Nature of Intellectual Property Rights

General view against CR protection

*Trosow*: CR has gone too far.

General Neo-Classical Economist Theory of CR (2)

1. Best functioning market (determines incentives needed, and optimal amount of protection afforded). 2. Allocative efficiency of a market where IP is privately owned - corollary = IP should have strong protection due to free-riding ability undermining allocative efficiency. Private ownership of resources is most conducive to optimal exploitation - and common-ownership is over-exploitation (tragedy of the commons).

Critics of Neo-Classical Economist Theory of CR (Lemley) (3)

1. CR unlimited in coverage, scope, duration to promote optimal use of intellectual resources = *neglecting fundamental characteristic* of intellectual products (non-rival nature) - over-exploitation of physical resources simply *doesn't apply to cultural resources* - the more people who have access, the better. 2. Costs of protection *high* re: IP - nature as 'public good' - IPRs not always socially/economically optimal. 3. Rent-seeking is an opportunity to charge the monopoly process.

Critics of reward theory for CR (2)

1. Circumstances for CR protection may not correspond to circumstances in which people *deserve* rewards - CR threshold very low level, catching works created for their *own sake* (letters, holiday photos, paintings) which are not unpleasant or burdensome to create. 2. Nature of the reward shouldn't necessarily be an exclusive right - other systems of reward like prizes (but rebuttal: CR allows general public to determine *who* should be rewarded and the *size* of the reward - the more copies sold, the greater the financial rewards accruing). (BENTHAM: exclusive privilege is of all rewards the best proprtioned, most natural, and least bothersome).

Drahos' consequences for IP deriving from fact that it regulates ownership and infringement of 'abstract' objects?

1. Court must identify abstract object to be subject. Corporealisation needed before property rights can attach. 2. Difficulties drawing boundaries between abstract objects where one allegedly overlaps another. Boundaries may only be delineated in context of IP litigation. Patents, not so much - patent specification: attempts to describe protected invention. Trademarks: graphical representation required before registration.

Political context of IP law - groups opposing stronger IP protection

1. Developing world representatives 2. Consumers or users of IP (librarians, home tapers etc.) 3. Defenders of free speech 4. Classic liberal economic theorists 5. Competition lawyers

2 arguments against CR protection

1. Existence of CR in a work *restricts use* that can be made. 2. CR has potential to *inhibit public ability to communicate*, develop new ideas, produce new works (e.g. to parody a song, substantial portion of music and lyrics must be reproduced - UK requires CR owner's permission - may be reluctant).

Justifications - 5 assumptions forming the basis of our system

1. Free market is good 2. Meaningful to allow property rights in works and ideas 3. Possible to create a system of IP rights not morally arbitrary (legitimate) 4. Consistent practice of implementation shouldn't undermine values it intends to embody. 5. Property rights in ideas must have a limited scope and term.

Consequentialist justifications (3) (Kitch) (Lord Oliver in Asahi) (Issues) (Boldrin's 3 criticisms)

1. Incentive to create/invest in R&D (costs high, coupled with ease of copying, leads to 'market failure'). 2. Incentive to disclose (contract/consideration theory) (preventing loss of good ideas to society) (reflected in 'sufficiency' requirements). 3. Incentive to develop/commercialise (investors more willing to fund R&D - vector links scientific and technical research with commercial spheres - important where products can be *reverse engineered* and retailers protect innovations to try and get competitive advantage). Kitch: 'prospect theory' emphasises ways that grant of patents can be analogous to granting mineral rights (incentives to invest in exploitation of 'prospect' and encourage inventions *and development*). Oliver in Asahi: the underlying purpose of the patent system is the *encouragement of improvements* and innovation - in return for making known his improvement to the public, inventors *receive benefit of private monopoly* during which he becomes entitled to prevent others from performing, except by his licence.

