counterfeiting offenders.41 Notably, post-Booker intellectual property offenders received government-sponsored downward deviations more frequently than did offenders in general or other economic crimes offenders. ii. Judge-Initiated Downward Deviations An analysis of downward deviations that were not government-sponsored, however, reveals a very different trend. The following chart illustrates the evolution of downward deviations that are not government-sponsored:

As shown above, 42 the percentage of overall cases where the judge alone granted a downward deviation shows a moderate (~19%) increase after Booker. In 41

The difference between the pre- and post-Booker frequency of government-sponsored downward deviations was statistically significant (p < 0.01) for all crimes and for fraud/forgery crimes. The difference between the pre- and post-Booker frequency of government-sponsored downward deviations was less significant for IP crimes and was unchanged for counterfeiting crimes.

42 The difference between the pre- and post-Booker frequency of non-government-sponsored downward deviations was statistically significant (p < 0.01) for IP crimes, fraud/forgery crimes, and counterfeiting crimes, but was not as significant (p < 0.28) for crimes overall. The difference between the frequency of post-Booker downward deviations for IP crimes as

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the case of intellectual property crimes, however, the data show that the percentage of intellectual property crimes that involved a non-government-sponsored downward deviation increased by 611% after Booker. This 611% increase is about thirty-two times the increase for cases overall and is about four times the increase in judge-initiated deviations for fraud/forgery crimes and for counterfeiting crimes.

This trend suggests that once the Booker decision issued, judges had a far greater need to adjust intellectual property crime sentences than they did any other kind of sentences.

The chart above also shows that judge-initiated deviations occur after Booker about twice as frequently for intellectual property offenders than for other offenders, whereas, pre-Booker, such judge-initiated deviations occurred less frequently than for crimes in general or for other economic crimes.

Several hypotheses may explain this data. First â&#x20AC;&#x201C; and most importantly for purposes of this article â&#x20AC;&#x201C; one may interpret the disproportionately large increase in non-government-sponsored sentence deviations for intellectual property crimes as showing that judges, on their own post-Booker initiative, believe that the Guidelines sentences for intellectual property crimes are unsuitable and disproportionately punish intellectual property defendants relative to defendants overall and relative to defendants in other, comparable economic crime cases.43 Second, one may hypothesize that judges believe economic crimes are disproportionately punished relative to all cases in general, as the post-Booker data show that judges reduce sentences for economic crime offenders at a higher rate than they do for offenders overall. The fact that intellectual property crimes received the fewest judge-initiated deviations before Booker and receive the most deviations after Booker further supports the hypothesis that judges believe that Guidelines intellectual property sentences are inappropriate and that judges are willing to exercise their Booker-based discretion to address this.

6. Downward Deviations Based on Judicial Application of Booker The following graph further supports the idea that judges believe that Guidelines for intellectual property offenders are unsuitable. This graph shows the

compared to the frequency of post-Booker downward deviations for all crimes, fraud/forgery crimes, and counterfeiting crimes was statistically significant (p < 0.01).

43

One may also view the modest increase in judge-initiated deviations for cases overall as showing that, in general, judges believe that the advisory Guidelines sentences are too harsh.

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percentage of cases in which the downward deviation was based on a judgeâ&#x20AC;&#x2122;s application of Booker at sentencing:

As shown above,44 judges applied Booker to effect downward sentence deviations in 27% of intellectual property cases. This rate is 138% greater than the Booker application rate for all cases, 78% greater than the Booker application rate to fraud/forgery crimes, and 105% greater than the Booker application rate to counterfeiting crimes. One may interpret this trend as further evidence that judges are significantly more inclined to modify a sentence for an intellectual property crime than for crimes in general and for other comparable economic crimes, which further supports the view the judges do not believe the Guidelines sentences for intellectual property crimes are satisfactory.

IV IMPLICATIONS OF POST-BOOKER SENTENCING TRENDS The foregoing data illustrate several overarching trends that apply to postBooker sentencing in general and to post-Booker sentencing of intellectual 44

The difference between the frequency of Booker application to effect downward sentence deviation in IP crimes and the frequency of Booker application for all crimes, fraud/forgery crimes, or counterfeit crimes was statistically significant (p < 0.01).

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property offenders. First, the proportion of intellectual property sentences that are outside the Guidelines-recommended range has increased significantly since Booker. Second, the proportion of intellectual property sentences that are outside the Guidelines-recommended range has increased by a far greater magnitude than the outside-Guidelines sentences for cases overall and for other economic crimes.

Third, judges are far more likely to apply Booker to modify a sentence in an intellectual property case than in cases overall or in another economic crime case.

These findings have several implications for the sentencing scheme and also for society’s view in general of intellectual property crimes.

A. Prospective Causes for Trends in Intellectual Property Sentences Although the data show a number of clear trends, the causes for these trends are perhaps less clear. This may be so because a number of factors are responsible for these sentencing trends.

First, as mentioned above, intellectual property crimes may be perpetrated against corporations, as opposed to individuals. Corporations are better equipped than individuals to absorb economic harm that results from the sale or other distribution of infringing goods or works, and post-Booker sentences may have taken this into account.

The sentencing trends may also be based on the fact that copyrighted and trademarked works – which are based primarily on creativity – may be originated without significant capital investment. This may be contrasted with theft of materials synthesized by a capital-intensive production processes or with the manufacture of goods that infringe a patent that is itself the result of significant research and capital investment by the patent owner. 45 Further, unlike the theft of tangible goods, neither copyright nor trademark infringement completely deprive the owner of the use of their right. 46 Instead, the infringement reduces the value of the right instead of depriving the owner of the

45

Aside from the costs of developing a patentable product, patent applications are far more expensive than are trademark or copyright applications. In terms of average application costs, a patent application costs about $20,000, a trademark application ranges from $500 to thousands dollars, and a copyright application costs $35. Manta, supra note 27, at 495 n.178 (2011) (citations omitted).

46 Id. at 475. (“Indeed, because IP tends to be both intangible and non-rivalrous, its infringement causes at most a reduction in value as opposed to a genuine ‘taking’ of the good.

Perhaps in the criminal context such infringement would often be more akin to other property crimes than it is to theft.”)

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ability to use their right.47 Intellectual property crimes also involve less immediate physical risk to the victim, as fraud and counterfeit crimes may, at least part of the time, be accomplished by an offender operating from a distance without ever making any physical contact with the victim.

One might also explain the trends in intellectual property sentencing on the ground that society is becoming inured to such crimes (e.g., file sharing, knock-off goods) on account of their prevalence. 48 Some have commented that “most people” no longer consider illegal downloading from the Internet a form of theft.49 Given that societal views of copyright infringement have evolved, the sentences that judges impose may have also evolved to mirror society’s views.

B. Implications for the Sentencing Guidelines The above-listed trends have certain implications for the Sentencing Guidelines as they presently exist, not the least of which is that the Guidelines are not in harmony with prosecutors’ and judges’ views of the harm that intellectual property crimes cause.

First, the fact that nearly two-thirds of sentences for post-Booker intellectual property cases are below the Guidelines-recommended range suggests that prosecutors (who are responsible for government-sponsored deviations) and judges (who exercise post-Booker discretion over the imposition of sentences) believe that the Guidelines-recommended sentences for intellectual property crimes are too heavy, as both government-sponsored and judge-initiated deviations are applied to intellectual property offenders more frequently than to other offenders. This is contrary to the recent recommendations by Congress and the current administration 47

See Dowling v. United States, 473 U.S. 207, 217 (1985) (observing that “[t]he infringer invades a statutorily defined province guaranteed to the copyright holder alone . . . he does not assume physical control over the copyright; nor does he wholly deprive its owner of its use.”); see also Stuart P. Green, Op-Ed., When Stealing Isn’t Stealing, N.Y. TIMES Mar. 28, 2012, at A27, available at http://www.nytimes.com/2012/03/29/opinion/theft-law-in-the-21st-century .html?pagewanted=all (“If Cyber Bob illegally downloads Digital Joe’s song from the Internet, it’s crucial to recognize that, in most cases, Joe hasn’t lost anything.”).

48 See Manta, supra note 27, at 517 (observing that (1) “given the widespread culture of filesharing,” copyright law may be perceived as “criminalizing ‘everybody’” and (2) that the public “does not accept” the claim that the “downloading of copyright works . . . is morally wrong and deserving of criminal sanction”); POST, supra note 33 (noting the “remarkable facility with which Internet users have been able to reproduce and redistribute information of all kinds – music, text, video, etc. – whether ostensibly protected by some nation’s copyright law or now, in quantities that truly stagger the mind.”) (emphasis added).

49 Green, supra note 47.

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to increase the guidelines, 50 as it appears that judicial actors believe that the penalties are too strong, not too lenient. This trend in the data is contrary to the attempts of many parties to strengthen the penalties assessed for intellectual property crimes. 51 Second, the fact that the proportion of intellectual property cases that received judge-initiated deviations increased by 611% after Booker (as opposed to far smaller increases for crimes in general and for economic crimes specifically) suggests that judges, in particular, believe that intellectual property sentences are too stringent. If judges believed otherwise, the rate at which they downwardly adjust sentences for intellectual property crimes would not be thirty-two times greater than the rate of downward adjustments for crimes generally and would not be four times greater than the rate of downward adjustments for other economic crimes. Additionally, judge-initiated deviations occurred after Booker about twice as frequently for intellectual property offenders than for other offenders, whereas, pre-Booker, such judge-initiated deviations occurred less frequently than for crimes in general or for other economic crimes. The fact that discretion-exercising judges apply sentences to intellectual property crimes in a way that is so qualitatively different from the way they impose sentences for other crimes suggests that judges take a special view of intellectual property crimes that differs from the view taken by the United States Sentencing Commission.

The divergence of views between judges and the Sentencing Commission warrants future exploration. As discussed above, intellectual property crimes are unique – the harm to the victim is frequently inchoate and difficult to quantify, 52 and understanding judges’ and prosecutors’ views of intellectual property crimes 50

Stop Online Piracy Act, H.R. 3261, 112th Cong. § 204; ADMINISTRATION’S WHITE PAPER ON INTELLECTUAL PROPERTY ENFORCEMENT LEGISLATIVE RECOMMENDATIONS 1-8 (March 2011), available at http://www.whitehouse.gov/sites/default/files/ip_white_paper.pdf.

51 Brian P. Heneghan, The NET Act, Fair Use, and Willfulness - Is Congress Making a Scarecrow of the Law?, 1 J. HIGH TECH. L. 27, 44 (2002) (“The Software Publishers Association even urged Judge Conaboy of the U.S. Sentencing Commission to adopt an emergency amendment to the sentencing guidelines to allow for the earliest possible implementation of the NET Act.”); Konrad Gatien, Internet Killed the Video Star: How In-House Internet Distribution of Home Video Will Affect Profit Participants, 13 FORDHAM INTELL. PROP. MEDIA & ENT. L. J. 909, 956 (2003) (“[to] combat international video piracy, the MPAA has set up an extra-judicial worldwide Internet enforcement group[.] This group consults with a former U.S. Department of Justice attorney who is well-versed in computer crime, and lobbies the U.S. trade representative to help "make sure trading nations are doing their part tracking down and prosecuting pirates”).

52 See Green, supra note 47 (“If Cyber Bob illegally downloads Digital Joe’s song from the Internet, it’s crucial to recognize that, in most cases, Joe hasn’t lost anything”).

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may help the United States Sentencing Commission as that body performs its ongoing review of federal sentencing statistics.

There are several approaches to curing the disharmony between the Guidelines and the sentences that judges actually impose. First, in order to honor Congress’s intent of allowing deviations only in exceptional cases,53 the Guideline range for intellectual property crimes should be lowered so that sentences that are presently qualified as downward deviations would be within the new, reduced advisory Guidelines range. This would result in a sentencing regime in which deviations are the exception and not the rule. 54 Second, by creating a sentencing regime in which sentences more frequently fall into a Guidelines range, defendants and prosecutors alike can better predict the offender’s final sentence. This may have implications for defendants facing a decision to either enter a plea bargain or go to trial, as the defendant may have a better sense of his or her likely sentence following trial.

In addition, adjusting the Guidelines may better align the sentences with the attitudes of those in the judicial system that actually impose the punishments, as judges and prosecutors alike seem to agree that the guideline sentences do not align with the proper punishment. While it is of course true that judges do not set the guidelines, the United States Sentencing Commission is comprised of judges, prosecutors, and other practitioners that have carefully researched sentencing issues, and adjusting the Guidelines to conform more closely to the sentences that judges actually impose would honor the Commission’s intent to have the Guidelines serve as a guidepost for the imposition of sentences.

V CONCLUSION There is no doubt that the Booker decision effected watershed changes on federal sentencing practices. However, Booker’s effect on the sentencing of intellectual property offenders has been even greater than its effect on cases in general and on economic crimes specifically. The fact that judges impose nonGuidelines sentences on two out of every three intellectual property offenders 53

E.g., United States v. Leon, 341 F.3d 928, 931 (9th Cir. 2003) (applying non-deferential, de novo standard of review to sentence that departed from Guidelines range); see also Prosecutorial Remedies and Other Tools to end the Exploitation of Children Today Act of 2003 ("PROTECT Act "), Pub. L. No. 108-21, 117 Stat. 650, 670 (2003) (changing standard of review for decisions to depart from the Guidelines to de novo).

54 As described above, two out of every three IP offenders receive a sentence that is below the suggested Guidelines range.

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illustrates that the sentences prescribed by the Guidelines by and large do not align with judges’ view of intellectual property crimes. Further, the fact that judges impose non-Guidelines sentences for intellectual property crimes far more frequently than for crimes in general or for economic crimes illustrates that judges have a unique view of intellectual property crimes that differs from their views on other crimes. The data also shows that prosecutors share this special view of intellectual property crimes, as prosecutors sponsor downward deviations more frequently for intellectual property offenders than they do for offenders in general and for economic crime offenders.

Further analysis may be useful to determine the best way to assess sentences for intellectual property offenders. But until the tension between Guidelines’ recommendations and judges’ actual sentences is resolved, prosecutors and defendants alike will continue to operate in a regime where two out of every three intellectual property offenders receives a sentence that is outside the contemplation of the United States Sentencing Commission’s Guideline, thus frustrating Congress’s overarching goal of achieving predictable, uniform sentencing. 55

55

U.S. SENTENCING GUIDELINES MANUAL, ch. 1, pt. A, introductory cmt. (2000).

CONCEPTION AND MISCONCEPTION IN JOINT INVENTORSHIP AARON X. FELLMETH *

INTRODUCTION ..........................................................................................................73 I. THE LAW OF INVENTION AND INVENTORSHIP .................................................80 A. The Patent Law Concept of Invention ......................................................80 1. The Role of Conception .......................................................................83 2. The Role of the Claims ........................................................................88 B. Inventorship and Joint Inventorship.........................................................94 1. The Evolved Doctrine..........................................................................94 2. The Distorting Effect of Claims Fixation ..........................................106 C. The Strong Presumption of Validity in Inventorship Analysis ...............111 II. RELINKING INVENTORSHIP ANALYSIS TO TECHNOLOGY POLICY ..................118 A. Legislative History of the 1984 Patent Law Amendments Act ...............119 B. Reconstructing Inventorship...................................................................128 1. Equity and Strategic Nonjoinder ......................................................128 2. Restoring Incentives for Collaborative Research .............................134 CONCLUSION ...........................................................................................................139 INTRODUCTION It is an axiom of patent law that utility patents protect “inventions” only; it is a paradox of patent law that the Patent Act does not define “invention” except tautologically: “The term ‘invention’ means invention or discovery.” 1 Given that patents are designed to reward inventors for the disclosure of their inventions, 2 it *

Professor, Arizona State University College of Law; J.D., Yale Law School; M.A., Yale University; B.A., University of California, Berkeley. The author thanks Dennis Karjala and Mark Lemley for helpful comments on an earlier draft of this article.

1 35 U.S.C. § 100(a) (2006). Half of this definition is semicircular, the other half compounds its own obscurity by failing to define a “discovery,” resulting in much confusion and misunderstanding as to the scope of patentable subject matter. See Linda J. Demaine & Aaron X. Fellmeth, Reinventing the Double Helix: A Novel and Nonobvious Conception of the Biotechnology Patent, 55 STAN. L. REV. 303, 368-77 (2002-2003).

2 See Grant v. Raymond, 312 U.S. 218, 241-42 (1832); Graham v. John Deere Co., 383 U.S. 1, 5-8 (1966).

73

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would have been helpful had the Act settled just what constitutes an invention.

Alas, it does not. After 220 years of progressively developed patent statutes and jurisprudence, the concept of invention, so central and fundamental to patent law, has become one of the most misunderstood.

The Patent Act’s obscurity on this key point of law does not prevent the Act from employing the term “invention” ubiquitously. A person is entitled to a patent unless “the invention was known or used by others in this country” or the inventor “has abandoned the invention.” 3 Patentability may not be negated “by the manner in which the invention was made.” 4 A person infringes the patent by making or selling the “patented invention.” 5 Among the mysteries emanating from uncertainty about what kinds of technologies qualify as a patentable invention, identifying the proper inventors has developed into one of the most intractable. Because the U.S. Constitution allows only “inventors” to obtain patents on their inventions,6 we must know what an invention is before we can decide who qualifies as its inventor. The inventor himself has a self-evident interest in certainty about his or her entitlement to a patent as well.

In 2011, Congress supplemented the definitions section of the Patent Act through the Leahy-Smith America Invents Act (“AIA”), to take effect in March 2013, which defines the term “inventor” for the first time. However, that definition merely adds another point of confusion; it provides, “The term ‘inventor’ means the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention.” 7 A definition stating that an inventor is the person who invents the invention would offer us nothing more than another tautology. However, the new amendment does not exactly do that; instead, it defines as the “inventor” the person who invents the

3

35 U.S.C. § 102(a), (c) (2006). The America Invents Act substitutes the term “claimed invention” for “invention,” and defines that term in the new Section 101(j). See Leahy-Smith America Invents Act, § 3, Pub. L. 112-29, 125 Stat. 284 (codified in scattered sections of 35 U.S.C.). The implications of this change will be analyzed below.

4 35 U.S.C. § 103(a) (2006).

5 35 U.S.C. § 271(a) (2006).

6 U.S. CONST. art. I, §. 8, cl. 8; see also 35 U.S.C. § 111(a)(1) (2006) (“An application for patent shall be made, or authorized to be made, by the inventor, except as otherwise provided in this title . . . .”).

7 America Invents Act, supra note 3, § 3, to be codified as 35 U.S.C. § 101(f).

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“subject matter” of the invention. 8 It is not immediately clear how the subject matter of an invention differs meaningfully from the invention itself. Instead of resolving a difficult and core problem of law, the new definition merely adds a point of obscurity.

The intuitive way to begin resolving this paradox is to define as an “invention” whatever satisfies the legal requirements for the grant of a utility patent. The Patent Act requires that, to qualify for a utility patent, an invention must be “novel,” “non-obvious” at the time of conception (after the AIA, the “effective filing date”), and “useful.”9 But the Act and its implementing regulations also require the fulfillment of several more conditions for a patent to issue, including a written disclosure of the invention, an oath or declaration by the applicant, and the payment of a fee. 10 Surely, not all of these requirements speak to the definition of an invention. We can hardly say that a person has failed to invent something until he has signed an oath and paid a fee to the U.S. Patent and Trademark Office.11 At the application stage, the doctrinal analysis for invention and inventorship is deceptively straightforward. If the application satisfies the requirements of the Patent Act and regulations, the invention will be considered whatever is described in the application, and the question of inventorship will be resolved by 8

Id. 35 U.S.C. §§ 101-03 (2006). To supplement the Patent Act, it might be thought useful to look to treaties mandating standards of patent protection among state parties. The most relevant such treaty, the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, does not define “invention,” but it does specify that to qualify for a patent, an invention must be “new, involve an inventive step, and [be] capable of industrial application.” TRIPS: Agreement on Trade-Related Aspects of Intellectual Property Rights art. 27(1), Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization [hereinafter WTO Agreement], Annex 1C, THE LEGAL TEXTS: THE RESULTS OF THE URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS 320 (1999), 1869 U.N.T.S. 299 [hereinafter TRIPS Agreement]. Unfortunately, this adds nothing to our understanding of what constitutes an invention.

10 35 U.S.C. §§ 112, 115 (2006); 37 C.F.R. § 1.17. The TRIPS Agreement also requires a written disclosure, although it does not require all of the information provided for in the 1952 Patent Act, such as a best mode disclosure. Compare TRIPS Agreement, supra note 9, art. 29(1) with 35 U.S.C. § 112 (2006) (amended 2011).

11 Intuitively, we might be tempted to draw a distinction between substantive and procedural requirements of patentability, with only the former qualifying as components of the definition of invention. As will be discussed, this approach would miss some core features of invention that do not clearly fall into the category of substantive criteria.

9

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presumption. The PTO will not examine inventorship, but will usually accept without question the claims of the applicants that they originated the invention. 12 The trouble typically arises when the patent is enforced or challenged in litigation. 13 In the disputing context, the definition of the invention does not normally assume a pivotal role because the focus of litigation tends toward the “claims.” Claims are statements in the patent “particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention.”14 To infringe a utility patent, the accused infringer must generally have made, used, sold, or imported a product described in one or more of the patent’s claims. If the defendant challenges the validity of the patent, the strategy is to prove the invalidity of all allegedly infringed claims.

Courts have similarly gravitated toward claims analysis to determine whether a member of a research team qualifies as an inventor. As consistently invoked by both the Supreme Court and the U.S. Court of Appeals for the Federal Circuit, the accepted patent law doctrine treats claims as if they were equivalent to the invention itself. 15 Yet, in inventorship disputes, the case for fixating on the claims is based more on pedigree than logic or policy. Claims are nearly always drafted by lawyers or patent agents after (sometimes years after) the invention was completed.16 The claims may or may not express what the inventor conceived; they rarely express the full scope of the invention, and not infrequently capture

12

The PTO’s Manual of Patent Examining Procedure does not even contemplate examination of inventorship. See MANUAL OF PATENT EXAMINING PROCEDURE ch. 700 (8th ed., July 2010 rev.), available at http://www.uspto.gov/web/offices/pac/mpep/index.htm [hereinafter MPEP].

13 It may also arise in a stage of administrative review, such as in derivation proceedings conducted under 35 U.S.C. § 135, or possibly post-grant review conducted under 35 U.S.C. ch.

32.

14 America Invents Act, supra note 3, § 118, to be codified at 35 U.S.C. § 112(b).

15 See Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (citing many Supreme Court and earlier Federal Circuit cases for the proposition that the claims measure the invention).

However, one writer has rightly pointed out that excessive fixation on the claims tends to encourage patent applicants to claim more than they have enabled. Oskar Liivak, Rescuing the Invention from the Cult of the Claim, 42 SETON HALL L. REV. 1 (2012); see also Christopher A. Cotropia, What Is the “Invention”?, 53 WM. & MARY L. REV. 1855 (2012) (discussing the functional advantages of defining an invention more broadly than as the claims).

16 An example is seen in this case study of the typical process from invention to patent. Greg Myers, From Discovery to Invention: The Writing and Rewriting of Two Patents, 25 SOCIAL STUDIES OF SCIENCE 1, 57, 69 (1995).

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more than what the inventor invented. 17 Despite the convenience of equating the claims with invention in infringement analysis, judicial opinions equating the two have propelled patent law down a treacherous path.

The consequences of this wayward doctrine reach into the very processes of innovation. Most modern technology research is the product of collaborations between multiple scientists and engineers, usually in large research institutions.18 Collaborations frequently involve teams from industry and universities or government agencies joining forces to advance technology despite divergent economic interests. Joint inventorship has accordingly come to assume a critical role in technological research and development. Approximately half of all patents now list more than one inventor.19 As Congress has long recognized,20 the patent system best achieves its goal of encouraging technological development by facilitating rather than hindering joint invention.

To achieve this goal, inventorship doctrine needs to define its criteria with sufficient specificity to allow research teams to determine who qualifies as an inventor with some confidence. To achieve maximal efficiency and fairness, those criteria should be neither overinclusive nor underinclusive. All collaborators who contribute significantly to the conception of the invention, and only those collaborators, should qualify as inventors. The consequences for a bona fide inventor who is excluded from a patent application covering an invention to which he contributed significantly can be devastating for the omitted inventor. The financial rewards of being named an inventor may be substantial, indeed monumental, because the inventors are the presumptive owners of the patent to the invention as tenants in common. 21 In the absence of an agreement to the contrary, a joint inventor is entitled to exploit the patented invention commercially without the consent of, or owing a duty of contribution or accounting to, the other 17

See Robert P. Merges & Richard R. Nelson, On the Complex Economies of Patent Scope, 90 COLUM. L. REV. 839, 848 (1990) (noting that current practice permits the stretching of claims beyond what the inventor has disclosed).

18 See George Franck, Scientific Communication — A Vanity Fair?, 286 SCI. 53, 53 (1999); Edward T. Lentz, Inventorship in Laboratory Research, in UNDERSTANDING BIOTECHNOLOGY LAW 187, 188 (Gale R. Peterson ed., 1993).

19 See John R. Allison & Mark A. Lemley, Who’s Patenting What? An Empirical Exploration of Patent Prosecution, 53 VAND. L. REV. 2099, 2117 (2000).

20 See Part I.B.1, infra.

21 35 U.S.C. § 262 (2006); see Lawrence M. Sung, Collegiality and Collaboration in the Age of Exclusivity, 3 DEPAUL J. HEALTH CARE L. 411, 425 (2000).

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inventors. 22 In other words, exclusion from joint inventorship means that the putative inventor may lose all of the financial rewards of the invention, no matter how great that inventor’s investment of time, resources, or creativity in the invention.23 Recognition as a joint inventor means not only a potential share of the economic rewards, but it may have career-altering effects. A scientist or engineer may invest months or years in a research project that ultimately results in a patent.

He may expend institutional funds, exhaust grants, and stake his or her reputation on the success of the project. Frequently, hiring, promotion, or tenure depends on successful completion of the project. Exclusion from the inventorship on the resulting patent denies the researcher not only his or her just financial rewards, but career recognition that may dictate his future in academia or industry.

Fixating on claims will in many cases have no effect on inventorship determinations. Frequently, a joint inventor’s contribution, if it appears anywhere in the issued patent, will be claimed expressly. But relying exclusively on claims to determine inventorship is like solving three adjacent sides of a Rubik’s Cube.

From some viewpoints, the puzzle appears fully solved. But the apparent order masks a fundamental incoherence evident from other viewpoints. The full puzzle cannot be solved without twisting the ostensibly finished sides back into disorder.

Inventorship doctrine suffers from the same fundamental incoherence. Fixating on the claims makes inventorship doctrine seem sound when the inventor’s contribution is recited expressis verbis in one or more claims. Other inventive contributions fall within the confused jumble of fragmentary judicial statements on the doctrine of invention. For reasons to be explained, there is no necessary correlation between the relative importance of an inventive contribution, or the effort or creativity involved in that contribution, and its expression in the claims.

To deny such collaborators recognition as inventors is unfair to them, confuses basic patent doctrine, and undermines the patent law’s incentive structure.

22

Drake v. Hall, 220 F. 905, 906 (7th Cir. 1914). The right of joint patent owners contrasts with common law rights of joint owners of other kinds of property. Tenants in common of real property, for example, have a duty of accounting for and sharing profits with other tenants. See 20 AM. JUR. 2D Cotenancy and Joint Ownership § 42 (2012). Even joint copyright owners share an undivided interest in the work. Childress v. Taylor, 945 F.2d 500, 505 (2d Cir. 1991); Weinstein v. University of Ill., 811 F.2d 1091, 1095 (7th Cir. 1987).

23 “May” lose, because the inventor may be entitled to some compensation by prior contractual arrangement.

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The purpose of this article is to disaggregate the patent claims from the invention and to restore the integrity of the concepts of invention and inventorship.

This restoration will require abandoning the time-honored judicial fixation on claims. Giles Rich, frequently cited by reverent courts and patent bar alike,24 famously said, “[T]he name of the game is the claim.” 25 That phrase reflects Rich’s zealous opposition to the concept of invention 26 as well as the key role of claims in limiting the patent monopoly. But the influence of his maxim has far surpassed its meager truth. As Oliver Wendell Holmes once observed, “It is one of the misfortunes of the law that ideas become encysted in phrases and thereafter for a long time cease to provoke further analysis.” 27 Claims are operationally important to patent law, but inventors do not invent claims, they invent inventions.

And, to coin a rather different maxim: The prevention of any mention of invention causes misapprehension. This article will explore the causes of the confusion; its consequences for inventors; and its resulting effect on U.S. technological development.

Part II of this article begins by summarizing the law governing invention and inventorship, and its development and interpretation by the Supreme Court and Federal Circuit. Joint inventorship receives special attention in this part because the case law in this area reveals especially well how fixating on the patent claims distorts patent law analysis more generally. Part II then relates how an idiosyncrasy in the standard of proof in patent litigation has reinforced distorting biases in inventorship analysis. Part III maps out how the broken link between inventorship doctrine and the public policy it is intended to promote can be repaired. Specifically, Part III.A analyzes the legislative history of the Patent Act provisions on joint inventorship to determine congressional intent and compares the current joint inventorship doctrine’s misdirected fixation on claims to the policy goals sought by Congress and discusses the policy consequences. Part III.B then evaluates how the question of inventorship affects the role of the patent

24

See, e.g., Arlington Indus., Inc. v. Bridgeport Fittings, Inc., 632 F.3d 1246, 1256 n.2 (Fed. Cir. 2011); In re Hiniker Co., 150 F.3d 1362, 1369 (Fed. Cir. 1998); Hilton Davis Chem. Co. v.

Warner-Jenkinson Co., 62 F.3d 1512, 1539 (Fed. Cir. 1995) (Plager, J., dissenting); Two-Way Media LLC v. America Online, Inc., 508 F. Supp. 2d 526, 528 (S.D. Tex. 2007).

25 Giles S. Rich, The Extent of the Protection and Interpretation of Claims-American Perspectives, 21 INT’L REV. INDUS. PROP. & COPYRIGHT L., 497, 499 (1990).

26 See, e.g., Giles S. Rich, Why and How Section 103 Came to Be, in NONOBVIOUSNESS: THE ULTIMATE CONDITION OF PATENTABILITY 1, 201 (John F. Witherspoon ed., 1980).

27 Hyde v. United States, 225 U.S. 347, 391 (1912) (Holmes, J., dissenting).

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system in technological development generally and proposes an interpretation of the Patent Act that better fulfills the goals of U.S. technology policy. Part IV concludes by summarizing the argument.

I THE LAW OF INVENTION AND INVENTORSHIP A. The Patent Law Concept of Invention Although the 1952 Patent Act uses the term “invention” throughout, the closest the Act comes to defining the term nontautologically is in Section 101: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” 28 This is not technically a definition, but it gives clues to one by specifying that an invention is a process or physical product that is new and useful. 29 The term “new” is almost universally interpreted as a term of art in patent law (equivalent to “novel”) 30, further defined in Section 102. 31 The term “useful” is not defined in the Act but has been construed in the case law to mean that the invention offers some immediate and practical benefit to the public. 32 While Sections 100 and 101 provides a starting point for defining invention, they are incomplete. As suggested in Part I, there are other requirements for patentability. Procedural requirements such as the inventor’s oath or the application fee obviously do not figure in the definition of the invention itself. But there are other substantive requirements for an invention to qualify for patent protection, the most important of which is nonobviousness. Despite its omission 28

35 U.S.C. § 101 (2006).

See In re Nuijten, 500 F.3d 1346, 1354 (Fed. Cir. 2007) (“The four categories [process, machine, manufacture, and composition of matter] together describe the exclusive reach of patentable subject matter. If a claim covers material not found in any of the four statutory categories, that claim falls outside the plainly expressed scope of § 101 even if the subject matter is otherwise new and useful.”).

30 See S. REP. NO. 82-1979 (1952), reprinted in 1952 U.S.C.C.A.N. 2394, 2410 (“Section 102, in general, may be said to describe the statutory novelty required for patentability, and includes, in effect, an amplification and definition of ‘new’ in section 101.”). But see Demaine & Fellmeth, supra note 1, at 385-88 (arguing that the term “new” in Section 101 should be read more broadly to exclude products of nature and natural processes from patentability).

31 35 U.S.C. § 102 (2006).

32 See Nelson v. Bowler, 626 F.2d 853, 856 (C.C.P.A. 1980).

29

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from Section 101 of the Patent Act, nonobviousness is in some ways the keystone of the definition of invention.

The Patent Act, as amended by the America Invents Act, defines an invention as obvious: if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. . . . 33 The nonobviousness requirement lies so close to the heart of the definition of an invention because its purpose is to clarify the historically confused, and sometimes contradictory, judicial interpretation of the constitutional requirement of “invention.” 34 A new technology that would have been obvious to an ordinary scientist or engineer at the critical date may qualify as an innovation in the colloquial sense, but it is not an invention in the patent law sense. 35 A statutory analysis of the concept of invention might be expected to end here. Other requirements for obtaining a patent are usually considered procedural rather than substantive. The Patent Act itself classifies the novelty, utility, and nonobviousness requirements in a chapter of the Act (“Patentability of Inventions”) separate from the chapter specifying the procedural requirements (Chapter 11—“Application for Patent”). Yet, the definition of invention remains incomplete because nothing in Sections 101 to 103 obligates the inventor to understand and appreciate the significance of his own discovery. 36 An

33

35 U.S.C. § 103 (2006). Prior to the 2011 amendments, the Patent Act referred to “subject matter” rather than “claimed invention”; there is no indication that this amendment was intended to change the substantive standard of patentability.

34 See Rich, supra note 25, at 497-99; Demaine & Fellmeth, supra note 1, at 365-67.

35 The Patent Act applies to “inventions” and “claimed inventions” — it nowhere creates or deals with a concept of “unpatentable inventions.” However, it may be inferred that some “inventions” are unpatentable if the applicant is either not the true inventor or fails to satisfy the procedural requirements in the patent application.

36 See Invitrogen Corp. v. Clontech Labs., Inc., 429 F.3d 1052, 1063 (Fed. Cir. 2005) (“[C]onception requires that the inventor be able to define the compound so as to distinguish it from other materials, and to describe how to obtain it . . . . In other words, conception requires that the inventor appreciate that which he has invented.”); see also Dow Chem. Co. v. Astro-

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unrecognized product or process is not yet an invention at all in the patent law sense.37 The relevant section of the Patent Act, Section 112, is found among the procedural provisions of Chapter 11. Section 112 codifies the disclosure requirement. 38 Specifically, it requires that every patent application include a “specification” section that sets forth a full written description of the invention, “and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use” that invention. 39 Section 112 also includes the requirement that the application terminate with “claims.” 40 Between the written description and the claims, the specification is supposed to alert the public to the outward bounds of the invention that will be protected by patent, and to teach the public how to make and use the claimed part of the invention. For this reason, Section 112 is commonly thought to embody the fundamental bargain of the patent system: the inventor discloses the invention to the public in exchange for a temporary legal monopoly over making, using, selling, offering to sell, or importing the invention. 41 To that extent, the enablement

Valcour, Inc., 267 F.3d 1334, 1341 (Fed. Cir. 2001) (“[T]he date of conception of a prior inventor’s invention is the date the inventor first appreciated the fact of what he made.”).

37 A distinction should be made between an invention, the novelty of which the inventor has not yet recognized and an invention, the novelty and operative characteristics of which the inventor recognizes, but whose mode of operation the inventor does not fully understand. The latter can qualify as a patentable invention, because understanding precisely how an invention achieves its purpose is not required; this is why patent applicants may frame their claims in “means-plus-function” or “step-plus-function” format. See 35 U.S.C. § 112(f) (2013).

38 35 U.S.C. § 112 (2013).

39 Id. § 112(a).

40 Id. § 112(b) 41 See, e.g., Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 150-51 (1989); Kewanee Oil Co. v. Bicron, 416 U.S. 470, 480-81 (1974). The value of disclosure as a basis for the patent grant has been recurrently questioned, however. See, e.g., Brenner v. Manson, 383 U.S. 519, 534 (1966) (Harlan, J., dissenting); Alan Devlin, The Misunderstood Function of Disclosure in Patent Law, 23 HARV. J.L. & TECH. 401, 403 (2010); Mark A. Lemley & Ragesh K. Tangri, Ending Patent Law’s Willfulness Game, 18 BERK. TECH. L.J. 1085, 1100-02 (2003); Rebecca S. Eisenberg, Patents and the Progress of Science: Exclusive Rights and Experimental Use, 56 U. CHI. L. REV. 1017, 1028–29 (1989). Mark Lemley has argued that the real benefit of the patent to most inventors may be to avoid the risk of being excluded from practicing the technology at issue. Mark Lemley, The Myth of the Sole Inventor, 110 MICH. L. REV. 709, 755 (2012).

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provisions of Section 112 are indeed procedural and not substantive. They establish a disclosure requirement that the applicant must fulfill in order to obtain a patent, but this requirement assumes that the inventor sufficiently appreciates what he has invented and how to reproduce it. In other words, an applicant who can fulfill the requirement to describe clearly how to make and use the invention proves that he understands the invention sufficiently, and that he “actually invented the invention claimed.” 42 1. The Role of Conception Section 112 thus implies an uncodified but essential aspect of the definition of an invention. Invention has not occurred until the inventor appreciates that he or she has invented something useful, functioning, worthwhile. This subjective component of invention is inherent in the idea of “conception,” which is integral to establishing the moment when the invention became entitled to a patent.

Conception is considered the “touchstone” of invention,43 and has been defined as “the complete performance of the mental part of the inventive act” and “the formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice.” 44 Conception is incomplete unless the idea of the invention “is so clearly defined in the inventor’s mind that only ordinary skill would be necessary to reduce the invention to practice, without extensive research or experimentation.” 45 In other words, even if the inventor has a complete mental picture of the invention’s physical configuration, the invention is not “conceived” in patent law until the inventor has also determined how to make and use the invention in practice.46

42

Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc); see In re Wertheim, 541 F.2d 257, 263 (C.C.P.A. 1976).

43 Burroughs Wellcome v. Barr Labs., Inc., 40 F.3d 1223, 1227 (Fed. Cir. 1994).

44 Townsend v. Smith, 36 F.2d 292, 295 (Ct. Cust. & Pat. App. 1930); Hybritech Inc. v.

Monoclonal Antibodies, Inc., 802 F.2d 1367, 1376 (Fed. Cir. 1986).

45 Burroughs Wellcome, 40 F.3d at 1228; Hiatt v. Ziegler, 179 U.S.P.Q. 757, 763 (Bd. Pat. App. 1973). Reduction to practice means that the inventor actually creates the physical invention (if it is a product) or performs the steps of the invention (if it is a process). Alternatively, an inventor can constructively reduce an invention to practice by filing a valid patent application clearly describing how to make and use the invention. MPEP, supra note 12, § 2138.05.

46 The Federal Circuit has held that conception requires both understanding the invention’s structure and an operative method of making it. See, e.g., Amgen, Inc. v. Chugai Pharm. Co., 927 F.2d 1200, 1206 (Fed. Cir. 1991). It would be more accurate to add that conception also requires understanding how to use the invention. The Patent Act requires that the invention be

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Even when conception no longer defines the date at which the inventor is entitled to a patent, conception will still be necessary, because without it the applicant will lack the information necessary to complete the Section 112 disclosure.

Therefore, while Section 112 is indeed a procedural provision, one of its other functions is to provide evidence of whether the application’s subject matter satisfies the substantive requirements of invention. As the Federal Circuit put it: “The conception analysis necessarily turns on the inventor’s ability to describe his invention with particularity. Until he can do so, he cannot prove possession of the complete mental picture of the invention.” 47 The relationship between the inventor’s understanding and the physical configuration of the invention can be illustrated through an example: {1a} Ira has processed several chemicals to create a novel and nonobvious compound through a complex series of steps. Ira believes the compound could prove to cure cancer, because its molecular structure is loosely related to the structures of other chemicals that have anticancer effects.

In example {1a}, Ira may be capable of fully describing how to make and use his new molecule, and so he can satisfy the procedural requisites of Section 112. However, if Ira’s belief in the molecule’s anticancer properties lacks any firm basis in science, the molecule does not satisfy the Section 101 utility requirement.

Although under current law an inventor need not know with certainty or even probability that the invention will work for conception to be considered complete,48 a mere wish or unsupported expectation does not suffice. In Hitzeman

useful, 35 U.S.C. § 101. Although, as noted, the Federal Circuit interprets the Act not to require the inventor to know with confidence that the invention is useful, the Act clearly requires that the inventor disclose how to use the invention, assuming it does work. See 35 U.S.C. § 112 (2006).

Therefore, conception of a product properly requires knowledge of: (1) the physical structure of the invention, (2) how to make the invention, and (3) how to use the invention. Cf. Space Systems/Loral, Inc. v. Lockheed Martin Corp., 271 F.3d 1076, 1080 (Fed. Cir. 2001) (“To be ‘ready for patenting’ the inventor must be able to prepare a patent application, that is, to provide an enabling disclosure as required by 35 U.S.C. § 112. . . . [If] the inventor himself [is] uncertain whether it could be made to work, a bare conception that has not been enabled is not a completed invention ready for patenting.”).

47 Burroughs Wellcome, 40 F.3d at 1228.

48 See, e.g., id. (“[A]n inventor need not know that his invention will work for conception to be complete.”); Cross v. Iizuka, 753 F.2d 1040, 1051 (Fed. Cir. 1985) (holding that in vitro

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v. Rutter, the Federal Circuit held that a genetically-altered yeast intended to produce antigens having certain key size and sedimentation rates had not yet been conceived by the inventor, because the inventor had only a “hope,” not a reasonable expectation, that the yeast would perform in that manner. 49 In Scenario {1a}, then, unless Ira has some scientifically sound basis, however partial, for attributing anti-cancer properties to his molecule, there is not (yet) a patentable invention.

Consider a slight alteration of example {1a}: {1b} On January 30, Ilsa processes several chemicals to create a novel and nonobvious compound through a complex series of steps. At the time, she has no idea whether the chemical has any effective use. On June 1, she discovers that the new chemical is extremely effective at treating cancer. Ilsa files a patent application on the chemical.

Ilsa has clearly created the precursor to a new cancer-fighting drug, but when was it invented? On January 30 or June 1?

Example {1b} illustrates the subjective requirement of invention. A new product or process may meet the objective statutory patentability requirements (novelty, nonobviousness, and utility), but it is not a patentable “invention” until its creator appreciates the utility of the invention and understands how to reproduce it.50 As a correlate, there have been cases in which the inventor created a new

testing of a potential therapeutic compound, though far from establishing actual benefit to any person, suffices to show utility).

49 Hitzeman v. Rutter, 243 F.3d 1345 (Fed. Cir. 2001).

50 See Silvestri v. Grant, 496 F.2d 593, 596 (Ct. Cust. & Pat. App. 1974); Invitrogen, Corp. v.

Clontech Labs., Inc., 429 F.3d 1052, 1064 (Fed. Cir. 2005) (holding that establishing conception requires evidence that the inventor understood the invention to have the features that comprise the inventive subject matter at issue). Chisum has also interpreted the Supreme Court jurisprudence to hold that “discovery of a practical utility is part of the act of inventing.”

DONALD CHISUM, CHISUM ON PATENTS § 2.02[5] (Rel. 110-9, 2007); see also Lentz, supra note 18, at 190 (“Thus, a person who conceives of or actually something, e.g., a new chemical entity, but who does not know of a use for the thing probably has not made a patentable invention and is not, therefore, an inventor unless and until a utility is discovered.”).

The European Patent Office seems to interpret the European Patent Convention’s requirement of “susceptibility to industrial application”—the parallel of the utility requirement— as integral to the concept of invention as well. See Michigan State U./Euthanasia Compositions,

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chemical substance unwittingly; the substance was not deemed to have been conceived until the inventor perceived its presence, 51 because conception has not occurred until the inventor gains the ability to describe the invention. 52 In Example {1b}, conception occurred on June 1. Another variation illustrates a concomitant principle: {1c} On January 30, Ian conceives of a chemical compound that he has sound scientific reason to believe will be extremely effective at treating cancer. However, he has no expertise in synthesizing this class of chemicals. On June 1, Rowena assists Ian to synthesize the compound using new insights and techniques developed specifically for the purpose.

Example {1c} is in some ways the reverse of {1b}. In {1b}, the first inventor could visualize and make the compound but did not know how to use it.

In {1c}, the first inventor could visualize and knew how to use the compound, but did not know how to make it. The outcomes are equivalent; in both cases, the compound is not “invented” until June 1; in scenario {1c}, Ian and Rowena are joint inventors. 53 The foregoing discussion, like any doctrinal restatement, gives an illusion of certainty about the law relating to invention. In practice, gray areas in the subjective prong of conception, coupled with frequent misunderstanding of the inventive process, plague the law and its application with inconsistencies. The explanation of example {1b} relies on the PTO’s or court’s ability to distinguish between sufficient and insufficient bases for attributing utility to the invention.

From a scientific or engineering perspective, the question of whether an untested Eur. Pat. Off. Bd. App., Case No. T 0866/01, para. 4.6 (unrep. May 11, 2005), available at http://www.epo.org/law-practice/case-law-appeals/pdf/t010866eu1.pdf.

51 See, e.g., Langer v. Kaufman, 465 F.2d 915, 918 (C.C.P.A. 1972).

52 Burroughs Wellcome, 40 F.3d at 1228.

53 See Falana v. Kent State Univ., 669 F.3d 1349, 1358 (Fed. Cir. 2012) (holding that the putative inventor who envisioned the genus of compounds and contributed the method of making it contributes to the conception of that genus); cf. Bd. of Educ. ex rel. Bd. Of Trustees of Fla. State Univ. v. Am. Bioscience, Inc., 333 F.3d 1330, 1342 (Fed. Cir. 2003) (observing that, if some inventors conceived a chemical compound but were unable to make it without the help of another scientist, the assisting scientist might qualify as a coinventor); Fina Oil & Chem. Co. v.

Ewen, 123 F.3d 1466, 1473 (Fed. Cir. 1997) (“Conception of a chemical substance requires knowledge of both the specific chemical structure of the compound and an operative method of making it.”).

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product or process will function as intended is not a “yes” or “no” one, but a sliding scale of probability. The Federal Circuit has adopted a murky test to determine where conception occurs on the scale between mere surmise and certainty of adequate functioning. For example, on one hand, in order to shift the burden of proof to the applicant, a PTO examiner challenging utility must produce evidence that a person having ordinary skill in the relevant art would reasonably doubt the alleged utility. 54 On the other hand, an applicant or patentee asserting the utility of a patented invention must produce at least some evidence, however inconclusive, that the invention works as intended. 55 This leaves the PTO, which bears the burden of proving an absence of utility, 56 without much guidance. To be safe, the PTO has effectively adopted the practice of virtually never rejecting pharmaceutical inventions on utility grounds unless the allegation of utility is incredible. 57 This is partly because the PTO does not test the utility of an invention disclosed in a patent application and so must rely primarily on the applicant’s representations and the (usually very general) background knowledge of the examiner.

Such an “incredibility” test is inappropriate in judicial proceedings, where the party challenging the patent may introduce evidence of inutility that was unavailable to a PTO examiner. Yet, the Federal Circuit and its predecessor have endorsed an exceedingly low standard of evidence to uphold an allegation of utility, especially in the active field of pharmaceutical research.58 Congealing the uncertainty is the jurisprudence,

54

In re Brana, 51 F.3d 1560. 1566 (Fed. Cir. 1995).

Id.; see also In re ‘318 Patent Infringement Litig., 583 F.3d 1317, 1327 (Fed. Cir. 2009) (“Thus, at the end of the day, the specification, even read in the light of the knowledge of those skilled in the art, does no more than state a hypothesis and propose testing to determine the accuracy of that hypothesis. That is not sufficient.”); Envirotech Corp. v. Al George, Inc., 730 F.2d 753, 762 (Fed. Cir. 1984) (holding that lack of utility is shown when there is a complete absence of data supporting the assertion of utility). But see Univ. of Pittsburgh v. Hedrick, 573 F.3d 1290, 1298 (Fed. Cir. 2009) (“An inventor need not know that his invention will work for conception to be complete . . . the discovery that the invention actually works is part of its reduction to practice.”).

56 In re Bundy, 642 F.2d 430, 433 (C.C.P.A. 1981).

57 See MPEP, supra note 12, § 2107.01.

58 See, e.g., Brana, 51 F.3d at 1566-68 (“Usefulness in patent law, and in particular in the context of pharmaceutical inventions, necessarily includes the expectation of further research and development. The stage at which an invention in this field becomes useful is well before it is ready to be administered to humans.”); Nelson v. Bowler, 626 F.2d 853, 856 (C.C.P.A 1980) (holding that inconclusive and statistically insignificant tests of the utility of a chemical 55

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discussed in Part II.C, creating a strong legal presumption of validity of the patent despite a complete or nearly complete vacuum of information about whether the invention was in fact useful at the time the patent was examined and issued.

Another difficult doctrinal issue is raised in example {1b}. Suppose Ilsa did not discover the utility of the chemical; a new researcher, Ron, did. Does this not make Ron the inventor rather than Ilsa? Or does Ilsa remain the inventor? Or might they be considered joint inventors? From a logical and strictly doctrinal standpoint, the fact that conception was incomplete until Ron discovered the utility of the chemical implies that Ron is the sole inventor if he did not collaborate with Ilsa in any way, and a joint inventor with Ilsa if they did collaborate and Ron’s discovery was more than a straightforward application of well-known principles of chemistry. However, as discussed in Part II.C, Federal Circuit and Supreme Court precedents have created a basis for doubting whether courts would actually endorse this outcome.

2. The Role of the Claims The problematic patent law conception of invention arises in part from the role of the claims in defining the invention. The claims, as noted above, are the part of the patent document that delimits the outer boundaries of the invention for which the applicant seeks protection. They are typically one sentence long and terse, if not cryptic, in their phrasing. Partly because the claims are drafted by patent lawyers or agents rather than the inventor, and partly due to the organic idiosyncrasies of language, the claims may or may not encompass all of the invention. In fact, they may encompass quite a bit more than the invention. 59 A claim may encompass subject matter that the inventor never conceived and never could conceive. There is no a priori reason why the claims will completely overlap with the invention.

An inventor who claims less than the invention may lose some of the benefit of the invention. There are several reasons why this might happen. One is poor drafting, although the consequences of poor drafting to the hapless patentee are mitigated by the doctrine of equivalents and the possibility of broadening reissue compound were sufficient to establish utility); In re Gazave, 379 F.2d 973, 978 (C.C.P.A. 1967) (“[I]n the usual case where the mode of operation alleged can be readily understood and conforms to the known laws of physics and chemistry, operativeness is not questioned, and no further evidence is required.”).

