INTELLECTUAL PROPERTY FOR AN INFORMATION AGE Prof Pamela

INTELLECTUAL PROPERTY FOR AN INFORMATION AGE Prof. Pamela Samuelson, UC Berkeley, CCST, October 10, 2000 Oct. 10, 2000 CCST 1

WHY IP? • Fundamental economic insight: a grant of rights to creators enhances incentives to invest in innovation & make innovative products available • U. S. Constitution gives Congress power to promote the progress of science & useful arts by conferring on authors and inventors exclusive rights in writings & discoveries • Obvious that many other factors play a role in promoting innovation, but IP is among them Oct. 10, 2000 CCST 2

FEDERAL IP LAW • Patent law grants exclusive rights to make, use & sell technological inventions for no more than 20 years • Copyright law grants exclusive rights to make & publicly distribute copies, prepare derivatives, & publicly perform original works of authorship • Some specialized IP laws (e. g. , chip designs) • Need for national uniformity as reason to put in the Constitution • Has served U. S. industries well Oct. 10, 2000 CCST 3

STATE IP (OR RELATED) LAWS • Trademark/trade dress (federal law gives nationwide protection to common law TM rights) • Trademark dilution (now a federal law too) • Trade secrecy law (some might say this is unfair competition because no exclusive right) • Unfair competition/misappropriation • Right of publicity law • Moral rights (e. g. , author rights to share in resale) Oct. 10, 2000 CCST 4

BIG PICTURE ? s • IP rules well-suited to manufacturing era, but will they do as well for the information age? – More knowhow borne on or near the face of information products (e. g. , biotech, software) – Some valuable information products don’t fit the old paradigms (e. g. , software, databases) • How to maintain balance in the law? – IP law works in part because of limitations (e. g. , reverse engineering, reuse of information & ideas) – Not the case that more IP is necessarily better IP Oct. 10, 2000 CCST 5

1 st CHALLENGES FOR IP IN THE INFORMATION AGE • Computer software was first big challenge because it is a machine whose medium of construction happens to be text – Machines, machine parts not copyrightable – Not a “literary work” in traditional sense – Texts and information innovations historically not patentable – Benson decision: only processes that transform matter can be patented – Source code may be trade secret, but program contains source equivalent; accessible through decompilation Oct. 10, 2000 CCST 6

MORE ON CHALLENGES • Resolution of software dilemma: – Copyright now protects source & object code, fanciful user interface designs, some structural design features – Patent now protects algorithms, methods of operation, functional user interface designs – Fair use to decompile for legitimate purpose – Trade secret law protects unpublished source, design documents, & some program internals – Hotly contested whether licenses forbidding reverse engineering should be enforceable Oct. 10, 2000 CCST 7

2 d WAVE OF CHALLENGES • “The Digital Dilemma” NRC report on copyright in the information age (www. cstb. org) • Copyright owners previously unable to control access & use, but in digital form, access & use involves “copying” (is “copy” useful anymore? ) • Growing use of licenses changes access/use/sharing expectations (e. g. , library subscriptions) • Emerging use of technical protections (CSS for DVDs); anti-circumvention rules Oct. 10, 2000 CCST 8

MORE ON 2 d WAVE • Private use copying historically not significant, mostly fair use (Sony Betamax) • With digital information, natural barriers to infringement erode (cheap & easy to make perfect copies) • On the Internet, everyone is a publisher/distributor so acts of individuals can have market impacts • Most people think it’s OK to make private or noncommercial copies & share with friends, yet industry thinks private use copying is illegal Oct. 10, 2000 CCST 9

NAPSTER AS AN EXAMPLE • A&M Records: knowingly contributes to copyright infringement—shut it down! • Napster defenses: – AHRA exemption for noncommercial copies – Capable of substantial noninfringing uses – Many uses lawful because authorized or fair use (e. g. , sampling to decide to buy, making a copy of song you already own) – Evidence that Napster users buy more CDs so no harm Oct. 10, 2000 CCST 10