4 justifications for patents

1. Natural Rights (Machlup and Penrose) 2. Reward (Machlup and Penrose) (Becker) 3. Public Interest (Chisum)

MacQueen's general theories of IP rights (9)

1. Natural rights theories (Kant and Hegel - IP protects rights of authors - justified on consequentialist or natural rights framework). 2. Reward theories 3. Utilitarian/Incentive theories - IP system provides incentives for authors to create works of general utility and value (property rights in what you create - convenient fiction justified by social utility of whole system)(anti-theory? Claiming that IP systems have no intrinsic philosophical interest but are contingent procedural arrangements). 4. Economic theories 5. Democratic pursuits 6. User centered/public benefit (promoting the greatest possible access to works by users). 7. Publisher centered (possible for entrepreneurs to invest in production of IP and have some assurance that their investment will not be stolen/expropriated) 8. Ethical arguments/unjust enrichment (rhetorically powerful) 9. Pluralist (combining author, user, publisher rights - work out in an environment of balancing interest, rather than zero-sum conflict. Resulting system never ideal).

Himma's general criticisms of IP law (3)

1. No physical entity - no rationale for protection (many people can use at same time - no exclusivity to protect). 2. Freedom of information should prevail. 3. NO such thing as property to be owned.

Public Interest Patent Rationale (2 benefits + Davies + Chisum's views)

1. Public interest flows from *patentee introducing forms of technology not previously available* in UK. 2. Later, argument was that *public benefit lay in disclosure of invention* occurring on publication of application - patent system generates and circulates technical information (information function) and ecourage disclosure in practically useful ways (Davies: incentivise individuals or organisations to disclose information that may otherwise have remained secret. Information function reinforced by PA 1977 and EPC emphasis on need for invention to be disclosed in ways to enable it to be put into practice). Chisum: but we may ask: are the *interests of those whose liberty is constrained* served by the overall general good that is being promoted?

Assumption that IP rights are better than no rights:

All views based on premise that *if we had none*, it would be worse than what we have - responsibility to decide on objectives. Competition increases consumer choice and prices - criticised as 'monopoly rights' - ill-founded and not all IP rights have the ability to exert monopoly power within the market. Theya re just exclusive (i.e. my new drink may not beat coke).

Reform proposed in response to reward theory (Hettinger)

Alternative mechanisms such as fees, awards, acknowledgement, gratitude, praise, security, power, status, public financial support.

Support for all in UDHR

Art 27: creator and user acknowledged and everyone has right to freely participate in cultural life of community + protect moral/material interests from scientific/literary/artistic production.

Criticism of Natural Rights Theories in CR (General)

Assumes that natural right in labour justifies natural right in mixed product.

What is the relationship involved in Copyright?

Authors, users, publishers as middlemen.

Incentive based theory for CR

Bentham's utilitarian argument - laws are socially justified where they bring greatest happiness to greatest number (granting IPR is means to ensure *enough intellectual products are available for users*).

Conclusions on CR justification (Bently) (Litman) (Austin) (Aplin and Davis)

Bently: more problems arise when people begin to believe the rhetoric and assume that CR law is determined and shaped by these philosophical ideals. Litman: digital CR 'in the ongoing negotiations among industry representatives, normative arguments about the nature of CR show up as *rhetorical flourishes*, but typically change nobody's mind. Austin: realities of IP lawmaking are such that there are *few instances where theory dictates the formulation and development* of positive law. Aplin and Davies: attempting to explain IPR according to one particular justification *oversimplifies* ways in which laws are generated.

Critics of incentive based theories for CR (Breyer)(Hurt and Schuchman)(Hettinger)

Breyer: Questionable whether incentive is *necessary* for production (creation and dissemination of works often do not depend on CR existence - eg. incentives provided by lead time + possible use of contractual subscriptions) (No empirical evidence suggests that creators wouldn't create without IPRs). Hurt and Schuchman: artificial incentives needed to rectify market failure - but *is exclusive property right* the appropriate incentive? Costs imposed on those who wish to use the work + transaction costs on those seeking permissions. Hettinger: difficult to decide *exactly the level* of incentive which is optimal - what should CR owner be able to prever (and for how long?). IPRs restrict use and dissemination of intangible creations - expect to see laws calibrated in manners providing optimal amounts of protection (only as much needed to stimulate creation).