59 Merges & Nelson, supra note 17.

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proceedings.60 Another possible reason is that the inventor wishes to commercially exploit only a subset of an invention’s embodiments and to dedicate the remainder to the public.61 In that case, patent coverage narrower than the invention as a whole poses no policy problems, because it is voluntary.

In contrast, an inventor who claims more than the invention risks the overbroad claims being invalidated.62 When the claims exceed what was enabled in the written description, they fail to honor the basic patent bargain of disclosure of the invention in exchange for a legal monopoly over the claimed subject matter.63 Patents with overbroad claims also fail to ensure that the inventor possessed the claimed subject matter, because there is no way to verify that the applicant did indeed invent what he cannot or will not describe. Indeed, such patents may suffer from a constitutional deficiency on the theory that Congress has no power to grant patents on subject matter the inventor did not invent. 64 Probably the most famous example of an inventor who tried to claim far more than he invented relates to the Morse telegraph.65 Morse, recognized as the inventor of the electro-magnetic telegraph, obtained a reissue patent with eight claims. The first seven claimed various uncontroversial components and embodiments of the electric telegraph. The eighth claim, however, covered much broader subject matter: I do not propose to limit myself to the specific machinery or parts of machinery described in the foregoing specifications and claims; the essence of my invention being the use of the motive power of the electric or galvanic current, which I call electro-magnetism, however developed for marking or printing intelligible characters, signs, or

60

On reissue proceedings, see 35 U.S.C. § 251 (2006); see generally 37 C.F.R. § 1.176.

Any part of the invention disclosed in the specification but not claimed is deemed dedicated to the public. See Maxwell v. J. Baker, Inc., 86 F.3d 1098, 1106 (Fed. Cir. 1996). For an interesting exploration of this issue, see generally Robert A. Migliorini, The Dedication to the Public Doctrine and Lessons for Patent Practitioners, 87 J. PAT. & TRADEMARK OFF. SOC’Y 825 (2005).

62 See O’Reilly v. Morse, 56 U.S. (15 How.) 62 (1853).

63 See sources cited supra note 10.

64 See U.S. CONST. art. I, § 8, cl. 8.

65 Morse, 56 U.S. (15 How.) at 62.

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letters, at any distances, being a new application of that power of which I claim to be the first inventor or discoverer.66 The Supreme Court struck the claim as overbroad, because it covered subject matter that Morse had not described in his patent â&#x20AC;&#x153;and indeed had not invented.â&#x20AC;?67 Professor Morse has not discovered, that the electric or galvanic current will always print at a distance, no matter what may be the form of the machinery or mechanical contrivances through which it passes. You may use electro-magnetism as a motive power, and yet not produce the described effect, that is, print at a distance intelligible marks or signs. To produce that effect, it must be combined with, and passed through, and operate upon, certain complicated and delicate machinery, adjusted and arranged upon philosophical principles, and prepared by the highest mechanical skill. And it is the high praise of Professor Morse, that he has been able, by a new combination of known powers, of which electro-magnetism is one, to discover a method by which intelligible marks or signs may be printed at a distance. And for the method or process thus discovered, he is entitled to a patent. But he has not discovered that the electro-magnetic current, used as motive power, in any other method, and with any other combination, will do as well.68 If the claim had been upheld, Morse could prevent another inventor who had developed an entirely different and potentially better means of using electricity to transmit information for printing at a distance (for instance, by wireless radio frequency transmitter and receiver) from practicing his patent. The Court accordingly rejected the claim.

The Morse case illustrates the interdependence of the Section 112 disclosure requirement and the concept of invention. The Courtâ&#x20AC;&#x2122;s reasoning implied that the disclosure requirement does not only alert the public to the parameters of the protected intellectual property and teach the public how to make and use the invention, but tailors the scope of patent protection to what the inventor actually

66

Id. at 112.

Id. at 113.

68 Id. at 117.

67

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contributed to the technological field. 69 When the applicant claims more than he invented, the benefits of the patent to the public are attenuated and the possibility of a dysfunctional patent precedent arises.

Patent prosecutors are typically more concerned about underclaiming than overclaiming. The patent examiner frequently whittles down an overly aggressive claim, and those exaggerated claims that survive prosecution will benefit from a strong presumption of validity, which gives the patentee useful leverage for negotiating with licensees and competitors, even if the claims are not strictly enforceable under a proper interpretation of the claim. At worst, the patentee can obtain a narrowing reissue a few years down the road to ensure the claim’s enforceability. 70 An overly narrow claim, in contrast, risks dedicating the unclaimed subject matter to the public for all time. It is possible to seek a broadening reissue, but only within two years after the patent is granted. 71 As a result, many patent prosecutors tend toward aggressively claiming more than the inventor actually conceived, so long as the overclaiming will not court rejection by the PTO examiner.

The claims are important, but as the Federal Circuit has emphasized en banc, not all-important: “The claims . . . do not stand alone. Rather, they are part of ‘a fully integrated written instrument’” (i.e., the patent). 72 Yet, when not engaged in the narrow task of claim construction, courts have sometimes fetishized the claims as if they were the only legally material part of the patent. The importance of the claims in determining whether anticipation by prior art or patent infringement has occurred has led many courts, including the Supreme Court, to use language that conflates the claims with the invention itself: the claims, they assert, “define the invention.”73 The Federal Circuit has stated that a researcher must “conceive” of a

69

See id.

See 35 U.S.C. § 251 (2006).

71 Id. 72 Phillips v. AWH Corp., 415 F.3d 1303, 1315 (Fed. Cir. 2005) (en banc) (quoting Markman v. Westview Instruments, Inc., 52 F.3d 967, 978 (Fed. Cir. 1995)); see also United States v.

Adams, 383 U.S. 39, 49 (1966).

73 See, e.g., Altoona Publix Theatres, Inc. v. American Tri-Ergon Corp., 294 U.S. 477, 487 (1935); Purdue Pharma L.P. v. Endo Pharm. Inc., 438 F.3d 1123, 1136 (Fed. Cir. 2006) (“[I]t is the claims ultimately that define the invention.”); Netscape Commc’ns Corp. v. Konrad, 295 F.3d 1315, 1323 (Fed. Cir. 2002) (“However, it is the claims that define a patented invention.”).

70

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“claim” (rather than an invention) to be an inventor, 74 and suggested that Section 116 of the Patent Act requires a coinventor to “make a contribution to the conception of the subject matter of a claim.” 75 The Patent Act says no such thing; it formerly referred to inventions and “subject matter” rather than claims, and now refers to these and to the “claimed invention” as well. Claims may or may not coincide with the full scope of the invention or even the “claimed invention.” Oskar Liivak has defined the invention as “the set of all of the embodiments that the inventor has invented. That is, the invention is the set of embodiments conceived by the inventor in enough detail so that each of those embodiments is capable of being reduced to practice.” 76 This definition, while incomplete, has the virtue of indicating how the invention is (or at least should be) more expansive than the claims, which are “written attempts to circumscribe varying subsets of the embodiments disclosed in the specification.” 77 Liivak’s point, that the claims (and indeed the “claimed invention” of Section 100(j)) are a subset of the invention rather than the invention itself, is well taken.

Courts have on a few occasions distinguished explicitly between the aspects of the invention protected by patent and the invention as a whole. For example, in a moment of clarity, a panel of the Federal Circuit observed that “the specification teaches an invention, whereas the claims define the right to exclude.” 78 The Supreme Court has also distinguished between the two, stating that claims are “construed . . . with a view to ascertaining the invention.” 79 The necessity of distinguishing between the claims and the invention to which the claims pertain is also evident from the Patent Cooperation Treaty (PCT), to which the United States is a party. 80 The PCT allows inventors to file a single patent application that may result in patents in multiple countries. Under the “unity of invention” requirement, the patent application must relate to just one 74

Univ. of Pittsburgh v. Hedrick, 573 F.3d 1290, 1297-98 (Fed. Cir. 2009); see also Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1460 (Fed. Cir. 1998) (“[T]he critical question for joint conception is who conceived, as that term is used in the patent law, the subject matter of the claims at issue.”) (emphasis added).

75 Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1361-62 (Fed. Cir. 2004).

76 See Liivak, supra note 15.

77 Id. 78 Univ. of Rochester v. G.D. Searle & Co., 375 F.3d 1303, 1306 (Fed. Cir. 2004).

79 United States v. Adams, 383 U.S. 39, 49 (1966).

80 Patent Cooperation Treaty, done on June 19, 1970, 28 U.S.T. 7645, 1160 U.N.T.S. 231, available at http://www.wipo.int/pct/en/texts/articles/atoc.htm [hereinafter PCT].

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“invention” or a “group of inventions so linked as to form a single general inventive concept.”81 Yet, in each state granting a patent resulting from the PCT application, the claims may differ to comply with local filing requirements. 82 A single invention could not receive the same patent protection in different countries using different claims unless the invention is something larger than the claims.

The frequent judicial and scholarly statements that claims “define” the invention, then, are misleading.83 The invention is more than the claims; the claims limit the invention but they do not alone define it. “[I]t is fundamental that claims are to be construed in the light of the specifications and both are to be read with a view to ascertaining the invention.” 84 The written description portion of the specification “‘is always highly relevant to the claim construction analysis.

Usually, it is dispositive; it is the single best guide to the meaning of a disputed term.’” 85 If the claims must always be read in light of the specification, the claims cannot “define” the invention; they merely limit the extent to which the patent protects the invention.

The Leahy-Smith America Invents Act, the relevant provisions of which take effect on March 16, 2013, suggests that Congress shares this perception of the distinction between the claims and invention. The Section 102 amendments substitute the term “invention” in the novelty provisions of the Patent Act with the term “claimed invention,”86 which is in turn defined as “the subject matter defined

81

See id. arts. 2(i), 3(4)(iii), 17(3). See also Paris Convention for the Protection of Industrial Property art. 4(G), done on July 14, 1967, 21 U.S.T. 1583, 828 U.N.T.S. 305, available at http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html (establishing unity of invention requirement for priority patent applications).

82 See PCT, supra note 80, art. 28.

83 See, e.g., Sjoland v. Musland, 847 F.2d 1573, 1582 (Fed. Cir. 1988) (noting that claims define the invention); Mark J. Stewart, The Written Description Requirement of 35 U.S.C. § 112(1): The Standard After Regents of The University of California v. Eli Lilly & Co., 32 IND. L. REV. 537, 541 (1998-1999).

84 Adams, 383 U.S. at 49.

85 Phillips v. AWH Corp., 415 F.3d 1303, 1315 (Fed. Cir. 2005) (en banc) (quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996)).

86 America Invents Act, supra note 3, § 3, to be codified as 35 U.S.C. § 102.

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by a claim in a patent or an application for a patent.”87 From this, it appears that Congress considers the “invention” to be different from the “claimed invention.” 88 Because the patent protects only the claimed portion of an invention from infringement, it is possible to infringe on a “claim,” but not an “invention.” By extension, 89 prior art may anticipate specific claims in a patent application without rendering the invention unpatentable. Section 102 now more clearly suggests that novelty analysis consists in determining whether specific claims are anticipated by prior art, as opposed to analyzing whether the “invention” as a whole is anticipated by prior art, because each claim stands on its own. It follows that a person who infringes any one claim infringes the patent, even if the accused product or process does not infringe any other claim.

For both anticipation and infringement purposes, then, claims do not “define” the invention in the conventional sense; they define the rough outlines of what part of the invention can overcome anticipatory prior art and accordingly what part of the invention the patent protects from infringement. This key distinction between the invention and the claims has unappreciated importance for determinations of inventorship, and especially of joint inventorship.

B. Inventorship and Joint Inventorship 1. The Evolved Doctrine When a sole researcher conceives the entirety of an invention, she must satisfy all of the patentability requirements by herself. When the inventor fulfills these requirements, abstruse doctrinal or policy problems arise only in exceptional cases. But the image of the lone scientist confined to a laboratory for months, and ultimately emerging with a triumphant new invention has more romantic appeal than correspondence with reality. Although much government rhetoric exalts the

87

Id., to be codified as 35 U.S.C. § 101(i).

Technically, to avoid an internal contradiction in the Patent Act, Congress should have amended Section 112 to say: “the subject matter for which the applicant seeks patent protection.”

As the AIA amends the Patent Act, what the inventor “regards as his invention” is irrelevant; what matters are the aspects of the invention for which the applicant seeks and can obtain patent protection.

89 See Peters v. Active Mfg. Co., 129 U.S. 530, 537 (1889) (“That which infringes if later anticipates if earlier.”).

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independent inventor, 90 in modern industry, discoveries in applied science are usually a product of teamwork. Joint invention is now more common than sole invention.91 In general, a joint invention “is the product of a collaboration between two or more persons working together to solve the problem addressed.” 92 Yet, the process of identifying whether a collaborator qualifies as a joint inventor was until very recently crude and uncertain, and even today the law remains underdeveloped.

Before 1984, the Patent Act’s provisions on joint inventorship were entirely procedural; they offered no guidance to the judiciary on how joint inventorship should be understood. The Act merely stated: “When an invention is made by two or more persons jointly, they shall apply for patent jointly and each sign the application and make the required oath, except as otherwise provided in this title.” 93 It then went on to explain what procedural measures could be taken if a joint inventor refused to join in the application, as well as the consequences of a non-inventor being wrongly listed as an inventor (commonly known as “misjoinder”) or an inventor being erroneously omitted (“nonjoinder”). 94 For many years, courts struggled with the question of how to determine who was a joint inventor. Regarding the threshold of contribution required to qualify as a joint inventor, their formulated tests were frequently vague and sometimes contradictory, leading one district court judge to lament: The exact parameters of what constitutes joint inventorship are quite difficult to define. It is one of the muddiest concepts in the muddy metaphysics of the patent law. . . . Perhaps one need not be able to point to a specific component as one’s sole idea, but one must be able to say that without his contribution to the final conception, it would have been less—less efficient, less simple, less economical, less something of benefit. . . .

90

See Mark Janis, Patent Abolitionism, 17 BERKELEY TECH. L.J. 899, 910-20 (2002) (describing governmental statements and policies paying homage to the “independent inventor”).

91 See Stefan Wuchty, Benjamin F. Jones & Brian Uzzi, The Increasing Dominance of Teams in Production of Knowledge, 316 SCIENCE 1036, 1036-37 (2007); Dennis D. Crouch & Jason Rantenen, The Changing Nature [sic] Inventing: Collaborative Inventing, PATENTLY-O BLOG (July 9, 2009, 9:28 AM), at http://www.patentlyo.com/patent/2009/07/the-changing-natureinventing-collaborative-inventing.html.

92 Burroughs Wellcome Co. v. Barr Labs., Inc., 40 F.3d 1223, 1227 (Fed. Cir. 1994).

93 Act July 19, 1952, ch. 950, § 116, 66 Stat. 792 (codified at 35 U.S.C. § 116 (1952)).

94 Id.

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.... . . . . This situation does make it difficult to say . . . with real certainty, whether or not a given person “is” a joint inventor in a given case.95 Such guidance was indeed lean. “Less something of benefit” is rather overinclusive as a standard; it would reward routine, and indeed flatly obvious, contributions with coinventorship. Courts were plainly struggling with the doctrine. Another judge wrote: The conception of the entire device may be due to one [inventor], but if the other makes suggestions of practical value, which assisted in working out the main idea and making it operative, or contributes an independent part of the entire invention, which is united with the parts produced by the other and creates the whole, he is a joint inventor, even though his contribution be of comparatively minor importance and merely the application of an old idea.96 These pronouncements were problematic not only because of their lack of guidance. The mere contribution of “an old idea” of “minor importance” is probably too low a standard, and has been at least called into doubt by Federal Circuit precedent.97 If a joint inventor must contribute something nonobvious, then the nature of the contribution determines joint inventorship, not merely the effect of the contribution on the invention’s functioning. It would seem that a collaborator who contributed nothing more than information or designs well known in the art would not qualify as an inventor unless the application of that prior art to the problem at hand would have been nonobvious. 98 A decided 95

Mueller Brass Co. v. Reading Indus., 352 F. Supp. 1357, 1372-73 (E.D. Pa. 1972), aff’d, 487 F.2d 1395 (3d Cir. 1973). The reason for the quotation marks around “is” is unclear. See also Jamesbury Corp. v. United States, 518 F.2d 1384, 1396 (U.S. Ct. Cl. 1975) (commenting on “[t]he difficulty . . . in attempting to define a standard to be used to determine who is a joint inventor and the type of contribution that is necessary to qualify as a coinventor . . . .”).

96 De Laski & Thropp Circular Woven Tire Co. v. Williamm R. Thropp & Sons Co., 218 F. 458, 464 (D.N.J. 1914), aff’d, 226 F. 941 (3d Cir. 1915).

97 Cf. Hess v. Advanced Cardiovascular Sys., Inc., 106 F.3d 976, 981 (Fed. Cir. 1997).

98 The timing of the supply of information or ideas by the collaborator determines whether it qualifies as a contribution to conception for purposes of establishing joint inventorship.

Specifically, a not insignificant contribution to conception establishes joint inventorship if the contribution was not in the prior art at the time contributed. If the contribution entered the public

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improvement in the functioning of the invention is relevant to assessing the quality of the contribution but far from dispositive.

While the historical standard of joint inventorship might have seemed low, in some ways it compensated for an aberration of patent law that discouraged team research. In case after case, federal courts denied joint inventors the right to file a single patent with multiple claims on the product of their collaboration, if all inventors did not contribute to each and every claim. 99 In other words, this “all claims rule” excluded from inventorship any collaborator who did not contribute to every claim of the patent. As a leading treatise of the time put it: “Only where the same single, unitary idea of means is the product of two or more minds, working pari passu, and in communication with each other, is the conception truly joint and the result a joint invention.”100 One nineteenth century court even held that when two researchers invent distinct parts of the same new machine, they should obtain separate patents as sole inventors on each part of the machine rather than a single patent as coinventors on the machine as a whole. 101 In 1967, a federal trial court cleared up much of the doctrinal obscurity and tried to reverse the bias against collaborative research. Monsanto v. Kamp Co. arose from an interference proceeding before the U.S. Patent Office, predecessor to the PTO.102 The invention in question was a specially coated plastic container for pharmaceuticals.103 The plaintiffs challenged the designation of two defendants as

domain later, after its contribution to the research team but before the team files a patent application, it qualifies the contributor as an inventor. As the Federal Circuit has explained: “Contributions to realizing an invention may not amount to contribution to conception if they merely explain what was ‘then state of the art.’” Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1359 (Fed. Cir. 2004) (quoting Hess, 106 F.3d, at 981)(emphasis added). The Patent Act, as amended by the AIA, provides explicitly that an invention does not necessarily sacrifice patentability merely by public exposure. See 35 U.S.C. § 102(b)(1) (2013) (requiring that disclosures by the inventor (or derived from the inventor) do not constitute a bar to patentability unless made one year prior to the effective filing date of the patent application). The same is true a fortiori for a contribution to conception of a patentable invention, because the contribution assisted in the final conception regardless of whether it later became public knowledge.

99 For a review of the case law interpreting joint inventorship before 1984, see generally John O. Tresansky, Joint Invention, 7 AIPLA Q.J. 96 (1979).

100 1 WILLIAM C. ROBINSON, THE LAW OF PATENTS FOR USEFUL INVENTIONS § 396 (1890).

101 Worden v. Fisher, 11 F. 505, 508-09 (E.D. Mich. 1882).

102 Monsanto Co. v. Kamp, 269 F. Supp. 818 (D.D.C. 1967).

103 Id.

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joint inventors, which launched the court into an original discussion of the principles of joint invention: A joint invention is the product of collaboration of the inventive endeavors of two or more persons working toward the same end and producing an invention by their aggregate efforts. To constitute a joint invention, it is necessary that each of the inventors work on the same subject matter and make some contribution to the inventive thought and to the final result. Each needs to perform but a part of the task if an invention emerges from all of the steps taken together. It is not necessary that the entire inventive concept should occur to each of the joint inventors, or that the two should physically work on the project together. One may take a step at one time, the other an approach at different times. One may do more of the experimental work while the other makes suggestions from time to time. The fact that each of the inventors plays a different role and that the contribution of one may not be as great as that of another, does not detract from the fact that the invention is joint, if each makes some original contribution, though partial, to the final solution of the problem. 104 The district court decision in Kamp was (and is) cited with some frequency by other courts, including the Federal Circuit. 105 Although Kamp stood as a beacon of thoughtful interpretation, a district court decision could not unify patent doctrine nationwide. Eventually, Congress had to clarify the standards of joint invention. This took the form of the 1984 Patent Law Amendments Act (PLAA), which added the following language to what is now Section 116(a): Inventors may apply for a patent jointly even though (1) they did not physically work together or at the same time, (2) each did not make

104

Id. at 824.

Cited 158 times as of this printing. See, e.g., Vanderbilt University v. Icos Corp., 601 F.3d 1297, 1302 (Fed. Cir. 2010); Hyatt v. Doll, 576 F.3d 1246, 1271 (Fed. Cir. 2009). Cited in the MPEP as well, supra note 12, ยง 605.07.

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the same type or amount of contribution, or (3) each did not make a contribution to the subject matter of every claim of the patent. 106 This language has not been altered since and remains the main Patent Act provision defining the conditions for joint inventorship.

The 1984 PLAA reversed the all claims rule, allowing a research team to apply for a single patent on a unitary inventive concept despite the fact that some team members may have contributed to only a single claim in a multiple claim patent. It also codified the trend advanced by the Kamp decision toward relaxing the standard of collaborative invention. It is now clear that direct interaction between or among collaborators is unnecessary. For example, consider the following scenario: {2}

Three scientists, Alpha, Beta, and Gamma, are involved in research calculated to lead to the discovery of a room-temperature superconducting material. Alpha is involved throughout the entire project, which takes a total of ten years before an invention has been conceived and is ready for patenting, but Alpha’s contribution, although of an inventive quality, is relatively minor. Quantitatively, Alpha’s contribution of effort, expertise, and creative thinking amounts to about 10% of all the effort, expertise, and creative thinking that went into the invention. Beta was involved from the beginning as well, but after nine years and six months, quit the project. Beta’s contribution was, however, overwhelming, accounting for 80% of the research effort, etc. During the last six months, Gamma became involved in the project and collaborated with Alpha to finalize the conception of the invention. Due to Gamma’s late arrival, Gamma contributed only 10% to the project. Beta and Gamma never directly communicated with one another; Gamma merely took up Beta’s almost-completed work.

In scenario {2}, a requirement of direct collaboration at the time the invention was completed would make Alpha and Gamma joint inventors, but not Beta, despite the fact that Beta individually contributed much more than the other two inventors combined. This result is not only unfair to Beta, it creates a

106

Patent Law Amendments Act of 1984, Pub. L. 98-622, § 104, 98 Stat. 3385 (current version at 35 U.S.C. § 116 (2006)).

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powerful disincentive to collaborate in applied research, because, except in the rare situation that the research is certain to result in the successful development of a valuable invention in short order, a researcher’s contribution could be wasted if the researcher needs to leave the collaboration before a patentable result is produced.

Many such reasons would be beyond the control of the collaborator, such as illness, financial distress during extended research, termination of employment with an employer sponsoring the research, and so forth. The PLAA establishes beyond peradventure that Beta is as much an inventor as his collaborators.

Similarly, the PLAA suggests that in assessing inventorship in scenario {1b} above, if Ron rather than Ilsa discovered the utility of Ilsa’s compound, Ron would be a coinventor. Before the PLAA, courts could deny the importance of Ron’s inventive contribution. For example, in Eli Lilly & Co. v. Premo Pharmaceutical Laboratories, Inc., two scientists had synthesized a compound (cephalexin) in “the hope that the resulting compound would be [an] effective oral antibiotic” for certain biochemical reasons.107 A third scientist tested the compound and found that it was indeed an effective oral antibiotic for entirely different biochemical reasons than the first two scientists had guessed. The patent on the compound, however, listed only the first two scientists as inventors. When an accused infringer challenged the validity of the patent for nonjoinder, the Third Circuit held that the third scientist’s discovery of the invention’s “nonobvious trait” did not qualify him as a joint inventor of the compound. In attempting to justify this result, the court wrote: it is without question that the named inventors, Drs. Morin and Jackson, were the only persons who performed the synthesis that created the patented product. In the words of § 116, cephalexin was ‘made by’ the two named inventors, not by the biochemist who first noted that the organic chemists’ predictions had been realized.108 After the PLAA, this result even less plausible than before. A compound whose utility or nonobvious traits are unknown has not yet been “conceived” as an invention under the patent law.109 A collaborator who makes a significant, original contribution to conception, such as by discovering utility or the nonobvious trait, is

107

Eli Lilly & Co. v. Premo Pharma. Labs., Inc., 630 F.2d 120, 135 (3d Cir. 1980).

Id. 109 See supra text accompanying note 46.

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a coinventor even if his contribution was different in type (testing of the compound versus synthesis of the compound) from that of his collaborators. 110 With regard to the level and kind of contribution required of a joint inventor, the PLAA added relatively little. 111 Instead, the newly organized Federal Circuit developed joint inventorship analysis in its jurisprudence—a jurisprudence that continues to dominate discussions of inventorship today. 112 Beginning in the early 1990s, the court decided a series of cases that delineated the basic substantive contours of joint inventorship. 113 For the most part, these did not radically depart from the main body of cases decided before the PLAA. Before the amendment, the concept of joint inventorship was rarely interpreted to require “give-and-take” between or among joint inventors. In a 1980 case, for example, a Florida district court found that when one researcher developed a prototype of the invention and passed the prototype to a second researcher, who perfected it, they were joint inventors despite the lack of any regular communication between them. “The ideas” of the first inventor “were presented daily” to the second “by the prototype, and the final result was a creation that exceeded the results of either inventor,” the

110

This is a point well explained by Edward Lentz: [A] person who conceives of or actually makes something, e.g., a new chemical entity, but who does not know of a use for the thing probably has not made a patentable invention and is not, therefore, an inventor unless and until a utility is discovered. At that time, a patentable invention will have been made and the person who conceived of the utility is probably a joint inventor with the person who conceived the thing.

In some cases, the novelty of an invention is not appreciated by the person who conceives of the invention but rather is discovered subsequently. In these cases, conception of the invention is not complete until the novelty is appreciated.

Lentz, supra note 18, at 190.

111 Cf. Burroughs Wellcome Co. v. Barr Labs., Inc., 40 F.3d 1223, 1227 (Fed. Cir. 1994) (“The statute does not set forth the minimum quality or quantity of contribution required for joint inventorship.”).

112 In the 2011 America Invents Act, Congress adopted the first formal definition of a “joint inventor” or “coinventor,” meaning “any 1 of the individuals who invented or discovered the subject matter of a joint invention.” 35 U.S.C. § 100(g) (2012). As with the definition of “inventor,” this amendment does little beyond present a tautology and the mysterious additional concept of “subject matter” of an invention.

113 Kimberly-Clark Corp. v. Procter & Gamble Distrib. Co., 973 F.2d 911 (Fed. Cir. 1992).

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court observed.114 The court understood that, although collaboration always requires communication between the collaborators, communication can take nonverbal as well as verbal forms. There is no policy reason to prioritize verbal over nonverbal collaboration if both forms can accelerate technological development.

The Federal Circuit continued this interpretation of joint inventorship law; so long as the inventors were consciously cooperating, one collaborator may simply read and build upon a report written by another, or profit from the suggestion of another at a meeting, to qualify them as joint inventors. 115 More importantly, the Federal Circuit unified and fleshed out the kind of contribution necessary to qualify a collaborator as a joint inventor. From Pannu v.

Iolab, 116 three general conditions may be deduced. First, the alleged coinventor must contribute to the conception of the invention. 117 Second, his contribution to the invention must not be insignificant in quality, when measured against the dimension of the full invention. 118 Third, the contributor must do more than merely explain to the real inventors well-known concepts or the current state of the art.119 The second and third conditions follow in a sense from the first. The alleged joint inventor’s contribution could not merely relate the state of the art to the collaborators, because providing well-known information “is not a contribution to conception.”120 One does not invent merely by repeating public information or using ordinary skills; the contribution must go beyond well-known prior art.

Similarly, non-technical contributions to the invention, such as suggesting a desirable goal of research (unless identifying that goal is technically difficult and

114

Clairol Inc. v. Save-Way Indus., 210 U.S.P.Q. 459, 465 (S.D. Fla. 1980).

Kimberly-Clark Corp., 973 F.2d at 915-17; see also Arbitron, Inc. v. Kiefl, No. 09-CV04013, 2010 U.S. Dist. LEXIS 83597, at *16-17 (S.D.N.Y., Aug. 13, 2010) (holding that one scientist who reviewed and built on a report about another’s discovery collaborated sufficiently to qualify as joint inventors).

116 Pannu v. Iolab Corp., 155 F.3d 1344 (Fed. Cir. 1998)..

117 Id. at 1351.

118 Id. 119 Id. 120 Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1362 (Fed. Cir. 2004); Pannu, 155 F.3d at 1351.

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not obvious) and providing management or financing, are not contributions to conception.121 The Federal Circuit has repeatedly observed that Section 116 of the Patent Act “sets no explicit lower limit on the quantum or quality of inventive contribution required for a person to qualify as a joint inventor.” 122 However, the court has interpreted Section 116 to impose a second condition on the alleged joint inventor—that his contribution must be “not insignificant in quality, when that contribution is measured against the dimension of the full invention.” 123 Where to draw the line of significance on the scale between a critical contribution and a trivial one is a tricky and highly subjective exercise. Unfortunately, the case law interpreting significance remains notably thin.

In one unpublished case, the U.S. Court of Appeals for the Fourth Circuit interpreted the significance factor to require that all joint inventors contribute to the specific aspect of the invention that made it patentable. In Levin v. Septodont, the developer of a new numbing cream to treat mouth ulcers, Dr. Kilday, was approached by a retired dentist, Dr. Levin, who had the idea of developing a numbing mouth rinse to reduce pain caused by routine dental procedures.124 Working together, Kilday and Levin determined that the active ingredients in the rinse should be the antiseptic phenol and the anesthetic benzocaine. 125 Kilday determined the proportion of ingredients in the product. 126 However, Kilday also recognized that these ingredients could not be dissolved in an alcohol solution due to the burning sensation caused by alcohol. Kilday therefore approached Eastman Chemical to help develop a suitable suspension solution. After significant research, Eastman developed a new solution composed of a combination of polyethylene glycol and propylene glycol that solved the burning problem. 127

121

See generally Robert W. Harris, Conceptual Specificity as a Factor in Determination of Inventorship, 67 J. PAT. & TRADEMARK OFF. SOC’Y 315 (1985) (discussing the kinds of contributions to invention that do not rise to the level of contributions to conception due to lack of sufficient specificity).

122 Fina Oil & Chem. Co. v. Ewen, 123 F.3d 1466, 1473 (Fed. Cir. 1997); Aradigm Corp., 376 F.3d at 1358.

123 Fina Oil & Chem., 123 F.3d at 1473; Pannu, 155 F.3d at 1351.

124 Levin v. Septodont, Inc., 34 Fed. Appx. 65 (4th Cir. 2002).

125 Id. at 67.

126 Id. at 70.

127 Id. at 67.

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Eastman sought a patent on the resulting dental mouth rinse, but named only its employees, and not Kilday. 128 Septodont sought to correct the patent by joining Kilday as a coinventor.

Levin resisted on the ground that the PTO examiner had opposed the patent application as obvious until a limitation was added specifically claiming the Eastman suspension solution. The court sided with Levin, interpreting joint inventorship doctrine to require contribution to the novel and nonobvious limitations of the claim—indeed, regardless of whether a specific collaborator’s contribution appears in the claims or indeed is the defining feature of the invention.129 In other words, the Fourth Circuit would have interpreted an inventive contribution’s “significance” in light of its novelty and nonobviousness.

Levin v. Septodont is not a precedential opinion,130 but it illustrates a troubling misunderstanding of the concept of joint invention. The court effectively held that the collaborators who conceived the invention as a whole, determined its utility, and chose key ingredients and their proportions did not contribute significantly to conception. The problem arises from the Fourth Circuit’s dissection of the invention. The invention as a whole was novel and nonobvious— an anesthetic mouth rinse for routine dentistry—and it was conceived by Levin, Kilday, and Eastman scientists in collaboration. A collaborator’s contribution need not define the nonobvious aspect of the invention itself, so long as it satisfies the three Pannu conditions. No doubt the Eastman collaborators were inventors as well, given their contribution to an important and nonobvious aspect of the invention. Possibly their suspension solution was independently patentable, and in that case the Eastman scientists would stand alone as inventors of the solution. But the patent claimed not the solution itself but rather an “anesthetic and antiseptic mouth rinse” using a non-alcohol solution.131 Simply put, the invention before the court would have been impossible without Levin and Kilday’s original 128

Id. Id. at 71-73.

130 Id. at 67. Aside from the fact that the opinion was not selected for publication, the Fourth Circuit cannot bind the Federal Circuit. Normally, this issue would have been decided by the Federal Circuit, but the case was not primarily an infringement action, but rather a breach of contract action. 28 U.S.C. § 1295(a)(1) (2006) (noting that the Federal Circuit shall have exclusive jurisdiction from the appeal of a final decision of a district court in any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents or plant variety protection.)

131 U.S. Patent No. 5,547,657 (filed Oct. 11, 1994).

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contributions. In denying them status as coinventors, the Fourth Circuit not only deprived a valuable collaborator of the patent reward, but conferred that reward on Eastman for novel and nonobvious ideas that Eastman did not develop and probably could not have developed itself.

It is probably fair to say that any contribution adding the novel, nonobvious, or useful element to the invention is ipso facto significant. To conclude from this, however, that any other contribution is insignificant is a non sequitur. The question of what kind of contribution does qualify as significant—a question the Federal Circuit has not had occasion to answer in great detail—remains open.

Presumably, such factors as whether the collaborator: • identified or solved a problem unrecognized by the others; • solved a problem that other collaborators could not solve; • added a nontrivial advantage to the invention that the other collaborators did not contemplate; or • contributed the novel, nonobvious, or useful aspect of the invention or a nontrivial part of it would weigh heavily in favor of finding an inventive contribution “not insignificant” if directed to any functional aspect of the invention. 132 The contributor’s skill set and abilities relative to other collaborators may have some bearing on whether these criteria are satisfied. The kind and level of expertise of the collaborator, his effort expended relative to other collaborators, and the importance and originality of his insight to the advantages of the invention, would all be relevant as well. 133

132

The patent laws of most countries, like that of the United States, are underdeveloped in defining who qualifies as a joint inventor. For example, Canadian, German, and Japanese patent laws are all vague on the concept of joint inventorship. See, e.g., Motorkettensäge Case, Fed. Ct. Just. (Bundesgerichtshof) Decision of June 20, 1979 (Fed. Rep. of Ger.) (contributions that have not influenced the overall success of the invention or solved any significant problem do not support coinventorship). However, some offer more guidance than others. The first three of the factors listed in the text are used by Australian courts in determining the “material effect” of the collaborator’s contribution. See Row Weeder Pty., Ltd. v Nielsen, (1997) 39 IPR 400 (Austl.).

133 Cf., e.g., Rhone-Poulenc Agro, S.A. v. Monsanto Co., 445 F. Supp. 2d 531, 548 (M.D.N.C. 2006) (expertise); Ethicon Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1460 (Fed. Cir. 1998) (skills possessed by one inventor and not the other).

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The consequences of designating too many or too few collaborators as inventors on a patent application may be trivial or (much more rarely) fatal, depending on the provable intent of the applicants. Misjoinder or nonjoinder of joint inventors is supposed to invalidate a patent if done intentionally, but an accused infringer cannot realistically be expected to produce clear and convincing evidence of the applicant’s state of mind in most cases. As a result, successfully proving misjoinder or nonjoinder usually results in a correction of inventors in order to save the patent from invalidity. 134 2. The Distorting Effect of Claims Fixation The joint inventorship doctrine described in Pannu v. Iolab is sound as far as it goes. It meshes with both the constitutional limitations on the congressional patent power and the language and policy purposes of the Patent Act. The problem is not in the general standard of joint inventorship, but in its implementation. The Federal Circuit has sometimes diverted the inquiry away from a fact-intensive examination of the realities of the inventive process into a rigidly formulaic test, with the regrettable result of facilitating mistaken or fraudulent nonjoinder.

The judicial decisions carrying the greatest potential to warp inventorship standards probably are not substantive, but procedural. This relates back to the manner in which courts have confused the claims with the invention. The Constitution and Patent Act refer to inventors and their inventions, but as noted, courts have frequently written the invention out of patent law and substituted the claims, so that, for example, an inventor in the Federal Circuit’s jurisprudence does not conceive an invention, but rather a “claim,” 135 and a coinventor must contribute not to the conception of the invention, but to the conception of “the subject matter of a claim.” 136 The standard procedure developed by the Federal Circuit for evaluating joint inventorship was explained in Trovan, Ltd. v. Sokymat S.A. Irori.137 There, the court equated inventorship analysis to infringement analysis. 138 Infringement analysis begins with a binding interpretation of the claims through a Markman 134

35 U.S.C. §§ 116, 256 (2006); see Pannu v. Iolab Corp., 155 F.3d 1344, 1350 (Fed. Cir. 1998); MCV, Inc. v. King-Seeley Thermos Co., 870 F.2d 1568, 1570 (Fed. Cir. 1989).

135 Univ. of Pittsburgh v. Hedrick, 573 F.3d 1290, 1298 (Fed. Cir. 2009).

136 Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1361-62 (Fed. Cir. 2004).

137 Trovan, Ltd. v. Sokymat S.A., Irori, 299 F.3d 1292, 1301-02 (Fed. Cir. 2002).

138 Id.

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hearing.139 With the meaning of the claims established, the court then compares the accused product or process to the claims on a claim-by-claim basis; if the accused product or process literally or equivalently satisfies all the limitations of a claim, then infringement has occurred. 140 Under Trovan, the procedure to be followed in inventorship analysis also begins with an interpretation of the claims “to determine the subject matter encompassed thereby.” The next step is “to compare the alleged contributions of each asserted coinventor with the subject matter of the properly construed claim to then determine whether the correct inventors were named.” 141 As one patent lawyer has observed, inventorship is now determined “on a claim-by-claim basis”142 as well, despite the fact that an inventor on any one claim is considered an inventor of the entire invention (and, therefore, all of the claims). 143 Trovan analysis, which has become the accepted procedure for evaluating disputes about inventorship, creates an aberration in the Federal Circuit’s otherwise mostly sound jurisprudence on joint inventorship. In undertaking inventorship analysis, courts now tend to fixate on whether an alleged coinventor can point to specific claims language directly attributable to that alleged coinventor’s contributions.144 The result of fixating on claims is frequently an overly simplistic understanding of the inventive process. In Eli Lilly & Co. v. Aradigm Corp., the Federal Circuit justified its practice of ruling out some collaborators as joint inventors based on the “quality” of inventive contribution: The line between actual contributions to conception and the remaining, more prosaic contributions to the inventive process that do not render the contributor a coinventor is sometimes a difficult one to draw. Contributions to realizing an invention may not amount to a contribution to conception . . . if they are too far removed from

139

Markman v. Westview Instruments, Inc., 517 U.S. 370, 372 (1996).

Trovan, 299 F.3d at 1302.

141 Id. 142 George M. Sirilla, How the Federal Circuit Clarified the “Muddy Concept” of Joint Inventorship, 91 J. PAT. & TRADEMARK OFF. SOC’Y 509, 509 (2009).

143 Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1460 (Fed. Cir. 1998).

144 See, e.g., Bd. of Educ. ex rel. Bd. of Trustees of Fla. State Univ. v. Am. Bioscience, Inc., 333 F.3d 1330, 1339 (Fed. Cir. 2003); Ethicon, 135 F.3d at 1463 (“[T]his court must determine what Choi’s contribution was and then construe the claim language to determine if Choi’s contribution found its way into the defined invention.”) (emphasis added).

140

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the real-world realization of an invention, or if they are focused solely on such realization.145 The first point, relating to highly abstract or indefinite contributions, is intended to weed out collaborators who merely point out the goal without contributing concrete ideas for achieving the goal. A collaborator who does nothing more than to propose that the research team develop a vaccine for HIV or a more efficient solar receptor is not an inventor even if the team succeeds in inventing the vaccine or receptor. Yet, it is quite possible to interpret the court’s language to deprive legitimate inventors of recognition for their contributions.

Sometimes the most difficult and important part of the inventive process is understanding the problem to be solved. The contribution of a collaborator who merely identifies the problem may indeed be far removed from resolving it, but his work may be the foundation or even keystone of the invention.

For example, suppose a research team working for a chemical developer is trying to synthesize an effective insecticide for termites. The goal is to discover a compound to whose toxicity termites find it difficult to adapt by rapid evolution.

After years of fruitless and expensive labor on this project, one team member, Carlos, observes that exposure to certain nontoxic chemicals causes the termites to avoid tree wood and preferentially consume other forms of organic matter. After running some experiments, Carlos determines that it is possible that some such chemicals are likely to resist evolutionary adaptation, although it is not clear which chemical compounds would do the trick. After communicating his findings to the team, Carlos is transferred to a different research team. However, based on Carlos’s observations, the original team reorients its entire research program and, after a few more months, invents a nontoxic compound that effectively makes lumber termite-proof. Carlos’ contribution was undoubtedly “far removed from the real-world realization” of the resulting compound; he does not even know what the compound looks like or how it was produced. Yet, to say that Carlos was not a joint inventor of the compound disserves the goals of patent law. In the scenario, Carlos’ contribution was not a mere recitation of the prior art and was integral to and necessary for the invention of the compound. If he is not considered an inventor, he has no incentive to reveal his key insight to the other members of the research team, and the policy goal of Section 116 is subverted. Moreover, he is

145

Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1359 (Fed. Cir. 2004) (citations omitted).

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unfairly denied a reward for a breakthrough discovery that enabled the patented invention.

The Eli Lilly court’s last point, regarding contributions solely to the “realization” of the invention, is supposed to weed out collaborators who merely performed technical steps in the reduction to practice of an invention already fully conceived.146 The superficial appeal of this limitation is deceptive as well. The court could merely have been reciting the tautology that, if the invention was already complete, then no further contribution could be significant. If the condition is not tautological (or redundant of the other requirements of joint inventorship), then the collaborator in question must have made both a technically significant and nonobvious contribution to making or using a product invention (or performing a process invention). If the resulting idea could not be made or used (or performed) without a significant and nonobvious contribution from a third party, it has not been fully conceived yet. If the collaborator’s contribution converts an incipient concept into a mature, invented product or process, then he has satisfied the conditions of joint inventorship. Because knowledge of making and using an invention is part of the invention itself, a significant and nonobvious contribution “solely” to the “realization” (or reduction to practice) of an invention may indeed qualify the contributor as a joint inventor.147 The necessity of the contribution for patentability strongly suggests that the invention had not yet been fully conceived. The court’s statement on this point relates once again back to its fixation on the claims; claims do not necessarily teach how to make and use the invention, so if the claims “define” the invention, then a collaborator who painstakingly discovers how to make or use the invention properly is no inventor if the means of making or using the invention is not recited explicitly in a claim.

While the ambiguities in the Federal Circuit’s jurisprudence on joint inventorship may seem technical, their effects are magnified by the all-or-none consequences of inventorship determinations.

Section 116 specifies that collaborators are not precluded from designation as inventors by the fact that they did not contribute to every claim in the patent. In Ethicon Inc. v. U.S. Surgical Corp., the Federal Circuit interpreted this provision to give every inventor who contributed to any claim in the patent equal ownership in all claims, including 146

See Ethicon, 135 F.3d at 1460 (“[O]ne does not qualify as a joint inventor by merely assisting the actual inventor after conception of the claimed invention.”).

147 The Federal Circuit very recently affirmed this point with respect to “making” the invention in Falana v. Kent State University, 669 F.3d 1349, 1358 (Fed. Cir. 2012)

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claims to which that inventor never contributed. 148 Despite frequent criticism of the court’s opinion,149 the result was all but dictated by the language of Section 116 and the concept of unity of invention that underlies patent law. 150 But this policy has the unfortunate consequence of giving the most important contributor to an invention no greater rights than the least important.151 The probable result is to dampen the incentive to engage in team research, because adding new members to a research team—especially those not obligated to assign their rights to the same employer—could result in a loss of meaningful patent rights. 152 The current jurisprudence therefore gives patent applicants a strong incentive, and no realistic disincentive, to fraudulently omit joint inventors from the patent application in order to avoid sharing the patent bounty.

148

Ethicon, 135 F.3d 1456.

See, e.g., id. at 1469 (Newman, J., dissenting); Gregory N. Mandel, Left-Brain versus Right-Brain: Competing Conceptions of Creativity in Intellectual Property Law, 44 U.C. DAVIS L. REV. 283, 294-95 (2010).

150 37 C.F.R. §§ 1.475(a), 1.499 (2011). U.S. law on this subject reflects the requirements of important international patent treaties. See PCT, supra note 80, arts. 2(i), 3(4)(iii), 17(3); Patent Cooperation Treaty Regs. Rule 13.1 (“The international application shall relate to one invention only or to a group of inventions so linked as to form a single general inventive concept (“requirement of unity of invention”)); Paris Convention for the Protection of Industrial Property, supra note 81, art. 4(G).

151 Gregory Mandel has proposed giving proportional rights to joint inventors who made contributions of varying levels to the invention. Mandel, supra note 149, at 353. In principle, such a rule could mitigate the problem to a degree, but suggesting the adoption of equitable apportionment methods is much easier in the abstract than operationalizing the concept.

Judgments about the relative creativity of different collaborators’ inventive contributions would be a highly subjective exercise even with perfect information. In practice, it would be impossible due to the frequent inability to differentiate the source of inventive contributions in collaborative research and the temptation of any given collaborator to “remember” that another’s contribution was actually his own. After all, the main purpose of the modern Section 116 of the Patent Act is to eschew nice parsing of inventive contributions among coinventors.

Moreover, not all inventive contributions are creative; some may take the form of perceptive observations of a helpful phenomenon by a prepared mind, or simply by systematic experimentation. Such contributions may qualify as inventive regardless of the absence of creativity. See 35 U.S.C. § 103(a). How is a court to weigh, on minimal objective evidence, the incomparable values of one collaborator’s creative insight against another’s tireless experimentation? Apportionment is, in short, sound in theory but not a practical solution to the problem of skewed inventorship rewards.

152 See Mandel, supra note 149, at 347.

149

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C. The Strong Presumption of Validity in Inventorship Analysis The grant of a patent by the PTO creates a presumption that the patent is correct and valid. The 1952 Patent Act provides expressly that anyone challenging the validity of a patent bears the burden of persuasion that the patent is invalid.153 This burden originates from early patent law cases in which the U.S. Supreme Court established a general rule of deference to informed decisions of the Patent Office, most notably in Morgan v. Daniels: Upon principle and authority, . . . it must be laid down as a rule that where the question decided in the Patent Office is one between contesting parties as to priority of invention, the decision there made must be accepted as controlling upon that question of fact in any subsequent suit between the same parties, unless the contrary is established by testimony which in character and amount carries thorough conviction.154 The patent applicant actually benefits from a presumption in his favor beginning at the moment the application is filed. The Federal Circuit noted that the PTO bears the burden of challenging the patent applicant’s “presumptively correct” allegations regarding the utility of the claimed invention. 155 A private party challenging an issued patent before a court bears an even heavier burden.

Morgan v. Daniels has long been interpreted by the Federal Circuit and its predecessor, the Court of Customs and Patent Appeals, to mean that anyone challenging the validity of a patent must satisfy an elevated burden of proof, by supplying clear and convincing evidence of invalidity. 156 The “clear and convincing” standard of proof is nowhere to be found in the Patent Act. Its origin is instead a long line of judicial decisions holding that a government agency such as the PTO is “presumed to do its job” correctly. 157 As with other aspects of patent

153

35 U.S.C. § 282(1) (2006).

Morgan v. Daniels, 153 U.S. 120, 121, 125 (1894).

155 In re Brana, 51 F.3d 1560, 1566 (Fed. Cir. 1995).

156 See Nartron Corp. v. Schukra U.S.A., Inc., 558 F.3d 1352, 1356 (Fed. Cir. 2009).

157 Am. Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1359 (Fed. Cir. 1984); see also Radio Corp. of Am. v. Radio Eng’g Labs., Inc., 293 U.S. 1, 2 (1934).

154

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validity, a private party challenging a patent on grounds of misjoinder or nonjoinder bears the clear and convincing burden of persuasion. 158 In enacting the 1952 Patent Act, Congress chose not to specify the standard of proof for parties alleging patent invalidity for reasons unknown. In the recent case Microsoft v. i4i, the Supreme Court inferred from Congress’s silence that the legislature intended to incorporate (part of) the judicially invented standard of proof into the statute. 159 Indeed, the Court asserted that it “must” presume— apparently as a canon of statutory construction—that Congress intended to continue the status quo unless the statute otherwise specifies.160 It is doubtful that, whenever Congress fails to comment on a matter within the scope of a statute, Congress thereby automatically endorses all case law not expressly disclaimed by the statute. 161 However, the fact that Congress has overlooked numerous opportunities to change the highly visible standard of proof suggests that the clear and convincing standard generally aligns with congressional intent in this instance.

Doug Lichtman and Mark Lemley have argued against the strong presumption of validity, except with respect to a narrow category of patent challenges, on policy grounds.162 Although the courts have never articulated a fully developed policy basis for the strong presumption, Lichtman and Lemley infer the two most likely justifications as being deference to the PTO’s expertise and a desire to strengthen patent rights in order to encourage commercialization.163 But Lichtman and Lemley point out that the PTO does not, probably with current funding cannot, and in any event lacks sufficient motivation to, invest the resources necessary to render an authoritative determination on all questions of patentability. 164 The absence of third-party information in most cases further limits

158

Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1358 (Fed. Cir. 2004); Fina Oil & Chem. Co. v. Ewen, 123 F.3d 1466, 1472 (Fed. Cir. 1997).

159 Microsoft Corp. v. i4i Ltd. P’ship, 131 S.Ct. 2238, 98 U.S.P.Q.2d 1857, 1862 (2011).

160 Id., 98 U.S.P.Q.2d at 1863.

161 Only Justice Thomas declined to read Section 282 as implicitly incorporating the judicially developed standard of proof. Id. at 1868 (Thomas, J., concurring).

