By The AP's Own Logic, The AP Ripped Off Obama

from the creative-thinking... dept

Law professor Doug Lichtman has a monthly podcast (on an annoyingly flash-only website) called the Intellectual Property Colloquium. A few months back, we discussed the episode that looked at file sharing damages. I must admit that I tend to disagree with a significant percentage of Lichtman's conclusions on intellectual property, but unlike many copyright maximalists, I tend to believe he's much more intellectually honest on these issues. His positions don't seem to come from a "more is absolutely better because it makes me/my clients more money" position, but he honestly tends to believe that greater copyright leads to a greater net outcome, and tends to argue reasonably about it -- though, I believe some of that reasoning, and the assumptions that underpin it are faulty.

In the latest podcast, Lichtman and three guests discuss "fair use" with most of the focus being on the Shepard Fairey case. Lichtman talks with one of Fairey's lawyers (Mark Lemley), a lawyer for the AP (Dale Cendali) and finally the General Counsel of the NY Times, Ken Richieri. It won't surprise many, I'm sure to say, that I strongly agreed with the points Lemley made, in explaining (a) how Fairey's use is almost certainly fair use. But the debate between Lemley and Lichtman is still quite worthwhile.

The key point that Lichtman keeps jumping back to is an interesting attempt to justify blocking fair use on what (at first glance) appears to be free market principles. That is, Lichtman states, repeatedly, that because Fairey could have licensed an image of Obama prior to making his artwork, there shouldn't be fair use. His argument is that this is as free market approach, and that fair use might not even need to be considered. To Lichtman, if there is a "functioning" market that can be made, there's no fair use. At a first pass, this may sound quite appealing to free marketer/libertarian types. But it's wrong. That's because what he's talking about is not a true free market at all. It's an artificial market, based entirely on a gov't backed artificial scarcity. It's a market built on a monopoly, which is no free market at all.

It also seems to go against the very intent of copyright itself, in that it suggests that as long as there's a "reasonable" tollbooth that can be placed on things, there shouldn't be fair use. But if that tollbooth is actually creating friction and decreasing, limiting or hindering creative output, then it can and should be seen not as "promoting the progress," but the exact opposite. Lemley does a decent job on the spot to warn against the frictions caused by such a "permission" culture, in that it's quite unreasonable in many cases to have to get permission, but Lichtman dismisses this as a minor issue, or really one that can be worked out separately. To me, that suggests a rather distinctly poor assumption about creativity and creative culture these days. Requiring ad hoc permission on any potential use would create massive chilling effects on all sorts of creativity. Lichtman also suggests that a third party intermediary (perhaps YouTube) could serve as a clearinghouse for such rights, but that too creates all sorts of problems.

Overall though, this highlights the problem I have with those who continue to support strong copyrights under a "free market" perspective. A true free market for a good with infinite supply will price that good at zero. But copyright distorts that market to limit that possibilities. It's as if some believe that any market represents a free market, even if that market is massively inefficient. Back in the days of the sugar monopolies, there was "a market" for sugar, but it was not a fair market price, because of the gov't backed monopoly. Or, to make the point clearer, today there is no "market" for air, despite the fact that it's quite valuable to all of us mammals who like to breathe. We could, in theory, create a gov't backed market for air, recognizing its value, and forcing people to pay to breathe, but most people inherently recognize how inefficient and wasteful that would be. Yet, content has the same fundamental (effectively) limitless supply as air (if anything, air is more limited). And yet, some think it needs a similar artificial and inefficient market.

As for the rest of the podcast, Cendali's defense of the AP's position was an incredible stretch (and, it was disappointing that Lichtman softballed his responses to her, pretending to "channel" what Lemley might say). Her defense was effectively: "The AP relies on licensing to survive. We need to survive. If what Shepard Fairey did was fair use, then it would destroy the AP, thus it can't be fair use." That's wrong on a variety of levels, and Lichtman barely touched on any of them. The purpose of copyright isn't to protect the business model of a single company. I could create a company that is harmed by fair use of my works, but that doesn't mean they're not fair use. Cendali also induced a guffaw from me in response to Lichtman's question about why the AP didn't notice the fact that its image was being used. Her response was that since the AP has so many images, it would be impossible to track them all and see if they're being used. Indeed, but no one was asking that. What Lichtman asked (and failed to follow up on) was why the AP didn't notice that this image -- which was being used everywhere -- was based on an AP image. No one expected the AP to track all its images, but you would think with such an iconic image getting so much coverage, that the AP would notice.