Democratic Theory of CR (Netanel)

CR fortifies our democratic institutions by *promoting public education, self-reliant authorship, and robust debate* - CR law seen as a *state measure* designed to enhance independent and pluralist character of civil society. CR encourages greater productivity but also designed to *secure the qualitative condition for creative autonomy and expressive diversity*.

Natural Rights argument for recognition and extension of CR (European traditions and US literature)

CR granted to recognise productions *emanating from the mind of an individual author* and should be seen as property, copying equivalent to theft. European (Hughes): 'to every cow its calf' - works should be protected because they express each particular author's personality. We allow the creator to protect the work (misattribution, modification, unauthorised exploitation) - as the extension of his/her persona. US literature (Yen): Lockean theory - person has *natural* right over productions of own intellectual labour.

Technological challenges for intangible IP rights.

Constant *destabilisation* by technological advances. But not initial technology so much as *technology of imitation* stimulating strongest demand for IP. Great advances require considerable investments, but are often taken over by others quickly, efficiently and cheaply.

Other forms of protection (General IP)

Current system is better than state subsidy or patronage to affect what gets produced. Lessig: compensate right holders harmed by internet - 'Fisher suggests a very clever way around the current impasse of the internet - all content capable of digital transmission would 1. be marked with a digital watermark (no incentive to evade) and then entrepreneurs would develop 2. systems to monitor how many items of each content were distributed. On the basis of those numbers, 3. Artists would be compensated. Compensation 4. Paid for by appropriate tax. Reform to a tax based system may be attractive, but Lessig would rather compensate than abolish the current system. Lessig: law could create statutory licences ensuring that artists get something from the trade of their work (balance morality and utility - many pieces considered 'great works' after life of artist - why protect these particular forms of IP? Why not supplement?)

Criticism of Natural Rights Theories in CR (Shiffrin 2001)

Extension to CR and individual creation of ideas criticised - emphasis on *social* or 'intertextual' nature of writing and painting. If works are seen as less than products of individual labour/personality and more as *reworkings of previous ideas and texts* the claim to ownership seems weak. Not clear that *total value of intellectual creations* are entirely attributable to labour of individuals given that intellectual creations may be considered as social products.

CR Reward Theory (account 1)

Grant CR protection because *fair* for efforts expended in creation and giving to the public. CR is a legal expression of *gratitude* for doing more than society expects. Unjust that the unauthorised user of work receives benefit from use and 'reaps where she has not sown'.

Political context of IP law - Putative or Existing rights holders

Inadequate protection: 1. Threshold for *patent* protection for GM biological material too high. 2. *Copyright and patent* protection needs explicit extension to cover multimedia works and software. 3. *TM* owners aren't sufficiently protected against cyber squatters acquiring related domain names.

What do Landes and Posner say about CR justification?

Incentive based theories - CR provides legal means by which those investing time and labour in production of cultural/informational goods can be confident that they will be able to recoup investment and reap proportional profits. Favoured in US and entrenched in CR and Patents clause in US constitution.

The Intangible Nature of IP

Incorporeal/intangible creations are separate from property rights - the author retains IPR even if they give away physical property.

What do all theories of property address?

Issues of appropriation: how is it that owned things become property? IP theories are unique: insist that we consider 'anti-appropriation' (moving owned things into status of unowned things). Without limitation, IP would become an oligarchy of who got there first.

Mitchell on overall basis in IP

Lack of logic in IP system - metaphor borrowed from Mills (computer scientist) - the legal theory of IP *resembles a cow much more than it resembles a Greek temple* - it is the highly functional, absurdly complex, startlingly contingent product of a long evolutionary process. Time is ripe for developing a non-author centrered theory. Must base on understanding of 'public domain' - shifts focus of authorship from creation *ex nihilo to appropriation of material from intellectual commons*. Would focus not only on author's rights, but on author's *obligations to expand the intellectual commons*.

Supporters of Neo-Classical Economist Theory of CR

Landes and Posner: failing to protect sound recordings by CR leads to over-use and public interest would tire, diminishing value -- dynamic benefit of property rights = possession imparts to invest in creating/improving resources (no one else can appropriate). Smith: Economic health results from freedom of individuals to pursue manifold, differing self-interests.