162 Doug Lichtman & Mark A. Lemley, Rethinking Patent Law’s Presumption of Validity, 60 STAN. L. REV. 45 (2007).

163 Id. at 52-53.

164 Id. at 53-55. Lemley and Sampat’s empirical research indicates that the PTO effectively weeds out a small but significant percentage of applications. See generally Mark A. Lemley & Bhaven Sampat, Is the Patent Office a Rubber Stamp?, 58 EMORY L.J. 181 (2008) (evaluating the PTO’s patent rejection rate and finding it at 15%-20%).

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the ability of PTO examiners to assess thoroughly the validity of the patent. As for the disincentive to invest in a patent of uncertain validity, Lichtman and Lemley observe that such uncertainty exists in any case and is only one (probably minor) factor affecting commercialization. 165 To the extent that the patent’s validity has been insufficiently verified by the PTO, strengthening the presumption of validity distorts patent markets arbitrarily.

Regardless of whether this argument persuades, the justification for the strong presumption of validity fails utterly with respect to matters never considered by the PTO. The PTO relies heavily or entirely on the thoroughness, honesty, and candor of the patent applicant with regard to some patent matters. Even for those confident in the PTO’s expertise and rigor, a general presumption that the PTO does its job correctly does not justify a presumption of omniscience. Why should the mere submission of the patent application by self-interested applicants create a prima facie presumption of accuracy and truthfulness? 166 On this logic, parties have sometimes challenged the strong presumption of validity with respect to questions not examined by or raised before the PTO. In Eli Lilly & Co. v. Aradigm Corp., the plaintiff made the exceedingly narrow argument that a preponderance of evidence standard should be used “‘when there are two co-pending patent applications claiming the same subject matter’ in front of the [PTO], one of which issues as a patent allegedly omitting the inventor, and the other of which was filed by the allegedly omitted inventor.” 167 The plaintiff, in short, was not challenging the heightened burden of proof in general or even with respect to inventorship questions not considered by the PTO. Its argument was limited to the case in which an interference should have been declared but was not. The Federal Circuit rejected even that limited argument, pointing to the alleged coinventor’s “strong temptation” to misrepresent the extent of its involvement in the collaboration and the absence of any risk to its rights in its own patent application, which it could lose in an interference. 168

165

Lichtman & Lemley, supra note 162, at 52-53.

See Brown v. Edeler, 110 F.2d 858, 861 (C.C.P.A. 1940) (finding that a duly executed joint application is prima facie evidence of joint inventorship); Van Otteren v. Hafner, 278 F.2d 738, 741 (C.C.P.A. 1960) (finding that a duly executed joint application is prima facie evidence of joint inventorship).

167 Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1364 (Fed. Cir. 2004).

168 Id. at 1366-67.

166

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Neither of the Eli Lilly court’s contentions justifies the clear and convincing evidence standard. The patent applicant seeking to exclude joint inventors has as strong a temptation to misrepresent its role in the inventive process as the alleged coinventors. The same advantages are at stake for each of them—the ability to commercialize (or suppress) the claimed invention. As for the absence of risk, this argument is simply irrelevant. If the issued patent survives challenge by the alleged coinventor, then the patentee may enjoy its patent rights without sharing them with a coinventor. The alleged coinventor will have no right to obtain a junior patent on the same subject matter, so it risks its rights either way.

Moreover, the costs of a full-scale patent litigation dwarf the costs of a review or reexamination, and the alleged coinventor faces as much litigation expense as the patentee.

Notwithstanding the Eli Lilly decision, a panel of the Federal Circuit faced another, more aggressive challenge to the clear and convincing evidence standard in inventorship determinations in Vanderbilt University v. ICOS Corp.169 Pointing to the PTO’s inability to consider the status of alleged coinventors not listed in the patent application, Vanderbilt proposed applying the normal burden of proof.170 The court again rejected the argument, but this time noted that the plaintiff was “of course free to seek en banc reconsideration of our settled law on this issue.”171 Although the Federal Circuit has always rejected these challenges to the standard of proof since its creation in 1982, courts frequently expressed doubt with regard to matters not before the PTO both before and after 1952. Morgan itself required deference only to questions “decided in the Patent Office,” and not to questions never considered by the agency. 172 Since then, numerous courts have observed that the rationale for the strong presumption of validity was weakened in such circumstances,173 and in several cases have actually given reduced deference to the PTO. 174 In KSR International Co. v. Teleflex, Inc., the Supreme Court itself joined the chorus, holding that when a matter had not been raised before the PTO,

169

Vanderbilt Univ. v. ICOS Corp., 601 F.3d 1297 (Fed. Cir. 2010).

Id. at 1305.

171 Id. n.3.

172 Morgan v. Daniels, 153 U.S. 120, 125 (1894).

173 See Microsoft, 98 U.S.P.Q.2d at 1866 (collecting cases).

174 See, e.g., Mfg. Research Corp. v. Graybar Elec. Co., 679 F.2d 1355, 1360-61 (11th Cir. 1982); NDM Corp. v. Hayes Prods., Inc., 641 F.2d 1274, 1277 (9th Cir. 1981); Lee Blacksmith, Inc. v. Lindsay Bros., Inc., 605 F.2d 341, 342-43 (7th Cir. 1979).

170

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“the rationale underlying the presumption—that the PTO, in its expertise, has approved the claim—seems much diminished.”175 Nonetheless, the Supreme Court has recently enshrined a uniform clear and convincing evidence standard for all aspects of the issued patent. The Court in Microsoft Corp. v. i4i Ltd. declined to interpret prior cases to cast doubt on the clear and convincing evidence standard, despite seeming to recognize in the same pre-1952 cases many doubts about the logic of the clear and convincing evidence standard applied to matters unexamined by the PTO. 176 By the majority opinion’s logic, Congress should also be “presumed” to have codified these cases. Instead, the i4i Court adopted an expedient, holding that when a matter was not considered by the PTO, the PTO’s judgment “may lose significant force” and “the challenger’s burden to persuade the jury of its invalidity defense by clear and convincing evidence may be easier to sustain.” 177 Just how the challenged part of the patent “los[ing] significant force” differs meaningfully from lowering the burden of proof is hard to comprehend.

Operationally, the Court has intimated that the trial judge can, or perhaps must, notify the jury that the facts at issue were never considered by the PTO while at the same time insisting that the jury apply the clear and convincing standard of proof.178 But the jury never bases its judgment of patent validity on an assumption of the PTO’s infallibility. The facts are presented to the jury, and the court explains its interpretation of the law, including the burden and standard of proof.

The jury may be expected always to decide the question of patent validity based on the facts presented to it, regardless of whether the PTO considered the same question earlier based on different (or no) facts. The jury is not called upon to judge the PTO’s thoroughness or accuracy. If the standard of proof does not vary, neither will the jury’s judgment. How could it?

By holding that the 1952 Patent Act codified the clear and convincing evidence standard without equally codifying the case law doubting the uniform applicability of that standard, the Court has seriously undermined a key element of the patent system’s logic. The Court has at best created arbitrary doctrine favoring patent owners and at worst created an incentive for dishonest prosecution practices.

175

KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 426 (2007).

Microsoft, 98 U.S.P.Q.2d at 1865-66.

177 Id. at 1866.

178 Id. 176

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The applicant controls the patent application process and decides which information to reveal to the PTO and which to withhold. The PTO, badly overburdened with applications 179 and staffed with examiners who are rarely expert in the specific technology at issue, does not always thoroughly examine such questions as novelty and nonobviousness, and never questions a superficially credible allegation of utility or inventorship. The clear and convincing evidence standard gives applicants a perverse incentive to obtain a patent fraudulently and enjoy special legal protection for their misdeeds.

Recently, the Federal Circuit managed to compound the errors of the i4i jurisprudence under the bizarre circumstances of Sciele Pharma v. Lupin Ltd.180 The patent applicant in that case had received nonobviousness rejections on some of its claims by the PTO examiner. In response, the applicant canceled the claims, effectively creating a public record that the applicant and examiner agreed that the claims were invalid. Nevertheless, by a PTO error, the patent as ultimately issued reinstated the canceled claims. 181 The patentee, instead of seeking a certificate of correction, reexamination, or reissue to correct the error, ignored it. When the patentee attempted to assert these claims in an infringement litigation, the accused infringer attacked the claims as invalid. The claims, the defendant argued, should not benefit from the strong presumption of validity, because they were clearly invalid by public acknowledgement of both the patent applicant and PTO. Nonetheless, the Federal Circuit insisted that admittedly invalid claims should be presumed valid with the elevated standard of proof under i4i. 182 One wonders whether the next doctrinal step will be for courts to uphold as valid claims that the patentee openly admits are invalid during the litigation itself.

The consequences for joint inventors alleging unlawful nonjoinder to the patent will be especially unfortunate. The flaws in using an enhanced burden of proof for unexamined patent matters are multiplied in the inventorship context by two key differences between the PTO’s inventorship “determination” and any other possible challenge to the patent. First, a charge of nonjoinder or misjoinder does not usually invalidate the patent. The normal remedy is merely correction by

179

See Mark A. Lemley, Can the Patent Office Be Fixed?, in RULES (Robert Litan ed., 2011); Allison & Lemley, supra note 19 at 2118–19.

180 684 F.3d 1253 (Fed. Cir. 2012).

181 Id. at 1256-57.

182 Id. at 1260-61.

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judicial amendment of the patent. 183 The consequences of being forced to share patent rights with a coinventor are rarely as dire as the complete invalidation of the patent or its operative claims, and so justify less extraordinary protections for the patentee. Second, as noted, the PTO virtually never questions the applicant’s assertions of inventorship when examining the patent. It relies on the oath of the inventors, which must identify each inventor of the invention for which a patent is sought. 184 Patent applicants seeking to exclude a coinventor for self-serving purposes may have little compunction about misrepresenting inventorship.

Because the PTO is well known not to examine inventorship, the chances of discovery are slim unless the patent is challenged in court under the enhanced burden of proof. Even if the patent is challenged, as noted, the result will not be any kind of sanction but mere correction of inventorship. There is no minimally convincing justification for applying the clear and convincing evidence standard to questions of inventorship.

What is perhaps most ironic about the strong presumption of validity of the PTO’s fictitious inventorship “determination” is that the Federal Circuit has consistently treated inventorship as a question of law rather than a question of fact.

Specifically, it has called the “overall inventorship determination” a question of law, which is “premised on underlying questions of fact.” 185 The court has also observed that the “determination of whether a person is a joint inventor is fact specific, and no bright-line standard will suffice in every case.” 186 These pronouncements suggest some confusion as to the distinction between questions of law and fact. Questions of law necessarily reference the facts that must be present to satisfy the test of legality. Whether these facts are present in any given case is, by definition, not a question of law. The question of fact in the case of joint inventorship is the alleged coinventor’s role in conceiving the invention. The manner of and degree to which a contribution enables or improves the conception of the invention, or the process of conception, are also questions of

183

See 35 U.S.C. §§ 116, 256.

35 U.S.C. § 115; 37 C.F.R. § 1.63(a)(2).

185 See Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1362 (Fed. Cir. 2004).

186 Fina Oil & Chem. Co. v. Ewen, 123 F.3d 1466, 1473 (Fed. Cir. 1997). Specifically, as one court observed, “[t]he findings relating to joint inventorship issues such as conception and inventive contributions are dependent upon an understanding of the scientific problem or problems the parties were trying to resolve.” Rhone-Poulenc Agro, S.A. v. Monsanto Co., 445 F. Supp. 2d 531, 535 (M.D.N.C. 2006).

184

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fact. Whether the facts satisfy the legal standard of significance requires an assessment of how those facts match up to the legal standard—traditionally, a matter within the province of the factfinder, not the court. 187 The Federal Circuit is mistaken, then, in concluding that “whether a person is a joint inventor” is a question of law. The standard of law is indeed a bright line: either the alleged coinventor made a significant contribution to conception of the invention, or she did not. There is nothing in between. The pertinent question of law is typically what kind of contribution to conception is sufficiently “significant” to qualify the contributor as a joint inventor. What the court means in saying that there is no bright line, rather, is that it feels unable to articulate with great precision what is the standard of “significance” as a rule for all cases. The question of law is what the standard of significance should be, not whether any specific alleged coinventor’s contribution is significant.

In any case, given that the Federal Circuit has adopted the position that inventorship is a question of law, it follows that the appellate court should give no deference to the PTO’s decision on inventorship and should thus review challenges to inventorship under the normal preponderance of evidence standard. Appellate courts defer to lower tribunals on questions of fact only, while reviewing determinations of law de novo. 188 II RELINKING INVENTORSHIP ANALYSIS TO TECHNOLOGY POLICY The previous part revealed how the dysfunction in joint inventorship law can be traced to two key doctrines. The first is the treatment of claims as if they defined the invention rather than merely limited the scope of its patent protection.

187

Judge Rader offered a similar objection to the Federal Circuit’s treatment of experimental use as a question of law. See Lough v. Brunswick Corp., 103 F.3d 1517, 1532-33 (Fed. Cir. 1997) (Rader, J., dissenting from the denial of rehearing en banc) (“With factual considerations dictating the outcome of the underlying analysis, logic relegates the standard of review to the factual realm as well. . . . Frankly the proposition that experimental use—a judge-made doctrine without any express basis in the Patent Act—is a question of law is absurd on its face. It is hard to imagine how case law decisions made by judges to resolve unique factual cases on a factdriven issue could create questions of law.”). His reasoning applies a fortiori to the issue of inventorship. On the disputed standard of review of mixed questions of law and fact, see generally Evan Tsen Lee, Principled Decision Making and the Proper Role of Federal Appellate Curts: The Mixed Questions Conflict, 64 S. CAL. L. REV. 235 (1991).

188 See Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1376 (Fed. Cir. 1986).

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The second is the strong presumption of validity for all aspects of the patent, including inventorship, in the absence of any cogent policy justification for such a presumption. Combined, these two positions threaten to warp the logic of inventorship and to undermine the incentives for collaborative research. In Part III.A, the alignment of modern inventorship doctrine with the legislative intent underlying the adoption of the 1984 amendments to Section 116 of the Patent Act will be evaluated. Part III.B follows with an analysis of the policy consequences of the current inventorship doctrine and a proposal for how to correct it to conform to legislative intent and the public policy favoring team research.

A. Legislative History of the 1984 Patent Law Amendments Act Congress faces relatively few constitutional limitations on its ability to grant and enforce patent rights. The journals of the 1787 constitutional convention record no debate on the intellectual property clause, which appeared in the earliest drafts of the Constitution and was unanimously approved and passed. The clause empowers Congress “To promote the Progress of . . . useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries.” 189 It has long been accepted that the clause means approximately what it says; it authorizes Congress to give to inventors an “exclusive” right to practice their inventions 190 for the purpose of encouraging the development of new applied technology (the “useful Arts”). The Constitution thus seems to mandate that patent legislation be interpreted in the manner most likely to advance technology. In pursuing this goal, patents must be granted to the true inventors of the invention patented; the Constitution nowhere authorizes the grant of exclusive rights to persons other than inventors. 191 Both the first Congress and the Supreme Court accordingly interpreted the clause to require the patent reward to be directed to the true inventor of the invention for which a patent is sought. 192

189

U.S. CONST. art. I, § 8, cl. 8.

On the seemingly odd choice of the word “Discoveries,” see Demaine & Fellmeth, supra note 1, at 367-74.

191 This is not to say that the Constitution forbids Congress to allow inventors to assign their rights to others, of course.

192 See An Act to Promote the Progress of Useful Arts (Patent Act of 1790), ch. 7, sec. 1, 1 Stat. 109 (Apr. 10, 1790); Grant v. Raymond, 31 U.S. (6 Pet.) 218, 242 (1832) (“[The patent] is the reward stipulated for the advantages derived by the public for the exertions of the individual [inventor], and is intended as a stimulus to those exertions.”).

190

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The legislative history of the 1984 PLAA tells much about its policy purposes, and these align well with the Constitution’s mandate. The PLAA began as a pair of bills introduced in the Senate and House of Representatives in 1983 “to make certain clarifications with respect to joint inventors.” The bills in each case merely provided that each inventor “need not have made a contribution to each claim contained in the application.”193 These early drafts were intended to reverse the judicial “all claims rule,” requiring every collaborator to have contributed to every claim in a patent in order to qualify as an inventor on that patent. 194 The all claims rule forced research teams to struggle to parse out each collaborator’s contribution to each claim and to file multiple patents on closely related inventions, with a resulting risk that some patents would become prior art and preempt others by the same collaborators.

The 1983 bills were popular with the patent bar and inventing industries, but these also viewed the bills as an opportunity to codify certain other key pre-Federal Circuit judicial decisions, such as Monsanto v. Kamp. 195 The patent bar lobbied Congress through the American Intellectual Property Law Association (AIPLA) and other bar and industry organizations. On March 15, 1984, AIPLA submitted a proposed amendment to the bills specifically intended to open the door to joint inventorship in the kinds of collaboration not involving direct contact between joint inventors or an equal contribution by each. The amendment’s goals were described in testimony by AIPLA’s president: Researchers in an organization sometimes work on one aspect of an invention, while others may work on a different aspect. Personnel are continually added to the research team, while others may leave the team. Concepts and development are often generated through 193

H.R. 4527, 98th Cong. (1983); S.B. 1535, 98th Cong., 1983 Cong. Rec. S9006.

See, e.g., In re Sarett, 327 F.2d 1005, 1010, n.7 (Ct. Cust. & Pat. App. 1964).

195 Congress established the U.S. Court of Appeals for the Federal Circuit in 1982 in order to centralize appeals for patent cases. Before 1982, the U.S. Court of Customs and Patent Appeals handled all appeals from administrative actions by the PTO, but appeals arising from infringement litigation were decided by the various circuit courts. The Federal Circuit was designed to remedy the lack of uniformity in patent doctrine arising from this fracturing of authority. See generally THE U.S. JUDICIAL CONF. COMM. ON THE BICENTENNIAL OF THE CONSTITUTION OF THE U.S., THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT: A HISTORY 1982-1990 (1991) (describing advent of the Federal Circuit); Daniel J. Meador, Origin of the Federal Circuit: A Personal Account, 41 AM. U.L. REV. 581 (1992) (same).

194

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brainstorming and cannot accurately be attributed to a particular inventor or inventors. The criteria for joint inventorship, as the amendments to Section 116 would state such criteria, have been judicially recognized. 196 The main judicial recognition to which the AIPLA president referred was Monsanto v. Kamp. His testimony made clear that paragraphs (1) and (2) of the new Section 116 were adopting the criteria cited by the Kamp district court.197 The AIPLA report to the House Subcommittee on Courts, Civil Liberties, and the Administration of Justice repeated these concerns: A research project in today’s environment may include many inventions and some inventions may have contributions which are made by some individuals who were not involved in other aspects of the invention. It is appropriate to recognize the contribution of each individual even though the individual may not have been involved in, or may not have contributed to, all aspects of the invention.198 High-ranking PTO officials supported the AIPLA amendments with testimony that paralleled or duplicated the AIPLA rationales for amending Section 116.199 In his written statement to Congress, the Commissioner of Patents echoed AIPLA’s point about the difficulty of pinpointing the source of inventive contributions during collaborative research: Scientists or researchers in an organization often work on a particular aspect or embodiment of the invention, or on only a portion of the invention, while others work on different aspects, embodiments or portions. Scientists are continually added to a research team, while other scientists leave the team. Concepts and development plans

196

Statement of Bernarr R. Pravel, President, Am. Intel. Prop. L. Ass’n, before the House Subcommittee on Courts, Civil Liberties, and the Administration of Justice (June 13, 1984), in Innovation and Patent Law Reform (Mar. 28, Apr. 26, & June 6, 27, 1984), 98th Cong., 2d Sess., Pt. 3, Serial No. 105, at 2690, 2719 [hereinafter “Innovation and Patent Law Reform Hearings”].

197 Id. at 2735-36.

198 Id. at 2737.

199 Testimony Of Gerald J. Mossinghoff, Assist. Sec’y & Comm’r of Pats. & Trademarks, Accompanied by Donald Quigg, Dep’y Asst. Sec’y & Dep’y Comm’r of Pats. & Trademarks, & Rene D. Tegtmeyer, Asst. Comm’r for Pats. (Mar. 28, 1984), in Innovation and Patent Law Reform Hearings, supra note 196, at 2, 7.

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generated through brainstorming cannot always be accurately attributed. . . . H.R. 4527 would eliminate the need for making these sometimes chancy, complex and time-consuming determinations by specifying that joint inventors need not have contributed jointly to each claim in an application. As we understand the provision, inventors would also be regarded as joint inventors whether or not they physically worked together at the same place or at the same time in developing the invention. Further, joint inventorship would not require that each inventor make the same type or amount of contribution to the invention or that each make a contribution to the subject matter of each claim of the patent.200 The Commissioner was mistaken in asserting that the amendment would “eliminate” the need to make a determination of inventive contribution, because, after the amendment, the applicants would still have to determine whether each collaborator listed as an inventor had made the threshold contribution to conception. The amendment would, however, create a more uniform standard and lower threshold for qualifying as a joint inventor, which would reduce the risk of nonjoinder and misjoinder.

Identical statements were made by the Commissioner of Patents before the Senate Judiciary Committee. 201 Industry representatives also testified overwhelmingly in favor of the amendments. 202 Representatives of industries in which collaborative research is extremely common if not critical to commercial success, such as industrial chemicals and pharmaceuticals, supported the bill on these grounds. The American Chemical Society’s letter of support asserted: The proposed modification of Section 116 of 35 U.S.C. is appropriate and just, for it recognizes that much research that results in an invention is conducted on a team basis. Team members may each contribute to a significant stage of the research, but seldom does each 200

Statement of Gerald J. Mossinghoff, in id. at 28-29.

See Patent Law Improvements Act, Hearing before the Subcomm. on Patents, Copyrights and Trademarks of the Comm. on the Judiciary, U.S. Senate, 98th Cong., 2d Sess., on S.1535 and S. 1841 (Apr. 3, 1984), Serial No. J-98-107, at 18, 32-34 (Mossinghoff), 70 (AIPLA) [hereinafter “Senate Judiciary Comm. PLAA Hearings”].

202 E.g., 130 CONG. REC. 28,075 (1984) (statement of Rep. Moorhead); see W. Fritz Fasse, The Muddy Metaphysics of Joint Inventorship: Cleaning Up After the 1984 Amendments to 35 U.S.C. § 116, 5 HARV. J.L. & TECH. 153, 175 (1992).

201

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team member contribute to each stage. The ACS supports this modification for it removes the inequity of depriving an individual of the status of joint inventor when that person was a significant contributor to an invention.203 In response to these suggestions, the sponsor of House Bill 4527 (Rep. Kastenmeier) let that version die in committee and introduced a new bill, H.R. 6286, in November 1984 containing AIPLA’s language verbatim. 204 In doing so, Kastenmeier also mentioned the new bill’s expected benefits to “universities and corporations which rely on team research” 205—a purpose also reflected in the official analysis of the bill.206 The Senate bill was similarly amended, with a parallel explanation of the purpose of the bill described as recognizing “the realities of modern team research.” 207 The report of the post-conference bill made identical references to these “realities” and made explicit that paragraphs (i) and (ii) adopted “the rationale of decisions such as Monsanto v. Kamp.” 208 The President’s statement on signing the bill into law, too, emphasized its utility for removing technical obstacles to team research.209 With strong industry support and minimal opposition to the bills, Congress enacted the amendment to Section 116 in the precise words proposed by AIPLA. 210 The legislative history indicates that the primary purpose of the PLAA was to codify a flexible standard of joint invention in order to encourage team research and, ultimately, efficient technological development.

Congress evidently perceived no coherent policy purpose in forcing large research companies and university science and engineering laboratories to conform to arbitrary rules about which researcher may participate on a team without precluding a valid patent or at

203

Letter from Warren D. Niederhauser, Pres.-Elect, Am. Chem. Soc’y, to Robert W. Kastenmeier, Chair, House Subcomm. on Cts., Civ. Libs., & the Admin. of Just. (Apr. 20, 1984), in Senate Judiciary Comm. PLAA Hearings, supra note 201, at 2617.

204 H.R. 6286 (1984).

205 1984 Cong. Rec. 28073 (Oct. 1, 1984) (statement of Rep. Kastenmeier).

206 Section-by-Section Analysis of H.R. 6286, Patent Law Amendments Act of 1984, 130 Cong. Rec. 10525-29 (1984), reprinted in 1984 U.S.C.C.A.N. 5827, 5833.

207 S. Rep. No. 998-663, 98th Cong., 2d Sess. (Oct. 5, 1984), at 8.

208 1984 U.S.C.C.A.N. 5827, 5834-35.

209 President’s Statement on Signing H.R. 6268 into Law, 20 WEEKLY COMP. PRES. DOC. 1818 (Nov. 9, 1984).

210 See Innovation and Patent Law Reform Hearings, supra note 196, at 2720 (introducing the amendment to Section 116 of the Patent Act as adopted by Congress).

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least raising the costs of patenting. Ideally, the sole determinant of research collaboration should be the most efficient use of research personnel and resources.

Interfering with the research efficiency hardly advances the patent law’s purpose of fostering technological development.

With its exclusive concern the promotion of collaborative research, the PLAA amendment to Section 116 left the substantive definition of conception untouched. The amendment does confirm that different collaborators may make different types and amounts of contributions without losing their status as coinventors, and it does not limit such contributions to any specific subclass of inventive input. Beyond that, the PLAA had nothing to say about the standard of inventorship.

Yet, the Federal Circuit soon began interpreting inventorship in a manner that privileges certain kinds of inventive contributions while dismissing other, equally valuable contributions. In Ethicon v. U.S. Surgical Corp., 211 the court’s analysis focused on whether the putative inventor’s contribution appears in the claims.

The court qualified this by stating elsewhere in the case that coinventorship depends not on a contribution to the claim itself or specific language in the claim, but rather on whether the collaborator “contributed to the invention” defined and limited by a claim. 212 Nonetheless, the court in Trovan reinforced the doctrinal fixation on claims by laying out a formal procedure for determining inventorship that seemed to rigidly ignore every inventive contribution not reflected in specific claim language.213 As discussed, Ethicon and Trovan set forth a procedure for determining inventorship. However, the Federal Circuit has never explicitly held that an inventor’s contribution must appear expressis verbis in the claims. In both Ethicon and Trovan, the inventor had allegedly contributed specific, identifiable limitations or elements to a combination invention. In Trovan, the alleged contribution was the addition of a wire support feature to an electronic transponder. In Ethicon, the 211

In Ethicon v. U.S. Surgical Corp., the court wrote that it must construe the claim language to determine whether the putative coinventor’s contribution “found its way into the defined invention.” Ethicon Co. v. U.S. Surgical Corp., 135 F.3d 1456, 1463 (Fed. Cir. 1998).

212 Id. at 1461-63.

213 Trovan, Ltd. V. Sokymat S.A. Irori, 299 F.3d 1292 (Fed. Cir. 2002). See, e.g., Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1361-62 (Fed. Cir. 2004) (“[T]he law requires only that a coinventor make a contribution to the conception of the subject matter of a claim.”) (emphasis added).

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alleged contribution was the addition of a safety feature (a “detaining means”) to a surgical trocar. In both cases, the contribution was a specific physical feature integrated into the invention. Such features are almost invariably set forth explicitly in the claims, and the Federal Circuit accordingly focused on whether the alleged coinventor’s contribution was encompassed by the claims.

The contribution to the claims in such cases served as a satisfactory proxy for an analysis of whether the inventor contributed to the invention itself. In neither case did the Federal Circuit repudiate the importance of contributing to the invention when that contribution was not recited explicitly in the claims. Indeed, the court has recognized that a coinventor must contribute to the conception of the “invention” rather than the claims. 214 The picture that emerges from these cases is one of a jurisprudence mired in confusion about the critical distinction between the claims and the invention.

The most problematic aspect of Trovan analysis, which has become the normal procedure for determining inventorship, is its elision of the distinction between claims and invention through the inapposite analogy of inventorship to infringement analysis. Infringement analysis is not a good parallel to inventorship analysis for several reasons. Most importantly, the two analyses serve entirely different policy purposes. Infringement analysis focuses tightly on the claims because the Patent Act’s disclosure requirements limit the scope of the patent. In the infringement context, focusing on the claims makes good sense. The claims are meant to limit the inventor’s enforcement powers. By definition, infringement means that the accused product or process has trespassed on one or more of the specific claims. It follows that infringement analysis should revolve around the claims.

However, even in the infringement context, the claims are not the only or even last word on the scope of patent protection. Courts have generally recognized that, as important as claims are to determining whether patent infringement has occurred, they do not exist in a vacuum, but rather should be interpreted in the context of the invention as a whole, as described in the specification and prosecution history. 215 Moreover, using the doctrine of equivalents, courts have 214

Bd. of Educ. ex rel. Bd. of Trustees of Fla. State Univ. v. Am. Bioscience, Inc., 333 F.3d 1330, 1337 (Fed. Cir. 2003) (“[E]ach joint inventor must generally contribute to the conception of the invention.”) (emphasis added).

215 See, e.g., United States v. Adams, 383 U.S. 39, 49 (1966); Phillips v. AWH Corp., 415 F.3d 1303, 1315 (Fed. Cir. 2005) (en banc); Retractable Techns., Inc. v. Becton, Dickinson &

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expanded patent protection to encompass more of the invention than the inventor technically claimed. 216 Why should the patent owner have the right to enforce the patent against a product or process not explicitly claimed in that patent? The answer can only be that the doctrine is designed to protect the invention when the claims do not fully capture that invention. Such a theory is possible only if the invention is something greater than the claims. The theory underlying the doctrine of equivalents is precisely that the invention and the claims are different but overlapping concepts.

The need for claims relates especially to their public notice function. Claims serve the purpose of putting the public on notice of what practices the patent forbids, while the patent document as a whole also teaches the public how to practice the invention. An infringement determination is the precondition to enforcing the patent, and so focusing on the claims protects accused infringers against being subjected to damages and penalties that were unforeseeable based on the claim language. Limiting infringement actions to the claims requires the inventor, as the person with the most control over the phrasing of the patent application, to define as clearly as possible the scope of the invention so that competitors will be given fair notice of the subject matter protected by the patent. 217 Accordingly, infringement (at least, literal infringement) means intrusion on the claims by definition. If the accused infringer’s activities did not fall within the scope of the claims as reasonably interpreted, and did not equivalently infringe, the accused infringer need fear no sanctions.

In contrast, an inventorship determination is designed neither to protect the public’s expectations about which technologies they are free to use nor to maintain the patent’s value against threats by competitors. It is instead intended to encourage innovation and, in the context of Section 116 of the Patent Act, to preserve the incentives for collaboration between persons having complementary skill sets or whose research work otherwise synergizes well. Accordingly, Section 116 of the Patent Act nowhere says or implies that the inventive contribution must appear in the claims portion of the specification. Getting inventorship right

Co., 653 F.3d 1296, 1303 (Fed. Cir. 2011), reh’g en banc denied, 659 F.3d 1369 (Fed. Cir. 2011). But cf. id. at 1312-13 (Rader, J., dissenting in part) (cautioning against importing limitations on claims from unclear language in the written description).

216 See Graver Tank & Mfg. Co. v. Linde Air Prod. Co., 339 U.S. 605 (1950).

217 See Gen. Elec. Co. v. Wabash Appliance Corp., 304 U.S. 364, 369 (1938); Hoganas AB v.

Dresser Indus., 9 F.3d 948, 951 (Fed. Cir. 1993).

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encourages inventive activity by rewarding those persons who make a significant contribution to the invention and serves equity by ensuring that no collaborator free-rides off another collaborator’s important contribution. For these purposes, the appearance of a collaborator’s contribution in the claims may indicate that the collaborator is a bona fide coinventor if the contribution is significant, goes to conception, and does more than recite the state of the art. Nothing in the pre-1984 case law or the PLAA suggests the adoption of a change in the substantive standard of inventorship to exclude any collaborator whose contributions do not appear in the claims. The policy rationale for not limiting inventorship analysis to the claims is further explored in the next section.

Unfortunately, the clarity of the jurisprudence on joint inventorship has been further degraded by imprecise language in American Board of Education v.

American Bioscience, Inc.,218 where the Federal Circuit suggested that a collaborator could not be a joint inventor of a class of chemical compounds unless it “conceived” one “of the claimed compounds.” 219 These dicta do not actually reflect the trend of Federal Circuit jurisprudence on the whole. The court stated in Ethicon that each joint inventor “needs to perform only a part of the task which produces the invention,” 220 as provided in Section 116 of the Patent Act. In Fina Oil, the court was even clearer: “One need not alone conceive of the entire invention, for this would obviate the concept of joint inventorship.” 221 Imagine the probability of all joint inventors simultaneously forming identical pictures in their individual minds of the entire operative invention.

218

Bd. of Educ., 333 F.3d 1330 (Fed. Cir. 2003).

Id. at 1340-41.

220 Ethicon, Inc. v. United States Surgical Corp., 135 F.3d 1456, 1460 (Fed. Cir. 1998).

221 Fina Oil & Chem. Co. v. Ewen, 123 F.3d 1466, 1472 (Fed. Cir. 1997); see also RhonePoulenc Agro, S.A. v. Monsanto Co., 445 F. Supp. 2d 531, 549 (M.D.N.C. 2006) (“[N]either the statute nor the cases relating to joint inventorship requires the simultaneous presence or awareness of all who have contributed significantly toward conception when the last piece of the conception puzzle slips into place.”); Regents of the Univ. of Mich. v. Bristol-Myers Squibb Co., 301 F. Supp. 2d 633, 642 (E.D. Mich. 2003) (“[A] joint inventor need not have had the definite and permanent conception of the full invention – otherwise, he would be the sole inventor.”); Tavory v. NTP, Inc., 297 F. Appx. 976, 979, 2008 WL 4710761, **4 (Fed. Cir., Oct. 27, 2008) (unpub.) (“[N]o individual coinventor need have a ‘definite and permanent idea of the complete and operative invention’ so long as all of the coinventors collectively satisfy that requirement.”).

219

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B. Reconstructing Inventorship It will be helpful here to summarize the main points of the argument so far.

Claims limit the protectable aspect of the invention; they do not “define” the invention, as courts frequently assert. Inventorship analysis cannot be analogized to infringement analysis, as the Federal Circuit has erroneously suggested in Ethicon, Trovan, and a long line of subsequent cases. It is unnecessary for a collaborator on a research team to have contributed specific language to a claim in order to qualify as a joint inventor, so long as he or she satisfies the three Pannu conditions.

These observations lead to the conclusion that a collaborator who makes a significant contribution to the conception of an invention may qualify as a coinventor without the need for Trovan analysis. More specifically, a collaborator who makes a sufficient contribution to the utility or nonobvious aspect of the invention, or to the method of making or using it, may qualify as an inventor even if his contribution does not appear in the claims. Without such contributions, there might have been no invention at all, and therefore no patent with claims to enforce.

Claims limit the patentee’s enforcement powers; they do not, however, suffice to qualify the invention for patent protection. That protection is contingent on the invention’s novelty, nonobviousness, utility, and adequate disclosure. Unless the coinventors collectively satisfy all of these requirements, no patent may issue in the first place.

A uniform requirement to conduct Trovan inventorship analysis, in confusing the claims with the invention, undermines this dynamic. If the invention were nothing more than the claims, the analogy to infringement analysis would make sense. But the invention is different, sometimes radically different, from the claims. The resulting merging of the claims with the invention disenfranchises any coinventor whose contribution the patent applicant did not expressly describe in the claims as a limitation, no matter how important that contribution might have been. This section will discuss how a correction of the judicial understanding of “invention” can point the way toward a correction of determinations of joint inventorship. With such a correction, the incentives toward collaborative research and disincentives toward strategic nonjoinder of inventors can be restored.

1. Equity and Strategic Nonjoinder Dan Burk and Mark Lemley have explained some practical consequences of overemphasizing the claims and ignoring the invention as a whole. As they point out, patent applicants can draft claims narrowly in order to get around objections

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by the examiner and to obtain a patent, and then later interpret the claims broadly in light of the specification or through the doctrine of equivalents: The shift in focus from the invention to the claim language allows both sides to game the process. It permits—and indeed even encourages—over claiming by patentees, particularly patentees drafting or interpreting claims years after the invention itself. If the focus is on the language of my claims, not the product that I actually built or described, I can interpret the language creatively to claim, in retrospect, to own inventions that I didn’t have in mind when I wrote the patent claims. 222 The result is to undermine the disclosure and public notice function of Section 112 of the Patent Act. The patent bar is well aware of these consequences and capitalizes on them as a matter of course. Although some patent lawyers avoid overclaiming to strengthen the patent against potential challenges, most seek to draft claims broadly by default.223 With regard to inventorship determinations, the focus on the claims would allow legally sophisticated researchers to exclude naïve collaborators from inventorship by drafting claims in a manner that underplays or ignores the latter’s crucial inventive contributions, without which the patent might have been unobtainable. Consider the following scenario: {3}

222

Three scientists, Delta, Epsilon, and Zeta, jointly begin a research project for the discovery of a flexible, bulletproof fabric. Through extensive testing, Delta and Epsilon rule out hundreds of fiber candidates and suggest several molecular and material characteristics that a bulletproof fabric would have, with clues to how one could fabricate such fibers. With this guidance in hand, Zeta successfully creates the material.

Dan L. Burk & Mark A. Lemley, Fence Post or Sign Posts? Rethinking Patent Claim Construction, 157 U. PA. L. REV. 1743, 1762 (2009).

223 See, e.g., Thalia V. Warnement & Troy E. Grabow, Drafting the Patent Specification, Am. Intell. Prop. L. Ass’n, Practical Patent Prosecution Training For New Lawyers, Aug. 2008, at http://www.aipla.org/learningcenter/library/papers/bootcamps/08patentbootcamp/Documents /Grabow-paper.pdf; Rajiv Sarathy, Broad Patents Can Be Both Lucrative and Expensive, Perkins Coie Patent Law Insights, Nov. 21, 2009, at http://www.patentlawinsights.com/tags/broadclaims/.

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In this case, all three collaborators qualify as joint inventors on the resulting patent. The contributions of each are ex hypothesi more than mere recitations of well-known principles and are plainly significant to the invention’s novelty, nonobviousness, and utility. The Federal Circuit has accurately observed that “a person is not precluded from being a joint inventor simply because his or her contribution to a collaborative effort is experimental,” 224 so the fact that Delta and Epsilon were not involved in the final steps in inventing and crafting the patented material does not deny them joint inventor status.225 Yet, suppose Zeta, who is the only inventor in possession of a complete mental picture of the fabric, were to apply for a patent without crediting Delta and Epsilon as coinventors. Zeta could rely on Trovan and its progeny to support his self-identification as the sole inventor of the material. Focusing on the claims, a court would compare the inventive contributions of Delta and Epsilon to the claim language. Nothing in the claims would necessarily point to the contributions of Delta and Epsilon, especially if Zeta drafted the claims strategically. The claims would certainly not mention anything about the fiber candidates that Delta and Epsilon had so painstakingly ruled out; claims describe what the applicant regards as the invention, not what the applicant regards as irrelevant or nonfunctional. Yet, much of the inventive process is typically “negative discoveries” that winnow the paths toward the inventive goal to the smallest number possible. 226 Nor would the claims necessarily refer to the material’s bulletproof characteristics; claims (especially in the chemical, metallurgical, and pharmaceutical arts) commonly describe an invention without reference to its utility or purpose. This information would most likely appear in the written description portion of the patent. The reason for its omission from the claims 224

Fina Oil & Chem. Co. v. Ewen, 123 F.3d 1466, 1473 (Fed. Cir. 1997); see Burroughs Wellcome Co. v. Barr Labs., Inc., 40 F.3d 1223, 1229 (Fed. Cir. 1994).

225 A few district courts have misread the Patent Act to allow courts to exclude as joint inventors collaborators who left the research team after the experimental stage. See, e.g., Huang v. California Inst. of Tech., 72 U.S.P.Q.2d 1161, 1177 (C.D. Cal. 2004) (“To judge the significance of an alleged joint inventor’s contribution to the complete invention, a court may consider whether the alleged joint inventor was able at the relevant time period to understand and articulate the inventive team’s final operative embodiments.”). This misses the entire point of the 1984 amendment to Section 116, which was based the desire to grant equal reward to early stage team members, as the Kamp decision upon which the amendment was based indicated. See Monsanto Co. v. Kamp, 269 F. Supp. 818 (D.D.C. 1967).

226 See Sean B. Seymore, The Null Patent, 53 WM. & MARY L. REV. 2041 (2012).

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makes sense in the context of patent law, where a patent grants exclusionary rights to the patented invention used for any purpose, regardless of whether it was a purpose contemplated by the inventor. Patent applicants accordingly omit reference to the utility and other details of the invention in the claims to avoid narrowing the scope of the claims. The motivation of seeking a patent that covers unforeseen uses of, or methods of making, a patented product is logically unconnected to, and has no effect on, the determination of inventorship of that product. The utility of an invention, and the knowledge of how to make and properly use it, are essential aspects of the invention, even if they do not necessarily limit its protections.

As the only collaborator with knowledge of the material’s molecular structure and fibers, and perhaps the only one with knowledge of how to fabricate the material, then, Zeta may rely on a great deal of Federal Circuit precedent to arrive at precisely the wrong conclusion—that he is the sole inventor. 227 The effort and creativity that Zeta put into the invention may be dwarfed by those of his collaborators, but the logic of Trovan analysis, strictly applied, awards him the entire patent right anyway.

227

This scenario is not merely fanciful. A federal district court recently misinterpreted the law of joint inventorship in just such a manner in Vanderbilt Univ. v. ICOS Corp., 594 F. Supp.

2d 482 (D. Del. 2009), aff’d, 601 F.3d 1297 (Fed. Cir. 2010). Relying on Burroughs Wellcome and American Bioscience, the district court held that university researchers who had collaborated with a drug company to identify and test a series of pharmaceuticals could not be joint inventors because none of the university scientists had “conceived the ‘specific chemical structure of the compound’ claimed.” Id. at 505. Although the court recognized that the university researchers must have made a valuable contribution to the discovery of the patented compounds and found the drug company’s denial of benefit from the university “troubling,” it could find no basis in law for treating the university scientists as joint inventors even if they contributed the very scaffolding of the drug. Id. at 505-07.

Judge Clevenger, writing for a panel of the Federal Circuit, corrected this error by pointing out that every coinventor need not individually conceive the final and entire invention; someone in the “inventorship team” need merely conceive the complete and final invention. Vanderbilt Univ. v. ICOS Corp., 601 F.3d 1297, 1306-07 (Fed. Cir. 2010). Yet, relying on the facts on record which were tainted by the trial court’s misunderstanding of the law, the Federal Circuit affirmed the district court opinion despite the absence of a sufficiently developed record based on a proper interpretation of the law, id. at 1307-08, an unfortunate choice, as Judge Dyk pointed out in dissent, id. at 1310 (Dyk, J., dissenting in part). This outcome results mainly from a jurisprudential problem already discussed—the Federal Circuit treating inventorship as a question of law rather than a question of fact.

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This problem does not arise as readily in patents covering mechanical devices or processes, because a coinventor will usually have contributed an identifiable physical component to a device or a step to a process. For example, in Ethicon v. U.S. Surgical Corp., the alleged coinventor of surgical trocar could point to a specific safety means limitation, incorporated into the relevant claim, that he contributed to the trocar.228 Moreover, mechanical device patents frequently specify their utility in the claims themselves, 229 so a collaborator’s contribution to utility would survive Trovan analysis. But no great imagination is required to envision hypothetical cases posing the same problem in the mechanical engineering field. For example, a novel device invented by Iago may be obvious over the prior art until Charles discovers a nonobvious use for the device. 230 Or a novel manufacturing process invented by Ilsa may be nonfunctioning when applied to certain materials, but if Calvin discovers that the process functions well when applied to a nonobvious choice of materials, Calvin is a coinventor. The inventive contributions of Charles and Calvin rendered their respective inventions patentable, but those contributions need not appear in the claims.

The arbitrary exclusion of some inventors caused by overreliance on the claims creates special problems in materials, chemical, and pharmaceutical development. As noted, patents in these fields typically claim the compound itself with no mention of its utility. Discussion of utility is relegated to the written description portion of the patent for such inventions.231 Claims that omit any mention of the invention’s utility, or the method of making and using it, highlight the merely partial role played by the claims as a definition of the invention. They

228

Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1463 (Fed. Cir. 1998).

E.g., U.S. Pat. No. 7,975,315 (July 5, 2011) (“The present invention relates to an atomic force microscope . . . .”); U.S. Pat. No. U.S. Pat. No. 7,947,218 (May 24, 2011) (“The present invention relates to a portable cooling device . . . that provides air flow, and a shroud . . . at an article . . . .”).

230 Many device patents do omit any mention of utility from the claims. See, e.g., U.S. Pat. No. 7,947,349 (May 24, 2011) (“The invention relates to a moulded piece forming a negative mould . . . .”).

231 See, e.g., U.S. Pat. No. 7,973,166 (July 5, 2011) (claim 1); U.S. Pat. No. 6,740,654 (May 25, 2004) (claims 1-20); U.S. Pat. No. 5,972,658 (Oct. 26, 1999) (claims 1-8); U.S. Pat. No. 4,024,272 (May 17, 1977) (claims 1-9, 12-20). European practice is consonant. See Mobil Oil/Friction Reducing Additive, Eur. Pat. Off. Bd. App. Case No. G 0002/88, para. 5 (Dec. 11, 1989), [1990] E.P.O.R. 73 (“The discovered use of [a] compound or composition will normally be described in the patent, but may not be expressly claimed.”).

229

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also prevent a collaborator who discovers a compound’s utility from qualifying as an inventor under a strict Trovan analysis.

Pharmaceutical inventions illustrate this point with special aptness. In developing a new pharmaceutical invention, the scientific problem is not to create a novel compound in a vacuum. A pharmaceutical compound, once created, does not “do” anything; it has no utility outside of its target biological organism. In order for a patent covering such a compound to issue, the applicant must credibly allege that the compound has some biochemical effect on a target organism. In other words, a pharmaceutical compound is not a functioning invention until introduced into its target organism. The claims, to the extent that they merely recite some molecular structure without mention of a therapeutic utility, limit the patentable scope of the invention but cannot “define” it in any meaningful sense.

The incomplete role of the claims in “defining” pharmaceutical inventions reveals its significance clearly in any description of the inventive process. The process of conceiving and synthesizing the claimed compound is often a relatively small part of drug design. In order to complete conception of the compound through trial-and-error testing, the inventors may need to perform all of the following steps: (1) understand the biological mechanism or agent causing the disorder; (2) select or develop a target chemical molecule (“candidate”) potentially capable of treating the disorder; (3) develop an efficient method for producing the candidate on a mass scale; (4) develop or select a series of systems for screening the candidate against the biological mechanism, or an environment that simulates the mechanism; and (5) modify the candidate as needed to increase its potency; reduce toxicity, side effects, or contraindications; reduce the molecular half-life; and determine proper dosage and delivery method.232 As a result, pharmaceutical inventions usually result from team research involving biologists, biochemists, medicinal chemists, and pharmacologists performing different tasks.

Inventors may have contributed to any of these steps. In some cases, the biological mechanism underlying the disorder to be treated may be well understood in the art, but the kind of molecule that will remedy the biological disorder will be

232

See generally Shayne Cox Gad, Introduction: Drug Discovery in the 21st Century, in DRUG DISCOVERY HANDBOOK 1, 1-7 (Shayne C. God ed., 2005). In rational drug design, the use of computer modeling may eliminate the need for and reduce reliance on some of these steps.

See generally ULF MADSEN, POVL KROGSGAARD-LARSEN & TOMMY LILJEFORS, TEXTBOOK OF DRUG DESIGN AND DISCOVERY (2002).

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the subject of uncertainty. In other cases, the biological mechanism will be mysterious or misunderstood, and the conception of the invention may require unique insights into the biological source of the disorder. The latter class of inventions is by far the most challenging to develop and perfect; all pharmaceutical inventions require the selection, testing, and possible modification of a bioactive compound, but not all require extensive original research into human or other animal biochemical functioning. Yet, because the claims will typically recite only the chemical structure of the molecule, an inflexible Trovan-type analysis would arbitrarily privilege the second and fifth steps over the others, despite the fact that in any given case the former may require the least effort, expertise, creativity, or other inventive contribution. 233 2. Restoring Incentives for Collaborative Research Claim fixation results in an inventorship analysis obviously inequitable to the excluded inventors, but it also poses a threat to collaborative research. Often, private companies seek to collaborate with university scientists and engineers to develop innovative products. For example, drug developers frequently collaborate with university biologists and chemists to discover diagnostics and treatments for persistent human diseases and disorders. University researchers are typically involved in exploring human or other animal biology or biochemistry, while the drug companies have expertise in medicinal chemistry and pharmacology. In such collaboration, Trovan analysis seems to suggest that the university researchers could never qualify as inventors if they did not contribute some specific molecular arrangement to the claimed compound. The patent incentive to collaboration with drug companies disappears.

An interesting illustration of the flaws in Trovan analysis occurred in a previously mentioned case, Board of Education ex rel. Florida State University v.

American Bioscience. 234 There, FSU scientists and their post-doctoral fellow, Dr. Tao, had been experimenting with variants of paclitaxel, a naturally-occurring 233

For example, the fifth step typically requires repeated recourse to the system developed in step 4, in order to verify that the modifications of the molecule perform the function desired in an acceptable manner. In any given case, the inventors may be able to use a prior art, off-the-shelf assay system to test and modify a nonobvious compound, or they may have to develop a nonobvious system for testing and modifying a prior art compound. Either step may constitute a valid contribution to conception.

234 Bd. of Educ. ex rel. Bd. Of Trustees of Fla. State Univ. v. Am. Bioscience, Inc., 333 F.3d 1330 (Fed. Cir. 2003).

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anticancer compound. At the FSU lab, Tao learned a “semi-synthetic” process for producing paclitaxel analogs. During this time, FSU scientists undertook a research project to develop nitro-taxols as chemotherapeutic radiosensitizing taxanes. Within a relatively short time, the FSU scientists discovered that a specific compound they had synthesized, PNIP, showed promise as a radiosensitizing agent. One of the FSU scientists (Dr. Nadizadeh) had developed a “secret” method for synthesizing PNIP, of which Tao was informed.

At some point during this research, one of the FSU scientists spoke at a conference regarding the synthesis of paclitaxel. Scientists at a pharmaceutical developer, VivoRx, had attended and decided to start researching radiosensitizing agents using a variant of paclitaxel, known generically as docetaxel, as the parent structure. Soon after having begun research, VivoRx hired Tao to assist in the project, and with his help in synthesizing compounds (allegedly using Nadizadeh’s secret method of making nitro-taxols), VivoRx obtained patents on several docetaxel analogs.