Cendali, keeps trying to suggest that the Mannie Garcia photo was something special, but fails to explain (even Lichtman pushes back somewhat, and Cendali answers a different question) what parts of the photo are actually protectable under copyright. She basically just says that because Garcia was a professional photographer, that the work is clearly covered by copyright. That's not how copyright works, though. She also keeps saying that because Fairey picked this particular photo it proves that the photo had something special. But, if he'd picked a totally different photo, she'd say the same thing. The simple fact is that Fairey could only pick one photo to make this picture, and this is the one he chose:

"He could have selected any one of probably hundreds if not thousands of photographs, But he selected this particular photograph, and he selected it for a reason, as he's already stated in various interviews. He was looking for a particular photograph that presented Obama in a particular way, in a hopeful way, in a way looking forward to the future... This wasn't just any random photograph... He was looking for a particular photo... and for him to now minimize that is not fair."

No, what's not fair is claiming that any of that is the AP's to own. None of it. Not a single part of it was. All of that -- the hope, the way he was looking, was simply there. What made him choose it was the look on Obama's face -- which is not Garcia's creative output, and thus cannot be covered by copyright. In fact, the most frustrating thing of all is that Cendali repeatedly claims that Fairey was ripping off Garcia (and the AP), but misses the obvious problem with that argument: which is that if her argument is correct, then the AP and Garcia also ripped off Obama, since it was his creativity in looking the way he did and making the facial expression he did. Once again, such externalities are apparently only acceptable when the AP benefits. But, Cendali seems to ignore that, and Lichtman lets her get off, noting that he basically agrees with her.

The final guest was actually a pleasant surprise. Richieri notes that he's not a copyright lawyer, but a newspaper lawyer, and thus doesn't approach things from an "ownership" perspective, but a "fairness" perspective, and notes the importance of fair use in the news business. He doesn't add too much new to the conversation, but it is refreshing to hear someone who, unlike the AP, seems to recognize that trying to own every last word/phrase/headline doesn't really make much sense.

Overall, the podcast is worth listening to, but the Cendali section may involve a bit of headbanging for it being so blatantly mistaken on the very basics of copyright law.

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We Waited Too Long To Figure Out If Genes Are Patentable

from the now-it-will-only-cause-problems... dept

Yesterday, at the excellent Tech Policy Summit, I got to interview Stanford professor and IP expert Mark Lemley on stage. Lemley has a new book out, The Patent Crisis and How the Courts Can Solve It. It's a good read -- and I recommend it to everyone interested in what's happening with patents. I don't agree with everything Lemley says in the book, but I think it is a much more thoughtful view than you hear coming from the two big industries fighting over patent reform. Patent reform has been (unfairly) set up as the tech industry vs. the pharma industry, and that totally misses the real problems with the system. Lemley believes that the problems can be fixed via the court system... whereas I'm not convinced, but I do think that the current patent reform proposals miss the mark by a wide margin.

The interview was quite interesting, and while most of it reviewed some of the big discussion points (what's the "problem," where is the reform plan heading, does it make sense to carve out exceptions -- such as for software patents) my final question to him was about the lawsuit we wrote about yesterday concerning the patentability of genes.

Lemley did a great job outlining the issues brought forth in the case, but concluded by highlighting what I believe is the big problem with letting the courts sort things out. He noted that while there had been legal battles over patented genes before, they had always been between two biotech firms, neither of which wanted to challenge the very idea of gene patents. So, instead, the very concept of patenting genes has been left untested in the courts for twenty-five years. What's the result? Well, an entire industry built up around it. If we suddenly say that genes are unpatentable, that will wreak havoc in that industry. Now, that may be a good thing, but it highlights the problem of leaving the question to the courts. Since no one challenged this for so long, the disruption could have quite an impact.