Why is patent harder to justify? (Machlup)

Law not coherent, certain or fair (uncertain, extensive and insufficiently protective). Machlup: if we did not have a patent system, it would be irresponsible on the basis of our present knowledge of economic consequences to recommend instituting one. But since we have a patent system for a long time, it would be irresponsible on the basis of our present knowledge to recommend abolishing it.

Growing pressures to recognise public interest/user rights:

Lessig: we come from a tradition of 'free culture' - not 'free' as in 'free beer' - but 'free' as in 'free speech' 'free market' 'free trade' 'free enterprise' - support creators and innovators and grants IP rights. Indirectly limits the reach of rights - follow-on creators and innovators remain as free as possible from the control of the past. A free culture is not a culture without property, just as a free market is not a market in which everything is free. The opposite of free culture is 'permission culture' - creators get to create only with the permission of the powerful/creators from the past. Breakey: legal developments/clearer notions of public domain and user's rights.

Reward theory for patent (Machlup and Penrose) (Becker)

Machlup + Penrose: justice demands inventor's contribution to society should be recognised by grant of reward. Becker: desert principle must *include proportionality* requirement (benefit or penalty to be proportional to value added or subtracted by the labour)(labour alone does not deserve anything)(benefits must be proportional to *value* produced by labour).

Natural Rights theory for patent (Machlup and Penrose) (Drahos) (Nozick)

Machlup + Penrose: products of mental labour. Drahos: if labour is the basis of natural property rights there must be some way to demarcate precisely the object of the property right (what defines the boundaries... labour *creates* property rights but what *identifies* the object? Nozick: inventor's patent doesn't deprive others of an object which wouldn't exist if not for the inventor.

Criticism of Natural Rights Theories in CR (J Garon)

No normative guidance as to specific *form* of CR law.

Criticism of Natural Rights Theories in CR (Litman and Boyle)

One-sided 'author-centred' understanding of IP theory ignores author's debt to previous owners for starting her material. Why is it that natural rights should justify recognition of anything more than a right over the manuscript or immediate creation?

Issues with consequentialist justifications + Boldrin's criticism

Patenting a product/process suggests public sanction - important in ethical debates about granting for GM humans, animals, plants. Boldrin: Patents are not technological innovations but legal constructs to block competition. Far too many are granted. 1. Lack of evidence of incentive effects (unclear whether design of patent system optimises incentive)(equivocal arguments from economics)(is incentive necessary?) 2. Disincentive effect for other scientists may outweigh incentives for inventor. 3. Should patent owners be able to charge more for more important, life supporting inventions? Which takes priority - right of property or right of health? Human rights to affordable healthcare should *trump inventor's entitlement to monopoly profits*.

3 academics against CR protection (Pessach) (Garon) (Strahilevit)

Pessach: diminishes diversity. Garon: with advent of internet, CR stifles ability to make the most of new environment. Widespread illegal copying on the internet can be explained by reference to fact that the public are not persuaded by rationales for CR. Strahilevitz: alternative explanation of public practices.

Political challenges

Power of IPRs over the market are debatable.

What does incentive based theory presuppose?

Public dissemination of cultural objects (books, music, art, films) as valuable and important. Without protection, production and dissemination wouldn't be optimum. Whilst works are often very costly to produce, they are very easily copied once published Legal protection *rectifies market failure* through incentives.

CR Reward Theory (account 2) (two cases)

Reward deserved where *persons invest labour* - irrespective of ulterior motives or pleasure/pain of labouring - British CR law often follows this. Designers Guild v Williams (Bingham): CR rests on a clear principle: anyone who by his or her own skill and labour creates an original work of whatever character shall, for a limited period, enjoy an exclusive right to copy that work. *No one else may for a season reap what the CR owner has sown*. Walter v Lane (Halsbury LC): it would be 'grievous injustice' if the law 'permitted one man to make profit and to appropriate to himself the labour, skill, and capital of another'.