In evaluating whether any FSU scientists qualified as joint inventors of the patented compounds, the Federal Circuit discounted FSU’s experimental work: “general knowledge regarding the anticipated biological properties of groups of complex chemical compounds is insufficient to confer inventorship status with respect to specifically claimed compounds.” 235 The court then observed that “invention does require conception, and there is no evidence that FSU’s inventors conceived any of the claimed compounds.” 236 With regard to the use of FSU’s methods to make the compounds, the court concluded that this was irrelevant, because the patent did not claim the method of making the compounds.237 Specifically, FSU alleged that Tao had used Nadizadeh’s secret method to synthesize the patented compounds. To this, the court replied: despite the fact that Nadizadeh may have developed a method of making PNIP and other taxol derivatives, the record in the present case indicates that he did not conceive the claimed compounds; only ABI’s inventors were in possession of both the structure of the

235

Id. at 1340.

Id. (emphasis added). Throughout this portion of the opinion, the court repeated and elaborated on the mistaken conclusion that the FSU scientists had to conceive the entire compounds to be joint inventors. Id. at 1340-42.

237 Id. at 1341.

236

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claimed compounds and an operative method of making those compounds.238 Although the court acknowledged that conception of an invention requires disclosure of the method of making it, it held that the inventor of the method could not be a coinventor of the compounds made by his method unless he “conceive[d] of the claimed compounds” himself. 239 The American Bioscience court’s focus on the “claimed compounds” and discounting of the (unclaimed) method of making them is symptomatic of claims fixation. Whether FSU scientists conceived of an entire claimed compound is not the pertinent question; the patented compounds were conceived by at least some of the inventors. The FSU scientists need only have contributed to the conception of the invention in some way; conception of the entire compound by any specific inventor is entirely irrelevant, as long as the research team collectively conceived the claimed compounds.

A proper analysis of inventorship would have acknowledged that the contribution of necessary background biological knowledge, useful suggestions for functional groups of the claimed compounds, and techniques for making the compounds, could all qualify the contributors as coinventors if the contributors had collaborated with the VivoRx team and satisfied the three Pannu conditions of coinventorship. Under this analysis, it is possible that some of the FSU scientists would not have qualified as joint inventors. It is also possible that some would have qualified. The court’s repeated distortion of the law of inventorship in the case did considerable mischief on the facts before it, where FSU scientists who may have contributed substantially to the VivoRx inventions were excluded from consideration as joint inventors. In effect, the Federal Circuit sanctioned what may have been the misappropriation of a university’s valuable research, gathered over the course of many years, by a private company that promptly commercialized it for its own benefit and the preemption of any benefit by the university scientists.

More troubling still, the decision has had a predictably perverse effect on the development of joint inventorship doctrine. For example, it misled the district court in Vanderbilt University v. ICOS Corp. into concluding that failure of any

238 239

Id. at 1342.

Id.

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alleged collaborator to independently conceive of the entire claimed invention negated any possibility of joint inventorship. 240 Very recently, the Federal Circuit has retreated from the American Bioscience reasoning and partially rectified the wayward doctrine. In Falana v.

Kent State University, the plaintiff, a university researcher, developed an original method of making certain compounds for use in liquid crystal displays. 241 After the plaintiff (Dr. Falana) left the university’s employment, his supervisor used Falana’s method to synthesize a compound that he patented without naming Falana as a coinventor. The university read American Bioscience to dictate that, because it had not sought to patent Falana’s method, and Falana had never conceived the patented compounds, he was not a coinventor of any compound resulting from the use of his method.

The Federal Circuit disagreed with this understanding of American Bioscience. 242 Actually, the university’s reading of the case was quite reasonable.

The American Bioscience opinion was plainly dismissive of a researcher who had contributed a method of making the patented compound without conceiving of the compound itself. To get past American Bioscience without reversing itself, the court had to somehow reconcile its own holding with the fact that Dr. Falana, like Dr. Nadizadeh in American Bioscience, had never made or seen the university’s patented compounds.

To do this, the court resorted to the time-honored tactic of distinguishing the cases on the facts. In American Bioscience, Nadizadeh never actually worked with the patentee’s inventive team directly; he worked with Tao, who in turn worked with the patentee to develop the compound. In Falana, the eponymous plaintiff worked directly with the university research team, although he left before the compound was discovered. This distinction is, of course, irrelevant; the Patent Act does not require that all joint inventors work together, merely that they are exposed to each other’s work in the course of some cooperative enterprise.

The Falana court also suggested that, in American Bioscience, Nadizadeh had simply “taught skills or general methods” that merely facilitated the later

240

Vanderbilt Univ. v. ICOS Corp., 594 F. Supp. 2d 482, 504-06 (D. Del. 2009), aff’d, 601 F.3d 1297 (Fed. Cir. 2010).

241 Falana v. Kent State Univ., 669 F.3d 1349, 1358 (Fed. Cir. 2012) 242 Id. at 1357.

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invention “without more.” 243 But this too is irrelevant; the operative question is whether the skills and methods taught by the collaborator (a) contributed more than well-known principles, and (b) made a significant contribution (c) to conception.

As the court itself recognized in Falana, “Where the method requires more than the exercise of ordinary skill . . . the discovery of that method is as much a contribution to the compound as the discovery of the compound itself.”244 Problematic as the distinction between the cases may be, it is salutary that the Federal Circuit is beginning to perceive a more accurate concept of invention. The misfortune is that, in not reversing the mistakes of American Bioscience unambiguously, the court leaves standing contradictory approaches to the role of claims in determining inventorship.

Also problematical is the potential of claims-fixation to lead to an oxymoronic “inventorless invention.” A slight extension of scenario {3} demonstrates how this paradox might arise: {4}

Eta, Theta, and Iota are collaborating to discover a cure for lung cancer.

Through diligent and unusually insightful research, Eta discovers a hitherto unknown biochemical mechanism that makes cancer cells susceptible to certain kinds of polypeptides. Theta invests several months into creating a series of nonobvious screening systems for testing compounds against the discovered vulnerability in cancer cells. Together, Eta and Theta propose to Iota, a medicinal chemist, the characteristics that such a compound should have. Following these instructions, Iota pulls a well-known drug compound off his shelf, modifies it into a series of novel derivative compounds using well known techniques, and runs them through Theta’s screening systems.

One of the derivative compounds turns out to be a wonder drug that cures lung cancer with a very high probability in humans. Together, they seek a patent on the compound only.

Under the facts of scenario {4}, neither Eta nor Theta ever pictured in their minds the finished compound. Nor did they contribute any specific physical structure to the claimed molecule. They lacked the requisite knowledge of medicinal chemistry to do so. Neither Eta nor Theta would be coinventors under a strict Trovan analysis or the American Bioscience approach, because none of their contributions appear in the claims. Iota synthesized the patented molecule, and 243 244

Id. at 1358.

Id..

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was the first and only collaborator to conceive it in his mind, but nothing in his contribution exceeded the state of the art of medicinal chemistry. His work was the least inventive of the three, and arguably did not rise to a contribution to conception. If the claims merely recite the molecular structure of the claimed compound, the result will be that an invention of undoubted novelty, nonobviousness, and utility, might have no inventor at all.245 Under an expansive interpretation of Trovan, the cure for cancer described in scenario {4} could well be doctrinally unpatentable. 246 The result is diametrically opposite to any patent policy of encouraging collaborative research and the equitable sharing of its benefits.

CONCLUSION The argument of this Article—that the concept of invention and inventorship has been erroneously construed as “defined” by the claims—has relied on an argument sufficiently complex to proceed in stages. First, I showed that the invention cannot be defined by the claims, because the claims do not necessarily express all the prerequisites for a patentable invention. These omitted elements include most typically utility, a method for making the invention, and a method for using the invention. Without these, no novel and nonobvious product or process has yet attained the status of an “invention” ready for patenting. Therefore, a research collaborator who contributes one or more of these aspects to an invention qualifies as a co-inventor even if his contribution does not appear in the claims.

Moreover, treating the claims as defining the invention contradicts both the unity of invention rule and the rationale underlying the doctrine of equivalents. The Trovan sequence of analysis relied upon by the Federal Circuit consequently cannot be the only valid method for determining inventorship.

245

But see William R. Thropp & Sons Co. v. De Laski & Thropp Circular Woven Tire Co., 226 F. 941, 949 (3d Cir. 1915) (“One may conceive a general or imperfect outline of an entirely novel thing, which, without the conception of another developing it and giving it body, might never amount to invention; but if the conceptions of one supplement and complement the conceptions of the other, the result might be invention and therefore joint invention.”).

246 In practice, a court might stretch the law to cover this case through the judicial fiction that Eta and Theta “conceived” the compound by producing all the information required to lead a person having ordinary skill in the art to the compound. However, Trovan analysis in no way sanctions such an interpretation of inventorship, which illustrates again how Trovan crams inventorship analysis into a Procrustean bed. Trovan, Ltd. v. Sokymat S.A., Irori, 299 F.3d 1292, 1302 (Fed. Cir. 2002).

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Second, I explained how the consequences of fixating on the claims undermined Congress’ clearly expressed intentions in amending Section 116 of the Patent Act to encourage collaborative technological research. Third, I discussed the aggravating effects of two erroneous and contradictory doctrines adopted by courts: (a) the strong presumption of validity accorded to all aspects of an issued patent, regardless of whether the PTO examined the aspect at issue, and (b) the treatment of inventorship as a question of law. Finally, I suggested how inventorship doctrine could be rectified, most generally by treating the claims as defining the outward limits of patent protection for the invention rather defining than the invention itself. Procedurally, courts should hew to Falana analysis and resort to Trovan analysis only when the alleged co-inventor’s sole contribution appears expressis verbis in the claims.

Until the Supreme Court or Federal Circuit decisively clarifies the distinction between the invention and the claims, and the role of joint inventors in the former, the law of inventorship will continue to impose unnecessary costs on collaborative research and to skew inventorship determinations in favor of legally sophisticated but unprincipled researchers to the disadvantage of their less urbane collaborators. The problems resulting from claim fixation are further aggravated by adherence to an unjustifiably strong presumption that the persons named as inventors in the patent are the true and only inventors. There is no statutory basis for a strong presumption of validity on matters unexamined by the PTO, and no cogent rationale for judicially imposing a “clear and convincing evidence” standard.

Because all coinventors have equal and nonexclusive ownership rights in the patent by default, 247 the stakes for nonjoinder are potentially very high. Absent an assignment agreement, all inventors own rights to all claims in their patent, regardless of whether they contributed to those claims in any way. The Federal Circuit’s decision in Ethicon giving inventors ownership rights to claims to which they did not contribute was perhaps inevitable given the unity of invention principle and the phrasing of Sections 116 and 262 of the Patent Act, but it had the unfortunate consequence of increasing the risks of collaborative research outside of an employment contract. Collaborations between private companies, or between research universities and private industry, stand to suffer unnecessarily.

247

See supra text accompanying notes 144-146.

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Any adjustment of the ownership rights in a patent with multiple inventors would best be accomplished legislatively, but many of the current doctrine’s ill effects can be remedied by rectifying the wayward judicial conception of the invention. The overwrought fixation on claims and strong presumption of validity in inventorship determinations appear nowhere in the Patent Act. They are progeny of the judiciary and correctible by it. The judicial attitude toward overemphasizing claims should mirror that of Bill Cosby’s father to the young Bill: “I brought you into this world, and I can take you out.”248

248

BILL COSBY: HIMSELF (20th Century Fox 1983).

COPYRIGHT CONSPIRACY: HOW THE NEW COPYRIGHT ALERT SYSTEM MAY VIOLATE THE SHERMAN ACT SEAN M. FLAIM *

In July 2011, a consortium of major content providers and Internet service providers announced their intention to implement the Copyright Alert System, a graduated response plan aimed at stemming online copyright infringement by individual users. While other commentators have examined the rise of these systems abroad and certain potential issues with the implementation of such measures in the United States, little has been said about the antitrust implications of a private system of copyright enforcement. This article recounts the history of online infringement leading up to the Copyright Alert System and then analyzes the system from the perspective of antitrust law, taking the position that the system announced raises significant antitrust concerns. The article concludes with recommendations for improving the current system to protect the rights of consumers.

INTRODUCTION ........................................................................................................143 I. THE COPYRIGHT ALERT SYSTEM ..................................................................146 A. A Brief History of Online Infringement ..................................................146 B. The Development of the Graduated Response System ...........................149 C. U.S. Graduated Response: The Copyright Alert System ........................153 1. Creation of the Center for Copyright Information............................154 2. Identifying Infringing Content...........................................................155 3. Copyright Alert Program ..................................................................156 4. Due Process Under the Copyright Alert System ...............................158 II. ANTITRUST ...................................................................................................159 A. Brief Overview of Antitrust Law .............................................................160 B. The Relationship Between Antitrust Law and Copyright .......................162 C. Private Enforcement and Group Boycotts .............................................164

*

Copyright 2011 by Sean M. Flaim, J.D., 2011, Catholic University of America, Columbus School of Law. I would like to thank Judge Edward J. Damich, Eric Goldman, James Grimmelmann, Timothy B. Lee, and Suzanne Munck for their valuable comments on earlier drafts, and Elizabeth Flaim for her invaluable support during the writing process.

142

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1. Early Boycott Cases – Per Se Liability .............................................164 2. Per Se Liability to Rule of Reason ....................................................166

APPLICATION OF ANTITRUST LAW TO THE COPYRIGHT ALERT SYSTEM .......168 A. What Is the Restraint at Issue? ...............................................................168 1. Horizontal, Vertical, or Hybrid Agreement? ....................................169 2. Concerted Refusal to Deal and/or Group Boycott ............................170 B. Do the Parties Possess Market Power? .................................................171 1. Product Market..................................................................................172 2. Geographic Market ...........................................................................173 C. What Are the Anticompetitive Aspects of the Copyright Alert System? .174 1. Consumer Welfare .............................................................................174 2. Governance Provisions .....................................................................176 D. What Are the Pro-Competitive Justifications Offered? .........................177 1. Societal Costs of Copyright Infringement .........................................178 2. Network Congestion ..........................................................................180 3. Copyright Alert System Benefits Consumers.....................................181 4. Section 512(i) of the Digital Millennium Copyright Act ...................183 E. The Copyright Alert System Fails the Rule of Reason ...........................183 RECOMMENDATIONS FOR IMPROVEMENT......................................................184 A. Congressional Action .............................................................................184 B. The Department of Justice and the Federal Trade Commission............185 CONCLUSION.................................................................................................187

III.

IV.

V.

INTRODUCTION On July 7, 2011, leaders of the content industries and Internet Service Providers (“ISPs”) announced they had reached a landmark agreement for implementing a system of “Copyright Alerts.” 1 The highly anticipated 2 system represents the latest line of defense by the content industries against the economic

1

Press Release, Recording Industry Association of America, Music, Movie, TV and Broadband Leaders Team to Curb Online Content Theft (July 7, 2011), http://www.riaa.com/ newsitem.php?content_selector=newsandviews&news_month_filter=7&news_year_filter=2011 &id=2DDC3887-A4D5-8D41-649D-6E4F7C5225A5 [hereinafter Press Release].

2 See Greg Sandoval, Exclusive: Top ISPs Poised to Adopt Graduated Response to Piracy, CNET.COM (June 22, 2011), http://news.cnet.com/8301-31001_3-20073522-261/exclusive-topisps-poised-to-adopt-graduated-response-to-piracy/.

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problems associated with online infringement. 3 While the media has generally responded positively, 4 consumer and civil liberties groups were quick to raise concerns 5 with the new agreement between content owners and ISPs who had been up to now grudging partners in the battle against online infringement. 6 The new system purports to offer a standard “best practices” framework designed to enable ISPs to effectively alert their individual customers of accusations of online infringement. 7 Studies suggest that Internet users who are educated about copyright infringement and its potential consequences will quickly take steps to ensure that their connection is not used for further infringement. 8 By implementing a system of increasingly severe warnings directed to users accused

3

See, e.g., Darren Murph, ISP's Agree on Copyright Alert System, Plan to Notify You to Death for Piracy Infringements, ENGADGET (July 7, 2011), http://www.engadget.com/2011/ 07/08/isps-agree-on-copyright-alert-system-plan-to-notify-you-to-dea/.

4 See Amy Lee, Top Internet Providers To Step In To Stop Piracy Online, THE HUFFINGTON POST (July 7, 2011), http://www.huffingtonpost.com/2011/07/07/internet-provide-piracy_n_ 892385.html; Chloe Albanesius, Pirates Beware, ISPs Agree to Copyright Alert System (July 7, 2011), http://www.pcmag.com/article2/0,2817,2388184,00.asp; Eric Engleman, AT&T Joins Verizon in Web-Piracy Fight to Preempt U.S. Crackdown, BLOOMBERG (July 7, 2011), http://www.bloomberg.com/news/2011-07-08/at-t-joins-verizon-in-web-piracy-fight-to-preemptu-s-crackdown.html.

5 See CDT, Public Knowledge Joint Statement on ‘Copyright Alert System’, PUBLIC KNOWLEDGE (July 7, 2011), http://www.publicknowledge.org/cdt-public-knowledge-jointstatement-copyright-ale (voicing concern over the allowance of Internet account suspension as a possible remedy); Abigail Phillips, The Content Industry and ISPs Announce a “Common Framework for Copyright Alerts”: What Does it Mean for Users?, ELECTRONIC FRONTIER FOUNDATION (July 7, 2011), https://www.eff.org/deeplinks/2011/07/content-industry-and-ispsannounce-common (voicing concern over the possibility that Internet access will be terminated

by ISPs after five or six alerts, the provision that allows failure to secure a wireless router only once as a defense, and educating users about copyright law); Corynne McSherry and Eric Goldman, The “Graduated Response” Deal: What If Users Had Been at the Table?, ELECTRONIC FRONTIER FOUNDATION (July 18, 2011), https://www.eff.org/deeplinks/2011/07/ graduated-response-deal-what-if-users-had-been (voicing concern over the inadequate representation of subscribers’ interest in the executive committee, imposition of mitigation measures on subscribers without adequate due process, use of subscriber education as a means to present subscribers with an unbalanced view of copyright law, and lack of transparency).

6 See Greg Sandoval, AT&T Exec: ISP Will Never Terminate Service on RIAA's Word (Mar. 25, 2009), CNET.COM http://news.cnet.com/8301-1023_3-10204514-93.html.

7 Press Release, supra note 2.

8 Id. See also Peter K. Yu, The Graduated Response, 62 FLA. L. REV. 1373, 1381 (2010) (noting the effective nature of graduated response systems as a deterrent to online infringement).

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of online infringement, the parties hope to encourage consumers to confine their online activities to legal ones.9 The concept of a graduated response system is not new. Originally developed overseas, many commentators believed it was only a matter of time until some sort of graduated response system made its way to the United States. 10 The topic has already received serious attention from American legal scholars, who have examined the potential interaction of a graduated response system with § 512 of the Digital Millennium Copyright Act (“DMCA”), 11 common carriage, 12 the First Amendment, 13 fair use,14 and consumer protection.15 However, adoption of the Copyright Alert system faces another legal hurdle—one that has elicited little discussion in both the media and from academia. 16 As both a horizontal and vertical agreement between companies who are otherwise competitors, the proposed system may amount to violation of § 1 of the Sherman Antitrust Act.17 The Sherman Act proscribes private actors from entering into any contract, combination, or conspiracy in restraint of trade. 18 By joining together to combat piracy through private enforcement, the conduct of content owners and ISPs may have crossed the line from a legitimate to an illicit combination in restraint of trade. 19 The antitrust laws are complex, however, and

9

See Press Release, supra note 2.

See Yu, supra note 8, at 1378; Annemarie Bridy, Graduated Response and the Turn to Private Enforcement Ordering in Online Copyright Enforcement, 89 OR. L. REV. 81, 82 (2010).

11 Yu, supra note 8, at 1403–10; Bridy, supra note 10, at 87–103.

12 Bridy, supra note 10, at 103–24.

13 Yu, supra note 8, at 1413–16.

14 Id. at 1417–18.

15 Bridy, supra note 10, at 124–31.

16 See James Grimmelmann, Six Strikes and You're Out at the Antitrust Ball Game?, THE LABORATORIUM (July 28, 2011), http://laboratorium.net/archive/2011/07/28/six_strikes_and_ youre_out_at_the_antitrust_ball_ga; Timothy B. Lee, What the 1930s Fashion Industry Tells Us About Big Content's "Six Strikes" Plan, ARS TECHNICA (July 28, 2011), http://arstechnica.com/tech-policy/news/2011/07/what-the-1930s-fashion-industry-means-forbig-contents-six-strikes-plan.ars.

17 15 U.S.C. § 1 (2006).

18 Id. The text of the § 1 reads: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. . . .” Id. 19 See, generally, Lee, supra note 16; Grimmelmann, supra note 16.

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navigating their intricacies remains an ever-challenging goal for many American technology companies. 20 This article analyzes the new Copyright Alert System from the perspective of antitrust law. Part I discusses the evolution of graduated response, first by recounting the history of online copyright infringement, and then by discussing the development of graduated response systems abroad. It concludes with the salient points of the U.S. graduated response, the Copyright Alert System. Part II shifts the focus to antitrust law, briefly explaining antitrust law and its relationship to copyright law. Next, because the Copyright Alert System most closely resembles a concerted refusal to deal, the evolution of the Supreme Courtâ&#x20AC;&#x2122;s doctrine on this form of collusive self-help is explored. Part III then seeks to apply the principles of antitrust law provided in Part II to the Copyright Alert System through a Rule of Reason analysis. The article concludes from this analysis that the system raises significant anticompetitive concerns. The relationship of the parties to each other and the substance of their agreement are discussed first, followed by a discussion of market power. Then, both the potential anticompetitive and pro-competitive effects of the announced agreement are discussed in detail. Finally, because the system has some beneficial elements, Part IV discusses several suggestions for improving the announced system to make sure that it clears any hurdles that antitrust law may place in its path.

I THE COPYRIGHT ALERT SYSTEM A. A Brief History of Online Infringement The Copyright Alert System is only the most recent stage in the evolution of content ownersâ&#x20AC;&#x2122; efforts to protect the value of their works in the face of advancing digital technology. Since the beginning of the Internet, the challenge of adapting copyright law to the information era has been well known. As early as 1993, courts had begun to grapple with complaints of online copyright infringement, while academics were similarly beginning to discuss the ability of the Internet to

20

See, e.g., David Goldman, DOJ Files Antitrust Suit to Block AT&T Merger with T-Mobile, CNN (Aug. 31, 2011), http://money.cnn.com/2011/08/31/technology/att_tmobile_antitrust/ index.htm; Chris Lefkow, Google Under Scrutiny Over Search Dominance, GOOGLE (Sept. 19, 2011), http://www.google.com/hostednews/afp/article/ALeqM5hu8xN_IuBB3k1ZGxrZUfrpcia CMw?docId=CNG.457a668ff57c79200805ad29a4efac29.71.

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facilitate copyright infringement. 21 The application of copyright law to the Internet, however, was in a state of flux prior to 1998, 22 when Congress passed the Digital Millennium Copyright Act (DMCA). 23 Signed into law on October 28, 1998, the DMCA was the first legislative enactment specifically designed to clarify the application of copyright law to the Internet. The Act was passed as a response to the adoption by the United States of the 1996 World Intellectual Property Organization (WIPO) Copyright Treaty, 24 which required its members to implement increased intellectual property protection for digital works. Title II of the DMCA, the Online Copyright Infringement Liability Limitation Act, 25 enacted a set of “safe-harbors,” through which ISPs could limit exposure to secondary liability for copyright infringement. 26 Qualifying ISPs were specifically immunized from secondary liability for the action of their customers or their automated systems, provided they had no actual or constructive knowledge of the infringement, implemented a “repeat infringer” policy, and responded to requests from copyright holders to remove works that were deemed to be infringing.27

21

See Alan H. Bomser, et al., A Lawyer's Ramble Down the Information Superhighway, 64 FORDHAM L. REV. 697 (1995); Pamela Samuelson, Fair Use for Computer Programs and Other Copyrightable Works in Digital Form: The Implications of Sony, Galoob and Sega, 1 J. INTELL. PROP. L. 49 (1993); Don E. Tomlinson, Journalism and Entertainment As Intellectual Property on the Information Superhighway: The Challenge of the Digital Domain, 6 STAN. L. & POL'Y REV. 61 (1994).

22 Compare Religious Tech. Ctr. v. Netcom On-Line Commc'n Services, Inc., 907 F. Supp.

1361, 1365 (N.D. Cal. 1995) (granting summary judgment to ISP for direct and vicarious infringement), with Sega Enters. Ltd. v. MAPHIA, 857 F. Supp. 679, 683 (N.D. Cal. 1994) (holding bulletin board liable for contributory infringement).

23 Digital Millennium Copyright Act, Pub. L. 105-304, Stat. 112 Stat. 2860 (1998) [hereinafter DMCA].

24 World Intellectual Property Organization Copyright Treaty, Dec. 20, 1996, 36 I.L.M. 65, available at http://www.wipo.int/export/sites/www/treaties/en/ip/wct/pdf/trtdocs_wo033.pdf.

25 DMCA, supra note 23, at 2877.

26 See 17 U.S.C. § 512 (2006).

27 See § 512(a) (liability limitation for transitory storage); § 512(b) (limited liability for system caching); § 512(c) (limited liability for user generated content); § 512(d) (limited liability for information location tools, i.e. links). As a threshold requirement for these various liability limitations, providers must implement a policy for the termination of access of those deemed “repeat infringers.” § 512(i)(1)(A). “Notice-and-takedown” provisions are provided for in § 512(c).

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In enacting the DMCA, Congress failed to anticipate the creation in January 1999 of Napster. 28 The effect of the new file-sharing service was to shift the source of online copyright infringement from the centralized online systems controlled by ISPs to users residing in the periphery. 29 Within a year, over 25 million people used Napster software to download music files from the Internet, the vast majority of which were infringing. 30 The Recording Industry Association of America (“RIAA”) responded rapidly, filing suit against Napster in December 1999. 31 The United States Court of Appeals for the Ninth Circuit upheld the RIAA’s request for a preliminary injunction, holding that Napster, by providing a central repository for the file names, was both contributorily and vicariously liable for the copyright infringement of its users. 32 Unfortunately, the Whac-A-Mole game had just begun for content owners.

No sooner than Napster was vanquished, were other technological tools released that did not rely on the central repository of file names, the key factor to the Ninth Circuit’s determination of liability. 33 These software tools either distributed the indexing of files to certain users’ computers or used completely decentralized

28

A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1011–12 (9th Cir. 2001); Abbie Woelfel, The Napster Phenomenon: Turning the Music Industry Upside Down, UW-LA CROSSE JOURNAL OF UNDERGRADUATE RESEARCH (2001), available at http://murphylibrary.uwlax.edu/ digital/jur/2001/woelfel.pdf. Napster worked through creating an index of music files on a consumer’s computer. This list would then get sent to a central server owned by Napster, and became instantly searchable to any of Napster’s other users. Id. If another user found a song file of interest, the Napster server would “connect” the two users on the periphery to each other in a “peer-to-peer” connection, and the music file would be copied from one computer to the other.

Id. 29 Woelfel, supra note 28, at 1.

30 Id. at 2.

31 Id. 32 A&M Records, 239 F.3d at 1024.

33 Originally, these tools included Gnutella (Morpheus and LimeWire) and FastTrack (Grokster and KaZaA). Matthew Fagin, et al., Beyond Napster: Using Antitrust Law to Advance and Enhance Online Music Distribution, 8 B.U. J. SCI & TECH L. 451, 461–62 (2002). More recently, BitTorrent has become prevalent, having dispensed with many of the technical challenges raised by the earlier technologies. See Annemarie Bridy, Is Online Copyright Enforcement Scalable?, 13 VAND. J. ENT. & TECH. L. 695, 700–04 (2011). Bridy also notes that centralized online file lockers – or cyberlockers – are now another growing source of online infringement. Id. at 704–06.

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searches to retrieve file information.34 Content owners responded by filing lawsuits 35 against the providers of these various tools, but the genie had been let out of the bottle. It was the users of these tools who now posed the greatest threat to the content owners’ business model.

Realizing this, content owners aimed their fight at consumers. In September 2003, the RIAA filed the first of 382 lawsuits against individual users for copyright infringement. 36 By February 2004, this number rose to over 2,000. 37 Whether or not these suits reduced file sharing was—and still is—unknown,38 but the lawsuits were nonetheless roundly condemned by the public. 39 Confronted with this public relations fiasco, content owners changed direction once more, this time toward cooperation with ISPs, and they officially ended the litigation campaign in 2008.40 Content owners are now firmly invested in what they see as the next promising solution for resolving the problem of online infringement—the graduated response system. 41 B. The Development of the Graduated Response System It is no coincidence that, in 2007, content owners were already actively attempting to establish the first graduated response system in Europe. That year the French government announced an agreement—the Olivennes or Elysée

34

Stephanos Androutsellis-Theotokis & Diomidis Spinellis, A Survey of Peer-to-Peer Content Distribution Technologies, 36 ACM COMPUTING SURVEYS 335, 346 (2004).

35 See MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005); Arista Records L.L.C. v.

Lime Group LLC, 715 F. Supp. 2d 481 (S.D.N.Y. 2010).

36 Benny Evangelista, Online Music Finally Starts to Rock ‘n’ Roll, S.F. CHRON., Dec. 29, 2003, at E1; Press Release, Recording Industry Association of America, Recording Industry Begins Suing P2P File Sharers Who Illegally Offer Copyrighted Music Online, RIAA (Sept. 8, 2003), http://www.riaa.com/newsitem.php?id=85183A9C-28F4-19CE-BDE6-F48E206CE8A1.

37 Id. 38 See Peter K. Yu, The Escalating Copyright Wars, 32 HOFSTRA L. REV. 907, 922 n.93 (2004); Jefferson Graham, College Students Face Lawsuits on File Sharing, USA TODAY (Apr. 12, 2005), http://www.usatoday.com/tech/news/2005-04-12-internet2-suit_x.htm.

39 Wendy Davis, RIAA Ceases Suing Peer-to-Peer Users, MEDIAPOST (Dec. 22, 2008), http://www.mediapost.com/publications/article/97102/riaa-ceases-suing-peer-to-peer-users.html.

40 Id. 41 Nate Anderson, RIAA Graduated Response Plan: Q&A with Cary Sherman, ARS TECHNICA (Dec. 21, 2008), http://arstechnica.com/old/content/2008/12/riaa-graduated-responseplan-qa-with-cary-sherman.ars.

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agreement—between ISPs and the film and music industries. 42 This agreement later led to the projet de loi favorisant la diffusion et la protection de la création sur internet (“bill to support the diffusion and protection of creation on the internet”), introduced to the French parliament in June 2008. 43 The bill would ultimately create Loi HADOPI, an agency tasked with supervision over the implementation of the law. 44 The procedural framework was as follows: HADOPI would receive complaints from content owners regarding online infringement. 45 In turn, it would send two warnings to an Internet user regarding infringement by email or registered letter, the second more seriously worded (“graduated”) than the first. 46 On the third accusation of infringement, or “third-strike,” Internet users could either pay a monetary settlement, have their Internet connection suspended for three months to a year, or have a subpoena issued against them. 47 The bill was fiercely criticized by citizen’s advocacy groups such as UFC Que Choisir and La Quadrature Du Net, who argued “[t]his text is contrary to European law, whether in the field of human rights or free competition. It denies the social, economical and technical realities and demonstrates a serious lack of reflection concerning digital technology and related issues.”48 Opposition notwithstanding, the bill was approved by the French parliament and became law in 2009. 49 Notably, in response to a ruling by the French constitutional court that

42

See Jeremy de Beer & Christopher D. Clemmer, Global Trends in Online Copyright Enforcement: A Non-Neutral Role for Network Intermediaries?, 49 JURIMETRICS J. 375, 389 (2009).

43 Patrick Van Eecke & Maarten Truyens, Recent Events in EU Internet Law, 12 No. 4 J. INTERNET L. 28, 29 (Oct. 2008).

44 Id. “Loi HADOPI” is a shortened acronym for the agency, known as the Haute Autorité pour la Diffusion des Oeuvres et la Protection des droits sur Internet or the High Authority for Dissemination of Works and Protection of Rights On the Internet. Id. 45 Id. 46 Id. 47 Id. 48 Christophe Espern, Exclusive: The Latest “Flexible Response” French Law Draft, LA QUADRATURE DU NET (May 6, 2008), http://www.laquadrature.net/en/exclusive-the-latestflexible-response-french-law-draft.

49 Eric Pfanner, France Approves Wide Crackdown on Net Piracy, N.Y. TIMES (Oct. 23, 2009), http://www.nytimes.com/2009/10/23/technology/23net.html.

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the original law was invalid, the bill’s passage became contingent on the additional protection of judicial review prior to account suspension.50 France was not the only European government confronted with rising demands of content owners for the adoption of graduated response systems. In late 2008, the United Kingdom telecom regulator (OFCOM), working at the behest of the UK government, came to an agreement with six of the largest ISPs to implement such a system. 51 The UK plan, however, did not go as far as the French system in pushing for the suspension of Internet service and instead resorted to sanctions (such as speed throttling and content filtering) in response to allegations of infringement.52 In February 2009, Irish broadband provider Eircom agreed as part of a settlement with content owners to implement a gradual response system and to disconnect Internet users accused of infringement after three offenses. 53 Ireland remains the only country to have implemented a graduated response system through means other than legislative enactment.

Some European states firmly rejected graduated response measures. The Secretary of Justice for Germany stated that such a system was not “a fitting model for Germany or even Europe.” 54 Denmark 55 and Spain 56 also rejected a graduated response system. However, the example spread elsewhere worldwide, and in April 2009, South Korea passed its own version. 57 Stricter than the French system, user

50

Nate Anderson, French Court Savages “Three-Strikes” Law, Throws It Out, ARS TECHNICA (June 10, 2009), http://arstechnica.com/tech-policy/news/2009/06/french-courtsavages-3-strikes-law-tosses-it-out.ars.

51 De Beer, supra note 42, at 392; Van Eecke, supra note 43, at 30.

52 Id. 53 Patrick Van Eecke & Maarten Truyens, Recent Events in EU Internet Law, 12 No. 9 J. INTERNET L. 26, 26-27 (Mar. 2009).

54 Id. 55 Id. 56 Howell Llewellyn, ‘Three-Strikes' Off Anti-Piracy Agenda In Spain, BILLBOARD.BIZ (June 22, 2009), http://www.billboard.biz/bbbiz/content_display/industry/news/e3i8071e0d9c25cb6 b876d3771fb7e3d102.

57 IFPI, IFPI DIGITAL MUSIC REPORT 2011 18, available at http://www.ifpi.org/content/ library/DMR2011.pdf.

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accounts in South Korea are suspended after the first accusation. 58 Taiwan has also followed suit.59 In April 2010, the United Kingdom signed the Digital Economy Act into law.

The Act implemented much of what had previously been a voluntary system and specifically gave OFCOM the authority to promulgate rules for punitive actions against repeat offenders, including service suspension. 61 New Zealand followed the U.K. in April 2011, passing the Copyright (Infringing File Sharing) Amendment Act 2011.62 Purportedly, Australia, Brazil, Hong Kong, and Japan are also monitoring the success of these measures in other countries with an eye toward implementing their own graduated response systems in the future. 63 60

To date, content owners continue to press for countries throughout the world to adopt graduated response systems into law. For a short period of time, graduated response was a component of the Anti-Counterfeiting Trade Agreement. 64 This addition, however, proved to be contentious, and the enforceable provisions regarding graduated response were excised from the final treaty. 65 More recently, content owners have been applying pressure on the Australian government to implement a graduated response law. 66 Such efforts

58

Id. IFPI, IFPI DIGITAL MUSIC REPORT 2010 24, available at http://www.ifpi.org/content/ library/dmr2010.pdf.

60 Digital Economy Act of 2010, available at http://www.legislation.gov.uk/ukpga/2010/ 24/contents.

61 Id. at § 9. The Act has yet to be implemented and recent news reports illustrate the complexities in creating a graduated response system in the U.K. See Ben Woods, OFCOM: Digital Economy Act Still Needs Clarity, ZDNET (Oct. 20, 2011), http://www.zdnet.co.uk/news/ regulation/2011/10/20/ofcom-digital-economy-act-still-needs-clarity-40094244/.

62 Copyright (Infringing File Sharing) Amendment Act 2011, available at http://www.legislation.govt.nz/act/public/2011/0011/latest/DLM2764312.html.

63 IFPI, supra note 59, at 25. IFPI also maintains Germany is considering adoption of a graduated response system, contrary to the statements made by their public officials. Id.; supra notes 53–58 and accompanying text.

64 See Annemarie Bridy, ACTA and the Specter of Graduated Response, 26 AM. U. INT'L L. REV. 559 (2011).

65 Id. at 568–69. Even excised, however, the final draft contained language encouraging cooperation among ISPs and copyright owners. Id. at 569–71.

66 Asher Moses, Music and Film Industries Split Over Pirates, SYDNEY MORNING HERALD (June 6, 2011), http://www.smh.com.au/technology/technology-news/music-and-film-industriessplit-over-pirates-20110606-1fo8q.html.

59

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continue to be pushed even in light of a May 2011 report by the Human Rights Council of the United Nations declaring graduated response to be a violation of the International Covenant on Civil and Political Rights.67 No other country at this time appears to be considering such legislation. As a result, further implementation throughout the world of graduated response systems will likely come from private agreements between ISPs and content owners.

C. U.S. Graduated Response: The Copyright Alert System With no graduated response legislation in the United States proposed yet, content owners have turned to an alternative: private negotiation with domestic ISPs.68 After several years of talks, in 2011, various ISPs and content owners finally announced the creation of the United States graduated response system. 69 Reportedly, the Obama Administration was actively involved behind the scenes in the negotiations and is highly supportive of the announced agreement. 70 In their Memorandum of Understanding, the parties agreed to a comprehensive graduated response system, including the creation of a private governing body, the development of technical measures to identify online infringement and act on it, the creation of a comprehensive framework for informing and punishing consumers accused of copyright infringement, and the establishment of a due process system for those consumers accused of infringement who wish to challenge their punishment.

67

U.N. Human Rights Council, Report of the Special Rapporteur on the Promotion and Protection of the Right to Freedom of Opinion and Expression, Âś 78, U.N. Doc. A.HRC.17.27 (May 16, 2011), available at http://www2.ohchr.org/english/bodies/hrcouncil/docs/17session/ A.HRC.17.27_en.pdf.

68 See supra notes 39-41 and accompanying text.

69 Press Release, supra note 1.

70 Nate Anderson, White House: We "Win the Future" by Making ISPs Into Copyright Cops, ARS TECHNICA (July 7, 2011), http://arstechnica.com/tech-policy/news/2011/07/white-house-wewin-the-future-by-making-isps-into-copyright-enforcers.ars.

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1. Creation of the Center for Copyright Information The Memorandum of Understanding (“Memorandum”) between ISPs and content owners was finalized for signature by the parties on July 6, 2011.71 The Motion Picture Association of America (“MPAA”) and RIAA represented the interests of content owners. A number of the individual members of both the MPAA and RIAA, including most of the major movie studios and record labels, are also signatories to various parts of the Memorandum. Sixteen ISPs are signatories to the agreement, including Verizon, Comcast, Time Warner Cable, AT&T, and SBC Internet Services. Together, these various ISPs represent more than 60% of the overall ISP market as of August 2011. 72 According to the recitals, online copyright infringement “imposes substantial costs on copyright holders and the economy each year.” 73 The Memorandum further notes that online infringement may also increase network congestion, impacting individuals’ legitimate use of the Internet. Recognizing that government plays an important role in enforcing copyright law, the Memorandum asserts that the viral nature of the Internet necessitates alternative solutions to the problem of online infringement: Such efforts must respect the legitimate interests of speech, in accessing legitimate content, and in being able to challenge the accuracy of allegations of Online Infringement. This work should include an educational component because evidence suggests that most informed consumers will choose lawful services and not engage in Online Infringement. This work also should include the development of solutions that are reasonably necessary to effectuate the rights that are granted by copyright without unduly hampering the legitimate distribution of copyrighted works online or impairing the legitimate rights and interests of consumers and ISPs. Such efforts serve not only the shared interests of creators and distributors of creative works, but also the interests of Internet users who benefit from constructive measures aimed at education and deterrence in lieu of litigation with its attendant costs and legal risk.74

71

Mem. of Understanding (July 7, 2011), available at http://www.copyrightinformation.org/ sites/default/files/Momorandum of Understanding.pdf.

72 ISP Usage and Market Share, STATOWL.COM, http://www.statowl.com/network_isp_ market_share.php (last visited April 27, 2012).

73 Mem. of Understanding, supra note 71.

74 Id.

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The Memorandum establishes the Center for Copyright Information (“CCI”) to oversee the operation of the Copyright Alert system. 75 The CCI is directed by a six-member executive committee, with three members designated by each of the content owner representatives and participating ISPs. An executive director is chosen by a majority of the committee. A three member advisory board is also created, with one member appointed by each side, and the third member selected by the two designees. The advisory board is intended to represent subject matter expertise in both copyright and ISP technology, as well as the interests of consumers. The CCI is tasked with developing an educational program regarding online infringement, legitimate means for obtaining digital works—either online or elsewhere—and technical means that enable consumers to secure their networks to avoid providing others with a means for engaging in online infringement. 76 2. Identifying Infringing Content The Memorandum requires content owner representatives to create various methods of identifying peer-to-peer online infringement. Interestingly, the Memorandum specifies that content owners should focus their major efforts on identifying instances of peer-to-peer activity where the files consist of unauthorized copyrighted works in complete or substantially complete form and avoid identification of de minimis infringement, probably so as to focus on the worst infringers and reduce the amount of work performed by ISPs.77 ISPs are tasked with developing technical measures that identify consumers tied to specific IP addresses and allow ISPs to keep a record of repeat alleged infringers. 78 They are further required to develop the technical means to implement a graduated response system.

The CCI is required to retain independent experts to evaluate each of these proposed technical measures. 79 The evaluations are confidential, and only general descriptions of each party’s technical implementations are available to the other parties of the Memorandum. In addition, a content owner may not issue notices of alleged infringement to ISPs until its particular methodology for identifying peer-

75

Id. at § 2(A)-(D).

Id. at § 3.

77 Id. at § 4(C).

78 Id. at § 4(A).

79 Id. at § 4(B).

76

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to-peer infringement has been reviewed by an independent expert and deemed sufficiently reliable at identifying illegal downloading.80 The Memorandum also requires ISPs to amend their Acceptable Use Policies and Terms of Service to reflect that copyright infringement by a consumer violates these policies. 81 The policies must further authorize ISPs to implement Mitigation Measures, as defined below, against repeat infringers. These changes are in addition to any pre-existing policies an ISP may have already implemented under § 512 of the DMCA. Indeed, the Memorandum includes an explicit disclaimer that the ISP’s § 512 repeat infringer policy is neither part of, nor enforceable under, the Memorandum. 82 3. Copyright Alert Program Under the Memorandum, each ISP is required to create a graduated response system, referred to as the Copyright Alert Program. 83 Copyright Alerts are a series of notices and/or remedial measures directed to an ISP customer in response to the receipt of an allegation of infringement by a content owner. The program is designed to follow a four-step escalation procedure over a series of up to six alerts given to consumers.

First is the Initial Educational Step. 84 Upon receipt of notice from a content provider, an ISP is required to notify their customer of the allegation of infringement and advise the customer that infringement is illegal and that the customer is responsible for all users of their account. The notice should also direct the customer to legitimate alternatives for obtaining the content. Further, ISPs are required to warn the customer that continued infringement might result in the application of Mitigation Measures. Customers are to be advised that prior to the implementation of a Mitigation Measure, they will have an opportunity to seek a due process review. The Memorandum permits, but does not require, an ISP to repeat the Initial Educational Step a second time.

80

Id. at § 4(C).

Id. at § 4(F).

82 See id. at 9 n.1.

83 Id. at § 4(G).

84 Id. at § 4(G)(i).

81

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Second is the Acknowledgement Step. 85 The notice will require the customer to acknowledge receipt of the Copyright Alert and agree to cease any infringing conduct, although it will be worded in such a way that the customer will not be required to admit any infringement. The notice will also inform the customer that the ISP will respond to any lawful process made by a content provider or government agency requesting the customer’s identity. The ISP will require the acknowledgement through the redirection of the customer’s Web browser to a “landing page,” or via a “pop-up” notice within the browser. 86 An ISP will deliver at least two Acknowledgement Step notices before escalating to the next level.

Mitigation Measures are the third level of escalation. 87 Mitigation Measures require that the customer acknowledge receipt of a notice that sets forth the specific measure the ISP will apply and, further, gives the customer the opportunity to seek review through a dispute resolution system. If the customer does not dispute the notice within ten business or fourteen calendar days, the ISP will implement various physical measures, which include temporarily steppingdown a customer’s Internet service to a slower speed, temporarily redirecting the customer’s Web browser to a landing page that will require the customer to contact the ISP or complete a meaningful education program on copyright infringement, or implementing other similar restrictions that the ISP deems equivalent. ISPs are not required to disable a customer’s access to voice over IP, email, multichannel video programming, or security/home-health monitoring services. An ISP is allowed to waive implementation of this first active step if they direct their customer to a “final warning” notice.

The final level of escalation is the Post Mitigation Measures step. 88 As with the Mitigation Measures step, the ISP will give notice of the alleged infringement, informing the customer of his or her opportunity to seek review. If the customer does not seek review, the ISP will implement one of the physical measures

85

Id. at § 4(G)(ii).

A “landing page,” as referred to here, is a web page that seizes control of a web browser and displays on a computer before an Internet user may browse to other websites. They are commonly used for access control in places with public Wi-Fi networks to log in before a person may browse the Internet. See, e.g., WORLDSPOT.NET, http://worldspot.net (last visited Apr. 25, 2012). A “pop-up” notice opens a second browser window which serves a similar functionality.

87 Mem. of Understanding, supra note 71, at § 4(G)(iii).

88 Id. at § 4(G)(iv).

86

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described above. In addition, an ISP may at any time take action under its DMCA § 512 repeat infringer policy. An ISP is not required to continue sending notices during the Post Mitigation Measures period, but must continue to track and report the receipt of infringement allegations for use in any lawsuit initiated by the content provider.

A customer is provided a seven-day grace period between the issuance of each Copyright Alert to allow the customer to abate any ongoing online infringement. 89 If multiple copyright notices are received simultaneously, an ISP is only required to issue a single Copyright Alert within that seven-day period.

Further, the content owners are allowed to allocate among themselves the number of ISP notices they are entitled to send in a one-month period. 90 ISPs may cease processing notices temporarily if the number of notices overwhelms the ISPs capability to reasonably respond. 91 If twelve months pass between the receipt of allegations of infringement against a specific customer, the ISP will reset the counter of alerts received by the customer back to the beginning. 92 4. Due Process Under the Copyright Alert System A customer is not entitled to challenge the content provider’s notice of infringement prior to the Mitigation Measures step.93 At that time, the current Copyright Alert and all prior alerts received against that customer leading up to the Mitigation Measures alert become subject to a due process challenge. 94 In order to initiate a challenge, the customer must pay a filing fee of thirty-five dollars, unless they qualify for a hardship waiver. 95 This fee is refundable in the case of a favorable decision. Reviews are to be performed by lawyers chosen by a panel of neutrals. The agreement is silent on the mechanics of the due process proceedings, leaving much of the system to be fleshed out in the future. For example, there is no indication that a customer has any right to appear in person for a hearing to challenge accusations of infringement, or to obtain any information from the content owners or ISPs regarding the alleged infringement by way of limited discovery.

89

Id. at § 4(G).

Id. at § 5(C).

91 Id. at § 5(D).

92 Id. at § 4(G)(v).

93 Id. at § 4(H).

94 Id. at 30, Attachment C, § 4.1.4.

95 Id. at 30, Attachment C, § 4.1.6.

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The substance of a customer’s challenge to the notice of infringement is limited to six grounds. 96 First, the customer may claim their account was misidentified as one engaged in infringement. 97 The content owner’s method of identifying infringing IP addresses is entitled to a rebuttable presumption of correctness. Second, a customer may claim their account was used in an unauthorized manner by someone who is not a member or invitee of their household. 98 Under this defense, a customer is given only one chance to secure an open wireless router against unauthorized use. Third, a customer may assert they had the permission of the content owner, which must be supported by documentary evidence. 99 Fourth, a customer may assert fair use, which is examined “under prevailing principles of copyright law” as determined by an independent expert. 100 Fifth, a customer can assert that the file at issue is not the alleged copyrighted work.101 However, there is a rebuttable presumption that the content owner has correctly identified the work. Finally, a customer may assert that the work in question was first published prior to 1923. 102 II ANTITRUST Before analyzing the Copyright Alert System as a potential antitrust violation, brief introductions to antitrust law and its relationship to copyright are in order. Antitrust law is a complex subject, relating the ever-evolving field of economic theory to the practicalities of the law’s ability to correct market failures.

An overview of antitrust law is followed by a discussion of its relationship to copyright law. Finally, because the enforcement provisions of the Copyright Alert System most closely resemble a group boycott, a variety of self-help enforcement, the development of the antitrust doctrine regarding boycotts is applied to the case at hand.

96

Id. at 26, Attachment C, § 1(i)-(vi).

Id. at 27, Attachment C, § 2.1.

98 Id. at 27, Attachment C, § 2.2.

99 Id. at 27, Attachment C, § 2.3.

100 Id. at 28, Attachment C, § 2.4.

101 Id. at 28, Attachment C, § 2.5.

102 Id. at 28, Attachment C, § 2.6. This provision is curious in that there are many items in the public domain that were published after 1923 due to either the failure to observe the proper formalities or because the original term was never renewed.