Earlier in the interview, Lemley quoted one of my favorite quotes about the patent system, by economist Fritz Machlup, who noted that, if we had to do it all over again, there appears to be no reason to actually create a patent system, but since we already have one, it doesn't make sense to get rid of it. But that's a big part of the problem. Now that we already have "patented genes" and an entire industry built up over 25 years around it, some will undoubtedly argue that it doesn't make sense to get rid of gene patents because of all the problems that would cause. And thus, we're left with a situation that has been highlighted in Petra Moser's research: the patent system, by default, distorts the market by creating certain industries built up around those patents, and makes it very difficult for more complete market forces to take effect.

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Why Treating Patents As Property Is A Bad Idea

from the yet-again dept

We've pointed out in the past why it doesn't make much sense to treat "intellectual property" as "regular property," since it ignores some very important differences between the two. James Bessen and Michael Meurer, who wrote the recent book Patent Failure have always taken a slightly different approach. While they agree with us that the patent system tends to do more harm than good (and they've got a ton of research to back that up), they claim that the problem is that patents don't act enough like property. They say the problem is that the "fuzzy boundaries" around patents mean that there aren't clear rules or "fences" as with real property. So, their prescription is to look for ways to treat patents more like real property.

Eric Goldman points us to a recent paper by well known law professor and patent system expert Mark Lemley on why it's a good thing that patents aren't treated more like property. Lemley is mostly a patent system supporter, but (unlike some around here) he appears to recognize that the system could be improved, and seems open to evidence concerning where the patent system does more harm than good.

This paper makes some important distinctions between patents and real property, and notes that it's probably for the best that in the real world patents actually are not treated like property, because it would slow down innovation if, before anyone invented anything, they had to secure a ton of agreements with patent holders:

It is currently very much in vogue to talk about patent rights as a form of property, and in particular to draw analogies to real property. So let's engage in a thought experiment: what if we took the analogy seriously and actually behaved with patents as we do with real property? Product manufacturers would have to stop ignoring patents. No venture capitalist or bank (or shareholder, should Intel fund the project internally) would give Intel the money to build a new manufacturing plant (or "fab") unless it could demonstrate that it had conducted an exhaustive search for patents it might infringe in manufacturing its chips and had obtained irrevocable or at least long-term licenses to use any patent that anyone might conceivably later assert against the chips or the manufacturing plant. Intel, in turn, would look to a group of "patent insurance" firms that would spring up and that would conduct the search and determine what patents needed to be licensed. Unless and until all of this had happened, Intel could not start construction of its fab, much less make or sell chips produced by that fab. If there were significant disagreement over whether a party legitimately owned patent rights, perhaps Intel could bring a declaratory judgment action to try to clarify those rights, but it would hold construction in abeyance until it got an answer. And since there is no experimental use defense to patent infringement, scientists at both universities and corporations would have to conduct a similar search and wait to get permission from all possible interested parties before they began their research, lest they infringe a patent in the lab.

Would this world be desirable? I'm skeptical. Let's begin with the benefits of such a world. Patent owners would get paid early and often. Patent litigation would decrease, or maybe even disappear entirely, because anyone who wanted to make a product would find the patent owner and enter into a deal up front, or else not make the product. And patent owners who compete in the marketplace, and rely on the patent to preserve exclusivity, would not face competition during the often-protracted period during which the patent is being litigated.

At the same time, these benefits would come at significant cost. First, both research and the manufacture of products would be regularly delayed for years and perhaps decades as potential defendants identified and cleared rights....

Second, a real-property patent system would replace competition with central coordination in a significant number of cases. So far we have assumed that the patent owners will be willing to license their patents. But that is likely not to be true in many cases. Patent owners who compete in the marketplace want exclusivity, and there is no license price an equally efficient competitor will be willing to pay that will compensate for the loss of monopoly rights. Even patent owners who do not compete in the marketplace may find it more lucrative to grant an exclusive rather than a nonexclusive license to someone who does make a product, for the same reasons. Nor will a competing company be particularly sympathetic to efforts by outsiders to engage in research on the invention if the effect of that research will be to design around or improve that core invention. The effect of a real-property or title-search system is to replace competition in the shadow of a patent while it is being litigated with single-firm markets whenever the patentee participates in the market, either directly or by proxy. Researchers who could not obtain a license would direct their scientific efforts into different fields, and potential competitors would do the same, meaning that the owner of a core patent could control who, if anyone, worked on a particular technology. If you believe, as I do, that the evidence suggests that competition is often a better spur to innovation than monopoly, removing that contingent competition is a potentially significant cost.