WHAT’S AT STAKE IN NAPSTER • Trial court decision: Napster P 2 P system enjoined unless can prove that exchanges on it are lawful • Would seem to require rearchitecting not only Napster service, but the Internet (its end-to-end architecture doesn’t know whether data flowing through is authorized or not, legal or not) • Chilling effect on other “dual use” technologies (those having infringing as well as noninfringing uses)—ITAA, Di. MA amici (Hollywood v. SV) Oct. 10, 2000 CCST 11

OTHER CURRENT ISSUES • Business method/ecommerce/information patents: can PTO do a proper job? • Patents on ESTs: tragedy of anticommons? • Database protection (HR 354, HR 1858) • Trespass to chattels (e. Bay v. Bidder’s Edge) • Enforceability of anti-reverse engineering clauses (e. g. , DVD-CCA v. Bruner) Oct. 10, 2000 CCST 12

DVD-CCA v. BRUNER • DVD-CCA licenses content scrambling system (CSS) to makers of DVD players & disks on highly restrictive terms; claims CSS as trade secret • Jon Johansen, Norweigian 15 yr old, reverse engineered CSS; wrote De. CSS to “undo” it & posted on Internet • DVD-CCA claims this violated anti-reverse engineering clause of shrinkwrap contract, & so was misappropriation of CSS • CA court enjoined Bruner & others from posting Oct. De. CSS on Internet 10, 2000 CCST 13

MORE ON BRUNER • Some posters were rude & juvenile, but not parties to license & didn’t violate it • Unclear whether shrinkwrap license or anti-reverse eng’g clause was enforceable in Norway • Enforcing anti-reverse engineering clause in this case has profound ramifications for CA firms • CSS not embodied in De. CSS • Posting information on Internet has generally been OK if not yourself the misappropriator—Bruner changes the rules? Oct. 10, 2000 CCST 14

UCITA • Model law promulgated by NCCUSL in July 1999 • Originally joint project with ALI with aim to become Article 2 B of UCC; ALI dissatisfied • VA legislature passed but not effective till 7/01 • Maryland legislature passed variant • Pending in some other state legislatures (e. g. , Delaware, Hawaii) • Iowa passed anti-UCITA bill • Will be on CA legislative agenda one day Oct. 10, 2000 CCST 15

ORIGINS OF UCITA • ABA project on commercial law for software – Should shrinkwrap licenses be enforceable? – Are sale of goods rules inappropriate for software? • Scope expanded to transactions in digital information • Then expanded to transactions in information • After complaints this was too broad, contracted to “computer information transactions” • Paradigmatic transaction is a “license” Oct. 10, 2000 CCST 16

MAIN FEATURES • Default rules on contract formation – information licensor sets terms – user manifests assent by use or other conduct after opportunity to see terms • Mass-market licenses enforceable • Terms of license presumptively enforceable unless unconscionable or in conflict with “fundamental public policy” • Highly controversial law (especially as to consumer protection issues) Oct. 10, 2000 CCST 17

INNOVATION-RELATED CONCERNS RE UCITA • Enforceability of anti-reverse engineering clauses • Enforceability of anti-criticism/disclosure of flaws/anti-benchmarking clauses • Ability to block transfer of mass-market licenses (e. g. , sell used computer, merger) • Override “fair use” and other public policy limits of federal IP law; preemption issues? • Release of rights/idea submission rules likely to hurt the little guy (e. g. , individual innovators) Oct. 10, 2000 CCST 18

OTHER STATE LAW ISSUES • Revisit trespass to chattel law? • IP rights in personal information to promote personal privacy? • Inevitable disclosure of trade secrets? • Open access issues? • Use of stereolithography to copy? • But dormant commerce clause issues (e. g. , Ferguson v. Friendfinder)? Oct. 10, 2000 CCST 19

CONCLUSION (IN SYNCH WITH CREST REPORT) • Sustainability of CA technology miracle requires finely tuned IP rights – Enough to give incentives to innovate – Not so much as to interfere with ongoing innovation (e. g. , preserve reverse eng’g) – E. g. , CA policy on covenants not to compete promotes employee mobility which contributes to innovation environment here Oct. 10, 2000 CCST 20