97

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A. Brief Overview of Antitrust Law Antitrust law—or competition law—is generally concerned with promoting and maintaining competition through the regulation of exclusionary business conduct. Competition is said to enhance the efficiency of the marketplace and benefit society as a whole.103 Without competition, cartels of firms, or single firms known as monopolists, are able to extract rents from consumers by restricting the output of goods or services and raising prices to supracompetitive levels. 104 Monopolistic behavior results in economic waste to society, or “deadweight loss,” as wealth is transferred from consumers to monopolists. 105 In the United States, the Sherman Act 106 and the Clayton Act107 are the two main statutes that implement antitrust law. Section 1 of the Sherman Act provides that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”108 The Supreme Court has held since 1911 that the scope of the law only extends to unreasonable restraints of trade, as all contracts can be considered restraints of trade to some degree. 109 The Sherman Act owes its existence to the rise of large trusts such as the Standard Oil Company in the late nineteenth century. 110 These entities arose even though the common law at that time forbade such combinations in restraint of trade. 111 While a person injured by such a combination had standing to sue for relief under the common law, there was no effective enforcement mechanism through which the government could intervene.112 Congress passed the Act in 1890, with strong public support. The Sherman Act, among other provisions, enabled the Attorney General to sue to enjoin anticompetitive behavior.113

103

Keith N. Hylton, Antitrust Law: Economic Theory and Common Law Evolution 12

(2003).

104 Id. at 12–13.

105 Id. 106 15 U.S.C. §§ 1-7.

107 15 U.S.C. §§ 12-27.

108 15 U.S.C. § 1.

109 Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 87 (1911).

110 William Letwin, Law and Economic Policy in America: The Evolution of the Sherman Antitrust Act 54–55 (1965).

111 Id. at 80.

112 Id. at 81.

113 Id. at 94.

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Legislators declared that the purpose of the Act was to statutorily enact what had already been a matter of common law.114 The subsequent judicial interpretation of the Act has also followed a common law-like trajectory, leading some to consider the Sherman Act to be the enabling legislation of the federal common law of competition. 115 Over the years, the objectives of antitrust enforcement have evolved. 116 Originally, the goals of the antitrust laws were viewed as most effectively furthered through the shielding of small businesses from being underpriced and put out of business, or even bought out, by larger competitors.117 More recently, the law has been interpreted to protect the welfare of individual consumers, aiming to keep prices as low—and the supply of goods and consumer choice as high—as possible. 118 Thus, the law has shifted its focus from aiding competitors to focusing directly on the process of competition. 119 The antitrust laws recognize both per se, or rule-based violations of the statutes, as well as an intermediate standard called the Rule of Reason. 120 Per se antitrust offenses are those practices that the Supreme Court has deemed are

114

Id. at 96. “It does not announce a new principle of law, but applies old and wellrecognized principles of the common law to the complicated jurisdiction of our State and Federal Government.” Id. (quoting 21 Cong. Rec. 2456). But see RICHARD A. POSNER, ANTITRUST LAW 34–35 (2d ed. 2001) (stating the draftsmen of the Sherman Act “borrowed common-law terminology, but without meaning to codify the common law of competition and monopoly.”).

115 See HERBERT HOVENKAMP, FEDERAL ANTITRUST POLICY: THE LAW OF COMPETITION AND ITS PRACTICE 52 (2d ed. 1999); Thomas C. Arthur, Farewell to the Sea of Doubt: Jettisoning the Constitutional Sherman Act, 74 CALIF. L. REV. 266, 267–68 n.9 (1986) (setting forth similar statements from the various different schools of antitrust theorists). For an interesting critique of the “common law” nature of antitrust, see generally id.

116 See HYLTON, supra note 103, at 40; David McGowan, Innovation, Uncertainty, and Stability in Antitrust Law, 16 BERKELEY TECH. L.J. 729, 741–65 (2001).

117 See, e.g., 95 Cong. Rec. 11484, reprinted in 4 KINTNER, FEDERAL ANTITRUST, LAWS AND RELATED STATUTES 3476 (1980); United States v. Von’s Grocery Co., 384 U.S. 270 (1966); HYLTON, supra note 103, at 40.

118 HYLTON, supra note 103, at 40–42.

119 See Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962).

120 HYLTON, supra note 103, at 104–31; POSNER, supra note 114, at 39. A rule-based violation has lower administrative costs as one can observe the facts and determine whether they violate the rule. A standard-based violation, also known as “totality of the circumstances,” requires a much more in depth analysis of all of the facts and a balancing of them before a court may pass judgment, significantly raising the administrative costs.

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without any social value, such as direct price fixing between horizontal competitors.121 The administrative advantage of a strict rule in these circumstances provides both government and private industry bright line guidance on what are not allowable practices. 122 For those types of anti-competitive behavior that may also have significant pro-competitive benefits, courts examine the conduct under a standard known as the Rule of Reason. 123 In a Rule of Reason analysis, courts first look to see if the group accused of improper conduct has market power, or the power to lower output or raise prices without significant market response.124 If market power exists, courts then review the anticompetitive effects of the challenged practice and balance them against any pro-competitive justifications offered for the conduct. 125 B. The Relationship Between Antitrust Law and Copyright At first glance, antitrust law and copyright appear to conflict with each other. In fact, they literally do. Antitrust law seeks to limit the rent seeking that monopoly power allows.126 Copyright law, on the other hand, seeks to reward authors with a government-granted monopoly so that the author may obtain rents in excess of what their product would otherwise provide. 127

121

HYLTON, supra note 103, at 116; Posner, supra note 114, at 39. Horizontal refers to competitors at the same level of the distribution chain, i.e. retailers, wholesalers, manufacturers, etc. Price-fixing is an agreement to sell items at a certain price, normally one that is greater than a competitive market would otherwise provide.

122 HYLTON, supra note 103, at 116, 129–31; POSNER, supra note 114, at 39.

123 HYLTON, supra note 103, at 104–05.

124 California Dental Ass'n v. FTC., 526 U.S. 756, 782 (1999) (Breyer, J., dissenting) (noting that there are “four classical, subsidiary antitrust questions: (1) What is the specific restraint at issue? (2) What are its likely anticompetitive effects? (3) Are there offsetting procompetitive justifications? (4) Do the parties have sufficient market power to make a difference?”). Market power is generally determined using the “hypothetical monopolist” test, which seeks to define a market where the companies at issue could impose a small but significant and non-transitory increase in price for at least one year. See U.S. Dep’t of Justice, Fed. Trade Comm’n, Horizontal Merger Guidelines 9, Aug. 19, 2010, available at http://www.justice.gov/atr/public/guidelines/ hmg-2010.pdf.

125 California Dental Ass’n, 526 U.S. at 782 (Breyer, J., dissenting).

126 See Mem. of Understanding, supra note 71, at § 4(C) and accompanying text.

127 Aaron Xavier Fellmeth, Copyright Misuse and the Limits of the Intellectual Property Monopoly, 6 J. Intell. Prop. L. 1, 3 (1998).

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However, the underlying purpose of both laws—correcting market failures—gives the two more in common than a superficial view of either would indicate. 128 In the case of copyright, the existence of a market failure comes from the very nature of copyrighted expression. While the initial costs of creating a single unit of copyrighted material may be quite high, the marginal cost of creating each additional unit after the first is negligible. 129 That is, each additional unit of copyrighted material created after the first costs only the minimal time and material needed to create a duplicate—which in the case of digital content is de minimis. Faced with this fact, the government grants to the author the power to exclude others from reproducing a copyrighted good to prevent other producers or customers from free-riding off the copyright owner’s initial capital investment. A copyright thus allows the author to earn a fair (or even excessive) return on their investment.130 As noted by antitrust and intellectual property scholars, “[l]imited exclusive rights have long been seen as desirable and useful rewards for the inventors and creators[,]” and serve as a way to increase their incentives to continue to innovate.131 Antitrust law also concerns itself with innovation. 132 Some theorists have surmised that small companies may be more likely to innovate than larger companies with higher market share because the latter must also devote resources to preserve their existing market power.133 According to the mainstream view though, the pressure to innovate is a direct result of competition, as each competitor seeks to create newer, more desirable products, or lower their own marginal costs of production of goods in an attempt to increase profits and better satisfy consumer needs.134 Seen in this light, antitrust law, by maintaining the competitive environment, partially serves the same purpose as copyright law – to provide an environment in which innovation can flourish.

128

Id. Olivier Bomsel & Heritiana Ranaivoson, Decreasing Copyright Enforcement Costs: The Scope of a Graduated Response, 6 REV. ECON. RES. ON COPYRIGHT ISSUES 13, 15 (2009).

130 Id. 131 Ilkka Rahnasto, Intellectual Property Rights, External Effects, and Anti-trust Law: Leveraging IPRs in the Communications Industry 2 (2003).

132 McGowen, supra note 116, at 765.

133 Id. at 768.

134 Id. at 769.

129

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C. Private Enforcement and Group Boycotts One aspect of antitrust law that is especially relevant to the Copyright Alert System is its concern with self-regulation, self-help, and methods of ‘private enforcement’ by industry participants through the use of mandatory boycotts. A mandatory boycott is an agreement by competitors to refuse to deal with a particular party, usually intended to punish that party for violating rules set forth by the private entities. Over the years, the Supreme Court has looked askance at private industry efforts to create private enforcement mechanisms, especially those that mirror powers traditionally within the domain of the state. The enforcement of intellectual property rights is one such power.

1. Early Boycott Cases – Per Se Liability The Supreme Court first analyzed a group boycott under the Sherman Act in 1914 in E. States Retail Lumber Dealers' Ass'n v. United States. 135 A group of lumber retailers had banded together for the purpose of boycotting wholesalers who sold directly to consumers. 136 The dealers argued that such behavior fell within the exclusive right of the dealers to trade with their consumers in the retail market.137 The Court noted that, although every retailer individually had the right to stop trading with the wholesalers, combining in a group to do so constituted a conspiracy in restraint of trade.138 Noting again that Congress had the sole right to regulate interstate commerce and that it had exercised this right by banning agreements of this nature, the Court held the boycott illegal under the Sherman Act. 139 Later, in the 1930s, manufacturers of textiles and garments formed the Fashion Originators’ Guild of America (FOGA) in order to combat ‘style piracy’— the practice of copying garment patterns and designs created by other manufacturers—claiming that style piracy constituted a form of free-riding on the manufacturers’ design innovations.140 FOGA operated to protect fashion firms by boycotting any seller who sold pirated garments. 141 FOGA even maintained a

135

234 U.S. 600 (1914).

Id. at 606 (1914).

137 Id. at 611.

138 Id. 139 Id. at 614.

140 Fashion Originators’ Guild of America v. F.T.C., 312 U.S. 457, 461 (1941).

141 Id. at 461–62.

136

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system of secret shoppers to enforce their policy. If a retailer was found to have violated the policy, there was an “elaborate system of trial and appellate tribunals” to determine whether a retailer deserved punishment. 142 Upon discovering this system, the Federal Trade Commission brought an enforcement action under the antitrust laws and found FOGA to have violated Section 3 of the Clayton Act. 143 On appeal, the Supreme Court noted that “the combination is in reality an extra-governmental agency, which prescribes rules for the regulation and restraint of interstate commerce, and provides extra-judicial tribunals for determination and punishment of violations, and thus ‘trenches upon the power of the national legislature and violates the [antitrust laws.]’” 144 Objecting to the seizure of government-like authority by private industry, the Court found this agreement constituted a per se violation of the antitrust laws.145 Four years later, the Supreme Court reaffirmed the Fashion Originators’ Guild of America ruling in Associated Press v. United States. 146 The individual newspaper members of the Associated Press were required by the by-laws of their agreement to refuse to sell news to non-members and allowed current members to block potential new members from joining the group. 147 The Justice Department sued, arguing that the by-laws represented an illegal restraint of trade.148 Discussing the by-law provisions in elaborate detail, the Court noted that they “tied the hands of all of its numerous publishers, to the extent that they could not and did not sell any part of their news so that it could reach any of their non-member competitors.”149 Citing Fashion Originators’ Guild, the Court also held the AP by-laws, like the lumber dealers’ boycott before it, “trenches upon the power of the national legislature,” finding a per se violation of the Sherman Act. 150

142

Id. at 462.

Id. at 463–64 144 Id. at 465.

145 Id. at 468.

146 Associated Press v. United States, 326 U.S. 1 (1945).

147 Id. at 4.

148 Id. 149 Id. at 13.

150 Id. at 19.

143

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2. Per Se Liability to Rule of Reason In keeping with general trends in its antitrust jurisprudence, the Supreme Court has softened the per se approach to group boycotts since the middle of the last century. For example, in 1978, a professional association’s canon of ethics prohibited its members from participating in competitive bidding, which effectively constituted a type of group boycott. 151 In response to a suit brought by the federal government, the association claimed that it was justified, as firms that bid over price would cut corners on cost, producing shoddy engineering and endangering public safety. 152 Applying the Rule of Reason due to the unique justification offered, the Supreme Court nevertheless held that an economic restraint of trade cannot be justified by non-economic justifications such as health, safety, or welfare.153 Less than a decade later, the Supreme Court once again set its sights on group boycotts. Northwest Wholesale Stationers was a purchasing cooperative comprised of retail office supply stores.154 As in Associated Press, the cooperative had by-laws that restricted its members from certain forms of competition.155 Pacific Stationary and Printing Co. was accused of violating the by-laws and summarily expelled from membership.156 Pacific brought a private cause of action against Northwest and won in the lower courts on the basis that it had been denied procedural safeguards in its termination and thus was entitled to a per se finding of anticompetitive conduct.157 The Supreme Court rejected the per se analysis, subjecting the case instead to the Rule of Reason. 158 Noting that self-regulation was sometimes an essential policy for businesses, the court held that procedural safeguards were only important when Congress had “sanctioned and protected selfregulative activity.” 159 Consequently, the Court determined that Pacific had

151

Nat'l Soc’y of Prof'l Eng’rs v. United States, 435 U.S. 679, 679 (1978).

Id. 153 Id. at 695–96.

154 Nw. Wholesale Stationers, Inc. v. Pac. Stationary and Printing Co., 472 U.S. 284, 286 (1985).

155 Id. at 287.

156 Id. 157 Id. at 288–89.

158 Id. at 289.

159 Id. at 292 (quoting Silver v. New York Stock Exch., 373 U.S. 341, 364 (1963)).

152

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neither alleged nor proved that Northwest had market power, a prerequisite to a finding of antitrust liability under the Rule of Reason.160 The last major boycott case to reach the Supreme Court was decided just a year after Pacific Stationary. Indiana dentists had teamed together using their professional organization and refused to submit dental x-rays from patients to insurers on the basis that oversight by the insurers threatened the dentists’ professional independence. 161 The Federal Trade Commission brought an enforcement action alleging this practice to be an unfair method of competition.162 In its opinion, the Supreme Court noted that the refusal to provide the x-rays was similar to a group boycott, historically a per se violation of the antitrust laws.163 The Court declined, however, to find a per se violation for this self-regulative conduct and analyzed it under the Rule of Reason. 164 Responding to the argument by the dentists that supplying x-rays to insurers violated the law of the State of Indiana, the Court held “[t]hat a particular practice may be unlawful is not, in itself, a sufficient justification for collusion among competitors to prevent it. Anticompetitive collusion among private actors, even when its goal is consistent with state policy, acquires antitrust immunity only when it is actively supervised by the State.” 165 While the Supreme Court has generally softened its approach toward selfhelp in the form of a concerted refusal to deal or group boycott from a per se violation to conduct examined under the Rule of Reason, courts and enforcement agencies continue to carefully scrutinize such arrangements. 166 Although

160

Id. at 298.

FTC v. Indiana Fed’n of Dentists, 476 U.S. 447, 449 (1986).

162 Id. at 451.

163 Id. at 458.

164 Id. at 459.

165 Id. at 465 (alteration in original) (citation omitted).

166 HYLTON, supra note 103, at 166–85. See also Fed. Trade Comm’n, FTC Staff; No Present Intention of Challenging Council of Better Business Bureaus' Accountability Program for Online Behavioral Advertising as Anticompetitive (Aug. 15, 2011), available at http://www.ftc.gov/opa/2011/08/cbbb.shtm (demonstrating the FTC’s continuing interest in the anticompetitive effects of industry self-regulation). But see C. Paul Rogers III, Consumer Welfare and Group Boycott Law, 62 SMU L. Rev. 665, 666 (2009) (arguing that a “good deal of boycott precedent is effectively overruled”). Nonetheless, Rogers makes the point that consumer welfare remains the main concern of the courts in determining antitrust liability, which is precisely what is at issue with the Copyright Alert System. Id. 161

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commentators have noted the benefits of private regulation,167 the case law makes clear that both fair procedures and government supervision are essential to a finding of compliance with the Sherman Act for entities that contemplate disciplining a market participant via a coordinated boycott. 168 III APPLICATION OF ANTITRUST LAW TO THE COPYRIGHT ALERT SYSTEM As discussed infra Part II, a core concern of antitrust law is with agreements between competitors that seek to restrict individuals who may receive service from the cartel. While such coordinated behavior was traditionally viewed as a per se violation of the law, more recently it has been analyzed under the Rule of Reason. 169 In this section, I apply the Rule of Reason to the Copyright Alert System.

In Part III.A, the restraints imposed by the Memorandum of Understanding are analyzed with attention to both the relationship of the parties to each other and the substance of the partiesâ&#x20AC;&#x2122; agreement. In Part III.B, the market power of the parties is explored, including both the product and geographic markets. Next, in Part III.C, the potentially anticompetitive effects of the agreement on consumer welfare and governance of the parties is examined.

Finally, in Part III.D, the likely pro-competitive justifications, including the economic costs of copyright infringement, network management, the potential benefit to consumers, and the possible sanction of the system by the DMCA, is discussed and critiqued.

A. What Is the Restraint at Issue?

The first step in the Rule of Reason analysis performed here is to analyze the restraint of trade that the parties have agreed to implement. When analyzing a restraint, there are two important subsidiary questions. First, what is the nature of the relationship between the parties to the agreement? Second, what is the substantive nature of the restraint of trade itself?

167

Robert Pitofsky, Self-Regulation and Antitrust (Feb. 18, 1998), available at http://www.ftc.gov/speeches/pitofsky/self4.shtm.

168 Id. See also Nw. Wholesale Stationers, Inc. v. Pac. Stationary and Printing Co., 472 U.S. 284, 292 (1985); FTC v. Indiana Fedâ&#x20AC;&#x2122;n of Dentists, 476 U.S. 447, 449 (1986).

169 See supra Part II.C.2.

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1. Horizontal, Vertical, or Hybrid Agreement?

Because the Memorandum of Understanding brings together both content owners and ISPs in an agreement, it can be characterized as both a vertical agreement between the content owners and each ISP, as well as a horizontal agreement amongst the content owners and amongst the ISPs, respectively. The majority of the agreement contains duties owed by individual ISPs to content owners as a group—a vertical arrangement. However, the agreement also contains significant horizontal aspects. For example, the Memorandum specifically contains provisions that limit the ability of the content owners to submit Copyright Alerts to ISPs without express collusion among each other.170 These provisions constitute a horizontal arrangement between competitors at the same level of the distribution chain. ISPs, on the other hand, seem to have few responsibilities to coordinate with other ISPs. Only the general requirements of what the Alert System mandates of the ISPs are dictated; the specific technical mechanism for doing so is left to the individual companies. On the other hand, ISPs constitute fifty percent of the governing body of the coalition, and therefore have a great deal of control over the process itself and the conduct of other ISPs. Thus, it appears that the arrangement is most similar to a vertical agreement between content owners and each individual ISP, although the Memorandum retains some significant horizontal aspects between each of the ISPs. This distinction is important because vertical agreements are generally subject to less stringent antitrust oversight than horizontal ones. 171 Agreements between competitors at the same level of distribution to restrain trade have received the most stringent antitrust enforcement scrutiny over the years.172 Horizontal price fixing, for example, remains one of the few per se varieties of antitrust enforcement which has not been relaxed by the Supreme Court since the middle of the last century. 173 Purely vertical agreements, such as those between a manufacturer and a reseller, on the other hand, have generally been allowed greater

170

Mem. of Understanding, supra note 71, § 5(C).

LOUIS ALTMAN & MALLA POLLACK, CALLMANN ON UNFAIR COMPETITION, TRADEMARKS AND MONOPOLIES § 4:20 (4th ed. 2012) (“Vertical agreements are almost invariably agreements between non-competitors. Accordingly, they are not presumptively illegal; they are not similar to those cartel-like transactions that are never economically justifiable.”).

172 Id. 173 Id. § 4:34.

171

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leeway by enforcers, and courts generally subject such agreements to a less exacting Rule of Reason scrutiny. 174 Each party owes duties to the others. Those between content owners are marked by express restrictions between various content owners on how many notices each is entitled to send, such that they must consult with each other to set ‘quotas.’ 175 Certain content owner signatories to the agreement are not permitted to send any copyright notices.176 Both the content owners and ISPs jointly govern the program’s day-to-day activities. ISPs are required to have their customers adopt a uniform set of conditions under the ISPs’ Acceptable Use Policies and Terms of Service. Mandatory information sharing provisions also enable parties to police each other for compliance with the agreement. 177 Such provisions are essential given the incentives normally faced by cartel members to defect from an agreement to gain competitive advantage.

2. Concerted Refusal to Deal and/or Group Boycott The substantive restraint of trade agreed to by the parties most closely resembles a concerted refusal to deal or group boycott. However, it differs from many group boycotts previously analyzed by courts in one significant way.

Whereas group boycotts in the past tended to focus on competitors teaming up to boycott other industry participants, the Copyright Alert System focuses directly on consumers. It prescribes a series of both innocuous as well as punitive actions that ISPs must take against their customers. 178 Starting with the Initial Education Step, ISPs are required to send a warning to their customers.

Next, the Acknowledgement Step requires that ISPs divert their customers from Internet browsing, either through a browser pop-up or by redirecting their customers to a landing page without the explicit permission of the customer other than their general agreement to the ISP’s Terms of Service.

At the Mitigation Measures step, a customer is subjected to not only a browser redirect, but also a variety of additional physical measures, including possibly a temporary step-down in service— effectively a restriction on output.179

174

Id. Mem. of Understanding, supra note 71, § 5(C).

176 Mem. of Understanding, supra note 71, § 6(A).

177 Mem. of Understanding, supra note 71, §§ 4(B), 4(I).

178 See supra Part I.C.3.

179 See supra Part I.C.3.

175

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Any customer objecting to such treatment by the ISP must pay $35 to initiate a challenge against the infringement action under the “due process” provisions of the Copyright Alert System. 180 The due process proceedings are officiated by a nongovernmental body—an Administering Organization that is selected by the CCI Executive Committee. During the due process proceedings—before an extrajudicial tribunal—the customer must prove they are not guilty of infringement because the content owner’s methods of identifying infringing content and the related IP addresses are entitled to a presumption of correctness.

The Copyright Alert System is substantively a self-help enforcement scheme for the benefit of content owners, using the power of individual ISPs to affect their customer’s connections—a “refusal to deal” equally with alleged infringers. But the arrangement differs from the traditional concerted refusal to deal in that it places no restriction on a consumer from simply changing to another ISP once they reach the Mitigation Measures step. There appears to be no requirement for any new ISP to interfere with their service or any way to ‘carry-over’ Copyright Alerts from one ISP to another, as is the case between parties in a traditional group boycott, where all parties are required to participate in the boycott. Thus, a consumer is not completely excluded from the market, but rather, may substitute with another ISP to avoid having punitive measures levied against them. This diminishes the effectiveness of the sanctions implemented by ISPs, provided that it is easy for a customer to switch to another provider—a factor which is in part dependent on market power.

B. Do the Parties Possess Market Power?

The next step in applying the Rule of Reason analysis to the Copyright Alert System is to identify whether the parties to the agreement have market power.

Market power is generally determined by examining whether a consumer has the ability to easily obtain substitutes for the good or service in question. The question is subdivided into a determination of the relevant product market and geographic market.

180

See supra Part I.C.4.

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1. Product Market To begin the analysis of the relevant product market, we must look to the technologies that can provide home broadband Internet access.181 Generally, a consumer may receive broadband service via cable modem service, fiber-optic service, digital subscriber line (DSL), satellite Internet service, and via cell phone tethering in a 3G service area. Of these, the two wireless alternatives, satellite Internet service and cell phone tethering, can be eliminated as comparable substitutes to the other three. For the former, there are many more restrictions on bandwidth usage than most other broadband Internet services because the capacity of satellites can be quite limited compared to the number of users attempting to access data at any given time. 182 Moreover, the signal latency for satellite Internet traffic can last as much as 0.5 to 0.9 seconds. 183 As such, a user may not consistently get a much faster speed than a regular dial-up connection, or use a satellite connection for sustained high-bandwidth applications such as gaming or video streaming. Likewise, cell phone tethering is also bandwidth constricted, with most cellular telephone companies maintaining both burst data speed caps as well as relatively low monthly bandwidth allotments. 184 DSL can also be eliminated as a substitute to cable modem and fiber optic service due to the limitations of the technology. While DSL is a wireline technology capable of reaching comparable speeds to cable or fiber optic, 185 it is physically limited by the distance of the customer from the central telephone office.186 With a maximum range of 3.41 miles for the lowest speed DSL connection, and much shorter ranges for higher DSL speeds, there are many potential broadband customers, especially in suburban and rural areas, who are unable to use DSL as a substitute for Internet service. 187 For this group of

181

A person may also receive home Internet service via dial-up, which is not considered a broadband technology.

182 See Satellite Internet, ISP REVIEWS, http://www.isp-reviews.org/satellite.htm (last visited Apr. 25, 2012).

183 Id. 184 See Lance Whitney, Mobile Bandwidth Caps Challenging Web TV, CNET (July 21, 2010), http://news.cnet.com/8301-1035_3-20011171-94.html.

185 See Fast Guide to DSL, WHATIS.COM, http://whatis.techtarget.com/definition/0,,sid9_ gci213915,00.html (last visited Apr. 25, 2012).

186 Id. 187 Moreover, the presence of bridge taps or load coils on the line between the telephone central office and the customer will greatly reduce the distance that can be served by DSL. See

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customers, representing a significant portion of the national market for Internet service, cable or fiber optic broadband Internet remain the only options. As such, the relevant product market for broadband Internet can reasonably be narrowed to cable or fiber optic Internet service.

2. Geographic Market As to the relevant geographic market, the ISPs that are party to the agreement represent over 60% of the national ISP market, 188 which generally is considered the lower limit of market share that gives rise to a presumption of market power.189 However, Internet service is provided on a local basis, so national market share may not be representative of whether an ISP has market power in a specific location.

In large swaths of the country—containing 75% of the national population— consumers are expected soon to only have a single choice of a high-speed ISP, their local cable television company. 190 If the broadband ISP provider in these markets is a participating ISP, consumers will not have any reasonable alternatives for high-speed Internet service.

In effect, these markets are already monopolized—consumers have no ability to switch to alternate providers.

In other larger markets, such as Bethesda, Maryland—a suburb of Washington, D.C. — consumer broadband Internet via cable modem or fiber optic

Load Coils and Bridge Taps, INFO CELLAR, http://www.infocellar.com/networks/Telecom101/ load-coils.htm (last visited Apr. 25, 2012).

188 See ISP Usage and Market Share, supra note 72. In fact, this figure may be higher if you limit the market to broadband Internet service provided by cable television companies. Over 71% of all national cable television providers are parties to the Memorandum of Understanding.

See Top 25 Multichannel Video Programming Distributors as of June 2011, NTCA.COM, http://www.ncta.com/Stats/TopMSOs.aspx (last visited Apr. 25, 2012).

189 See, e.g., United States v. Dentsply Int'l, Inc., 399 F.3d 181, 187 (3d Cir. 2005) (holding that a share significantly larger than 55% is generally required to demonstrate market power).

Market power is differentiated from monopoly power, which generally requires a market share above 70% to make a prima facie showing. See Exxon Corp. v. Berwick Bay Real Estates Partners, 748 F.2d 937, 940 (5th Cir. 1984) (per curiam) (stating a minimum market share of 70% is needed to demonstrate monopoly power); Colo. Interstate Gas Co. v. Natural Gas Pipeline Co. of Am., 885 F.2d 683, 694 n.18 (10th Cir. 1989) (same).

190 FCC, Connecting America: National Broadband Plan, at 42 (2010), available at http://download.broadband.gov/plan/national-broadband-plan.pdf. See also Susan P. Crawford, The Communications Crisis in America, 5 HAR. L. & POL’Y REV. 245, 249–56 (2011) (describing the increasingly monopolized national market for broadband Internet).

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service is readily available from three major companies: Verizon, Comcast, and RCN. 191 Verizon and Comcast are both parties to the Memorandum of Understanding, but RCN is not. Therefore, customers in Bethesda are able to more readily switch to a company that is not part of the agreement if they do not want to do business with a company that may participate in the Copyright Alert System.

Nevertheless, while substitution in Bethesda may be more readily available, often times, customers receive multiple services from their ISP. All three broadband ISPs in Bethesda offer â&#x20AC;&#x153;triple-playâ&#x20AC;? deals, which combine telephone, cable television and Internet into one package. 192 Thus, a customer may determine that switching costs are higher in changing to a new service provider. These switching costs likely create an artificial barrier toward easy substitution, even in a market that offers several choices. This factor weighs toward finding market power even in markets where not all consumer broadband Internet providers are parties to the Memorandum of Understanding.

C. What Are the Anticompetitive Aspects of the Copyright Alert System?

1. Consumer Welfare As discussed infra Part II, antitrust has evolved from concerning itself with the survival of small competitors to directly focusing on consumer welfare. The most fundamental anticompetitive issue with the Copyright Alert System revolves around those terms directed solely at interfering with the provision of service to an ISP customer who is only accused, not proven, to be a copyright infringer.

Significantly, a consumer may be accused of copyright infringement and yet unable to challenge such an assertion until they reach the Mitigation Measures step of the process. And once they do, the consumer faces a difficult set of procedural hurdles to challenge the accusations under the due process provisions of the system. First, he or she must pay a $35 fee to challenge the accusations of infringement. Second, the proceedings are governed by an extra-judicial tribunal,

191

About RCN In D.C. Metro Area, RCN, http://www.rcn.com/about-rcn/where-weservice/dc-metro (last visited Apr. 25, 2012).

192 See Bundles and Special Offers, VERIZON, http://www22.verizon.com/home/bundles/fios/ (last visited Apr. 25, 2012); D.C. Metro, Cable TV, Internet and Phone Bundles, RCN, http://www.rcn.com/dc-metro/bundles (last visited Apr. 25, 2012); XFINITY Triple Play, COMCAST, http://www.comcast.com/Corporate/Learn/Bundles/bundles.html (last visited Apr. 25, 2012).

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under rules which restrict the arguments that can be made by a consumer and require that they prove that they did not infringe the content owner’s goods. There is nothing in the agreement that gives the consumer any right to be provided information by which they can evaluate and challenge the method used to identify the copyrighted good or the alleged infringing conduct. And in order to prevail, the consumer is forced to challenge and rebut all prior allegations of infringement.

There does not appear to be any time limitation on these prior accusations and it is possible that the lapse of time could negatively impact a consumer’s ability to mount an effective challenge. Finally, the plan provides for no second level or judicial review.

In effect, the burden of proof has been shifted from the copyright holder to prove infringement onto the consumer to disprove infringement. This shifting of the burden of proof is an important factor from a consumer welfare standpoint because it reaches far beyond what content owners are entitled to under the Copyright Act. Section 501 of the Act 193 declares the violation of any of the exclusive rights under that Act to be an infringement of copyright. As a remedy, a content owner may initiate an action for infringement in a Federal Court. Notably, as a plaintiff in an infringement suit, the content owners are required to establish that they are the holder of a valid copyright and prove that the defendant infringed one of the enumerated rights, both by a preponderance of the evidence.

Defendants are entitled to present any cognizable defense, of which fair use is but one. Both sides are entitled to pre-trial discovery. The prevailing party may be entitled to attorney’s fees under the statute’s fee shifting provision. 194 Under this elaborate system, which places burdens on both the copyright owner and the defendant, the number of Type I errors (false positives) is kept to a minimum.

The due process provisions of the Copyright Alert System disturbs this carefully calibrated system created by Congress. In resorting to this self-help system, content owners have vastly increased their power to identify and punish consumers who are suspected of copyright infringement without any effective means for consumers to respond and deny allegations of infringement. The system for identifying alleged infringers is masked in secrecy and consumers have only a limited ability to effectively challenge an allegation because the content owner’s identification of the consumer and the work is entitled to a presumption of

193

17 U.S.C. § 501 (2006).

The possibility of fee-shifting for attorney’s fees represents an important check on content owners from bringing unmeritorious claims.

194

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correctness. Consumers are forced to prove a negative, without having access to essential evidence which would allow them to do so. Because the due process protections provided are minimal, the chances of Type I error are likely to be much greater in the Copyright Alert System. As a result, the likelihood of an innocent user being punished is much higher, even if the system may work to catch a plurality of actual copyright infringers.195 Given the essential place that the Internet has taken in the everyday life of the average American consumer, the possibility of an erroneous deprivation of Internet services—even momentarily—is a subject that should be of concern to antitrust enforcers and the courts.

2. Governance Provisions In addition to the consumer directed provisions, the agreement also restricts the ability of ISPs located in competitive markets to engage in competition without the interference of an oversight body consisting of other industry participants.

Content owners are similarly restricted from issuing notices, either by means of a quota or a complete ban, 196 without the cooperation of other participants in their industry. These are important provisions because they allow each of the parties— content owners and ISPs alike—to police the others to maintain discipline within their cartel.

From an economic standpoint, such provisions serve to reinforce the anticompetitive nature of the deal. This is a classic free-rider problem: there are significant incentives for a cartel member to cheat on the arrangement for competitive advantage. In the case of this agreement, ISPs in competitive markets who implement less ‘successful’ Copyright Alert Systems than their competitors could serve to draw additional customers away from other cartel members who implement stricter systems. Similarly, the restrictions on limiting alerts by the various content owners serves to ensure that one content owner is not benefited more than another by the proposed plan. By allowing content owners and other

195

Additionally, it is likely that truly devoted infringers will simply adopt technology that will mask the ability of content owners to identify them. See, e.g., Ryan Paul, Swedish Political Party Offers Commercial Darknet Access, ARS TECHNICA (Aug. 15, 2006), http://arstechnica.com/old/content/2006/08/7502.ars; BT GUARD ANONYMOUS BITTORRENT SERVICES, http://btguard.com (last visited Apr. 25, 2012) (enabling users to pay $6.95/month to anonymize their IP addresses while participating in peer-to-peer Bittorrent file exchange, most likely exchanges constituting online infringement).

196 Mem. of Understanding, supra note 71, §§ 5(C), 6(A).

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ISPs to monitor compliance with the agreement, the parties can catch cheaters and punish them for competing.

Furthermore, although the governance and information sharing provisions primarily function to keep discipline among the participants, such arrangements may also facilitate future collusive efforts. Information sharing between competitors is another means of coordinating conduct that has often been used in the past to facilitate anticompetitive designs.197 Once the lines of communication are open between the parties, the opportunity to use them for other anticompetitive purposes may rise dramatically.

D. What Are the Pro-Competitive Justifications Offered?

While the Copyright Alert System has not yet been challenged in court, the Memorandum of Understanding contains many of the pro-competitive justifications likely to be offered by its parties, including: the substantial externalities that copyright infringement imposes on the economy each year, the potential for online infringement to contribute to network congestion, and consumer preference for deterrent educational measures over coercive infringement litigation. Finally, an argument can be made that Section 512(i) of the Copyright Act implicitly authorizes ISPs to engage in concerted behavior in their efforts to stem online infringement. 198

197

See, e.g., United States v. U.S. Gypsum Co., 438 U.S. 422 (1978).; United States v.

Container Corp. of America, 393 U.S. 333 (1969); American Column & Lumber v. United States, 257 U.S. 377 (1921).

198 In addition to these publicly known justifications, there are a number of other reasons the parties may have decided to come to this agreement. First, the memorandum itself contemplates the continuing disagreement between the content industries and ISPs regarding the latterâ&#x20AC;&#x2122;s responsibilities to terminate users under the DMCAâ&#x20AC;&#x2122;s repeat infringer provisions. See Mem. of Understanding, supra note 71 at 9 fn.1. ISPs may have desired to avoid potential litigation against the content industries based on this dispute. Further, Annemarie Bridy has speculated that a combination of political pressure and the convergence of economic interests between the content industries and ISPs related to the latterâ&#x20AC;&#x2122;s need to deliver content over their cable television networks were the major factors that led to the agreement. See Annemarie Bridy, Graduated Response American Style: 'Six Strikes' Measured Against Five Norms, 4-5 (forthcoming in the Fordham Intellectual Property, Media & Entertainment Law Journal).

Because divining the motivations of the parties requires speculation, the article will leave discussion of these additional justifications for the future.

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1. Societal Costs of Copyright Infringement The economic costs of copyright infringement to content owners and the resulting effect on their incentive to create is a justification to which courts would look in assessing an antitrust claim. An economic study by the Institute for Policy Innovation, cited by CCI on its website, estimates that online infringement costs the economy $25.6 billion each year and results in a total loss of 312,052 jobs.199 These and other similarly imposing figures produced by industry are not without their share of criticism, 200 especially in light of their unique methods of Indeed, such studies are hard to square with other reported calculation.201 statistics. For instance, the emergence of digital markets has actually increased the overall sales of the music industry since the early 2000â&#x20AC;&#x2122;s. 202 A recent report by the International Intellectual Property Alliance, an industry association, shows that the content industries are outperforming overall economic growth by over 1.1%â&#x20AC;&#x201D; contradicting the notion that piracy has killed a large number of industry jobs.203

199

Stephen E. Siwek, Institute for Policy Innovation, The True Cost of Copyright Industry Piracy to the U.S. Economy 9, 12 (Oct. 2007), available at http://www.ipi.org/docLib/20120515 _CopyrightPiracy.pdf.

200 Susan Sell, The Global IP Upward Ratchet, Anti-Counterfeiting and Piracy Enforcement Efforts: The State of Play, DIGITAL COMMONS @ AMERICAN UNIVERSITY 22, http://digitalcommons.wcl.american.edu/research/15/; Felix Oberholzer-Gee and Koleman Strumpf, File-Sharing and Copyright (2009), available at http://www.hbs.edu/research/pdf/09132.pdf; Peter K. Yu, Enforcement, Economics and Estimates, 2 WIPO J. 1, 6-9 (2010) (noting the inherently suspect nature of industry estimates of infringement).

201 See Timothy B. Lee, Texas-Size Sophistry, THE TECHNOLOGY LIBERATION FRONT (Oct. 1, 2006), http://techliberation.com/2006/10/01/texas-size-sophistry/; Timothy B. Lee, Another IPI Piracy Study, THE TECHNOLOGY LIBERATION FRONT (Aug. 25, 2007), http://techliberation.com/2007/08/25/another-ipi-piracy-study/. As noted by others, many such studies are based upon the fallacy that each copy of a copyrighted good downloaded would have otherwise been a sale at the full value of the item. Mike Masnick, Message To The BSA: You Aren't Fooling Anyone, TECHDIRT (Dec. 8, 2005), http://www.techdirt.com/articles/ 20051208/0947209_F.shtml. It is, of course, equally likely that an illegal downloader never would have purchased the work if they would have had to pay full price for it.

202 Oberholzer-Gee, supra note 200, at 45. See also Timothy B. Lee, Why We Shouldn't Worry About The (Alleged) Decline Of The Music Industry, FORBES (Jan. 30, 2012), http://www.forbes.com/sites/timothylee/2012/01/30/why-we-shouldnt-worry-about-the-declineof-the-music-industry/.

203 International Intellectual Property Alliance, Fact Sheet: Copyright Industries in the U.S. Economy: The 2011 Report, available at http://www.iipa.com/pdf/2011CopyrightIndustries FactSheet.PDF.

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In addition, several other studies—studies that are not funded or associated with the content industries—have concluded that online infringement has negligible effects on the sales of copyrighted material. 204 Thus, while the effects of copyright infringement on the incentive to innovate cannot be ignored, neither can they be quantified as a monetary loss or proven to any significant extent based upon the available research. 205 As such, a court would be hard pressed to balance the speculative nature of the figures cited above against the very real harm to consumers who are denied service.

Moreover, the Copyright Alert System serves to internalize the economic costs of content owners from copyright infringement broadly onto consumers, whether they infringe or not. The cost of implementing the program has been calculated to be quite high—as much as $32 per notification issued to a consumer. 206 These costs are not likely to be borne solely by ISPs; instead, the ISPs will factor in these costs when determining the monthly rates that they charge to all consumers for broadband Internet service. 207 As such, the costs of the enforcement system will be transferred to consumers, without ever giving them input into the process or even notifying them of these pass-through costs. In effect, the system represents a surcharge on Internet usage of all users designed to benefit the content industries without any corresponding benefit imparted toward the vast

204

Oberholzer-Gee, supra note 200, at 35–37; Micheal Masnick & Michael Ho, The Sky Is Rising: A Detailed Look at the State of the Entertainment Industry, TECHDIRT (Jan. 2012), http://www.techdirt.com/skyisrising/.

205 See Gov’t Acct. Ofc., Intellectual Property: Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods 15–16 (April 2010) (noting “it is difficult, if not impossible, to quantify the net effect of counterfeiting and piracy on the economy as a whole.”); Thierry Rayna & Laura Barbier, Fighting Consumer Piracy with Graduated Response: An Evaluation of the French and British Implementations, 8 INT. J. FORESIGHT & INNOVATION POL’Y 294 (2010).

206 See Department of Business, Innovation and Skills, et al., Digital Economy Bill: Impact Assessments 63–81 (Nov. 2009), available at http://www.ialibrary.bis.gov.uk/uploaded/DEBImpact-Assessments.pdf (outlining the costs of the U.K. graduated response system); Michael Geist, Estimating the Cost of a Three-Strikes and You're Out System, MICHAEL GEIST (Jan. 26, 2010), http://www.michaelgeist.ca/content/view/4731/135/; Barry Sookman, The Costs and Benefits of Graduated Response in Copyright Enforcement, BARRY SOOKMAN (Feb. 1, 2010), http://www.barrysookman.com/2010/02/01/the-costs-and-benefits-of-graduated-response-incopyright-enforcement/; Woods, supra note 61.

207 See Woods, supra note 61.

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majority of consumers. All consumers—innocent and guilty alike—are subject to these increased costs.

2. Network Congestion Another assertion made by content owners and ISPs is that using the Internet to download infringing content slows the network for other users. 208 The cause of this problem, however, is not that an infringer is allowed to use more than his or her fair share of network resources. Rather, ISPs oversell network segments on the assumption that all of the consumers on those segments will not use their allotted network bandwidth at the same time. 209 For example, a single neighborhood might be provisioned in the last mile with a bandwidth of 100 megabits per second. An ISP may then sell to 25 households in the neighborhood Internet connections that can achieve a maximum throughput of 10 megabits per second. As a result, no more than 10 households can utilize those connections at the maximum speed at any given time.

This network congestion problem is not caused by consumers exceeding their allocated bandwidth, but rather because the ISPs have built insufficient excess capacity into their systems to meet demand variability. 210 This failure of the ISPs to provide sufficient network infrastructure compared to the amount that they promise to consumers is only remotely related to the economic goal of stopping infringement. It more resembles a welfare concern for other users, which probably would not be considered by a court under the non-economic harm doctrine enunciated in National Society of Professional Engineers. 211 If analyzed as a pure economic concern, it is arguable that ISPs that comply with the Copyright Alert System on the basis of network congestion are actually colluding to restrict the

208

Peter Svensson, Comcast Blocks Some Internet Traffic, MSNBC.COM (Oct. 19, 2007), http://www.msnbc.msn.com/id/21376597/ns/technology_and_science-internet/t/comcast-blockssome-internet-traffic/.

209 Phillip Dampier, When Providers Oversell the Network: Paying for 10Mbps Service, Getting 1.2Mbps Instead, STOP THE CAP! (Jan. 31, 2011), http://stopthecap.com/2011/01/31/ when-providers-oversell-the-network-paying-for-10mbps-service-getting-1-2mbps-serviceinstead/.

210 See, e.g., Karl Bode, New Comcast Throttling System 100% Online, DSLREPORTS.COM (Jan. 9, 2009), http://www.dslreports.com/shownews/New-Comcast-Throttling-System-100Online-100015 (describing how Comcast throttles users who exceed more than 70% of the bandwidth they pay for any length of time).

211 Nat'l Soc’y of Prof'l Eng’rs v. U.S., 435 U.S. 679, 690–91 (1978).

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capacity of their systems. Doing so, while maintaining their current pricing practices, is effectively a hidden price increaseâ&#x20AC;&#x201D;behavior that has quintessentially been found in the past to be anticompetitive. 212 3. Copyright Alert System Benefits Consumers The most credible pro-competitive justification contained in the agreement between the parties is that education and deterrence in lieu of litigation benefits consumers. Some studies have shown that the educational notices in graduated response systems have a modest effect on deterring online infringement. 213 Indeed, it is intuitive that the educational steps of the Copyright Alert System provide both an informational benefit to consumers as well as an economic benefit to content owners. However, it is important to note these same studies also have shown that without the threat of action after the warnings, a non-trivial proportion of users will continue to engage in online infringement. Nevertheless, educational steps that do not require action against consumers on the part of ISPs do not directly harm consumers in an economic sense,214 and in fact can only benefit both them and the content owners.

However, once a consumer reaches the point where Mitigation Measures are to be applied, the issue becomes whether the implementation of such punitive measures works in a pro-competitive fashion. The ISPs are required to implement sanctions against their customers that deprive those customers of their Internet service. It is hard to see what direct benefit accrues either to the process of competition between the ISPs or to consumer welfare as a result. While consumers are benefitted from not having to participate in litigation, with its attendant expenses, they are also forced to give up certain rights of the litigant, including the obvious right of having the content owner prove its case.

The merits of such an arrangement are directly related to whether a person has been accurately identified as an infringer. In the case of a person who is an active infringer, this arrangement seems preferable for all involved parties. For those who are innocent of infringement, however, such a system imposes

212

See, e.g., United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940).

See Barry Sookman & Daniel Glover, Why the Copyright Act Needs a Graduated Response System, THE LAWYERS WEEKLY (Jan. 2010), http://www.lawyersweeklydigital.com/lawyersweekly/2934?pg=10.

214 Except, of course, to the extent to which they raise the overall costs of Internet service.

See supra section IV.D.1.

213

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substantial burdens. Industry has remained notably silent regarding various instances of misidentification. But misidentified users are not uncommon, considering the poor track record of the various technologies used to date to identify both online infringers and the works they allegedly infringe. 215 Moreover, one can easily imagine a situation where a grandchild uses their grandparents’ Internet without permission, or where a person leaves their Wi-Fi network unsecured, which would subject an innocent person to punitive connection throttling, requiring them to participate in the one-sided due process system.

Depending on how the alert system is implemented, it may be that a consumer will never receive any notices prior to the first punitive measure that is implemented.

The unauthorized user may simply find a way to divert the Copyright Alert issued by the ISP from being delivered to the subscriber.

The basis for ISPs joining together to do ‘harm’ to their customers does not have a solid grounding in their own competitive interests, as opposed to the anticompetitive interests of the content owners in enforcing their copyright monopolies. ISPs are only marginally involved in the economic harms imposed by online infringement. While content owners have an obvious—and legally protected—interest in stemming online infringement, ISPs are, at most, secondarily involved via their contractual agreements with content owners to provide copyrighted goods over their networks. As such, it would be hard for a court to conclude that the self-help provisions of the Copyright Alert System which requires ISPs to interfere with their customer’s Internet connection is a procompetitive justification for collusion on the part of the ISPs. The agreement neither increases overall output of Internet service nor produces lower costs of the service for consumers, the yardsticks by which the benefits of increased competition are measured.

215

See Yu, supra note 8, at 1395–96 (discussing many instances in which infringementidentifying technology has been found to be unreliable); see also Bridy, supra note 10, at 126 n.208 (citing further examples); Timothy B. Lee, Warner Bros: We Issue Takedowns For Files We Never Saw, ARS TECHNICA (Nov. 9, 2011), http://arstechnica.com/tech-policy/news/2011/ 11/warner-admits-it-issues-takedowns-for-files-it-hasnt-looked-at.ars (discussing instances where content owners never even examined the files accused of copyright infringement prior to issuing takedown notices due to the use of ‘automated’ systems to identify infringing content).

Considering the content owners are entitled in the Copyright Alert System to a presumption of correctness in identifying infringing works, the lack of care demonstrated by Warner Brothers in issuing alerts to date is extremely troubling.

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4. Section 512(i) of the Digital Millennium Copyright Act Finally, an argument can be made that Section 512(i) of the Copyright Act provides a potential statutory authority for content owners and ISPs to engage in collusive conduct to stem online infringement. 216 Among the other requirements related to eligibility for the DMCA safe harbor, section 512(i)(1)(B) partially shields from liability any ISP that “accommodates and does not interfere with standard technical measures.” 217 Section 512(i)(2) defines “standard technical measures" to include anti-infringement technology developed in a broad, open, fair, and voluntary industry standards process.218 However, this Congressional authorization to cooperate most likely does not cover the Copyright Alert System.

The program was not developed as a part of a technical standards process, and its promulgation to date has been anything but open. Moreover, the Supreme Court has articulated a presumption against implied repeal of the antitrust laws. 219 While Section 512 provides a potential statutory exemption from antitrust liability as it relates to standards setting, it is not clear that any immunity would extend beyond that process to the implementation of a technical measure that actually harms consumers. Section 512 does, however, indicate that Congress had intended for the content owners and ISPs to work together in an open fashion to achieve some of the same goals that have thus far been pursued in secret.

E. The Copyright Alert System Fails the Rule of Reason To summarize, the nature of the self-help enforcement provisions of the Copyright Alert System goes far beyond those found in Fashion Originators’ Guild as it “provides extra-judicial tribunals for determination and punishment of violations”220 directed toward individual consumers rather than competitors. In addition, it improperly encroaches on the authority granted solely to Congress by the Constitution to both regulate interstate commerce and allow for limited monopolies under such conditions and when necessary to “promote the Progress of Science and the useful Arts.” 221 The pro-competitive justifications offered by the parties, including speculative claims of economic damage, concerns regarding

216

17 U.S.C. § 512(i) (2006).

17 U.S.C. § 512(i)(1)(B) (2006).

218 17 U.S.C. § 512(i)(2) (2006).

219 “Repeal of the antitrust laws by implication is not favored and not casually to be allowed.” Gordon v. New York Stock Exch., Inc., 422 U.S. 659, 682 (1975).

220 Fashion Originators’ Guild of America v. FTC, 312 U.S. 457, 465 (1941).

221 U.S. CONST. art. I, § 8, cl. 8.

217

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network congestion, and assertions that the system may actually benefit users, all contain significant logical flaws. Nor can content owners or ISPs claim that section 512(i) of the Copyright Act sanctions the agreement they reached.