Third, and perhaps most important, a significant percentage -- maybe as many as three-fourths -- of these patents turn out to be either invalid or not infringed. It is this probabilistic nature that most critically distinguishes patents from real property. Under the current system in patent-ignoring industries, consumers benefit from competition during the time before those patents are invalidated or held not to be infringed. Under a real-property patent system, the owners of invalid patents can capture supracompetitive profits during the time before their patents are invalidated, profits made at the expense of consumers and that they will never have to disgorge. That extra profit, in turn, would create significant incentives to obtain and enforce dubious patents....

Finally, people usually build a house on a single plot of land, while as I have noted, there may be hundreds or thousands of rights that must be aggregated to build a multi-component product. As Carl Shapiro and I have argued elsewhere, this fact exacerbates the patent holdup problem and leads to systematic overpayments by manufacturing companies, because individual patent owners won’t discount the royalty they charge to account for the complementary rights owned by others.

He goes into a lot more detail beyond that, and basically suggests that the current system of companies simply ignoring patents until later is probably better than going to one where patents are fully treated like property.

However, he then suggests a bunch of changes to the patent system that could (he believes) create a more reasonable middle ground: (1) more resources to the patent office to get through more patents faster (2) preventing patent applicants from delaying the process through things like continuations (3) requiring rapid publication of all patent apps (4) allowing peer-review and post-grant opposition to better establish what a patent really covers (5) allow independent invention as a defense against infringement (6) change the rules on "willful infringement" (which currently encourage people not to look at any patents by tripling damages if they find out you even looked at a patent you're later found infringing on) (7) change patent remedy rules to end situations where patent holders can hold up the production of useful innovations (8) require companies to do patent searches to make sure they are not infringing (this, combined with #6 almost flips current willful infringement rules on their head) and (9) require the publication of any patent license terms.

It's quite a list... At this point, this post is long enough not to get into whether or not this is a good or bad proposal (suffice it to say, I think some of it makes sense, while other parts are troubling -- and I'd bet that patent system supporters will say the ones I think are good are bad, and the ones I think are bad are good), but wanted to post it up here for discussion.

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Who Says Patent Lawsuits Aren't Sexy?

from the cybersex-it-is dept

Joe Mullin has the details of a rather bizarre patent dispute involving a patent covering the user interface of force feedback technology used in "cybersex" or "teledildonics." You may have heard of the company Immersion, which, for years, has claimed to hold pretty much all patents on "haptic" technology, which most people are familiar with in the form of "force feedback" game controllers for console games. Some feel that Immersion's patents are overly broad, but that's beside the point on this one. Apparently, at some point, Immersion realized that there was going to be (or already was) a decent sized market in using such haptic technology for virtual sex. Yet, at the same time, the company felt uncomfortable about filing infringement lawsuits on such uses, recognizing that it could lead to negative publicity. So, instead, it licensed out the patents and the right to sue for infringement to a company called Internet Services, LLC (ISLLC), which (from the description in Mullin's article) sounds like a shell company just for this purpose.

However, when Immersion won its patent infringement lawsuit against Sony for its use of force feedback controllers on Sony gaming consoles, ISLLC apparently felt that Immersion owed it some of the proceeds. It hired famed patent attorney (and patent system expert) Mark Lemley to represent it. However, for somewhat unclear reasons, Lemley now appears to want nothing whatsoever to do with ISLLC and has asked to withdraw from the case. ISLLC has now hired other lawyers just to force Lemley to still represent it in its lawsuit against Immersion. It's like a patent battle soap opera -- complete with sex toys. See, just because stories are about patents, doesn't mean that they're not sexy.

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