Nonetheless, as in all antitrust cases that rely on the Rule of Reason, plaintiffs would face a heavy burden in proving their case. The Rule of Reason is a fact-driven, evidence-centric exercise which requires the testimony of economists and other experts to define the scope of the industry, identify the nature of the competitive harm, and provide a measure of the damages that result from the illegal conduct. Given the resources of the companies that would defend against such a claim, each element of proof of plaintiff’s claim would be subject to a rigorous challenge. While no one can predict what would happen should the system be challenged in court on antitrust grounds, it is likely that the both sides would face some significant challenges in prosecuting and defending against such a complaint.

IV RECOMMENDATIONS FOR IMPROVEMENT There are a number of ways the system can be improved to ensure that it is brought within the confines of the law while allowing it to achieve its goal of lessening online infringement. An obvious fix would be for the parties to renegotiate an agreement addressing line-by-line the antitrust issues with the enforcement provisions that I have discussed supra. This, of course, is unlikely due to the lengthy and possibly contentious negotiations that led to the current agreement. The next best solution would be to seek specific legislation that would bring the system inside the law and subject the Copyright Alert System to government supervision. In the alternative, either the Department of Justice or the Federal Trade Commission could intervene to better calibrate the system to avoid consumer harm.

A. Congressional Action As explained by the Supreme Court in Indiana Federation of Dentists, “collusion among private actors, even when its goal is consistent with state policy, acquires antitrust immunity only when it is actively supervised by the State.”222 The simplest way to resolve the antitrust difficulties plaguing the Copyright Alert System is to seek some sort of Congressional sanction for the agreement. Such an

222

FTC v. Indiana Fed’n of Dentists, 476 U.S. 447, 465 (1986).

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authorization may be the only way to assure the parties of immunity from private suit. Whether Congress would move to authorize the system, however, is less clear. The fact that such an authorization would be perceived by their constituents as another expansion of intellectual property rights similar to the recently defeated Stop Online Piracy Act and PROTECT-IP Acts might make legislators hesitant to enact it. 223 Nonetheless, a carefully crafted law could create a government oversight authority similar to the French system of graduated response that could lessen the burden for content owners and citizens alike to make and respond to allegations of infringement.

Some commentators have suggested that an abbreviated administrative proceeding could take place in front of an administrative law judge located within the Copyright Office. 224 Such a procedure would have similar administrative and cost advantages as the system adopted by the industry without having the same problems with due process and antitrust liability which plague the Copyright Alert System. In the alternative, Congress could implement supervision and reporting requirements for the current system or provide for the opportunity for judicial review upon a finding by the private industry adjudicator that an individual was engaged in online infringement. Such additional due process protections would do much to mitigate the possibility that an innocent party would be subjected to adverse action.

B. The Department of Justice and the Federal Trade Commission Another possibilityâ&#x20AC;&#x201D;one that does not require Congressional actionâ&#x20AC;&#x201D;is for the Department of Justice or the Federal Trade Commission to intervene and come to a consent decree with the parties that requires monitoring the Copyright Alert System and its effect on consumers. While such an agreement would not altogether immunize the parties to private suit, it would lend an aura of credibility to the system, which would make private plaintiffs think twice regarding wasting resources in such an effort. Of the two agencies, the Federal Trade Commission

223

See Timothy B. Lee, Internet Wins: SOPA and PIPA Both Shelved, ARS TECHNICA (Jan. 20, 2012), http://arstechnica.com/tech-policy/news/2012/01/internet-wins-sopa-and-pipa-bothshelved.ars.

224 Mark A. Lemley & R. Anthony Reese, Reducing Digital Copyright Infringement Without Restricting Innovation, 56 STAN. L. REV. 1345, 1413 (2004).

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may be the better choice due to its independence and its dual role in our government. 225 The FTC is a federal regulatory agency devoted to enforcing both competition and consumer protection laws within the United States. 226 It is an independent regulatory agency that is governed by a five commissioners, with no more than three from each political party, each nominated for seven-year terms.227 It has a broad base of specialized experience in antitrust enforcement and consumer protection that would be directly relevant to protecting the rights of consumers who receive Internet service from one of the participating ISPs. Further, the FTC possesses additional authority under Section 5 of the FTC Act to investigate the Copyright Alert System as a potential unfair trade practice in addition to a violation of the Sherman Act. 228 The independent nature of the FTC would insulate it from the political pressures applied by the various groups affected by the agreement and lend credibility to the system as a whole.

By initiating an investigation, the FTC has the ability to review the operations of the CCI, the independent groups selected to enforce the due process provisions, and the various individual parties to the agreement. Through the use of this oversight authority, the FTC can ensure that the infringement identification systems implemented will fairly serve the goals of the agreement without causing significant consumer harm. Furthermore, the FTC can work with the parties to correct the deficiencies identified in the due process provisions. Any proposed settlement between the FTC and the individual parties would be subject to an open notice and comment period before implementation, 229 giving both industry and the public an opportunity to weigh in on the final system. Finally, the involvement of

225

Normally the Federal Trade Commission does not have jurisdiction over entities that are governed by the Federal Communications Commission under the latter’s common-carrier or cable television regulations. Internet service, however, is only regulated under the FCC’s ancillary jurisdiction under Title I of the Communications Act of 1934, and as such does not appear to be exempted from the FTC’s antitrust authority.

226 About the Federal Trade Commission, FTC, http://www.ftc.gov/ftc/about.shtm (last visited May 17, 2012).

227 Commissioners, FTC, http://www.ftc.gov/commissioners/index.shtml (last visited May 17, 2012).

228 See 15 U.S.C. § 45 (2006).

229 16 C.F.R. § 2.34(c) (2012).

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the FTC in this process would satisfy the requirement of Indiana Federation of Dentists for active government supervision and approval of the system. 230 CONCLUSION The Copyright Alert System is an idea whose time has come. Identifying consumers who may be engaged in online copyright infringement and educating these consumers regarding the economic and legal consequences of their actions empowers content owners, ISPs, and consumers to take ownership of the growing problem of online infringement. However, such a system should not be used by the content industry to eviscerate our societyâ&#x20AC;&#x2122;s notions of fundamental fairness and due process. Nor should the legally sanctioned monopoly held by copyright owners be allowed to extend beyond the boundaries set forth by Congress under its constitutional authority embodied in the Commerce and Progress Clauses. The antitrust laws serve as a bulwark against the extension of the exclusive rights of copyright to the extent that consumers may be directly subjected to harm.

In this article, I have discussed some of the aspects of the Copyright Alert System that may run afoul of the antitrust laws, and suggested various ways in which the system could be improved to conform with the law and protect the rights of consumers. The government has a role in ensuring that both copyright owners and consumers are protected from economic harm. While it is administratively convenient for content owners to cut the government out of copyright enforcement on the Internet, the potential for harm from a private system of justice is too great to tolerate without government supervision. As such, it is important that the government remain actively involved in calibrating the rights of creators against those of consumers.

230

FTC v. Indiana Fedâ&#x20AC;&#x2122;n of Dentists, 476 U.S. 447, 465 (1986).

THE MOST FASCINATING KIND OF ART: FASHION DESIGN PROTECTION AS A MORAL RIGHT KATELYN N. ANDREWS *

In recent years, politicians, academics, and industry professionals have argued vehemently that copyright protection should extend to cover fashion designs, which are currently excluded under the “useful articles” doctrine. These arguments have proved somewhat successful, as a number of bills have been drafted to expand copyright laws to include fashion, most recently the Innovative Design Protection Act of 2012, and two congressional hearings have been held on the subject. None of bills, however, have managed to gain much traction in Congress, and progress appears to be stalled. My objective in this Note is not to examine the legislation that has been proposed, but to uncover why the supporters of fashion copyright have been so steadfast in their promotion of it. Copyright in the United States is built on economic principles and aims to incentivize innovation. It seems clear that from an economic perspective, copyright is unneeded to incentivize creativity in the fashion industry. After reviewing the legislative history and other arguments made by proponents of fashion copyright, a different picture emerges: supporters of fashion copyright view fashion as “art” and feel a sense of harm when it is cheaply or slavishly copied. Even if designers feel no economic harm from the copying of their creations, they are morally harmed by it. Perhaps then moral rights law, not copyright, provides the appropriate theoretical framework in which to analyze the extension of further protections to fashion design. The stalled debate over fashion copyright might be revitalized by discussing design protection in the more theoretically relevant framework of moral rights laws, which are concerned with reputational—as opposed to economic—harms.

INTRODUCTION ........................................................................................................189 I. SHORTCOMINGS OF THE ECONOMIC ANALYSIS ........................................197 A. The First-Mover Advantage ..............................................................198 B. Imperfect Copies................................................................................202

*

Associate, Skadden, Arps, Slate, Meagher & Flom, LLP, J.D., 2012, New York University School of Law, B.A., 2009, The University of Georgia. The views and opinions expressed in this Note are mine alone and do not represent the views of Skadden, Arps, Slate, Meagher and Flom, LLP. 188

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II.

FASHION AS ART......................................................................................205 A. Fashion Imitating Art ........................................................................208 1. The Fashion Designer as Artist.................................................208 2. Appropriation, Collaboration, and Inspiration ........................210 3. Museums’ and Runway Shows’ Display of Fashion as Art ......213 B. Art Imitating Fashion ........................................................................216 C. Is Fashion Art? ..................................................................................219 III. MORAL RIGHTS IN FASHION DESIGN .......................................................220 CONCLUSION ...........................................................................................................225 INTRODUCTION “Being good in business is the most fascinating kind of art.”

-Andy Warhol 1 In recent years, a debate has reemerged 2 in Congress, 3 in academia, 4 and in the fashion industry5 over the extension of copyright-like protection to fashion

1

ANDY WARHOL, THE PHILOSOPHY OF ANDY WARHOL 92 (1975).

Discussion of protection for fashion design (often along with other useful articles) has arisen many times throughout the last 100 years. A sui generis design protection clause that was struck from the 1976 Copyright Act just before it was passed would have granted up to ten years of protection for useful articles that were not “staple or commonplace.” See S. 22, 94th Cong.

(1975), reprinted in S. REP. NO. 94-473, at 162 (1975).

3 See Innovative Design Protection Act of 2012, S. 3523, 112th Cong. (2012) [hereinafter IDPA]; Innovative Design Protection and Piracy Prevention Act, H.R. 2511, 112th Cong. (2011); S. 3728, 111th Cong. (2010) [hereinafter IDPPPA]; Design Piracy Prohibition Act, H.R. 2196, 111th Cong. (2009); H.R. 2033, 110th Cong. (2007); S. 1957, 110th Cong. (2007) [hereinafter DPPA]; H.R. 5055, 109th Cong. (2006).

4 See, e.g., Jonathan M. Barnett, Shopping for Gucci on Canal Street: Reflections on Status Consumption, Intellectual Property, and the Incentive Thesis, 91 VA. L. REV. 1381 (2005); C. Scott Hemphill & Jeannie Suk, Remix and Cultural Production, 61 STAN. L. REV. 1227 (2009); C. Scott Hemphill & Jeannie Suk, The Law, Culture, and Economics of Fashion, 61 STAN. L. REV. 1147 (2009) [hereinafter Hemphill & Suk, Fashion]; Kal Raustiala & Christopher Sprigman, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, 92 VA. L. REV. 1687 (2006) [hereinafter Raustiala & Sprigman, The Piracy Paradox]; Kal Raustiala & Christopher Sprigman, The Piracy Paradox Revisited, 61 STAN. L. REV. 1201 (2009). There have also been numerous student notes written on the topic in recent years. See, e.g., Sara R. Ellis, Note, Copyrighting Couture: An Examination of Fashion Design Protection and Why the DPPA and IDPPPA are a Step Towards the Solution to Counterfeit Chic, 78 TENN. L. REV. 163 (2010); 2

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design.6 The proponents of increased protection for fashion design argue that copying technology—particularly the speed with which images of designs from runway shows can be sent around the world via the internet—has changed so drastically in recent years that designers are suffering unprecedented harm that must be rectified by copyright-like protection. 7 On the other hand, opponents argue that increased protection is unnecessary because the American fashion industry—a $340 billion industry 8—is thriving, 9 and therefore, even if copying has

Shelley C. Sackel, Note, Art is in the Eye of the Beholder: A Recommendation for Tailoring Design Piracy Legislation to Protect Fashion Design and the Public Domain, 35 AIPLA Q. J. 473 (2007).

5 See, e.g., CFDA, CFDA Design Manifesto, http://www.cfda.com/the-latest/cfda-designmanifesto-3 (last visited Aug. 16, 2012) (“All designers deserve the right to design protection and only the creator of an original design should profit from that design. Taking someone’s work and calling it your own is wrong and robs the designer of a rightful return on their investment.”) (quoting Stephen Kolb, CFDA CEO).

6 A bill that has been circulating throughout Congress in different forms since 2006 would extend protection for three years from the “date of commencement of protection” to “the overall appearance of an article of apparel,” which includes “original elements” that “provide a unique, distinguishable, non-trivial and non-utilitarian variation over prior designs for similar types of articles” against infringing designs that are “substantially identical,” meaning “so similar in appearance as to be likely to be mistaken for the protected design, and contains only those differences in construction or design which are merely trivial.” See IDPA, supra note 3.

7 See infra Part I. 8 See Innovative Design Protection and Piracy Prevention Act: Hearing on H.R. 2511 Before the Subcomm. on Intellectual Property, Competition, and the Internet of the H. Comm. on the Judiciary, 112th Cong. 4 (2011) [hereinafter 2011 Hearing] (statement of Lazaro Hernandez, Designer and Co-Founder, Proenza Schouler).

9 See, e.g., Design Law—Are Special Provisions Needed to Protect Unique Industries?: Hearing Before the Subcomm. on Courts, the Internet, and Intellectual Property of the H. Comm. on the Judiciary, 110th Cong. 20 (2008) [hereinafter 2008 Hearing] (statement of Hon. William D. Delahunt, Member, H. Comm. on the Judiciary) (“America has become the world leader in fashion design. This is not just an LA / NY phenomena, it’s happening across America. Fashion design businesses are proliferating and growing.”); id. at 24 (statement of Narciso Rodriguez on behalf of the CFDA) (“More and more young Americans are going into fashion, and America now leads the world in fashion design.”); A Bill to Provide Protection for Fashion Design: Hearing on H.R. 5055 Before Subcomm. on Courts, the Internet, and Intellectual Property of the

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increased in recent years, designers are not economically harmed by it. 10 Supporters of “fashion copyright”11 have introduced two design protection bills into Congress: the Design Piracy Prohibition Act (“DPPA”) 12 in 2006, which was revised as the Innovative Design Protection and Piracy Prevention Act (“IDPPPA”) 13 in 2011 and re-introduced in September 2012 as the Innovative Design Protection Act of 2012 (“IDPA”) 14. This bill would amend the Copyright Act to extend sui generis, copyright-like protection to fashion design. 15 The primary proponents of increasing intellectual property protection for fashion design have (unsurprisingly) been fashion designers, represented by the

H. Comm. on the Judiciary, 109th Cong. 85 (2006) [hereinafter 2006 Hearing] (statement of Christopher Sprigman, Associate Professor, University of Virginia School of Law) (“Now, the first thing I just want to remind you of is something that no one has disagreed with, which is that the fashion industry is thriving.”).

American designer Michael Kors’s company recently went public with a valuation of $3.8 billion, making it the largest public offering of a U.S. fashion company, with shares that performed better than the average U.S. IPO in first day trading in 2011. See Kors shares open 25% higher, FINANCIAL TIMES, Dec. 14, 2011, http://www.ft.com/intl/cms/s/0/47e920f0-267d11e1-9ed3-00144feabdc0.html#axzz1gj40NG00.

10 Raustiala and Sprigman go further to argue that copying actually promotes innovation by rendering old, copied designs less valuable to consumers, thus providing an incentive for designers to create new fashions, and advancing the fashion cycle. Raustiala & Sprigman, The Piracy Paradox, supra note 4. A common retort to this argument is that protection should only extend to exact or “line-by-line” copies, preserving the ability of all designers to draw inspiration from each other, and that the term of protection should be short, allowing designers to easily revive old designs, even in “line-by-line” copies. See, e.g., Hemphill & Suk, Fashion, supra note 4.

11 I will use the terms “fashion copyright” and “design protection” to refer both to the particular protection scheme proposed by the IDPA, see supra notes 3 & 6, and more generally to any copyright-like scheme for fashion protection that would extend protection to all designs without prior examination and would judge for infringement based on a “similarity” standard.

12 H.R. 2196, 111th Cong. (2009); DPPA, supra note 3; H.R. 2033, 110th Cong. (2007); H.R. 5055, 109th Cong. (2006).

13 IDPPPA, supra note 3.

14 IDPA, supra note 3.

15 See supra note 6.

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Council of Fashion Designers of America (“CFDA”), with the assistance of a number of law professors. 16 The greatest roadblock they have encountered in arguing for increased protection is convincing lawmakers that there is a reason to alter the status quo. American copyright law is generally seen as a means by which to incentivize investment in creative products by “securing for limited Times . . . the exclusive Right”17 to create and distribute copies of those creative products so that initial investments may be recouped before other copiers enter the market.18 In the absence of copyright, there would be a dearth of investment in the

16

Professor Jeannie Suk of Harvard and Professor Susan Scafidi of Fordham have both testified before Congress in support of increased design protection. See 2011 Hearing, supra note 8, at 13; 2006 Hearing, supra note 9, at 77. Although not all fashion designers have expressed support for increased protection, I refer to fashion designers generally because the CFDA purports to represent designers as a group and has sent a number of designers to testify before Congress on its behalf in supporting the DPPA and the IDPPPA. Further, designer Jeffrey Banks testified that “there is a groundswell of support for this bill” among his colleagues.

2006 Hearing, supra note 9, at 189.

It is certainly plausible that many designers oppose an increase in design protection, either because they fear that its benefits will only be available to large design houses with the resources to enforce their rights, perhaps to the detriment of some designers, or simply because they share the feelings of Gabrielle “Coco” Chanel who “saw the widespread copying of her couture originals as confirmation that they had gone beyond mere fashion to embody style itself.” Nancy J. Troy, Chanel’s Modernity, in CHANEL 20 (Harold Koda & Andrew Bolton eds., 2005).

17 U.S. CONST. art. I, § 8, cl. 8.

18 See William M. Landes and Richard A. Posner, An Economic Analysis of Copyright Law, 18 J. LEGAL STUD. 325, 328 (1989) (“In [copyright’s] absence anyone can buy a copy of the book when it first appears and make and sell copies of it. The market price of the book will eventually be bid down to the marginal cost of copying, with the unfortunate result that the book probably will not be produced in the first place, because the author and publisher will not be able to recover their costs of creating the work.”). This economic view serves as the primary justification for copyright under U.S. law. See, e.g., Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984) (“[T]he limited grant [of copyright privileges] is a means by which an important public purpose may be achieved. It is intended to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired.”); Pamela Samuelson, Should Economics Play a Role in Copyright Law and Policy?, 1 U. OTTOWA L. & TECH. J. 2, 3 (2003) (“The principal justification for intellectual property (IP) laws in the

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creative goods—a market failure that can be cured by copyright. 19 Copyright protection currently excludes fashion design under the “useful articles” doctrine, which bars copyright for any object whose design features cannot be separated from its utilitarian aspects, either physically or conceptually. 20 Although trademark laws protect brand names 21 and some designs enjoy trade dress 22 or

Anglo-American tradition is economic.”); Alfred C. Yen, The Interdisciplinary Future of Copyright Theory, 10 CARDOZO ARTS & ENT. L. J. 423, 425 (1992) (“The … theory states that copyright exists solely to provide necessary economic incentives for the production of creative work.”).

19 See Landes & Posner, supra note 18, at 328.

20 Copyright protection is afforded to “useful articles” only to the extent that their “design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” 17 U.S.C. § 101 (2006) (defining “pictorial, graphic, and sculptural works” as “works of artistic craftsmanship insofar as their form but not their mechanical or utilitarian aspects are concerned”). “Useful articles” include any object that has an intrinsic utilitarian function, even if it has other, nonutilitarian functions. See MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT §2.08[B][3]. Thus clothing, which serves the utilitarian function of covering the body, is a useful article even though it may have other aesthetic or signifying purposes.

The separability test applies to both physically and conceptually separable elements of an article of design such that “design elements that can be conceptualized as existing independently of their utilitarian function . . . are eligible for copyright protection.” Chosun Int’l, Inc. v.

Chrisha Creations, Ltd., 413 F.3d 324, 329 (2d Cir. 2005) (internal quotation marks omitted); see also Kieselstein-Cord v. Accessories by Pearl, Inc., 632 F.2d 989 (2d Cir. 1980) (conceptual separability sufficient for copyright). However, designs printed on clothing fabrics are copyrightable, see Scarves by Vera, Inc. v. United Merchs. & Mfrs., 173 F. Supp. 625 (S.D.N.Y. 1959); Peter Pan Fabrics, Inc. v. Brenda Fabrics, Inc., 169 F. Supp. 142 (S.D.N.Y. 1959).

21 Fashion products bearing logos and other source-identifying marks are protected under the Lanham Act against the sale of goods that bear confusingly similar marks, 15 U.S.C. § 1125(a) (2006), dilutive marks, § 1125(c), or counterfeit marks, § 1114. Counterfeit goods of the type seen on Canal Street, while an ongoing plague on the fashion industry, are not the subject of this Note.

22 The shape of a product may be protectable as “trade dress” when it is so distinctive as to have “secondary meaning”—i.e. consumers associate the design of the product with its source and consider the design to be source identifying. See Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205 (2000) (holding that product design trade dress can never be inherently distinctive and thus designs can only be protected upon a showing of secondary meaning).

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design patent 23 protection, the fashion industry generally operates under a low-IP regime. 24 The low-IP regime has existed since the beginning of the American fashion industry and, as many opponents of design protection have pointed out, the industry has thrived both creatively and economically in the absence of copyright, rather than crumbled as economic theories might predict. 25 Thus, there is little evidence of the type of market failure in the fashion industry that copyright seeks to remedy.

Why then have so many members of the fashion industry continued to argue for increased intellectual property protection for fashion design? If copying does not financially harm designers, then there must be non-economic motivations behind their quest for increased design protection. During recent Congressional hearings on the DPPA and IDPPPA, advocates of design protection, while attempting to tailor their arguments to fit an economic theory of copyright,

However, product designs that have aesthetic or utilitarian functionality generally are not protectable. See TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 29 (2001).

Furthermore, in order to be protected against trade dress dilution, which is more expansive than confusion protection, trademarks and trade dress must be shown to be “famous.” See 15 U.S.C. § 1125(c)(1) (2006).

23 Design patents are available for some novel fashion designs, but the high price and difficulty of achieving design patents for individual garments makes them generally impractical for the fashion industry. See, e.g., Sackel, supra note 4, at 493. Because it can take over a year to receive a design patent, they are most useful for items like handbags and shoes that are sold continually for many seasons.

24 See Raustiala & Sprigman, The Piracy Paradox, supra note 4, at 1698-1704 (describing “fashion’s low-IP equilibrium” and reviewing reasons that copyright, trademark, and patent law exclude protection of fashion designs).

25 See, e.g., 2006 Hearing, supra note 9, at 85 (statement of Professor Christopher Sprigman) (“[N]o one has disagreed . . . that the fashion industry is thriving. . . . We have U.S. firms participating in an industry that is approaching $1 trillion around the world. Never in our 217year history of copyright has Congress extended copyright or copyright-like protections to the fashion industry.”).

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revealed that they have been strongly motivated by morals-based reasoning that builds upon the unique contemporary relationship between fashion and art.26 The proponents of increased design protection have been correct to recognize the striking similarities between fashion and art in contemporary culture.27 Not only do fashion designers and artists collaborate and inspire each other,28 the practices and business models of the fashion and contemporary art worlds are hardly distinguishable in modern society. 29 Fashion designers are widely recognized and discussed as creative geniuses, 30 their work is examined and analyzed in art-historical frameworks, 31 and their designs are exhibited internationally in museums alongside prized art objects.32 Simultaneously, artists, particularly since the 1950s, have incorporated the mass-production, businessminded, and branding practices of the fashion industry into their work at least in part as a way to challenge the definition of art. 33 It is not economic harm, but the sense that fashion is art and thus deserves intellectual property protection that has motivated modern proponents of increased design protection. They desire moral, not economic protection.

However, U.S. copyright law generally rejects morals-based justifications in favor of economic, utilitarian ones. 34 It makes little sense to extend an economic right to fashion designers predicated upon a desire for morals-based protection— especially without explicit recognition of these motivations. Visual art, unlike

26

The problem of defining “art,” especially for the purposes of legal analysis, has continually plagued courts and academics. I use the term “art” in this Note in two senses: to refer to both the popular conception of “works of art” or “forms of art” and in a more narrow way to the work that critics, museums, and galleries generally refer to as “art.” This dual use of the term is in my view an inescapable symptom of the ever-changing and indefinable nature of the term itself.

27 See generally infra Part II. 28 See infra notes 91-97 and accompanying text.

29 See infra notes 115-122 and accompanying text.

30 See infra notes 88-90 and accompanying text.

31 See infra notes 98-103 and accompanying text.

32 See infra notes 104-106 and accompanying text.

33 See infra notes 114-126 and accompanying text.

34 See supra note 18 and accompanying text.

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other copyrightable goods, does receive special morals-based protection under the Visual Artists Rights Act of 1990 (“VARA”) 35 and various state moral rights laws.36 The moral rights granted under these statutes seek to protect the reputation of an artist by preventing others from modifying or misattributing his works. 37 If proponents of increased design protection desire prevention of copying predicated on morals-based harms, that position and related arguments both for and against such protection should be discussed openly. Discussion of the extension of increased design protection in the fashion industry should be considered and discussed under a moral rights, not copyright, framework.

In Part I, I analyze the shortcomings of the economic arguments for increased design protection. In Part II, I show that an examination of the legislative history of the DPPA and IDPPPA reveals that many of the proponents of increased rights are motivated by the belief that fashion is “art” and is thus deserving of intellectual property protection equal to that of art. Although it is highly contestable whether fashion merits the status of “art,” an understanding of this viewpoint is necessary to explore fully the arguments for increased design protection. In Part III, I argue that the contention that fashion should receive commensurate protection with art because of the similarities between the two creative fields draws more strongly on a morals- and personality-based theory of

35

VARA, 17 U.S.C. 106A (2006).

See, e.g., California Art Preservation Act, CAL. CIV. CODE § 987 (West 2012); N.Y. ARTS & CULT. AFF. LAW § 14.03 (McKinney 2012).

37 See 17 U.S.C. 106A(a) (preventing modification & misattribution that would be prejudicial to an artist’s honor or reputation); CAL. CIV. CODE § 987(a) (finding that “physical alteration or destruction of fine art, which is an expression of the artist's personality, is detrimental to the artist's reputation”); N.Y. ARTS & CULT. AFF. LAW § 14.03(1) (preventing modification when damage to the artist’s reputation is reasonably likely). See also John Henry Merryman, The Refrigerator of Bernard Buffet, 27 HASTINGS L.J. 1023, 1025 (1976) (“Copyright . . . protects the artist’s pecuniary interest in the work of art. The moral right, on the contrary, is one of a small group of rights intended to recognize and protect the individual’s personality[, including the] right to one’s identity, to a name, to one’s reputation . . . .”); Henry Hansmann & Marina Santilli, Authors’ and Artists’ Moral Rights: A Comparative Legal and Economic Analysis, 26 J. LEGAL STUD. 95, 104 (1997) (moral rights serve “in important part, to protect not just artists’ personal feelings about their creations but rather (or in addition) their reputational interests”).

36

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intellectual property than on the economic theories that underlie contemporary U.S. copyright doctrine. Thus, the debate over increased design protection should shift its focus to a discussion of reputational and moral intellectual property rights instead of straining to discuss fashion protection within the framework economically grounded American copyright law.

I SHORTCOMINGS OF THE ECONOMIC ANALYSIS “Art produces ugly things which frequently become more beautiful with time. Fashion, on the other hand, produces beautiful things which always become ugly with time.”

—Jean Cocteau 38 Under current U.S. law, fashion designs, unlike many other creative goods, can be freely copied. Although economic theories of copyright predict that in the absence of protection against copying, investments in creative goods will not be recouped and will result in a lack of incentive to create, the American fashion industry has continued to produce creative goods and to thrive financially in the absence of copyright protection. This “low-IP equilibrium” 39 is explained by the economic model, under which there are certain circumstances that may facilitate market stability in creative industries that lack copyright. First, if the copying of creative works takes a significant amount of time, and demand for the work decreases over time, the original producer of the work will enjoy a period of market exclusivity until copied works are available. In some instances, this firstmover advantage provides enough economic compensation to incentivize creation

38

JOSEPH ABBOUD, THREADS: MY LIFE BEHIND THE SEAMS IN THE HIGH-STAKES WORLD OF FASHION 79 (2005).

39 Raustiala & Sprigman, The Piracy Paradox, supra note 4 (describing the “low-IP equilibrium” and suggesting that copying might in fact lead to more innovation in the fashion industry since widespread copying often makes designs undesirable to early adopters who then demand new work from designers).

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in the absence of copyright.40 Second, if copies are not perfect, original creators will continue to enjoy economic success by selling their products to consumers who do not wish to buy low-quality substitutes.41 A. The First-Mover Advantage Proponents of “fashion copyright” have clung to the first-mover advantage exception in the economic theory, 42 arguing that in the past designers enjoyed a substantial first-mover advantage that has recently disintegrated due to technological change. 43 That copying (or “piracy”) has existed in the fashion industry since the birth of “fashion” as we know it is indisputable. 44 However, the

40

Landes & Posner, supra note 18, at 330 (“[F]or works that are faddish—where demand is initially strong but falls sharply after a brief period—copyright protection may not be as necessary in order to give the creator of the work a fully compensatory return.”).

41 Id. at 329 (“[I]n the case of works of art—such as a painting by a famous artist—a copy, however accurate, may be such a poor substitute in the market that it will have no negative effects on the price of the artist’s work.”).

42 Their argument is drawn straight from Landes and Posner’s theory: “because modern technology has reduced the time it takes to make copies as well as enabled more perfect copies to be made at low cost, the need for copyright protection has increased over time.” Id. at 330.

Generally, the quality of copies in fashion has not been as affected by technological changes as it has in other industries like music and film. I address the availability of “more perfect copies” in fashion in Part II.B infra.

43 See, e.g., 2006 Hearing, supra note 9, at 13 (statement of Jeffery Banks, Fashion Designer, on Behalf of the CFDA) (“We can’t compete against piracy so the creativity and innovation that has put American fashion in a leadership position will dry up.”); id. at 79 (statement of Susan Scafidi, Professor, Fordham Law School) (acknowledging that fashion has historically not received much intellectual property protection but that there are now “changed circumstances that indicate a greater need for some protection today.”).

44 See, e.g., Sara B. Marcketti and Jean L. Parsons, Design Piracy and Self-Regulation: The Fashion Originators' Guild of America, 1932-1941, 24 CLOTHING & TEXTILES RESEARCH J. 214, 216 (2006) (noting that in the late-19th century, “styles were copied so quickly that any innovative style was available to all consumers virtually immediately, at successively lower price points”); Piracy on the High Fashions, VOGUE, July 1933, at 28: It is a perfectly legitimate practice for American dress houses to send buyers to the Paris Openings, where they buy only one of each model they select. These are brought back and copied exactly in largish numbers for customers who are dying

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advocates of design protection argue that the piracy game has now changed significantly due to the increased speed with which high-resolution photos from runway shows can be disseminated across the globe via the internet. 45 Designer Lazaro Hernandez of Proenza Schouler summed up the problem for Congress in 2011: [T]here [are] Web sites now where you get a runway show, and they can literally zoom in to the garment front and back, copy stitch for stitch, and pretty much print it and make it in a couple days flat and ship it before we ourselves can even take orders on the product. And I think that’s something that’s happened in the last 10 years that has changed the game 100 percent. The protection hasn’t caught up to the level of technology. 46 Similarly, Professor Susan Scafidi told Congress five years earlier that “[c]reative fashion designers in earlier periods fought copyists by relying on strategic measures like speed and secrecy. . . . Today, however, the same speed and accuracy of information transfer that affects the music and film industries is also having an impact on fashion.”47

for a “French model.” . . . But there is no sin where none is felt; the French are aware that American shops buy their models for copying. That has become an accepted fact.

45 See, e.g., 2006 Hearing, supra note 9, at 12 (statement of Jeffery Banks) (“Copying, years ago, would take anywhere from three to four months to a year or more. But as I said, all that changed with new technology. . . . a new and original design . . . can be stolen before the applause has faded thanks to digital imagery and the internet.”).

46 2011 Hearing, supra note 8, at 99 (statement of Lazaro Hernandez); see also 2006 Hearing, supra note 9, at 11 (statement of Jeffrey Banks) (“In the blink of an eye, perfect 360 degree images of the latest runway fashions can be sent around the world. . . . And that . . . is the main reason I sit before you today.”).

47 2006 Hearing, supra note 9, at 81.

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This argument is not without intuitive appeal, and indeed many changes in copyright law have been motivated by changes in copying technology. 48 However, the use of this narrative in the story of the fashion industry’s plight has been less successful than in other creative industries. It is not so clear in fashion that the speed with which pictures can be sent across the globe has really had such a drastic impact on the fashion industry as Napster had on the music industry, YouTube had on the film industry, or Google Books has threatened to have on the publishing industry. 49 Unlike Napster, YouTube, and Google Books, copying in fashion is not completed merely through internet dissemination: physical copies must still be produced and those copies can never be perfect substitutes as Napster, YouTube, and Google Books copies usually are.50 After all, images of fashion designs have always been disseminated around the world. In the early days of fashion, designs originating in Paris were shown throughout Europe on traveling mannequins (that even travelled to America). 51 Later, as photography and

48

See, e.g., Russ VerSteeg, The Roman Law Roots of Copyright, 59 MD. L. REV. 522, 522 (2000) (“Modern technology—specifically the computer and its uses via the Internet— increasingly demands that we reconsider and rethink copyright law. This phenomenon is not new. Before computers made us reassess copyright law, other once-new forms of copying, communication, and information transmission did the same for the following: the satellite, the photocopier, the VCR, radio, sound recording, photography, the printing press, and various forms of television, including cable television.”).

49 These technological advances is film, music, and publishing not only affected the speed with which copies could be made and disseminated, but also drastically improved the quality of those copies, particularly in music and film. I discuss the impact of the quality of copying in fashion in Part I.B infra. See also supra note 41 and accompanying text.

50 Most of the arguments can also be made about visual art. The question of the necessity of copyright protection for art is beyond the scope of this Note, but it is worth noting that copyright in visual art is generally used to protect the market for licensing images of art works and for derivative goods like postcards, posters, and coffee mugs that are sold in museum gift shops.

Such derivative markets do not generally exist in fashion and further, the ability of a photograph of a fashion design to infringe the copyright in the garment has not been proposed in the discussion of fashion copyright.

51 In the late 18th century, Rose Bertin, the designer of choice for Marie Antoinette, grew to fame for her role of dressing the “grade Pandora” doll that traveled throughout Europe and the

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publication technologies developed, so did fashion magazines that spread images of new designs throughout Western culture. 52 Now, as digital technology and the internet expand, fashion blogs and websites broadcast runway show photos throughout the world instantly. 53 It is clear that the speed of image dissemination has increased with advances in technology, and it is no longer necessary for manufacturers to send designers to couture shows in Paris in order to sketch designs for copying as was necessary in the early-to-mid 20th century. Contemporary complaints about the speed of copying, however, seem hardly different from those of nearly 100 years ago. A designer in 1916 complained that “within forty-eight hours after [a design is] exhibited in a retail department store . . . at the corner of Twenty-third Street and Fifth Avenue, they are selling sketches of [as many of] my designs as can be secretly captured.”54 And the increased interest in fashion and style in the interwar period only led to an increase in the amount and extent of piracy, leading it to be called in 1928: “one of the most outstanding evils of the apparel industry.” 55 By 1932, dressmakers in New York felt that piracy had become so detrimental to the fashion industry that the major American design houses joined together to form the Fashion Originators’ Guild of America, which entered agreements with all of the

New World and was “one of the main ways to propagate fashions before the regular publication of fashion magazines.” REBECCA ARNOLD, FASHION: A VERY SHORT INTRODUCTION 13 (2009).

52 Id. at 15 (The 19th century saw “the growth of fashion media, photography, and by the end of the century, film, which disseminated imagery of fashion more widely than ever before, and fuelled women’s desire for more variety and quicker turnover of styles”).

53 For fashion companies, a strong web presence and creative use of social media is generally praised as marker of good branding and public relations. See, e.g., Cate T. Corcoran, Everyone’s Doing It: Brands Take on Social Media, WOMEN’S WEAR DAILY, Sep. 28, 2009, at 20, available at http://www.wwd.com/media-news/digital/everyones-doing-it-brands-take-on-social-media2318508 (discussing the “Digital IQ” study by NYU professor Scott Galloway that ranked the digital competence of 109 brands, and pointing out that several bloggers “were given front-row seats at the D&G show . . . complete with desks and laptops for instant transmission, knocking . . . retail heavyweights to the second row”).

54 JULIUS HENRY COHEN, LAW AND ORDER IN INDUSTRY: FIVE YEARS’ EXPERIENCE 88 (1916).

55 PAUL HENRY NYSTROM, ECONOMICS OF FASHION 425 (1928).

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major retailers that prevented them from selling pirated designs if they wished to sell the clothing of Guild members. 56 By the 1980s, fax machines allowed images of designs to be sent around the world within hours of their debut on the runway. In fact, Professor Sprigman has argued that even if the speed of copying today is drastically faster than it was in the early 20th century, it has increased only negligibly since the advent of the fax machine. 57 In the end, whether or not the speed of copying has increased in recent years, copying speed is meaningless in the debate over design protection unless we know two things. First, exactly how much lead-time is necessary for designers to receive sufficient compensation to maintain the low-IP equilibrium? And second, does the first-mover advantage actually affect the low-IP equilibrium in the fashion industry at all? It could certainly be the case that the speed with which design copies reach stores has no discernible economic effect on designers’ profits.

Unfortunately, economic evidence that would answer these questions has yet to— and may never—emerge, 58 leaving both advocates and opponents of design protection (and Congress) unsatisfied.

B. Imperfect Copies Under an economic analysis of copyright law, a second practical consideration may lead to market stability in the absence of protection: in the world of quick copies, the quality of copies may be so low that they do not serve as an adequate market alternative for originals.59 This natural limitation on

56

The Guild was soon ordered to disband because of antitrust violations. Fashion Originators’ Guild of America v. FTC, 312 U.S. 457 (1941).

57 2011 Hearing, supra note 8, at 94 (statement of Christopher Sprigman) (“I think the speed of copying hasn’t really changed very much in 20 years. . . . [T]he fax machine really changed the speed of copying.”).

58 Professors Raustiala and Sprigman introduced new economic data on the fashion industry to Congress in the 2011 hearings on the IDPPPA, but they were not nuanced enough to answer these questions. 2011 Hearing, supra note 8, at 81.

59 Landes & Posner, supra note 18, at 329. This is a consideration that the proponents of copyright-like protection for fashion have discussed less thoroughly than the first-mover advantage. This is probably because unlike in other creative industries like music and film,

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economically harmful copies seems to make perfect sense in the fashion industry: Economics tells us that even if copies reach stores at the same time as originals, buyers of originals will not defect to copies that are of a significantly lower quality; the fashion industry tells us that there are often significant differences between “fast-fashion” copies and the originals that inspire them. For example, it is hard to imagine that a regular Chanel customer who, for instance, accompanied her teenage daughter on a shopping trip to Forever 21 would be so enticed by a $20 copy of a new $2,000 Chanel jacket that she would buy the former instead of the latter. The Forever 21 version is undoubtedly of a drastically lower quality than the Chanel original, and, importantly, it lacks the powerful cachet of the “Chanel” name. It seems that even if Forever 21 can produce and sell an exact look-alike Chanel jacket as quickly as Chanel can, Chanel probably loses very few customers to fast-fashion.60

technological change has not had a drastic impact on the quality of fashion copies. The quality of fashion copies tends to decrease as the speed at which the copies reach the market increases, which is nearly unavoidable due to the physical (as opposed to digital) nature of the goods.

Furthermore, an element of this exception to the economic theory of copyright is that “the [imperfect] copy may have a positive effect on [the] price [of the original] by serving as advertising for [a creator’s] works.” Landes & Posner, supra note 18, at 329. Fashion designers quickly rebuff this argument, it seems, to avoid surrendering to an argument that is equivalent to the old adage that “any press is good press.” For example, during the 2006 Congressional hearings on the DPPA, designer Jeffery Banks complained that copies of dresses worn on the red carpet at the Academy Awards appeared days later on morning shows and were on sale within a week. Congressman Berman suggested that this benefitted the designers by publicizing their brands and designs, to which Mr. Banks countered, “That sells your personality as a designer, but that doesn’t sell your dress.” Of course designers make most of their money by selling “their personality,” both directly through licensing deals and indirectly through the effect that branding and publicity have on the perceived value of their designs. In the end Mr. Banks argued that the harm to designers occurs when the dress is knocked-off so quickly that consumers who could afford to buy the original fashion are dissuaded from purchasing because the knockoffs have in a sense tarnished the appeal of the fashion to them. 2006 Hearings, supra note 9, at 183-84.

60 There is, of course, the argument that the existence of cheap copies cheapens the value of the original design and dissuades consumers of the original from purchasing it once they know that the item can be purchased by less wealthy consumers at a significantly lower price. This class-based, sociological tarnishment of designs, however, is akin to the problem of brand

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Proponents of design protection usually counter this argument with anecdotes of the “personal tragedy” 61 of individual designers who are driven out of business by design pirates.62 As Professor Sprigman has noted, however, an economic analysis of copyright law in a particular industry is generally premised on an examination of benefits and losses taken together, not on an individual basis. 63 In any industry there are winners and losers, with or without copyright, and, as Professor Sprigman has advocated, “Before we go and change [a 217-year tradition denying copyright to fashion design], we should have more than a few anecdotes about harm. We should have some robust, formal, methodologically rigorous studies of this industry.” 64 We no longer live in a world where Mr. Macy sends a designer to the Christian Dior show in Paris to hastily sketch designs and buy individual pieces to be brought back across the Atlantic and copied in Seventh Avenue garment shops.

tarnishment that trademark dilution law seeks to redress, further indicating that a legal regime focused on the protection of reputation and consumer perception is more suited for the fashion industry than copyright law.

A second argument could be made that the two distinct classes of consumers described above are the result of an artificial inflation in prices for original designs because of the availability of knock-offs. That is, in a world without knock-offs, prices for originals may exist at some median price such that both classes of consumers could afford to buy originals. However, once copying begins, designers of originals start to lose revenue to knock-off manufacturers and then must increase prices to account for the losses to a point where the buyer of the knock-off can no longer afford to buy the original. It follows from this that design protection would lower costs and make original fashions more affordable to the public. A full economic analysis of these issues is beyond the scope of this Note, but it is worth considering that the basic cost of manufacturing original couture and ready-to-wear designer goods may be so high that members of the “general public” could never afford to buy designer originals, even at cost, and so no revenue could be lost to affordable knock-offs, meaning there would be no need to inflate prices of originals to account for losses to knock-offs.

61 2006 Hearing, supra note 9, at 187 (statement of Susan Scafidi).

62 See id. at 83 (statement of Susan Scafidi) (“While it is difficult to quantify or even identify designers who give up their businesses, particularly for reasons of piracy, there is strong anecdotal evidence that design piracy is harmful to the U.S. fashion industry.”).

63 Id. at 181.

64 Id. at 85.

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Copying is now quick and cheap, but simultaneously, the American fashion industry is thriving. Macy’s no longer has to send copyists to Paris, but can instead buy garments from an impressive assortment of original, innovative, and successful American designers. All of this economic growth and creative evolution has happened in the absence of copyright protection. If, as it seems, most participants in the fashion industry are economically successful and traditional economic arguments show lack of a need for fashion copyright, it remains to be seen why the debate over fashion copyright has continued to rage.65 In the end, the economic arguments both for and against design protection have proven unsuccessful.

II FASHION AS ART Art? Isn’t that a man’s name?”

—Andy Warhol 66 If copying in fashion design does not cause industry-wide economic harm at a level that would indicate a market failure necessitating correction through copyright protection, then a logical question arises: Why has the economically thriving fashion industry decided to wage this copyright war? I believe the answer can be found by stripping away the unconvincing economic arguments that disguise the thrust of the industry’s real argument—that fashion design is “an art

65

Although little movement has been seen at the Congressional level since the 2011 hearing on the IDPPPA, the bill remains a widely discussed topic among fashion industry professionals and lawyers. The U.S. Chamber of Commerce did voice its support for the bill in October 2011 by sending a letter to the House Judiciary Committee calling for a full committee vote. See Kristi Ellis, Design Piracy Bill Picks Up Support, WOMEN’S WEAR DAILY (Oct. 12, 2011), http://www.wwd.com/business-news/government-trade/design-piracy-bill-picks-up-support5289381, but as of this writing, no vote has taken place.

66 ARTHUR C. DANTO, ENCOUNTERS AND REFLECTIONS 286-87 (1990).

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form,” 67 an extension of a designer’s creative soul, and thus deserves 68 some form of protection.

The problem with copyright law according to Women’s Wear Daily, the leading industry publication, is that its “protection does not cover apparel because articles of clothing are currently considered ‘useful articles’ as opposed to works of art”69—an apparent “loophole in copyright law.” 70 Implicit in this statement is the faulty assumption that copyright protects “works of art,”71 and that if fashion can make the leap from being considered a “useful article” to a “work of art,” it too can enjoy some sort of copyright protection. The assumption that fashion design should receive copyright protection if it can be seen as “art” is not only an idea popularized by the fashion media but is also one regularly invoked by supporters of fashion copyright, including in the congressional debates on the DPPA and IDPPPA. For example, when the IDPPPA was passed by the Senate Judiciary Committee in December 2010, the manager of government relations for the American Apparel and Footwear Association approvingly remarked: The industry will finally have the ability to protect the truly original, artistic pieces of fashion that presently do not have any protection. This bill does a great job of drawing the line between what is useful and artistic. For those who do truly original art in fashion, they will have an opportunity to gain protection. 72 Earlier, in the 2006 hearing on the DPPA, Congressman Issa argued to his peers that “dresses are clearly, let’s be honest, it’s art. . . . [and thus] [c]learly there

67

2008 Hearing, supra note 9, at 27 (statement of Narciso Rodriguez).

See, e.g., 2006 Hearing, supra note 9, at 78 (statement of Susan Scafidi).

69 Kristi Ellis, Designers to Back Knock-off Bill, WOMEN’S WEAR DAILY, July 15, 2011, at 2.

70 Rosemary Feitelberg, Schumer Touts Plan to Fight Design Theft, WOMEN’S WEAR DAILY, Aug. 9, 2007, at 12.

71 The Copyright Act does not explicitly protect “works of art” but instead protects most visual art as a “pictorial, graphic, and sculptural works,” 17 U.S.C. § 102(a)(5), and extends further protection to “works of visual art” under VARA, 17 U.S.C. § 106A (2006).

72 Kristi Ellis, Design Piracy Bill Advances to Senate, WOMEN’S WEAR DAILY, Dec. 2, 2010, at 4 (quoting Kurt Courtney).

68

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is a constitutional obligation for us to [protect] these creations.” 73 In the 2008 DPPA hearing, designer Narciso Rodriguez argued that over the last century “fashion design has become an art form,” 74 and Professor Scafidi maintained that one reason fashion deserves protection is because it is “now recognized as a form of creative expression,” 75 and that French recognition of design protection indicates “[t]he formal recognition of fashion design as an art form” in France. 76 One could easily dismiss this line of reasoning as unprincipled by pointing out that copyright law does not seek to protect “works of art” but instead protects economic incentives when necessary to generate investment in creative goods that benefit the public good. Sometimes this results in the protection of “works of art.”

Although that may be correct as a matter of copyright jurisprudence, it has been unsuccessful in discouraging the proponents of design protection. The belief that fashion is art is deeply held, and has developed over decades of interaction between the fashion and art worlds. Beginning in the 1960s 77 and increasing rapidly over the past twenty years, simultaneous changes in the art world and fashion industry have led to an increased sense among designers, members of the fashion community, and many members of the fashion-consuming public that

73

2006 Hearing, supra note 9, at 187.

2008 Hearing, supra note 9, at 27.

75 2006 Hearing, supra note 9, at 81.

76 Id. at 84.

77 It has been noted that the pop art craze of the early 1960s “caused the realms of art, fashion, and journalism to intersect as rarely before.” JAMES MEYER, MINIMALISM: ART AND POLEMICS IN THE SIXTIES 25 (2001). And in the 1960s, fashion magazines like Harper’s Bazaar and Vogue featured the work and writings of contemporary artists like Robert Morris, Dan Flavin, Donald Judd, Sol Lewitt, James Rosenquist, and Frank Stella alongside and interspersed with fashion description and photography. The inclusion of high art in glossy fashion magazines “equated the new art with fashion and vice versa . . . . It brought the highbrow into congress with the middlebrow, blurring the distinction between those spheres; it lent the authority of fine art to design while conferring the glamour and publicity of fashion to fine art.” Id. at 29. This was perhaps more accurately a new beginning for the symbiosis of art and fashion, which had previously flourished in pre-war France with designers like Paul Poiret who were inspired by modern artists of the time. See ARNOLD, supra note 51, at 42.

74

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fashion, if not “art” in itself, is so closely related to and intertwined with “art” that it should receive—and in fact deserves—the same types of legal protections as art.

Discussions of increased design protection should not be ignorant of the contemporary relationship between fashion and art and the resulting sense that fashion designs should receive morals-based protections in a way similar to art. In the sections that follow, I describe the ways in which fashion is more art-like and art is more fashion-like than ever before, as I believe it would be naïve to ignore these developments in crafting appropriate intellectual property protection for fashion design.

A. Fashion Imitating Art "My primary concern has always been respect for my craft, which is not exactly an art, but which depends on an artist for its existence."

—Yves Saint Laurent 78 1. The Fashion Designer as Artist For the vast majority of human history, there was no such thing as “fashion” or the “fashion designer,” only clothing made at home or by seamstresses. 79 The concept of the fashion designer as a celebrated creative individual did not emerge until the late 19th century. 80 Prior to this time, well-dressed ladies in the courts of Europe had personal seamstresses who created custom garments without receiving any recognition as a “designer.”81 Most women wanted their peers to believe that their clothing was the product of individual creativity and style and avoided

78

Yves Saint Laurent, Exhibition Brochure, PETIT PALAIS, MUSÉE DES BEAUX-ARTS DE LA VILLE DE PARIS, at 6 (2010), available at http://www.petitpalais.paris.fr/sites/default/ files/DP_YSL_English_0.pdf.

79 See ARNOLD, supra note 51, at 12.

80 See, e.g., AMY DE LA HAYE, THE CUTTING EDGE: 50 YEARS OF BRITISH FASHION 13 (1997) (“The high-fashion industry as we know it today, with seasonally presented, designer-led fashions was established in Second Empire Paris (1852–70).”).

81 See ARNOLD, supra note 51, at 12.

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accrediting it to any designer.82 Charles Frederick Worth is generally cited as being the first “designer” in the modern sense. Worth formed his fashion house in 1858 and, with his resolute vision, created the system of designer-led fashion that we now take for granted: “With great aplomb and a shrewd business head, Worth emphasized that his taste was the final word.” 83 Worth and other early couturiers “were to crystallize the notion of the designer as the creator not just of handmade clothes, but also of the idea of what was fashionable at a particular time.” 84 Gabrielle “Coco” Chanel added further meaning to the concept of the designer by putting her own personality center-stage in the marketing of her clothes. Her success is credited as founded upon “the magic of the self,” 85 and she was lauded for her “ability to market an idealized vision of herself, and to embody her own perfect customer.” 86 Although European couturiers have been recognized for their creative genius since the time of Worth, it is only since the second half of the 20th century that American fashion designers attained a similar status. Prior to the emergence of American designers like Bill Blass, Perry Ellis, and Calvin Klein—the first to transition from mere garmento to true designer—American designers were regarded as anonymous craftsmen who used their sartorial skills to copy Parisian designs for the American consumer. 87

82

HAYE, supra note 80, at 13 (“Worth conceived and imposed his own design ideas and in so doing created fashion unequivocally determined by the designer.”).

83 Id. 84 ARNOLD, supra note 51, at 6.

85 Id. at 10 (quoting Ernestine Carter).

86 Id. (“Chanel designed herself, and then sold this image to the world.”). This technique has been used with similar success by designers like Donna Karan, Donatella Versace, and more recently Margherita Missoni. But the image of the designer remains incredibly important even when he is not selling a vision of himself. For example Karl Lagerfeld who designs for Chanel today does not epitomize the Chanel customer but instead uses his personal style to “denote[] his status as a cultured aesthete” and remains involved in art and cultural projects which support the elite status of his couture. Id. at 11.

87 Id. at 21.

DE LA

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Not only are designers now recognized as the creators of the clothing they produce and sometimes as the face of their brands, in the modern fashion world they are often discussed as having a kind of creative genius previously reserved for great artists. The design houses themselves have played no small part in the celebration of their designers as innovators and artists. 88 This exaltation of the designer as an artist has been pivotal in elevating fashion to be discussed “on a parallel footing to art” in the “larger system of visual culture and communication.”89 In turn, the admiration of the designer’s creative genius is fundamental to the argument that legal protection for fashion design might be based on a reputation-based theory of moral rights. 90 2. Appropriation, Collaboration, and Inspiration The many collaborations that have occurred and cross-inspirations that have been discussed between fashion and art in recent decades have furthered the notion that fashion is “art” (or at least art’s equally respectable cousin). Direct appropriation provides the most obvious example of fashion imitating art. Many times throughout his career, Yves Saint Laurent produced garments that looked as though they could have been made by stripping an artist’s canvas off of its frame and wrapping it around a body. Perhaps the most iconic of these was the “Mondrian” dress of 1965. Saint Laurent saw the simple planes of the popular shift dress as the perfect canvas for the geometric color blocks and lines of the Piet Mondrian’s paintings. 91 A year later Saint Laurent produced a pop art-inspired

88

See, e.g., id. at 17 (“Fashion houses, partly to raise the status of the designer, and partly to provide a recognizable identity and personality to promote each label, asserted the idea of the couturier as an innovator and artist.”).

89 Ingrid Sischy and Germano Celant, Editorial, ARTFORUM, Feb. 1982, 34.

90 See infra notes 134-141 and accompanying text.

91 See Yves Saint Laurent: “Mondrian” day dress (C.I.69.23), Heilbrunn Timeline of Art History, THE METROPOLITAN MUSEUM OF ART, http://www.metmuseum.org/toah/works-ofart/C.I.69.23 (last visited Aug. 16, 2012). It is interesting to note that the Metropolitan credits both Mondrian and Saint Laurent as being the “artist” of this piece in their index. Although Mondrian did not live to see Saint Laurent’s creation, one can imagine that he would have approved: “The essence of Mondrian’s ideas is that painting, composed of the most fundamental aspects of line and colour, must set an example to the other arts for achieving a society in which

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collection that featured “The Souper Dress,” a shift dress made of paper bearing Campbell’s soup can labels repeated in a geometric grid—a wearable Warhol.

Saint Laurent, an avid art collector in his own right,92 revived this practice many times throughout his career with tributes to Van Gogh, Matisse, Picasso, Braque, and Cocteau, among others. 93 In discussing this practice, Saint Laurent said that his “intention was not to compete with the Masters, but at the very most to get close to them and learn from their genius.” 94 If Yves Saint Laurent appropriated the work of artistic “Masters” in order to feel close to their genius, other designers have taken this impulse further to work directly in collaboration with the artists they admire. Two of the most salient and successful contemporary examples of this practice are Takashi Murakami’s and Richard Prince’s collaborations with Louis Vuitton. The Murakami collaboration produced a number of incredibly popular handbags, most famously the “Monogram Multicolor” bags that made their way into the collection of perennially produced Vuitton classics. Richard Prince also designed a capsule collection of “Joke Monogram” handbags for Vuitton, inspired by the artist’s Jokes series of paintings; Prince’s famous Nurses works influenced the designs of the entire Vuitton Spring/Summer 2008 collection designed by Marc Jacobs. The bags were

art as such has no place but belongs instead to the total realization of ‘beauty’.” Introduction, Piet Mondrian, The Collection, MUSEUM OF MODERN ART, http://www.moma.org/collection/ artist.php?artist_id=4057 (last visited Aug. 16, 2012).

92 After Saint Laurent died, his partner Pierre Bergé put their art collection, which included works by Picasso, Matisse, Duchamp, Brancusi, Mondrian, and de Chirico up for auction at Christie’s in Paris. See Steven Erlanger, Saint Laurent Art Sale Brings In $264 Million, N.Y. TIMES, Feb. 24, 2009, at A8, available at http://www.nytimes.com/2009/02/24/arts/design/ 24auction.html.

93 Yves Saint Laurent: “Mondrian” day dress, supra note 91. See also Barbara Pollack, All Dressed Up, ARTNEWS, Feb. 2012, at 88. As for art’s reclaiming of the designs, an Irving Penn photograph of one of the Braque inspired 1988 dresses recently sold at contemporary art auction house Phillips de Pury for $27,500, $9,500 over the high estimate. Lot 39, Irving Penn, Saint Laurent, Braque Inspired Fashion, Paris 1988, Photographs Auction, New York, April 9, 2011, http://www.phillipsdepury.com/auctions/lot-detail.aspx?sn=NY040111&search=&p=4&order= 1&lotnum=39.

94 Yves Saint Laurent, supra note 78, at 13.

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not only sold in traditional retail outlets but also in museums exhibiting the artists’ work—Murakami’s at the Los Angeles Museum of Contemporary Art in 200795 and the Brooklyn Museum of Art in 2008,96 and at a party for Prince’s Guggenheim retrospective in 200897—placing the objects in an intriguing place somewhere between commercial fashion and high art.

Beyond appropriation and collaboration, the fashions of the past fifty years are often discussed as operating within and contributing to major artistic movements and theories, particularly minimalism and postmodernism. Often designers describe themselves as inspired by artists and designers who preceded them, assisting us in finding a place for their work among broader aesthetic movements.98 Like the minimalist artists of the 1960s who rejected the constraints of oppressive artistic categories such as painting and sculpture,99 designers of high fashion at this time began to rebel against the dictations of the human form, which had previously served to limit design choices. Designers’ rebellion against the constraints of the body can be seen as a sartorial answer to minimalist art’s abandonment of representation.100 Hubert de Givenchy anticipated this when he introduced the “sack dress” in the late 1950s. It was met with skepticism, reflected in a Time magazine caption that read: “Ou est la poitrine, ou sont les hanches, ou

95

See Jack Bankowsky, © Murakami, ARTFORUM, Dec. 2007, at 334.

See Press Release, Brooklyn Museum, The Brooklyn Museum Announces the Inclusion of an Exclusive Louis Vuitton Store Within the Retrospective of Japanese Artist Takashi Murakami (Mar. 21, 2008), available at http://www.brooklynmuseum.org/press/uploads/Louis%20Vuitton %20Press%20Release-PROD.pdf.

97 See Fashion Scoops, Early to the Party, WOMEN’S WEAR DAILY, Jan. 10, 2008, at 13.

98 See, e.g., Francisco Costa, Foreword to ELYSSA DIMANT, MINIMALISM AND FASHION: REDUCTION IN THE POSTMODERN ERA, at 9 (2010) (“I often look to film, sculpture, photography, and architecture for inspiration and have found it in the unpretentious works of artists such as Brancusi, Madame Vionnet, Frank Stella, Man Ray, and John Pawson—my minimalist predecessors.”).

99 ELYSSA DIMANT, MINIMALISM AND FASHION: REDUCTION IN THE POSTMODERN ERA 31 (2010) (discussing Donald Judd’s expositions on minimalism in “Specific Objects”).

100 Id. at 32 (describing Balenciaga’s creation of “clothing that was neither bolstered by a corset infrastructure nor adherent to the human body’s natural shape”) 96

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est la femme?” 101 or “Where is the chest, where are the hips, where is the woman?”

To which M. Givenchy replied that the dress was “inspired by modern art, the experimental art that seeks new shapes and forms transgressing the limitations set by convention. With my new dress form I have discarded, among other things, the limitations set by the female form.” 102 This practice reemerged in the 1990s with Japanese designers such as Rei Kawakubo (of Comme des Garcons), Issey Miyake, and Yohji Yamamoto, who “mined their own form of sartorial minimalism, heavily reliant on the abstraction and rejection of the traditional female body.” 103 3. Museums’ and Runway Shows’ Display of Fashion as Art Further contributing to the conception that fashion might be considered art is the extreme popularity of museum fashion exhibitions. Museums have long exhibited clothing along with furniture, jewelry, and other decorative arts, generally as pieces of historic interest. There has been a shift, however, to the display, celebration, and contemplation of fashion for fashion’s sake, which owes much credit to Diana Vreeland, the former Vogue Editor-in-Chief who took the helm of the Costume Institute at the Metropolitan Museum of Art in 1971. 104 The

101

VALERIE STEELE, FIFTY YEARS OF FASHION: NEW LOOK TO NOW 41 (1997).

Id. at 41-42.

103 Id. at 75. Dimant also singles out Chanel as a forerunner of minimalism: Chanel’s easily adaptable components are the sartorial counterparts of minimal art’s primary shapes: basic building blocks that appealed intrinsically to a larger audience than the one drawn to overly ornate designs. . . . Of all Chanel’s innovations, her little back dress would emerge as a conceptual ready-made that conveyed discreet, refined chic no matter the price tag. . . . The little black dress is a standard and an original, a design that can be reinterpreted by nearly any designer or manufacturer and still retain its inherent value as the champion of progressive fashionable dressing. With regard to the minimalist discourse, this ready-made speaks to the major criticism of minimalism itself: in its simplicity, accessibility, and translation to mass production, is the minimal object enough “art”?

Id. at 54-55.

104 See, e.g., Diana Vreeland at the Costume Institute, DIANA VREELAND, http://dianavreeland.com/page/posts/op/read/id/73 (last visited Aug. 16, 2012).

102

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movement of fashion into the museum picked up speed in the 1990s as the Victoria and Albert Museum in London and the Musée des Arts Décoratifs in Paris curated increasing numbers of fashion exhibitions. Since then, the popularity of displaying fashion in museums has continued to soar, perhaps culminating in the 2011 Costume Institute retrospective of Alexander McQueen, which attracted over 650,000 viewers to the Metropolitan Museum of Art. 105 Placing an object in a museum certainly does not irrefutably make it art, but the museum context invites a more serious and contemplative approach to fashion, not offered by the retail store, that has led many fashion fans to think of the museum-exhibited garments as art.106 Similarly, the fashion show has gone from being a private venue for the showing of designs to buyers and press to a platform for public spectacle. The modern fashion show is highly conceptualized and choreographed to reflect and aid in the creation of a thematic coherency for each season’s collection. Gianni Versace changed the nature of the runway show in the 1980s by shifting the focus from the selling of clothing to the celebration of celebrity, glamour, and excess that his famed Supermodels exemplified. 107 Once liberated from its constraints, other designers were free to use the runway show as a vehicle for both outsized theatrics and more restrained, conceptual performance art. Karl Lagerfeld’s shows for

105

Diane Cardwell, Waiting Hours to See the McQueen Exhibit, in a Line Not Unlike a Runaway, N.Y. TIMES, Aug. 8, 2011, at A14, available at http://www.nytimes.com/2011/08/08/ nyregion/alexander-mcqueen-exhibition-at-metropolitan-museum-of-art-draws-thousands.html.

106 ARNOLD, supra note 51, at 5-6 (“Curatorial study of fashion has produced numerous important exhibitions and the vast number of visitors who attend such displays testify to the widespread interest in fashion. Importantly, exhibitions provide an easily accessible connection between curators’ specialist knowledge, current academic ideas and the central core of fashion, the garments themselves, and the images that help to create our ideas of what fashion is.”).

107 Reka C.V. Buckley and Stephen Gundle, Flash Trash: Gianni Versace and the Theory and Practice of Glamour, in FASHION CULTURES: THEORIES, EXPLORATIONS AND ANALYSIS 331, 339 (Stella Bruzzi & Pamela Church Gibson, eds., 2000) (“[Runway shows] evolved from restricted events aimed at the fashion press, buyers and selected clients into show business events which captured newspaper headlines, generated magazine coverage and therefore impacted on popular culture. In every aspect they were conceived and choreographed to attract attention.”).

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Chanel, often transformed Paris’ Palais Royale into an otherworldly paradise, such as the underwater universe he created to frame the Spring 2012 collection epitomize the former, 108 while the late Alexander McQueen’s strange shows have been compared approvingly to the latter. McQueen, who has been credited with “redefin[ing] the runway as a stage for high-concept theatrics,” 109 in 1999 presented a show in which a model in a white dress was repeatedly pelted by a paint gun, and in 2004 staged a show choreographed by celebrated contemporary dancer and choreographer Michael Clark. During Issey Miyake’s Spring/Summer 1999 presentation, models cut apart the designer’s “A-POC” (“A Piece of Cloth”) garments while on the runway, 110 in a show reminiscent of Yoko Ono’s “Cut Piece” performance art of 1964. 111 Fashion shows themselves have even begun to occupy the museums and galleries once reserved for serious artists. After sponsoring a Leonardo da Vinci retrospective at the Louvre, Ferragamo was the first fashion house to present a collection inside the hallowed museum walls in June 2012. 112 Moreover, in what is becoming a more common practice, many fashion companies held their Spring/Summer 2012 shows and presentations in New York galleries. 113

108

See Jess Cartner-Morley, Chanel goes underwater to unveil latest collection, THE GUARDIAN, Oct. 4, 2011, at 26, available at http://www.guardian.co.uk/fashion/2011/oct/04/ chanel-lagerfeld-pearl-collection.

109 David Velasco, Alexander McQueen: Savage Beauty, ARTFORUM, May 2011, at 134.

110 DIMANT, supra note 99, at 81.

111 See, e.g., Michael Bracewell, Yoko Ono, FRIEZE, Nov.11, 2003, available at http://www.frieze.com/issue/review/yoko_ono1.

112 Luisa Zargani, Salvatore Ferragamo to Sponsor Da Vinci Exhibit, WOMEN’S WEAR DAILY, Feb. 28, 2012, 11. Other designers, including Marc Jacobs for Louis Vuitton, have held shows in the Louvre’s courtyard.

113 See Ann Binlot, It's a Model Invasion! Inside Fashion Week's Full-Blown Takeover of NYC's Galleries and Museums, ARTINFO (Sept. 7, 2011), http://www.artinfo.com/news/story/ 38530/its-a-model-invasion-inside-fashion-weeks-full-blown-takeover-of-nycs-galleries-andmuseums/ (quoting Chelsea Art Museum special events manager Melissa Netecke: “I know that many of the galleries—both commercial and nonprofit—host fashion events because fashion, as an art form, falls along the lines of their mission or interests.”).

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B. Art Imitating Fashion “[I]f artists were in hell in 1946, now they are in business.”

–Allan Kaprow 114 For all the ways in which fashion has increasingly emulated art over the past fifty to sixty years, during the same period, artists have begun to incorporate into their work many practices that mimic those of the fashion industry. Many contemporary artists operate like fashion designers by having their work produced in factory-like settings by teams of assistants, celebrating the commerciality of their products, and embracing celebrity and popular culture. Andy Warhol exemplified this practice. He worked out of a space he called “the Factory,” idolized celebrities to an extreme, rarely had a hand in the physical production of his work, and unapologetically acknowledged the commerciality of his enterprise, famously remarking: “[b]eing good in business is the most fascinating kind of art.”115 The extreme commerciality 116 of fashion historically sullied its reputation in the art world and removed it from consideration as a serious artistic medium. In the 1960s, however, artists began to test the boundaries of commerciality. 117 While

114

Allan Kaprow, The Artist as a Man of the World (1964), reprinted in ESSAYS ON THE BLURRING OF ART AND LIFE 46, 47 (Jeff Kelley ed., 1993).

115 WARHOL, supra note 1, at 92; see also Amy M. Adler, Against Moral Rights, 97 CAL. L. REV. 263, 297-98 (2009) (pointing out that in the recent collaborations between contemporary artists and fashion designers, “[o]f course, Warhol’s spirit reigns over this merger of retail and art.”).

116 In describing the constraints of commerciality, Yves Saint Laurent noted, “I am bursting with the desire to go much further and revolutionize everything. Then I think: it would be perfect for the Saint-Germain-des-Près boutique at, say, $100 . . . but at couture prices will they accept it?” STEELE, supra note 101, at 65. But one could easily argue that with a fashion industry today so reliant on brand licensing for profits, designers of couture and runway designs have freedom to create without worrying about the saleability of their designs.

117 DIMANT, supra note 99, at 57 (describing the work of Claes Oldenburg who sold painted plaster reliefs (many of shoes and other types of clothing) at his Lower East Side outpost “The Store,” and was criticized at the time for blurring distinctions between art and commerce.)

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this practice was originally met with criticism, 118 it is now so commonplace that commerciality in contemporary art has become “overt and intrinsic.” 119 During a retrospective of the work of Japanese artist Takashi Murakami at the Los Angeles Museum of Contemporary Art in 2008, a Louis Vuitton boutique was installed within the museum to sell the handbags that the artist had helped create, signaling that Murakami was not only willing to sell his name to sell handbags, but also that the Vuitton venture was hardly separable from his “serious” art on view in the museum. Not only have artists such as Warhol and Murakami embraced the commerciality of their practice, but also market prices for contemporary art continue to soar, making it even more difficult to view art as a category of goods that transcend commerce. 120 While couturiers of the past might physically have constructed the fashions they designed, it is accepted in the modern fashion industry that designers have little presence in the creation of their works beyond the stages of initial conception and final approval. Similarly, although it is easy to picture a great artist of high modernism such as Jackson Pollock physically creating his art—theatrically applying paint to canvas—contemporary artists today are rarely so involved in the creation of their works. Artists like Murakami, Jeff Koons, and Damien Hirst supervise the work of teams of assistants who create the actual works that the artist conceives. Hirst has said of his “spot” paintings, “[M]y spots I painted are shite. . . . The best spot painting you can have by me is one painted by [my assistant]

118

Id. Samantha Vettese Forster, Connections Between Modern and Postmodern Art and Fashion, 12 DESIGN J. 217, 228 (2009) (“The ‘sellability’ of a Postmodern art work can now be a factor in its inclusion in the elected ‘art timeline’ – what will be recorded in history as ‘good art’ or an important movement. Some Postmodern artists now produce works with definite commercial considerations and gear their work to particular buyers and segmented sections of society, as with fashion, and dealers and galleries often use equivalent artifices to fashion marketing.”). See also Adler, supra note 115, at 297 & n.204 (noting that “young artists seem to embrace commercialism in a casual way that previous generations would have considered heresy” and “the increasing absurdity of trying to separate art from commerce”).

120 See Adler, supra note 115, at 298 (“As art increasingly functions like other luxury commodities, this shift undermines the notion that art is distinct from other products.”).

119

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Rachel.”121 This practice of denying authorship is certainly indebted to Warhol, who once remarked to a reporter in 1966, “Why don’t you ask my assistant Gerry Malanga some questions? He did a lot of my paintings.”122 We might still deny fashion’s equivalence with art by requiring art to be “serious” in either subject matter or meaning. Fashion could rarely compete on this level because of its preoccupations with beauty and celebrity. However, contemporary art has similarly embraced these notions. Warhol’s obsession with celebrity culture perhaps permanently abolished the idea that high art could somehow be above the intrigue of celebrity. Legendary designer Gianni Versace has been described as “[l]ike Andy Warhol, . . . in thrall to the aura of celebrity. . . . ‘unashamedly star-struck, so unashamedly that it became endearing.’” 123 Finally, one could argue that fashion, unlike art, rarely has any meaning or purpose beyond the functional and aesthetic: it exists to provide body clothing and warmth in an attractive and sometimes sexually appealing way. But like most precepts of “art” that have been attacked since the postmodern period, many contemporary artists refuse to announce any grand meaning behind their art, merely describe their work as “cool” or “really great looking.” Warhol described his process of choosing source material in a 1964 interview as relying on whatever image “caught my eye,” rejecting any notion that his images were symbolic or meaningful. 124 And while being deposed for a recent copyright infringement suit,

121

DAMIEN HIRST & GORDON BURN, ON THE WAY TO WORK 90 (2001). This is not a particularly contemporary practice but continues a long tradition of the use of found and massproduced objects going back to the early 20th century Dadaists. Marcel Duchamp began the practice of elevating the found object to the status of art with his “ready-mades,” and minimalist artists such as Donald Judd, Carl Andre, Sol le Witt and others had their sculptures manufactured by factories, a process imitated by Warhol in his “Factory.” Dan Flavin’s work using storebought light bulbs and florescent tubes, though minimalist, also associated him with the “found object” and “junk” tradition associated with Robert Rauschenberg, Jasper Johns, and Claes Oldenburg among others. See DIMANT, supra note 99, at 57.

122 I’LL BE YOUR MIRROR: THE SELECTED ANDY WARHOL INTERVIEWS 99 (Kenneth Goldsmith, ed. 2004).

123 Buckley & Gundle, supra note 107, at 341.

124 DIMANT, supra note 99, at 61-62.

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artist Richard Prince, in describing a work at issue said he wanted only to create a “balls-out, great, unbelievably looking great painting.” 125 Just as it is left to the wearer to breathe life into the raw materials of fashion, its left to the viewer to construct the meaning of much contemporary art. A recent collaboration between artist Gary Hume and fashion designer Stella McCartney perfectly illustrates this modern disavowal of artistic genius on the part of both the designer and artist.

Hume said of his work, “I just make things to look at. It’s a picture. It’s not a manifesto,” describing his style as “unexpressionist,” while McCartney similarly proclaimed, “I don’t design with a theme in mind; it’s about my friends and what I get up to when I’m in London. I’m not trying to shock people.” 126 C. Is Fashion Art? There are two possible conclusions to this story. The first is that fashion is art: contemporary art has been so successful in destroying the boundaries between “art” and everything else that consumer goods such as fashion articles have been allowed in. If this is the case, then should there be any consequence for fashion?

If “the great achievement of contemporary art, has been to destroy the category of art as we know it,” 127 then even if fashion is art, the classification as such means little in the contemporary art world where both everything and nothing is art. 128 If “art” is no longer a special category reserved for the products of artistic genius, should it mean anything that fashion has won entry into the category? The

125

Brief for Plaintiff-Appellee at 20, Cariou v. Prince, No. 11-1197 (2d Cir. Jan. 25, 2012).

Forster, supra note 119, at 234.

127 Adler, supra note 115, at 299. Professor Adler does qualify this potentially sweeping statement by noting: Or at least, to have come close to destroying it. Adorno wrote that “art revolts against its essential concepts while at the same time being inconceivable without them.” Has the contemporary revolt against the category of art been so successful that it has destroyed art's “essential concepts”? Has contemporary art turned “art” into a category that is “inconceivable”?

Id. at n.218 (internal citation omitted).

128 See id. at 298-99 (“I believe that art has been (almost) successful in destroying the line separating art from everything else. In an ultimate act of iconoclasm, the great achievement of contemporary art, has been to destroy the category of art as we know it.”).

126

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argument by the fashion community that their work is art may actually be counterproductive.

The second conclusion is that fashion is not art.129 Even though a principled method for conceptually distinguishing fashion from art may no longer exist, the two categories remain distinct, and we can quickly identify fashion by its wearability. However, even if fashion is not art, by exposing the place of fashion in relation to contemporary art, it is easier to understand the arguments of those who desire increased intellectual property protection for fashion. Whereas the argument that fashion designers need economic incentives to create is unsatisfying, it is understandable that in a contemporary culture where it is no longer clear that a principled line exists between fashion and art, members of the fashion community find it increasingly difficult to accept that their work exists within a starkly different legal regime from that of art.

III MORAL RIGHTS IN FASHION DESIGN “Design piracy denigrates the integrity of the style.”

—Nicole Miller 130 Although the assertion that fashion is art may be misguided, or at least an incomplete solution to problem of design protection, it is undeniable that fashion

129

See, e.g., ARNOLD, supra note 51, at 33-34: In [some fashion] designs and presentations, artistic methods are used to comment on the practice of fashion, but this does not necessarily turn their fashion into art. . . . Like other design forms, such as architecture, fashion has its own particular concerns that prevent it from ever being purely art, craft, or industrial design. . . .

In fashion’s case, focus on body and cloth, and the fact that it is, usually, designed to be worn and sold, distinguishes it from fine art. However, this does not prevent fashion from being meaningful, and the art world’s continued fascination with fashion underlies its cultural significance.

130 Kristi Ellis, Copyrighting a Dress: Congress Mulling Bill to Protect Designers, WOMEN’S WEAR DAILY, Apr. 26, 2007, at 13.

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and art today have a synergistic relationship.131 When viewed from this perspective, it is obvious why fashion designers have felt compelled to demand increased protection for their work: their beloved creations, which they think of as art, which they created with the love and devotion of an artist, which have been critically reviewed like art, and which have been displayed in museums like art, are treated in a radically different way under U.S. law than art. In an effort to receive commensurate treatment with art, designers have petitioned Congress for copyright protection, but are not in need of the economic-based protection that copyright provides.132 Instead, they feel a sense of personal harm when their “art” is cheaply and slavishly copied. Thus, what the proponents of fashion copyright really desire—and have essentially been arguing for—is a moral right to protect against the reputation-based harms that are felt when designs are copied.

Moral rights laws are generally designed to protect artists’ reputational interests in their works 133 and are often premised on a personhood theory of protection,134 which posits that works of art embody an artist’s “individual

131

See, supra Part II. See also Forster, supra note 119, at 239: Art and fashion may have crossed over through coincidence but most often, throughout the 20th century, it has been because of mutual aesthetic and ideological affinities. These affinities may be because of an underlying similarity between the artist and designer or because of an actual collaboration that has occurred. Artists can appropriate the stereotypically held notions of business success and glamour from fashion and fashion has often taken the sentiments of profundity and innovation believed of art. They have both benefited from the alliance in some way.

132 See supra Part I. 133 The Paris Act of the Berne Convention, Article 6bis defines moral rights as existing “[i]ndependently of the author’s economic rights” and protecting against certain acts that “would be prejudicial to [the author’s] honor or reputation.” S. Treaty Doc. No. 27, 99th Cong., 2d Sess.

37 (1986). There is also often said to be a general public interest in protecting moral rights of artists. See, e.g., Merryman, supra note 37, at 1029 (a work should be “protected and kept as it emerged from the imagination of its author and later conveyed to posterity without damage”) (quoting Millet, Tribunal de la Seine, May 20, 1911, Amm. I. 271).

134 See, e.g.,, Linda J. Lacey, Of Bread and Roses and Copyrights, 1989 DUKE L. J. 1532, 1542 (1989).

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essence”135 and are part of her “very identity.” 136 Therefore, in order to fully protect an artist’s interests,137 we should recognize rights that “preserve the bond between the artist and her work.”138 The U.S. grants moral rights under the Visual Artists Rights Act of 1990,139 which protects visual artists’ rights of attribution140 and integrity, 141 and many states grant similar moral rights protection.142 This sense that the work of an artist is an extension of the artist himself and is deserving of special, non-economic protection can be seen clearly in the Congressional debate over the DPPA and IDPPPA. Designers have not been shy to share heart-wrenching stories of their sense of personal attack in arguing for increased protection. They convey a sense that their creative works—thought of as

135

Id. Id. See also California Art Preservation Act, CAL. CIV. CODE § 987(a) (West 2012) (“the physical alteration or destruction of fine art, which is an expression of the artist's personality, is detrimental to the artist's reputation”).

137 See ROBERTA ROSENTHAL KWALL, THE SOUL OF CREATIVITY: FORGING A MORAL RIGHTS LAW FOR THE UNITED STATES 5 (2010) [hereinafter KWALL, SOUL OF CREATIVITY]: [T]here are practical benefits to designing a legal system of authors’ rights that promote authorship morality. . . . “[T]he law can have an important symbolic function if it accords with public views about what is fair, but it loses that power as the formal law diverges from public morality.” . . . In the context of intellectual property laws specifically, [people should] “believe that the rules established serve reasonable social purposes and are not simply efforts to create profits for special interest groups, such as large corporations. (quoting Tom R. Tyler, Compliance with Intellectual Property Laws: A Psychological Perspective, 29 N.Y.U. J. INT’L L. & POL. 219, 225-26 (1997)).

138 Lacey, supra note 134, at 1537. See also KWALL, SOUL OF CREATIVITY, supra note 137, at xiii (“The act of creative authorship implicates the honor, dignity, and artistic spirit of the author in a fundamentally personal way, embodying the author’s intrinsic dimension of creativity.”).

139 VARA, 17 U.S.C. § 106A (2006).

140 Id. § 106A (a)(1)(A).

141 Id. § 106A (a)(3)(A).

142 See, e.g., California Art Preservation Act, CAL. CIV. CODE § 987 (West 2012); N.Y. ARTS & CULT. AFF. LAW § 14.03 (McKinney 2012).

136

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“represent[ing] a complete embodiment of the internal self” 143—should be protected against unauthorized use because that would amount to a personal assault on the designer himself.144 For example, Narciso Rodriguez, who had the great fortune of designing the bridal gown for Carolyn Bissette’s wedding to John F. Kennedy, Jr., described the design as follows: “I designed something with great love for the most important person in my life. . . . You know, it was a very personal thing for me, that dress.”145 The dress was subsequently copied many times over for American women who wished to emulate the enviable Mrs. Kennedy’s style.

Mr. Rodriguez provided this story to Congress as an example of the way he was harmed in the absence of increased protection for fashion design, but he went on to say, “I never looked at it like something was stolen from me because I would have made that dress anyway.” 146 Mr. Rodriguez’s statement perfectly illustrates the tension of extending copyright-like protection to design under a utilitarian, economic theory of copyright. He loved the dress and he loved the woman for whom he designed it. He did not need an economic incentive to create it, but he still felt harmed when it was copied.147 It could be said that the design “embodie[d] an intrinsic dimension” where his “creative impulse…eminat[ed] from inner drives that exist in the human soul . . . [which] do not depend upon external reward or recognition but instead are motivated by . . . the creation of

143

Roberta Rosenthal Kwall, Inspiration and Innovation: The Intrinsic Dimension of the Artistic Soul, 81 NOTRE DAME L. REV. 1945, 1976 (2006) [hereinafter Kwall, Inspiration] (citing IMMANUEL KANT, THE PHILOSOPHY OF LAW 64 (W. Hastie trans., T. & T. Clark 1887)).

144 See Lacey, supra note 134, at 1542 (stating that artistic works are “part of an artist’s very identity”).

145 2008 Hearing, supra note 9, at 22.

146 Id. Mr. Rodriguez likely did not see this work as having been “stolen” because its value to him was emotional and not economic and thus could not be stolen.

147 The observation that many artists, authors, and other creators are motivated largely by non-economic sources and would continue to create without any economic incentive has formed the basis of most scholarship advocating the adoption of more expansive moral rights laws in the U.S. See Kwall, Inspiration, supra note 143; KWALL, SOUL OF CREATIVITY, supra note 137; Lacey, supra note 134.

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works with a particular meaning or significance.” 148 The intrinsic dimension of Mr. Rodriguez’s creativity is perfectly illustrated by his description of copying as “theft” and that “to steal something . . . [is] to copy my DNA and diffuse it.” 149 It is not just designers who have invoked this personality theory in their arguments for design protection. Professor Scafidi, the fashion industry’s staunchest supporter in legal academia, has argued that fashion is “creative expression” and should thus be protected because “creative expression” is “exactly what copyright is supposed to protect.”150 In other words, fashion design warrants protection not because protection incentivizes design, but because all creative expressions of an artistic soul deserve protection.151 Congresswoman Maxine Waters voiced her opinion that the copying of Diane von Furstenburg’s wrap dress in “cheap material” is “an insult to the work she has done” noting that “there is probably something called pride in your work” that shouldn’t be “undermined by those who [copy] poorly.” 152 Congressman Waters clearly sensed the moral rights undercurrent of the congressional hearing and felt that Ms. von Furstenburg deserved some sort of reputation-based right to protect the valuable creative energies she has expended in creating the wrap dress that is synonymous with her name. 153

148

KWALL, SOUL OF CREATIVITY, supra note 137, at xiii.

2008 Hearing, supra note 9, at 54.

150 2006 Hearing, supra note 9, at 79 (statement of Susan Scafidi).

151 See, e.g., KWALL, SOUL OF CREATIVITY, supra note 137.

152 2006 Hearing, supra note 9, at 189.

153 Another common argument advanced by proponents of increased protection is that the U.S. should attempt to conform to the design protection regimes of Europe in order to successfully compete in the global marketplace. See, e.g., 2006 Hearing, supra note 9, at 84 (statement of Susan Scafidi) (arguing that the French recognition of intellectual property rights in fashion design has “helped maintain the preeminence of the French fashion industry” also that the French see fashion as art). A detailed analysis of that argument is beyond the scope of this Note, but it is worth noting that many European design protections flow from Franco-German personality-based theories of intellectual property. See Kwall, Inspiration, supra note 143, at 1976.

149

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It is evident that advocates for increased design protection have been motivated by the sense that fashion is art to argue—albeit deceptively—that it deserves morals-based protection equivalent with that of art. Arguments over design protection that focus on the economic aspects of copyright law are inappropriate in the contemporary fashion industry. Instead, the debate should center on the moral rights protections that designers seemingly desire. But the question remains as to whether moral and reputational considerations can adequately justify the extension of copyright-like protection to fashion design,154 or if not, whether some alternative scheme might be devised to protect personality and reputational interests of designers. Instead of attacking the argument that copyright is economically necessary for the fashion industry, opponents of design protection should rebuke the arguments that fashion should receive commensurate protection with art or that any consumer goods should receive morals-based protection.

CONCLUSION In the end, the contemporary quest for copyright protection undertaken by fashion designers and other industry supporters is misguided. The American fashion industry as a whole has not suffered any detectable economic harm as a result of the lack of copyright protection, and modern technological changes have not improved copying techniques so drastically that there is reason to believe that the long-standing low-IP equilibrium has been upset. However, economically successful designers have continued to argue fervently for increased protection.

Upon further examination of their arguments, it is clear that in attempting to curtail copying, they seek to redress a morals-based harm. Their sense of harm when their designs are copied is magnified by the synergistic relationship between fashion and art that has recently emerged in the U.S., which has led to a growing perception that fashion is art. When comparing their work to that of their peers and

154

Many legal scholars have argued that natural law and personhood theories that are offered to justify moral rights laws should be incorporated into copyright law, but as it stands, most academics and courts continue to endorse the economic view. See, e.g., Kwall, Inspiration, supra note 143, at 1947 (“[T]he law can, and should, be shaped in response to all relevant forces motivating creativity, not just those concerned with economic reward.”).

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collaborators in the art world, fashion designers have been shocked to discover that U.S. law treats their precious work much differently than that of the artists. This has led designers to seek copyright protection in their work. However, their harm has little basis in economics and is instead predicated upon a sense of personal, morals-based harm that is felt when the integrity of their designs are compromised.

The debate over fashion design protection should focus on moral and reputational considerations outright, instead of veiling them in economics-based arguments favored by copyright policy. If it is moral rights protection that the fashion industry really desires, then a morals-based regime should be on the Congressional docket instead of the pending quasi-copyright proposal that has failed to gain significant legislative support.

WORK AS WEAPON, AUTHOR AS TARGET: WHY PARODIES THAT TARGET AUTHORS (NOT JUST THEIR WORKS) SHOULD BE FAIR USES RYAN KAIRALLA * INTRODUCTION ........................................................................................................227 I. OVERVIEW OF RELEVANT COPYRIGHT LAW AND FAIR USE ..........................230 A. Copyright Law Generally .......................................................................230 B. Fair Use ..................................................................................................231 C. Work Parody, Satire, and the Fair Use Factors ....................................232 1. The Work Parody/Satire Distinction .................................................232 2. The Distinction and Fair Use ............................................................234 II. AUTHOR PARODIES .......................................................................................237 A. Author Parodies in the Federal Courts ..................................................238 III. PRIVILEGING AUTHOR PARODIES WOULD CORRECT A MARKET FAILURE IN LICENSING SIMILAR TO THE ONE INHERENT IN WORK PARODY ....................242 IV. PRIVILEGING AUTHOR PARODIES IS PROPER UNDER THE FAIR USE FACTORS DUE TO THEIR SIMLIARITY TO WORK PARODIES (AND DISSIMILARITY TO SATIRES) .......................................................................................................249 A. The Purpose and Character of the Use ..................................................249 B. The Nature of the Copyrighted Work .....................................................250 C. Amount and Substantiality of the Portion Used .....................................251 D. Effect on Potential Market for or Value of the Copyrighted Work ........253 CONCLUSION ...........................................................................................................253 APPENDIX................................................................................................................255 INTRODUCTION In April 2011, comedic musician “Weird Al” Yankovic was preparing to release his thirteenth studio album. The LP Alpocalypse would provide his listeners with the same amusing rewrites of popular songs that they have come to expect *

Copyright © 2012 by Ryan Kairalla. J.D., 2012, New York University School of Law; B.B.A., 2008 (Economics), University of Miami. Many thanks to Pamela Samuelson, Richard M. Sherman Distinguished Professor of Law, University of California Berkeley, for her guidance, feedback, and mentoring throughout this endeavor. I would also like to thank my colleagues in NYU Law Revue for their helpful comments, as well as for making law school a truly unforgettable experience.

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from his previous efforts.1 Yankovic intended for the album’s lead single to be “Perform This Way,” a spoof of recording artist/songwriter Lady Gaga’s “Born This Way,” which she released earlier that year. 2 As had been his standard practice throughout his career, Yankovic sought the pop icon’s permission prior to adding “Perform” to his album. 3 After sending her a recording of the song for her review, Gaga’s camp rejected his request. 4 In response, “Weird Al” decided instead to post his song on YouTube and offer free downloads of “Perform” on his website. 5 But Alpocalypse’s twelfth track would be saved yet. In an interview, Yankovic told Billboard.com that the initial refusal was made by Gaga’s manager unbeknownst to Gaga herself and, after listening to “Perform,” Gaga gave her personal blessing for the rewrite. 6 But did he even need Lady Gaga’s permission to borrow from her hit song?

Yankovic did not think he did, as he claimed that his work was a parody and would be protected as a “fair use” under copyright law. 7 Had Lady Gaga sought legal action under the Copyright Act, however, the extent to which Yankovic could rely on fair use as a shield is not clear-cut. Instead, it might depend significantly upon whether “Perform This Way” would constitute a “parody” as defined by the Supreme Court in Campbell v. Acuff-Rose Music, Inc.8 Since Campbell defines parody as “the use of some elements of a prior author’s composition to create a new one that, at least in part, comments on that author’s works,” 9 “Perform This Way” would have to specifically mock “Born This Way” to fall squarely within Campbell’s ambit.

1

Throughout his career, Yankovic’s songs have spoofed the works of legendary artists such as Michael Jackson (“Eat It”), Queen (“Another One Rides the Bus”), Madonna (“Like a Surgeon”), and many others.

2 “Weird Al” Yankovic, The Gaga Saga, AL’S BLOG (April 20, 2011), http://alyankovic.wordpress.com/the-gaga-saga.

3 See id. (“[I]t has always been my personal policy to get the consent of the original artist before including my parodies on any album”).

4 Jason Lipshutz, Weird Al Gets Gaga's Approval for “Born This Way” Parody, BILLBOARD.COM (April 21, 2011, 2:04 PM), http://www.billboard.com/news/weird-al-gets-gagas-approval-for-born-this-1005148362.story.

5 See Yankovic, supra note 2.

6 Gary Graff, 'Weird Al' Yankovic: Lady Gaga Has 'Rocked the Zeitgeist', BILLBOARD.COM (June 1, 2011, 12:37 PM), http://www.billboard.com/news/weird-al-yankovic-lady-gaga-hasrocked-1005209612.story.

7 See Yankovic, supra note 2 (“My parodies have always fallen under what the courts call ‘fair use,’ and this one was no different, legally allowing me to record and release it without permission.”)

8 Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994).

9 Id. at 580 (emphasis added).

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But Yankovic himself has admitted that he did not intend for “Perform This Way” to mock the original work from which it derived. He felt that since Lady Gaga’s song was “such an earnest human rights anthem,” a work ridiculing it might be poorly received.10 Instead, Yankovic rewrote “Born This Way” to poke fun at Gaga herself—specifically her tendency to perform in bizarre costumes. 11 Indeed, nearly every line of “Perform” bitingly claims that the singer would wear all sorts of strange items on stage, including Swiss cheese, a porcupine, and even bodily organs. 12 So could “Perform”—and other unlicensed rewrites that ridicule the original work’s author—survive an infringement action? The Copyright Act grants authors an exclusive right to “prepare derivative works based on the[ir] copyrighted work.”13 Section 107 of the Act, however, provides an affirmative defense of “fair use” for certain otherwise infringing actions. 14 Precedent has proclaimed that, in the case of critical rewrites of copyrighted works, not all works are entitled to the same level of defense. For instance, the Campbell Court made explicit that parodies—rewrites which borrow from an author’s work for the purpose of criticizing that work—clearly fall within the purview of the fair use doctrine. 15 It also noted, however, that rewrites that are satirical in nature—i.e., the new work critiques something else unrelated to the work—are much more likely to find themselves on the wrong side of an infringement claim. 16 And while later cases have used Campbell’s parody/satire distinction to adjudicate many fair use claims involving comedic derivatives of copyrighted works, the distinction does not provide ready assistance for those who try to evaluate the propriety of rewrites that target the original work’s author. Rather, such works seem to defy seamless 10

Yankovic, supra note 2.

Here is how Yankovic described his song’s vision: “The basic concept is that I, as a Lady Gaga doppelganger of sorts, describe the incredibly extravagant ways in which I perform on stage. Meat dresses and giant eggs would most likely be referenced, but also much more ridiculous made-up examples of bizarre wardrobe and stage production.” Id. 12 For an excerpt of the two songs’ lyrics, see APPENDIX. 13 17 U.S.C. § 106(2) (2006).

14 17 U.S.C. § 107 (2006).

15 See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994) (“[P]arody, like other comment or criticism, may claim fair use under § 107.”). It also warrants noting that, since Campbell, “in every case (except one) that [a] court found a parody, it also found fair use.”

David A. Simon, Reasonable Perception and Parody in Copyright Law, 2010 UTAH L. REV. 779, 793 (2010).

16 See Campbell, 510 U.S. at 580 (“If . . . the commentary [of a rewrite] has no critical bearing on the substance or style of the original composition, . . . the claim to fairness in borrowing from another’s work diminishes accordingly (if it does not vanish) . . . .”).

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classification into either genre. By placing the original work’s author in its crosshairs, songs such as “Perform This Way” do not target a subject completely untethered to the source material (as satire does), but also do not take direct aim at the source material itself (as parody does).

Courts have only recently begun to consider whether to treat these “author parodies” more like traditional parodies, satires, or something else entirely. The Supreme Court and the circuit courts have yet to address the issue, and the few district courts that have weighed in have propounded opposite holdings. Given the prevalence of author parodies such as “Perform This Way” in popular culture,17 how the law eventually decides to view these distinctive works will have significant implications for authors and appropriators alike.

This article presents both an economic and legal argument for privileging author parodies in a fashion similar to parodies of a work. Part II will discuss relevant Copyright law, particularly the fair use statute and the parody/satire dichotomy. Part III will introduce author parodies and survey the court cases which have confronted these works. Part IV will demonstrate, through the presentation of an economic framework, that author parodies are no more likely than “work” parodies to receive favorable licensing terms from copyright holders. Thus, author parodies should be granted fair use protection to prevent a similar market failure.

Part V will show that author parodies should receive similar treatment to work parodies under the § 107 factors.18 I OVERVIEW OF RELEVANT COPYRIGHT LAW AND FAIR USE A. Copyright Law Generally The Constitution permits Congress to “promote the Progress of Science and useful Arts by securing for limited Times to Authors . . . the exclusive Right to

17

See infra Part II.A. A definitional note: This Article shall hereinafter refer to rewrites that critique the original work’s author as “author parodies,” while referring to the traditional, Campbell-type parodies as “work parodies.” This is done to help the reader delineate between the admittedly-similar concepts of work parody, satire, and author parody while the concepts are discussed throughout this analysis. This choice of terminology places this Article in accord with the cases and academic articles that have, albeit briefly, discussed works that parody a preexisting work’s author. These writings have referred to those works by the verbose label “parody of the author.”

See, e.g., Henley v. DeVore, 733 F. Supp. 2d 1144, 1154 (C.D. Cal. 2010); Simon, supra note 15, at 832. This Article shortens the term to the more manageable “author parody.”

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their respective Writings . . . .” 19 This enumerated power led to the institution of America’s federal copyright scheme, which affords copyright holders a limited monopoly to sell, reproduce, perform, display, and create derivative works of their original creations. 20 These rights, however, are not absolute; instead, American copyright law adheres to its constitutional goal of promoting artistic progress by striking a careful balance between providing authors an incentive to create and allowing future authors to build upon the works that came before them. 21 The Copyright Act and case law attempts to foster this balance in several significant ways, such as providing copyright protection for a limited period of time, 22 requiring substantial similarity between two works to sustain an infringement claim, 23 and protecting only expressions of ideas embodied in a work, not the ideas themselves, 24 and allowing for a fair use of a work.25 B. Fair Use Perhaps the most important mechanism courts employ to balance the interests of authors and appropriators is the “fair use” doctrine. Fair use, originally a common law doctrine, now codified in § 107 of the Copyright Act, provides an affirmative defense to copyright infringement. 26 The doctrine allows for appropriations of copyrighted material for limited purposes such as “criticism,” “comment,” “news reporting,” and “teaching.” 27 Rather than rigidly articulate which uses the law deems “fair,” however, the doctrine directs courts to determine

19

U.S. CONST. art. I, § 8, cl. 8.

17 U.S.C. § 106 (2006).

21 In Nash v. CBS, Judge Easterbrook of the Seventh Circuit addressed the two competing interests that copyright law must accommodate, noting: “Intellectual (and artistic) progress is possible only if each author builds on the work of others; [however,] to deny authors all reward for the value their labors contribute to the works of others also will lead to inefficiently little writing, just as sure as excessively broad rights will do.” 899 F.2d 1537, 1540–41 (7th Cir. 1990).

22 See 17 U.S.C. §§ 302–305 (2006).

23 See, e.g., Nichols v. Universal Pictures Corp, 45 F.2d 119, 121–22 (2d Cir. 1930), cert. denied, 282 U.S. 902 (1931).

24 For a strong articulation of the idea/expression dichotomy can be found, see Mazer v.

Stein, 347 U.S. 201, 217 (1954).

25 17 U.S.C. § 107 (2006) 26 Id.; see also Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 576 (1994) (tracing common law development of the fair use defense).

27 17 U.S.C. § 107 (2006).

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flexibly, on a case-by-case basis, whether a particular appropriation provides sufficient social gains that outweigh the copyright holder’s proprietary interests. 28 To accomplish this flexible, case-by-case inquiry, § 107 instructs courts to consider and balance four factors in determining whether a particular use is deemed “fair”: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. 29 Rather than view the factors in isolation, court are instructed that the factors are all “to be explored, and the results weighted together, in light of the purposes of copyright.”30 C. Work Parody, Satire, and the Fair Use Factors 1. The Work Parody/Satire Distinction Work parody as a literary form traces its roots back to Ancient Greece.31 Although the term possesses a rich history and etymology that makes defining it an imprecise exercise, 32 the following will suffice as a working definition: work 28

See Campbell, 510 U.S. at 576–77 (“The fair use doctrine . . . ‘permits [and requires] courts to avoid rigid application of the copyright statue when, on occasion, it would stifle the very creativity which that law is designed to foster.’”) (quoting Stewart v. Abend, 495 U.S. 207, 236 (1990)); Harper & Row v. Nation Enters., 471 U.S. 539, 549 (1985) (“Section 107 requires a case-by-case determination whether a particular use is fair.”); Blanch v. Koons, 467 F.3d 244, 250 (2d Cir. 2006) (“Copyright law thus must address the inevitable tension between the property rights it establishes . . . and the ability of authors, artists, and the rest of us to express them- or ourselves by reference to the works of others . . . . The fair use doctrine mediates between the two sets of interests . . . .”).

29 17 U.S.C. § 107 (2006).

30 Campbell, 510 U.S. at 578.

31 MARGARET A. ROSE, PARODY: ANCIENT, MODERN, AND POST-MODERN 6 (1993).

32 The varied roots of the word “parody” makes defining the term difficult. The term traces its etymology to Greek words parodia (referring to an adaptation of epic verse used to treat a light, satirical or mock-heroic subject), parodos (pertaining to an “imitating singer” or the idea of “singing in imitation), and parode (pertaining to the idea of a song or ode “sung in imitation of another”). Id. at 7–8. The genre has existed for millennia in some form or another, and “our understanding of what precisely the term denotes has changed in the course of the centuries.”

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parody is “the imitative reference of one literary text to another, often with an implied critique of the object text.”33 In other words, not only does a work parody engage in mockery, but also it directs its focus to the material itself. Satire, of which work parody is sometimes classified as a subgenre,34 is merely prose that ridicules prevailing social norms and follies. 35 Although work parody and satire are similar in that they can both make their target an object of criticism, satire “need not be restricted to the imitation, distortion, or quotation of . . . preformed artistic materials, and when it does deal with such preformed material, need not make itself as dependent on it for its own character.” 36 Another way to conceptualize the distinction between work parody and satire is by identifying each form’s purpose for using the primary work. Whereas satire can use a particular work as a weapon for attacking an unrelated target, in work parody the work is the target.37 For example, the Ninth Circuit held that a spoof of The Cat in the Hat, which used Dr. Seuss’ text to mock the widelypublicized O.J. Simpson litigation, was satire.38 The court found that the new work merely served as a vessel through which the defendant criticized a separate concept.39 Conversely, the Second Circuit found that a recreation of a Vanity Fair magazine cover depicting a naked, pregnant Demi Moore with comedian Leslie Nielsen’s head superimposed on a model’s body constituted work parody because the new work could “reasonably be perceived as commenting on the seriousness, even the pretentiousness, of the original.”40 In the former case, the court perceived The Cat in the Hat as a weapon, and in the latter the court viewed the Vanity Fair cover as targeted by the new work.

BEATE MÜLLER, Introduction to PARODY: DIMENSIONS AND PERSPECTIVES 1, 3 (Beate Müller ed., 1997).

33 JOSEPH A. DANE, PARODY: CRITICAL CONCEPTS VERSUS LITERARY PRACTICES, ARISTOPHANES TO STERNE 4 (1988) (emphasis added).

34 Id. at 10.

35 ROSE, supra note 31, at 80.

36 Id. at 81–82.

37 For further articulation of the weapon/target distinction between work parody and satire, see Richard A. Posner, When is Parody Fair Use, 21 J. LEGAL STUD. 67, 71 (1992). It should be noted that Posner does not refer to the two terms as “parody” and “satire,” but rather as “target parody” and “weapon parody” respectively. Despite his use of differing terms, it is clear from the text that Posner is referring to what this analysis deems work parody and satire.

38 Dr. Seuss Enters., L.P. v. Penguin Books (“Dr. Seuss II”), U.S.A., Inc., 109 F.3d 1394, 1401 (9th Cir. 1997).

39 Id. 40 Leibovitz v. Paramount Pictures Corp., 137 F.3d 109, 114 (2d Cir. 1998).

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2. The Distinction and Fair Use Apart from being an enjoyable exercise in artistic analysis, the categorization of a rewrite as either work parody or satire has significant legal implications for the vitality of that work’s fair use claim. In fact, this categorization tends to be a dispositive action for adjudicating courts. Whereas the “work parody” label usually foretells a fair use finding, a “satire” branding is all but a kiss of death for a copyright defendant.41 As the remainder of this section shall show, this is the case because of how work parody and satire’s specific attributes measure against the four fair use factors of § 107. 42 Fair use analysis under § 107 first commands courts to look at “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.”43 Although work parodies are often commercial in nature (which would normally weigh against a fair use finding under this factor) courts have been willing to downplay the significance of this attribute due to work parody’s “transformative” nature. 44 As the Supreme Court articulated in Campbell: (1) work parody is transformative in that it “adds something new, with a further purpose or different character, altering the first [work] with new expression, meaning, or message . . . .” 45; (2) moreover, “the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works.”46 As a result, (3) “the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.”47

41

See supra notes 15–16 and accompanying text; Maureen McCrann, Note and Comment, A Modest Proposal: Granting Presumptive Fair Use Protection for Musical Parodies, 14 ROGER WILLIAMS U. L. REV. 96, 97 (2009) (noting that the “distinction [between work parody and satire] has evolved in the legal world as the keystone to determining the legality of using a copyrighted work in the creation of a new work.”).

42 Some argue, however, that courts tend to place too much emphasis on the work parody/satire distinction in making a fair use finding, while effectively abandoning the flexible four-factor analysis that § 107 demands. See Bruce P. Keller & Rebecca Tushnet, Even More Parodic Than the Real Thing: Parody Lawsuits Revisited, 94 TRADEMARK REP. 979, 979 (2004) (arguing that “[s]everal courts have . . . explicitly relied on the distinction between these two forms of humor to impose liability on those who have created [satire], even though the [Supreme Court] counsels a more sensitive approach”).

43 17 U.S.C. § 107(1) (2006).

44 Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994).

45 Id. 46 Id. 47 Id.

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Work parody tends to escape the first § 107 factor unscathed despite its oftcommercial nature, but satire is not so lucky. Whereas the Supreme Court was more willing to allow transformative work parodies to borrow from their target material to fulfill their goals, the Court noted that satires—which do not comment on the original composition itself—“require[] justification for the very act of borrowing.”48 Consequently, a satirist’s “claim to fairness in borrowing from another’s work diminishes . . . and other factors, like the extent of its commerciality, loom larger.” 49 Thus, satires bear the full brunt of their commercialism, and do not fare as well as work parody under the first fair use factor.

The second fair use factor explores “the nature of the copyrighted work.”50 Under this factor courts recognize that copyright affords expressive, original works more protection against copying than it affords factual works. 51 Although this pronouncement would seem to count the second factor against work parodies, the Campbell Court also accepted that work parodies almost always borrow from expressive material, and thus the second factor is “not much help” in a fair use inquiry. 52 Despite this diminished role that the second factor plays in this inquiry, courts evaluating satirical uses of expressive copyrighted material tend to weigh this factor against the defendant. 53 The third factor examines “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.” 54 Under this factor, the extent to which a defendant can appropriate from a copyrighted work depends upon her purpose and the character of the use.55 In the case of work parody, courts recognize that to properly “take[] aim at an original work, the parody must be able to ‘conjure up’ at least enough of that original to make the object of its critical wit recognizable.”56 In contrast to work parody’s dependence on its source material, satires do not need to borrow from the original work to make their point. A satirist does not have to employ the copyrighted works of Dr. Seuss to effectively

48

Id. at 581.

Id. at 580.

50 17 U.S.C. § 107(2) (2006).

51 Campbell, 510 U.S. at 586.

52 Id. 53 See, e.g., Dr. Seuss II, 109 F.3d 1394, 1402 (9th Cir. 1997)..

54 17 U.S.C. § 107(3) (2006).

55 Campbell, 510 U.S. at 586–87.

56 Id. at 588.

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comment on the O.J. Simpson trial, and thus, the satirist receives less justification to borrow from those works under the third factor. 57 The final fair use factor involves an examination of “the effect of the use upon the potential market for or value of the copyrighted work.” 58 The Court stated that the importance of the market harm measured under factor four varies “not only with the amount of harm [to the original], but also with the relative strength of the showing on the other factors.” 59 When analyzing this factor, courts must consider not only the effect that the defendant’s work will have on the market for the original work, but also on the market for potential derivatives of that work: “If the defendant's work adversely affects the value of any of the rights in the copyrighted work . . . the use is not fair.”60 The above principle would seem to cause the fourth factor to adversely affect work parodies and satires equally, as both constitute derivative works.61 However, when making the market harm inquiry, courts distinguish between uses that harm the market through typical market substitution and those that do so by changing consumer preferences (such as how a critique of a work may suppress the work’s demand). Parodic derivatives receive more fair use protection, as market harm through disparagement is not an interest that the Copyright Act protects.62 Or, to put it another way, “the role of the courts is to distinguish between ‘biting criticism [that merely] suppresses demand [and] copyright infringement, [which] usurps it.” 63 Since courts refuse to find a “protectable derivative market for criticism,” work parodies, which take aim at the very works which inspired them,

57

See Dr. Seuss II, 109 F.3d at 1402–03.

17 U.S.C. § 107(4) (2006).

59 Campbell, 510 U.S. at 591 n.21.

60 Harper & Row v. Nation Enters., 471 U.S. 539, 568 (1985) (quoting 413 Nimmer on Copyright § 13.05).

61 A derivative work is: [A] work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a whole, represent an original work of authorship, is a “derivative work”.

17 U.S.C. § 101 (2006).

62 See Campbell, 510 U.S. at 592.

63 Id. (quoting Fisher v. Dees, 794 F.2d 432, 438 (9th Cir. 1986)). Criticism of copyrighted works is expressly listed as an example of a protected category under the fair use statute. 17 U.S.C. § 107 (2006).

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perform favorably under the market harm factor. 64 As the Campbell Court noted: “when a lethal parody . . . kills demand for the original, it does not produce a harm cognizable under the Copyright Act.”65 Satires, on the other hand, perform comparatively more poorly under this factor due to their failure to employ the sort of work-specific criticism (indicative of work parody) for which courts readily provide shelter under fair use doctrine.66 III AUTHOR PARODIES Given how the four factors differ in treatment of work parodies and satires, whether a court views a particular rewrite more like the former or the latter all but determines the fate of the rewrite’s fair use defense. Whereas work parodies almost always succeed under each of the factors, satires often languish. One can infer from this analysis that, to succeed on a fair use claim, a comedic rewrite of a copyrighted work must not select a target for mockery too unrelated to the original.

Thus, an unauthorized sequel to Gone With the Wind that ridiculed the novel’s depiction of slavery would be deemed a fair use;67 but, a rewrite of the song “Boogie Woogie Bugle Boy” that used the 1940s classic as a vehicle to generally critique societal customs, would not. 68 One might wonder at what point a critical derivative work becomes so unrelated to its source material that a copyright defendant loses the safe harbor of fair use. What if someone borrows elements from a work to create a new work that, while not mocking the original, mocks the original’s author? This question brings us to the concept of author parodies. Like work parodies, author parodies are not attacking something completely separate from the work itself. But like satire, author parodies use the original work as a weapon as opposed to a target. Courts must resolve how to treat these unique works, which seem to straddle the line between the two genres.

Author parody is by no means a new concept. Much like work parody, examples of author parody can be traced back to Ancient Greece. In Aristophanes’ 64

In fact, no court adjudicating the fair use claim of a work parody has ever failed to hold that the market harm factor in that case favored fair use. See Simon, supra note 15, at 829.

65 Campbell, 510 U.S. at 592.

66 Even though the Campbell Court expressly reserved judgment on how satires should fare under the market harm factor, see id. at 592 n.22, lower court cases post-Campbell have favored penalizing satirical works more for their market harm. See, e.g., Dr. Seuss II, 109 F.3d 1394, 1403 (9th Cir. 1997)..

67 See Suntrust Bank v. Houghton Mifflin Co., 268 F.3d 1257 (11th Cir. 2001).

68 See MCA, Inc. v. Wilson, 677 F.2d 180 (2d Cir. 1981).

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The Acharnians, the playwright parodied the works of Euripides for the purpose of mocking the celebrated tragedian.69 But despite the genre’s history, as well as its presence in today’s artistic landscape, an appeals court has yet to rule on an “author parody” fair use defense.70 The Second Circuit has upheld a fair use defense where a defendant borrowed from an author’s works to critique that author in a non-parody context: in New Era Publications International v. Carol Publishing Group, the court found noninfringing a critical biography of Scientology founder L. Ron Hubbard despite the fact that the biographer quoted extensively from Hubbard’s books.71 However, only district courts have examined fair use claims of parodic rewrites that lampoon the original’s author.

A. Author Parodies in the Federal Courts Federal district courts that have discussed the author parody fair use issue have offered contrary holdings. Some cases have treated author parodies as plausible fair uses, identifying their similarity to work parody. In Burnett v.

Twentieth Century Fox Film Corporation, 72 for instance, the Central District of California found fair use when the producers of “Family Guy” included on their program an animated version of the “Charwoman” fictional character, originally created by comedienne Carol Burnett. 73 The defendants claimed that their use of Burnett’s character was intended to mock Burnett herself, and the court found this rationale supported their fair use claim. 74 The Southern District of New York reached a similar holding in Bourne Co. v. Twentieth Century Fox Film Corporation.75 In Bourne, the defendants—coincidentally also the producers of “Family Guy” program—had written the song “I Need a Jew,” which was similar in lyrics and melody to the Disney classic “When You Wish Upon a Star.”76 In arguing for their fair use claim, the defendants claimed that their song was intended to mock Walt Disney’s alleged anti-Semitism. 77 Despite the fact that Disney neither wrote nor owned the copyright to “When you Wish Upon a Star,” the Southern District of New York found that using a copyrighted song as a means

69

See DANE, supra note 33, at 30.

See infra note 84, and accompanying text.

71 New Era Publ’ns Int’l v. Carol Publ’g Group, 904 F.2d 152 (2d Cir. 1990).

72 Burnett v. Twentieth Century Fox Film Corp., 491 F. Supp. 2d 962 (C.D. Cal. 2007).

73 Id. at 966.

74 Id. at 968–69.

75 Bourne Co. v. Twentieth Century Fox Film Corp., 602 F. Supp. 2d 499 (S.D.N.Y. 2009).

76 Id. at 501.

77 Id. at 507.

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to ridicule a public figure closely associated with the song was sufficiently parodic to support a fair use claim. 78 In other cases, courts have negatively treated author parody fair use defenses, casting the genre as merely a form of general satire and ruling on the fair use question accordingly. For example, one federal court noted in the dicta of a literary infringement case that “[t]he satirist (or one intending to parody an author but not any particular work) may freely evoke another artist by using the artist’s general style,” but “[o]nly when the satirist wishes to parody the copyrighted work does the taking . . . become permissible.” 79 Similarly, in Salinger v. Colting, the same federal court that seemed to approve initially of the author parody defense in Bourne would later offer a repudiation of it.80 The defendant in Salinger wrote an unlicensed derivative of The Catcher in the Rye, and depicted the classic novel’s teenage protagonist, Holden Caufield, as a 76-year-old man. 81 After dispatching with the defendant’s argument that the derivative constituted a parody of Catcher in the Rye and the Holden Caufield character, 82 the Salinger Court rejected the defendant’s final fair use claim—that his work constituted a permissible parody of Catcher in the Rye’s author, J.D. Salinger. 83 In reaching its holding, the court seemed to express a negative view toward the viability of author parody fair use claims generally when it stated that “the parodic framework of Campbell . . . requires critique or commentary of the work.”84 But of all of the author parody cases confronted by the district courts, the 2010 holding of Henley v. Devore85 warrants a separate, more meticulous analysis 78

Id. at 507–08.

Dr. Seuss Enters., L.P. v. Penguin Books USA, Inc. (“Dr. Seuss I”), 924 F. Supp 1559, 1568 (S.D. Cal. 1996) (emphasis added).

80 Salinger v. Colting (“Salinger I”), 641 F. Supp. 2d 250 (S.D.N.Y. 2009), rev’d on other grounds, 607 F.3d 68 (2d Cir. 2010). In Salinger I, the court attempted to reconcile the two seemingly contrary holdings of Salinger I and Bourne by arguing that the close association between Walt Disney and the “I Need a Jew” song “reinforced and reiterated” a broader attempt by the Bourne defendants to target the original song itself. Id. at 261 n.4. Conversely, the Salinger I court held that the author parody in their case failed to supplement a work parody of The Catcher in the Rye, and that author parody standing alone was not sufficiently transformative to succeed on a fair use claim. Id. 81 Id. at 258.

82 Id. at 258–60.

83 Id. at 268.

84 Id. at 261 (emphasis added). It warrants noting that the Second Circuit in Salinger v.

Colting mentioned the lower court’s rejection of author parody as fair use, but explicitly refused to endorse or reject its holding on that issue. See (“Salinger II”), 607 F.3d 68, 83 (2d Cir. 2010).

85 733 F. Supp. 2d 1144 (C.D. Cal. 2010).

79

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because of its extensive discussion of the issue. Rather than merely liken author parody to either work parody or satire in a matter akin to the above cases, the Henley Court specifically examined how author parodies might apply to each of the four fair use factors 86—which makes the case particularly useful to this analysis. Henley involved two acts of alleged copyright infringement by the U.S. Senate campaign of Republican politician Charles DeVore. 87 One of those acts involved the creation of a promotional song and YouTube music video designed to poke fun at President Barack Obama and House Speaker Nancy Pelosi. 88 The campaign’s song, titled “The Hope of November” (“November”), was an unauthorized rewrite of the Don Henley classic “The Boys of Summer.” 89 The defendants argued that “November’s” lyrics mock Henley’s supposed liberal views and his support of Obama. 90 The campaign specifically claims that the narrator of the song is meant to be Henley himself, and that the song presents the classic rock legend as “disappointed and disillusioned with Obama and nostalgic for the hopeful days of Obama’s campaign.”91 Through Don Henley’s “narration,” “‘November’ pokes fun at Obama and the naïveté and subsequent disappointment of his supporters, which includes Henley . . . .” 92 The Henley court found the defendant’s arguments strong enough to categorize “November” as a “reasonably perceptible” author parody, but also found that the lampooning of Don Henley was “a relatively minor element of the main satirical purpose of the song—targeting Obama and his supporters.” 93 The court in Henley explored how author parodies might measure up against the four fair use factors and, while not explicitly endorsing such works as a legitimate fair use,94 appeared to treat author parodies favorably on each prong.

Regarding the purpose/character of the use, the court suggested that author parodies could be sufficiently transformative because “the purpose of an authorparodying work is to evoke the author in order to provide socially-valuable 86

Id. at 1154–55.

Id. at 1147 88 Id. at 1148.

89 Id. at 1157.

90 Id. 91 Id. 92 Id. 93 Id. 94 The Henley court assumed without deciding that author parodies constituted a legitimate fair use for the purposes of adjudicating DeVore’s overall copyright infringement defense. See id. at 1156 (“With this framework in mind, and assuming that ‘parody-of-the-author’ is a legitimate transformative purpose, the Court now considers the four primary elements of the fair use inquiry for each of the allegedly infringing songs.”).

87

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criticism of the author, a public figure necessarily open to ridicule.” 95 In examining the nature of the copyrighted work, the court remarked that criticism of authors may require lampooning creative, non-factual works if an author’s fame derived from such works. 96 In looking at the “amount used” factor, the Henley court accepted the possibility that “referencing public figures through their work may require the use of at least some portion of those works,” suggesting that at least some borrowing of the author’s copyrighted material would be appropriate for author parody. 97 Finally, on the “market harm” factor, the court surmised that “a parody lampooning the author may be unlikely to supplant any potential market for the original or derivatives thereof” because it is unlikely that the original author would ever license such a work.98 Despite Henley’s favorable treatment of author parodies, the court held that even if the defendants were justified in appropriating “The Boys of Summer” to mock its author, the amount of the song used by the defendants “went far beyond that reasonably necessary to conjure up [Don] Henley.” 99 Furthermore, “many of the ‘November’ lyrics [did] not serve the purpose of ridiculing Henley and drift[ed] into pure satire, targeting Obama and Nancy Pelosi.” 100 Indeed, the court identified that many of “November’s” lyrics seemed to have nothing to do with mocking Don Henley at all and instead involved a general commentary on the perceived political failures of President Obama and Speaker Pelosi, 101 which would be indicative of a more satirical purpose. As a result, the court held that “November” was not fair use and upheld the plaintiff’s infringement claim. 102 As author parody cases continue to be adjudicated, eventually courts will have to resolve the current split and definitively establish how copyright law should treat the genre. The remainder of this Article will argue that author parodies should be viewed similarly to work parodies in the area of fair use. It will do this by first presenting an economic framework supporting the contention that treating 95

Id. at 1154.

Id. at 1154–55.

97 Id. at 1155.

98 Id. 99 Id. at 1161 100 Id. 101 An excerpt of “November’s” lyrics: “Obama overload/Obama overreach/We feel it everywhere/Trillions in the breach/Empty Bank, empty Street/Dollar goes down alone/Pelosi’s in the House/So now we all must atone/But we can see through--/Your broken promises oh One/You got your head cocked back and/Your teleprompter on, maybe/And can we tell you our love you/Will still be strong/After the hope of November’s gone?” Id. at 1169 Appendix A. 102 Id. 96

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author parodies similarly to work parodies in the fair use context would correct a market failure in the licensing of derivative works—thereby fostering a socially optimal outcome. Following the economic argument, the Article will make a legal argument for privileging author parodies by comprehensively demonstrating why these works should perform strongly under the § 107 fair use factors.

III PRIVILEGING AUTHOR PARODIES WOULD CORRECT A MARKET FAILURE IN LICENSING SIMILAR TO THE ONE INHERENT IN WORK PARODY Several scholars have propounded an economic rationale for affording work parody a fair use defense. The rationale is based on the idea that, absent fair use, fewer parodic works will be created due to a copyright holder’s general unwillingness to grant licenses, at any price, for derivatives which ridicule their creations. Professor Wendy Gordon notes that a copyright holder is “unlikely to license a hostile review or a parody” of her work and, consequently, her “antidissemination motives make . . . a strong case for fair use . . . .”103 Similarly, Judge Posner’s research favors privileging work parody due to the “private interest of the copyright owner . . . to suppress criticism of [his] work” rather than engage in market exchange with a potential work parodist.104 A similar economic rationale supports granting fair use protection for author parodies. Treating author parody similarly to work parody—and dissimilarly to satire and traditional derivative works—in the fair use context would correct a market failure, creating socially-valuable works that would not otherwise see the light of day. Just as authors would be generally unwilling to license parodies that ridicule their work, they would be similarly unwilling (if not more so) to license parodies in which they are personally attacked.

To illustrate this point, the remainder of this section will present an economic framework. It will demonstrate how granting author parodies a fair use defense akin to the one work parodies receive under Campbell, while allowing copyright holders to retain property rights over their traditional and satirical derivatives, will lead to the creation of the socially optimal number of copyrighted works: Assume a world with economically-motivated individuals. Five of the people in this world include Carl (a Composer of original love songs), Abby (an 103

Wendy J. Gordon, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and its Predecessors, 82 COLUM. L. REV. 1600, 1633 (1982).

104 See Posner, supra note 37, at 73.

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Author parodist), Wesley (a Work parodist), Sean (a Satirist), and Tabitha (a creator of Traditional derivative works, such as adaptations or translations, which would lack any apparent fair use defense under current law). Recently, Carl penned his latest song, “Your Love is Wonderful,” which became a hit single. A short time after the song was released, others wanted to create derivatives of Carl’s work that kept the chords and melody of “Your Love is Wonderful” but changed the song’s lyrics to serve a different purpose. Abby wanted to write “Your Love is as Wonderful as America is Terrible,” a song which lampoons Carl’s extremist political views. Wesley sought to pen “Your Love is Boring,” a song which criticizes the hackneyed and simplistic message of Carl’s love song. Sean wished to compose “My H.M.O. is NOT Wonderful,” a scathing critique of the medical industry. Finally, Tabitha hoped to create “O Seu Amor é Maravilhoso,” a line-byline translation of “Your Love is Wonderful” into Portuguese. The goal in this scenario will be to assign derivative work rights to these individuals in such a way to produce the most works of authorship at the lowest social cost.

The framework will begin with the presumption that it is economically efficient to give all of the derivative work rights to Carl, the original author. The rationale behind this presumption is not immediately apparent. The presumption particularly requires explanation when one considers that the Coase Theorem105 would suggest that production of derivative works would be unaffected regardless of whether the original or the derivative author possessed the property right.

Consider the following example: suppose that Carl wrote “Your Love is Wonderful” and Tabitha wanted to create her Portuguese translation of the song.

Assume that Carl valued the right to prevent others from making derivatives of his song at $1,000, and Tabitha valued the right to write her Portuguese version of the song at $5,000. Regardless of whether we assign the derivative right to Carl or Tabitha, the socially optimal outcome of the translation being made will occur. If Carl has the derivative right, Tabitha will pay Carl between $1,000 and $5,000 for a license to write her work. If instead Tabitha has the derivative right, she will write “O Seu Amor é Maravilhoso” without having to pay Carl. But if, instead, the circumstances are such that Carl valued the right to protect his song at $5,000 and Tabitha valued the right at $1,000, Tabitha would not create the translation regardless of which party receives the derivative right. If Carl has the right, he will not grant Tabitha a license; and, if Tabitha has a right, Carl will pay Tabitha between $1,000 and $5,000 for her to not write her song.

But despite the Coase Theorem’s conclusion that authors collectively would create the same number of derivative works regardless of how rights are assigned, 105

See R.H. Coase, The Problem of Social Cost, 3 J.L. & ECON. 1 (1960).

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the relevant scholarship on the subject presents several justifications for affording this right to the original copyright holder. 106 Chief among these are the distortions in the timing of publications that would occur if the original author did not also have an exclusive right to make derivatives. Lacking such a right, the author would have a perverse incentive to delay publication of his work “until he had created the derivative work as well (or arranged for its creation by licensees), in order to gain a head start on any would-be derivative authors.”107 Therefore, to prevent the unnecessary delay of original (and derivative) works for public consumption, this framework will presume that the original author should possess the exclusive right to create derivatives of his work in all circumstances. This presumption, however, can be rebutted if allowing the original author to retain this right leads to market failure by preventing the creation of the greatest number of original works of authorship. If the socially optimal number of works will be created by doing so, then a transfer of the derivative right from Carl to one of the derivative composers should occur. Such a transfer would be equivalent to granting that derivative composer a fair use defense should Carl choose to bring an infringement action against that composer for his work.

Assume, for the purposes of this framework, that society would benefit immensely from the creation of all five songs—that Carl’s original work, Wesley’s critique of Carl’s work, Abby’s critique of Carl, Sean’s medical industry commentary, and Tabitha’s Portuguese translation would all be valuable works, both in terms of profit as well as for their important social messages of the critical works. 108 Therefore, the goal should be to assign derivative rights to the five individuals in such a way that no market failures will occur and all five works will be created.

106

For a summary of these justifications, see Anastasia P. Winslow, Rapping on a Revolving Door: An Economic Analysis of Parody and Campbell v. Acuff-Rose Music, Inc., 69 S. CAL L. REV. 767, 780–82 (1996).

107 William M. Landes & Richard M. Posner, An Economic Analysis of Copyright Law, 18 J. LEGAL STUD. 325, 355 (1989).

108 The literature has provided much commentary on the social value of critical works--such as the derivative works composed by work parodists, author parodists, and satirists. For example: Criticism is valuable, inter alia, because the market works to further the social good only when consumers have accurate information about the goods available.

As the Supreme Court has written: "So long as we preserve a predominantly free enterprise economy, the allocation of our resources in large measure will be made through numerous private economic decisions. It is a matter of public interest that those decisions, in the aggregate, be . . . well informed.”

Gordon, supra note 103, at 1634 (quoting Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S 748, 765 (1976)).

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If Wesley, Abby, Sean, and Tabitha are profit maximizers, they will each approach Carl with the hope of obtaining a license from him to create his or her derivative work. As it would be in everyone’s pecuniary interest to make a deal, it would seem that a successful voluntary exchange should occur in each case. Carl should be willing to bargain separately for a share of each person’s potential profits from the derivative work and society will benefit from having all five songs (including the original).

Other factors, however, could disincentivize Carl from negotiating with Abby, Wesley, Sean, and Tabitha. It may be that, for certain reasons, Carl has a strong personal motive not to disseminate certain types of derivative works, causing him to forego a voluntary exchange—which would ultimately be in society’s interest. 109 It is unlikely that this would be the case when Tabitha offers to buy a license from Carl to make a Portuguese version of “Your Love is Wonderful.” There is no apparent reason why Carl would have a significant incentive to prevent the licensing of a traditional derivative work. Thus, since it would be profitable to do so, Carl would negotiate and eventually grant the license to Tabitha, and she would be able to compose “O Seu Amor é Maravilhoso.”

Similarly, Carl should also be willing to negotiate with Sean and grant a license for Sean’s satirical work “My H.M.O. is NOT Wonderful.” Although the highly critical message of Sean’s song is not as innocuous as Tabitha’s, Sean would have no personal interest in suppressing a song that offers a general critique of the medical industry. As a result, the negotiation should prove successful. 110 Since no 109

See Gordon, supra note 103 (“The owner of a copyright, however, may not be willing to exploit all of the possible derivative works over which his copyright would ordinarily give him control. . . . [b]ecause the owner's antidissemination motives make licensing unavailable in the consensual market . . . .”); see also Winslow, supra note 106 at 793 n.143 (“One assumption underlying the preference for voluntary exchange is that people will valuate resources to reflect the value society places on them. This assumption fails when there are external benefits, because society reaps a benefit from which the transacting parties do not profit.” (citation omitted)).

110 See Posner, supra note 37, at 73 (noting that for satires there is “no obstruction to letting the market make the tradeoff” for derivative rights because the author would have no personal antidissemination motive). However, one can certainly question the assumption that copyright holders will voluntarily negotiate licenses for satirical derivatives regardless of that satire’s subject. In offering a critique of Posner’s views, Professor Merges notes that a copyright holder may still have an antidissemination motive with regard to a satire if that satire critiques “a set of values or cultural assumptions deeply cherished by the copyright holder or at least widely held by the segment of the public loyal to her.” Robert P. Merges, Are You Making Fun of Me: Notes on Market Failure and the Parody Defense in Copyright, 21 AIPLA Q.J. 305, 311 (1993). If, for example, Carl does not share Sean’s views on the medical industry as propounded in his satirical work, he might refuse to negotiate a license with Sean. To the extent that these sort of antidissemination motives regarding satirical works will interfere with market exchange for

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failure in market exchange is likely to occur for Tabitha’s traditional derivative or for Sean’s satire, both derivatives would be made. Therefore, the socially optimal outcome can occur by allowing Sean (and generally all copyright holders of original works) to retain the exclusive right to make traditional derivatives and satirical works.

But the same cannot be said for work parodies. Carl would understandably bristle at Wesley’s request to rewrite “Your Love is Wonderful” as a new song that will ridicule his original composition. Rather than readily grant a license to Wesley in exchange for a share of “Your Love is Boring’s” profits, Carl would instead have a strong personal motive to censor Wesley’s song and refuse to grant him a license at any price.111 As the Ninth Circuit aptly noted: “Self-esteem is seldom strong enough to permit the granting of permission [for a work parody] even in exchange for a reasonable fee.”112 Echoing similar sentiment, the Campbell Court noted that “the unlikelihood that [authors] . . . will license critical reviews or lampoons of their own productions removes such uses from the very notion of a potential licensing market.”113 Even though the socially optimal outcome would be a successful licensing transaction between Carl and Wesley the work parodist, Carl’s personal interest would keep him from negotiating. To prevent the resulting market failure that would occur here—and with all work parodies—the derivative work right must shift from the original author to the work parodist.

Finally, the framework will examine Carl’s incentives to negotiate with Abby, the author parodist. We must now determine whether this would be a situation where Carl would gladly negotiate with Abby the way he did with the translator and the satirist, or, in a manner similar to the work parody example, whether Carl would have qualms about licensing “Your Love is Wonderful” for a rewrite that personally attacks him. It seems intuitive that Carl would likely have a strong personal interest in preventing the composition of author parodies at his expense. “Authors, like all people, do not like to be ridiculed. Given the fact that a person's reputation . . . cannot be restored with money once it has been destroyed, the chance that an author . . . would allow the destruction of those things via satirical derivative licenses, it stands to reason that the economic fair use argument for privileging satires strengthens accordingly.

111 See supra notes 103–104, and accompanying text.

112 Fisher v. Dees, 794 F.2d 432, 437 (9th Cir. 1986).

113 Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 592 (1994); see also Brian R. Landy, The Two Strands of the Fair Use Web: A Theory for Resolving the Dilemma of Music Parody, 54 OHIO ST. L.J., 227, 250–51 (1993) (“In parody cases, a plaintiff usually will refuse to grant permission, no matter what the price, simply because the plaintiff has an interest which is opposed to that of society: not to allow criticism of the plaintiff's work.”).

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parody is very slim.” 114 Consequently, one could argue that Campbell’s famous work parody maxim that “[p]eople ask . . . for criticism but they only want praise” 115 would be just as true, if not more so, for personal attacks as it would be for attacks of a person’s art. Whereas work parodies only indirectly target an individual’s labors, author parodies directly assault the individual—and thus may cut even deeper.

Furthermore, empirical evidence supports the intuition that public figures are unlikely to put a price on leaving themselves vulnerable to personal attack, through author parody or otherwise. A survey of 164 libel plaintiffs by Bezanson, Soloski, and Cranberg investigated, inter alia, whether the plaintiffs considered money damages an adequate remedy for the harm they suffered.116 The plaintiffs in the study rejected that proposition by an overwhelming margin. 117 Such a finding reflects the notion that, for defamation victims, “money damages cannot replace a reputation once lost.” 118 This information has implications for the possibility of successful voluntary exchange regarding author parodies. If no amount of money can adequately compensate those personally attacked through libel, this would suggest that no amount of money can compensate a copyright holder enough for them to permit a personal attack through author parody. Moreover, the similarities in plaintiff-motivations for bringing libel lawsuits and infringement claims against author parodies make the survey results all the more applicable. In both situations, the plaintiff suffers a personal public humiliation, inspiring them to pursue legal action. 119

114

Alfred C. Yen, When Authors Won’t Sell: Parody, Fair Use, and Efficiency in Copyright Law, 62 U. COLO. L. REV. 79, 104–05 (1991).

115 Campbell, 510 U.S. at 592 (quoting WILLIAM S. MAUGHAM, OF HUMAN BONDAGE 241 (Penguin Books 1992) (1915)).

116 RANDALL P. BENZANSON, ET AL., LIBEL LAW AND THE PRESS 23–28 (1987).

117 The vast majority of the surveyed plaintiffs instead felt that a retraction or apology would repair their harm suffered; moreover, less than one percent of the plaintiffs even requested money damages in their respective libel suits. Id. 118 Lucila I. van Dam, Note, Long Live the Lie Bill!, 41 U. MICH. J.L. REFORM 525, 531-32 (2008) (quoting DOUGLAS LAYCOCK, THE DEATH OF THE IRREPARABLE INJURY RULE 165 (1991)).

119 Professor Yen makes an analogous proposition regarding libel law and work parody: A libel victim sues because statements made to the public portray the victim in an unflattering light. The victim suffers through the ridicule and scorn heaped upon him by those who have seen the libelous statement. Similarly, an author sues a parodist because she resents the public portrayal of her work in an unflattering light. She suffers because those who have seen the parody hold her in lower esteem and laugh at her work.

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Whereas individuals like Carl have every incentive to prevent author parodies of their work, society has a strong interest in their creation. Significant external benefits result from educating society about public figures through criticism. 120 The public’s interest notwithstanding, it is likely Carl will refuse to sell Abby a license for her author parody. Consequently, Carl’s refusal would create a market failure similar to the one that occurs in the work parody scenario.

And just like with work parody, the presence of a market failure justifies reassigning the derivative work right over author parodies to the author parodist.

Before leaving the framework, some mention should be made of the fact that, in practice, not all authors will behave similarly to Carl. Certainly, some public figures will allow others to turn their works into author parodies. Lady Gaga, for one, seemed not to mind the needling she received from Al Yankovic’s “Perform This Way.” 121 And perhaps other authors might be willing to grant author parody licenses to others—albeit at a higher price than they would for traditional derivatives—as a way to compensate themselves partially for the harm they will suffer. However, the notion that some authors in the real world might be good sports in the face of ridicule does not negate the strong economic justifications for granting author parodies fair use protection. Authors who happily welcome public ridicule are the exception rather than the rule. 122 Moreover, the external benefits of criticism 123 are too valuable to let the potential target determine whether the criticism will occur—even if the target is willing to permit it for only a marginally higher fee. “The social product [of criticism] is diminished if persons are able to exact compensation from truthful critics of their failings, for such a right reduces the incentive to produce truth.” 124 In sum, the socially optimal result—demonstrated through the creation of Carl’s original song and all four derivative works—occurs by allowing Carl to keep some of his derivative work rights but transferring the rest to the other authors. Stripping Carl of all of his derivative rights may prevent the creation of any of the five songs because Carl would be incentivized to delay production of the Yen, supra note 114, at 105–06.

120 See supra note 108, and accompanying text; see also New York Times Co. v. Sullivan, 376 U.S. 254, 269–70 (1964) (discussing the public benefits derived from permitting criticism of public officials); Winslow, supra note 106 at 796.

121 See supra Part I. 122 See supra note 113 and accompanying text; Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 592 (1994) (quoting WILLIAM S. MAUGHAM, OF HUMAN BONDAGE 241 (Penguin Books 1992) (1915)) (“People ask . . . for criticism, but they only want praise.”).

123 See supra note 108, and accompanying text.

124 Posner, supra note 37, at 74.

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original song. On the other hand, affording Carl full control over all subsequent derivatives of “Your Love is Wonderful” will lead to the composition of only Tabitha’s translation and Sean’s satire, and the public will likely never hear Wesley’s work parody or Abby’s author parody due to market failure. The answer, therefore, is to afford author parodies a fair use defense similar to the one that work parodies currently receive under Campbell, and not treat such works in a manner akin to traditional or satirical derivatives.

IV PRIVILEGING AUTHOR PARODIES IS PROPER UNDER THE FAIR USE FACTORS DUE TO THEIR SIMLIARITY TO WORK PARODIES (AND DISSIMILARITY TO SATIRES) The previous section demonstrates that permitting a fair use defense for author parodies would correct a market failure similar to the one corrected by granting fair use protection for work parodies. This section will now supplement the economic argument for protecting author parodies with a legal one. It will do this by applying the § 107 factors and past precedent to demonstrate that courts in future cases should generally provide author parodists with an affirmative defense to copyright infringement. As shown by the four § 107 factors, author parodies (1) are transformative; (2) have a compelling reason to use creative works; (3) have a strong claim to appropriate copyrighted material due to their dependence on that material; and (4) do not impose a cognizable market harm upon the copyright holder.

A. The Purpose and Character of the Use Much like “Perform This Way” and “The Hope of November” from the Henley case, author parodies are often commercial in nature. Normally, a work’s commerciality weighs against its fair use claim. 125 However, if a work has transformative value, such as in cases of commercial work parody, it can still perform favorably under the purpose/character factor: “[T]he more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.” 126 Not only “is the goal of copyright, to promote science and the arts, . . . generally furthered by the 125

Harper & Row v. Nation Enters., 471 U.S. 539, 562 (1985) (“The fact that a publication was commercial as opposed to nonprofit is a separate factor that tends to weigh against a finding of fair use. ‘[Every] commercial use of copyrighted material is presumptively an unfair exploitation of the monopoly privilege that belongs to the owner of the copyright.’” (quoting Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 451 (1984)).

126 Campbell, 510 U.S. at 579.

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creation of transformative works,” 127 but these works tend to present “little or no risk of market substitution” due to the differences in purpose between the original and subsequent creation.128 Author parodies are undoubtedly transformative works. By using a copyrighted work as a tool by which to lampoon the work’s author, the author parodist “adds something new, with a further purpose or different character.”129 In accord with the foregoing, Judge Pierre Leval, an originator of the “transformative” term, noted that “exposing the character of the original author” can create the sort of “new information, new aesthetics, [and] new insights and understandings” that are indicative of transformative works.130 Therefore, in a manner similar to Campbell-type work parodies, the transformative nature of author parodies mitigates the use’s commerciality, leading to a strong performance on the purpose/character factor.

B. The Nature of the Copyrighted Work Author parodies typically borrow from expressive, original, and creative works, a fact well exemplified by the district court cases that have adjudicated fair use claims in this area. 131 The Nature factor “recognizes that there is a hierarchy of copyright protection in which original, creative works are afforded greater protection than derivative works for factual compilations.” 132 Since creative works “fall[] within the core of . . . copyright’s protected purposes,”133 the non-factual nature of author parody’s source material appears to weaken the fair use claim of these works. However, work parodies, which also primarily exploit creative works to accomplish their purposes, almost always attain fair use protection.134 This is partially due to the fact that courts tend to discount the importance of the second factor when analyzing work parodies because such uses “almost invariably

127

Id. Id. at 581 n.14.

129 Id. at 579.

130 Pierre N. Leval, Toward a Fair Use Standard, 103 HARV. L. REV. 1105, 1111 (1990).

131 See supra Part III.A. Every author parody case referenced in this Article used a fictional work as its source material: Burnett (“The Charwoman,” fictional character), Bourne (“When You Wish Upon a Star,” song), Salinger (“The Catcher in the Rye,” fictional novel), and Henley (“The Boys of Summer,” song).

132 Suntrust Bank v. Houghton Mifflin Co., 268 F.3d 1257, 1271 (11th Cir. 2001).

133 Campbell, 510 U.S. at 586.

134 See Simon, supra note 15 and accompanying text.

128

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[involve the] copy[ing of] . . . expressive works.” 135 A similar discounting of the second factor also seems appropriate for author parodies, as “criticism of public figures through their work may require the use of well-known creative expressions . . . .” 136 C. Amount and Substantiality of the Portion Used Just how much a fair use defendant can borrow from the original work varies with the type of use in which the defendant is engaged. 137 A proper mockery of a copyrighted work necessitates reference to that work, and thus work parodists have a strong claim to some borrowing of copyrighted material under the Amount Used factor.138 Conversely, satirical works are not dependent on their source material to achieve their broad societal commentary. Rather, satirists exploit copyrighted materials “merely to get attention or to avoid the drudgery in working up something fresh.”139 Thus, satirical works have less justification to borrow from the copyright holder.

As for an author parodist’s dependence on his source material, one could plausibly argue that, unlike work parodists, author parodists do not need to appropriate an author’s work to achieve their purpose. Al Yankovic could have conceivably critiqued Lady Gaga’s unique fashion sense though a variety of different methods (a magazine editorial, perhaps), but likely took an approach best suited to his talents as a songwriter—and most likely to lead to his financial gain.

But, on the other hand, many authors are known to the public primarily through the works they create. Thus, limiting an author parodist’s access to his target’s body of work could have a chilling effect on the socially valuable criticism that he or she could have created. As the Henley court noted: “without the ability to evoke their works—the very reasons [authors] live in the public eye—a would-be [author] parodist may lack an adequate tool with which to lampoon.” 140

135

Campbell, 510 U.S. at 586; see also Leibovitz v. Paramount Pictures Corp., 948 F. Supp.

1214, 1223 (S.D.N.Y. 1996) (noting that the Nature factor “assumes less importance in the fair use analysis with respect to a parody”).

136 Henley v. DeVore, 733 F. Supp. 2d 1144, 1154 (C.D. Cal. 2010).

137 Campbell, 510 U.S. at 586–87.

138 Id. at 588 (“When parody takes aim at a particular original work, the parody must be able to ‘conjure up’ at least enough of the original to make the object of its critical wit recognizable.”).

139 Id. at 580.

140 Henley, 733 F. Supp. at 1154. While examining the defendant’s author parody claim, the court further noted that,“[i]n this case, . . . the Defendants argue that they sought to poke fun at

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The Campbell ruling provides additional, albeit indirect, support for allowing author parodists to exploit an author’s works. The Court held that the law allows work parodists access to the original work’s “most distinctive or memorable features, which the [work] parodist can be sure the audience will know.” 141 One could read the spirit of this language as generally permitting authors of critical derivatives to invoke their target’s most prominent attributes to achieve their purpose. This language provides the satirist with little benefit on the third factor, as his target’s most prominent attributes bear no relation to the original work from which they have appropriated. However, it helps the author parodist immensely, as his target author’s “most distinctive or memorable features” from the public’s perspective are likely to be the very works which may have made that author famous. Accordingly, the author parodist has a strong claim to borrowing his target author’s material.

In keeping with the case-by-case nature of a fair use inquiry, the unique features of a particular author parody could affect the permissibility of borrowing.

Some authors exist in the public’s consciousness for reasons unrelated to their works. Professional athletes Peyton and Eli Manning, for example, are most known for their quarterbacking prowess in the National Football League, but they also happen to be authors of a children’s book. 142 An effective critique of these public figures would likely not require conjuring up their copyrighted work product, and so the third factor argument weakens accordingly here. A doctrinally obedient fair use analysis may require distinguishing between famous authors and famous people who also happen to produce works of authorship. Line drawing in this particular area, however, may prove unworkable for courts. It is impractical to demand that federal judges acquire the pop culture acumen necessary to identify which public figures’ fame is enmeshed with their copyrighted material sufficiently enough to permit copying by author parodists. A more prudent course—particularly in light of author criticism’s significant external benefits— would be for courts to indulge a strong presumption of such enmeshment and hold that author parodies generally have a claim to borrow from their target’s material under the Amount Used factor. 143 [Don] Henley, a famous musician. The best, and perhaps only, way to conjure up Henley in a manner recognizable to the public is through his music.” Id. 141 Campbell, 510 U.S. at 588.

142 See PEYTON MANNING, ELI MANNING, & ARCHIE MANNING, FAMILY HUDDLE (2009).

143 Just how much material the author parodist can borrow will likely depend on the derivative work’s overall purpose. If author criticism constitutes a small portion of the defendant’s work, courts will not countenance a significant appropriation of the author’s material. Cf. Campbell, 510 U.S. at 588 (“Once enough has been taken to assure identification,

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D. Effect on Potential Market for or Value of the Copyrighted Work The Market Effect “inquiry must take account not only of harm to the original [work], but also of harm to the market for derivative works.” 144 Regarding harm to the original work, it is foreseeable that a well-executed author parody will damage more than its victim’s ego. It stands to reason that a scathing critique of a public figure may make that person’s body of work—including the specific work exploited by the author parodist—less valuable to consumers. This type of injury, however, falls outside of the scope of protection provided by the law to copyright holders. The fourth factor only recognizes harm caused by uses which affect a work’s demand through market substitution, not through criticism which changes consumer preferences. 145 Since author parodies do not act as a market substitute for their source material, they do not present cognizable market harm to the original under this factor.

Author parodies also do not harm the potential market for derivative works.

Under the fourth factor, “[t]he market for potential derivative uses includes only those that creators of original works would in general develop or license others to develop.” 146 As demonstrated in the economic argument advanced in the previous section, no such potential market exists. Rare is the author who will compose or license a self-damaging derivative. The Henley court expressed a similar view regarding Market Effect: “[A] parody lampooning the author may be unlikely to supplant any potential market for the original or derivatives thereof because of the unlikelihood that authors would license parodies ridiculing themselves.” 147 Since no cognizable market harm occurs to either the author’s original work or any potential derivatives, author parodies perform strongly under the fourth factor.

Because author parodies perform similarly well as work parodies under all four § 107 factors, a strong legal argument can accompany the economic argument propounded earlier for affording these works a legitimate fair use defense.

CONCLUSION Author parodies present an intriguing issue in copyright law. Borrowing definitional elements from both traditional parody and satire, these works push the boundary regarding what forms of social critique courts should protect with an how much more is reasonable will depend, say, on the extent to which the song’s overriding purpose and character is to parody the original . . . .”); see also Henley, 733 F. Supp. at 43–44.

144 Harper & Row v. Nation Enters., 471 U.S. 539, 568 (1985) .

145 See Campbell, 510 U.S. at 591–92.

146 Id. at 592.

147 Henley, 733 F. Supp. at 1155.

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affirmative infringement defense. As the doctrine continues to develop, this Article aims to provide courts with some guidance for shaping the contours of this emerging issue. Author parodies are a valuable form of social criticism and a strong economic and legal argument can be made for treating these works similarly to a parody which targets a copyrighted work. Granting author parodies a fair use defense would correct a market failure stemming from a copyright holder’s unwillingness to voluntarily transact with an author parodist. These parodies also perform well under the § 107 factors. They are an example of the sort of transformative work that the copyright law seeks to encourage. Moreover, authors are generally famous for the works they create, which affords those who criticize them some entitlement to appropriate their target’s material. Some authors (such as professional athletes) achieve their fame in areas unrelated to their works, which one could argue diminishes an author parodist’s entitlement to use their work to assist in their critique. However, the difficulty in determining which authors adequately achieved their fame primarily through their copyrighted material, coupled with author parody’s social value, should encourage courts to presume the suitability of an author parodist’s appropriation. Finally, author parodies do not impose the sort of market harm on the original author’s works which copyright law seeks to protect.

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APPENDIX “Born This Way” (Lady Gaga)

“Perform This Way” (“Weird Al” Yankovic)

My mama told me when I was young We are all born superstars She rolled my hair and put my lipstick on In the glass of her boudoir "There's nothing wrong with loving who you are" She said, "'Cause he made you perfect, babe" "So hold your head up girl and you'll go far, Listen to me when I say

My mama told me when I was hatched Act like a superstar Save your allowance, buy a bubble dress And someday you will go far Now on red carpets, well, I'm hard to miss The press follows everywhere I go I'll poke your eye out with a dress like this Back off and enjoy the show!

I'm beautiful in my way 'Cause God makes no mistakes I'm on the right track, baby I was born this way Don't hide yourself in regret Just love yourself and you're set I'm on the right track, baby I was born this way

I'm sure my critics will say It's a grotesque display Well, they can bite me, baby I perform this way I might be wearin' Swiss cheese Or maybe covered with bees It doesn't mean I'm crazy I perform this way

Oh there ain't no other way Baby I was born this way Baby I was born this way Oh there ain't no other way Baby I was born this way I'm on the right track, baby I was born this way

Ooo, my little monsters pay Lots 'cause I perform this way Baby, I perform this way Ooo, don't worry, I'm okay Hey, I just perform this way I'm not crazy I perform this way

Don't be a drag—just be a queen Don't be a drag—just be a queen Don't be a drag—just be a queen Don't be!

I'll be a troll or evil queen I'll be a human jelly bean 'Cause every day is Halloween For me...

Give yourself prudence and love your friends Subway kid, rejoice your truth In the religion of the insecure I must be myself, respect my youth A different lover is not a sin Believe capital H-I-M I love my life I love this record and Mi amore vole fe yah (Love needs faith)

I'm so completely original My new look is all the rage I'll wrap my small intestines 'round my neck And set fire to myself on stage I'll wear a porcupine on my head On a W-H-I-M And for no reason now I'll sing in French Excusez-moi, Qui a pété? (Who Cut the Cheese?)

Lady Gaga—Born This Way Lyrics, LYRICS.COM, http://www.lyrics.com/born-this-way-lyrics-lady-gaga.html (last visited Oct. 6, 2011); Weird Al Yankovic—Perform This Way Lyrics, LYRICS.COM, http://www.lyrics.com/performthis-way-lyrics-weird-al-yankovic.html (last visited Oct. 6, 2011).