Copyright Law and Its Parody Defense: Multiple Legal Perspectives

Copyright Law and Its Parody Defense: Multiple Legal Perspectives
By Amy Lai* A PDF version of this article may be downloaded here.  

Introduction: Three Copyright Disputes

In 2001, Alice Randall published The Wind Done Gone, an alternative account of Margaret Mitchell’s classic novel Gone with the Wind (1936).[1] While Mitchell’s novel focuses on the life of a wealthy Southern woman who lives through the American Civil War and the Reconstruction Era, Randall’s novel recreates the story from the viewpoint of the woman’s slave girl.[2] Mitchell’s estate sued Randall and her publishing company for copyright infringement. After the United States District Court for the Northern District of Georgia blocked the publication of The Wind Done Gone, defendants appealed the preliminary injunction. The United States Court of Appeals for the Eleventh Circuit vacated the injunction barring publication of the book, holding that Randall’s new work was a parody seeking to rebut the “romantic, idealized portrait of the antebellum South” in Mitchell’s original novel.[3] The case ended with a settlement one year later, with Randall’s publishing company agreeing to make an unspecified donation to Morehouse College.[4] The Eleventh Circuit declared what seemed to be a victory for parodists. Yet, due to the failure of the parody doctrine as well as the pitfalls of the parody/satire distinction, this encouraging precedent failed to redeem Swedish American author Fredrik Colting, who published under his pseudonym, John David California, what he sarcastically called an “unauthorized sequel” to Jerome David Salinger’s The Catcher in the Rye (1951), almost sixty years after this American classic was first published.[5] Entitled 60 Years Later: Coming through the Rye, Colting’s work portrays both how Salinger’s teenaged protagonist finally changes his uncompromising worldview as an old man, and also critiques Salinger’s equally uncompromising, but persistent control over his own novel and protagonist.[6] The U.S. District Court for the Southern District of New York ruled in favor of Salinger on his claims of copyright infringement, holding that Colting’s novel was a satire that targeted Salinger and society at large, but did not sufficiently critique the original work.[7] Because it neither fit the definition of parody nor was transformative enough, the court held it was not fair use.[8] In April 2010 – three months after Salinger’s death – the Second Circuit upheld the injunction granted by the lower court.[9] In 2011, Colting settled the case by agreeing not to publish or distribute his book in the U.S. or Canada until the original novel enters the public domain.[10] One wonders to what extent Salinger’s victory influenced GoldieBlox’s decision to settle with Beastie Boys over their copyright dispute in 2014. A startup company that creates innovative toys for girls, GoldieBlox made a commercial by reworking hip-hop band Beastie Boys’ 1987 song “Girls” with new lyrics conveying a girl-power message.[11] It filed a pre-emptive lawsuit against Beastie Boys to claim fair use of the “Girls” track; Beastie Boys sued GoldieBlox in return by claiming copyright infringement.[12] While commentators were still debating whether the song was a parody or satire, GoldieBlox unexpectedly settled with Beastie Boys by pulling the song from the video, posting a public apology on its website, and agreeing to donate a portion of its revenue to science education charities selected by the band.[13] * * * In the United States, whether a disputed work qualifies as a parody is critical, if not determinative, to the success of a fair use defense in copyright lawsuits. This question is ultimately tied to the idea of authorship and the right associated with it. Because authors who are copyright owners have rights in their works, using their works without their permission presumptively infringes upon this right, unless one can offer a defense to the claim of copyright infringement. Yet, distinguishing between legitimate and illegitimate forms of copying poses a challenge. Equally challenging are attempts to define parody and satire. How can different schools of legal thought contribute to copyright law and its fair use doctrine, particularly its contentious parody exception? By drawing upon different legal theories, this article argues that courts, in determining whether new creative works that build upon existing works constitute fair use, should refrain from forcing these expressions into arbitrary categories of parody or satire. Courts should instead focus more heavily on the possible harm that the new works would bring to owners, and the copyright system of financial incentives as compared to their potential social benefits. Part I of this article will offer an overview of the American copyright regime by discussing the Copyright Act of 1976 and the Supreme Court’s application of the fair use doctrine, especially its definition of parody and its dichotomization of parody and satire. Because Lockean natural rights informed the Framers’ understanding of intellectual property law, and courts have a long history of using natural law justifications in intellectual property cases, Part II will begin by examining the nature of copyright through the lenses of natural law theories. Using John Locke’s theory of property and John Rawls’ “justice as fairness” model, this Part will discover the inherent conflict between copyright and free speech as a basic liberty. The reminder that copyright is not an absolute right, and the caution against expanding authors’ rights at the expense of the public, will pave the way for a re-evaluation of authorship in Part III. Drawing upon relational feminism as well as other feminist theories, Part III will substitute the idea of the “relational author” for the isolated, individuated, and proprietary author on which the current copyright regime is premised. Because authors are social creatures who write from within vast networks of pre-existing texts, creative transformations of these pre-existing works should be recognized and embraced as original expressions of authorship. Part IV will turn to the potential of law and economics in reforming the copyright regime so that it can fully accommodate the “relational author” and his/her right to free speech. It will explain how intuitive cost-benefit analysis, rather than efficiency principles, has facilitated judicial decision-making in fair use claims. This Part will then illuminate the common mistake of these two methods, which is to reinforce a narrow definition of parody that privileges owners’ rights over the social benefits of transformative works. Courts, therefore, should shift their focus from the parody/satire dichotomy to the likelihood that the new works would pose harm to owners and the copyright system versus their social benefits. Although the current copyright law is flawed, Part V will adopt legal realist perspectives to explore how courts have turned copyright law “in the books” to copyright law “in action,” and how legal realism enables courts to utilize a flawed law to better accommodate the rights of the public. After offering new insights into the Salinger holdings, this Part will examine how the dispute between Beastie Boys and GoldieBlox would and should have been adjudicated if it had gone to court. The article concludes that the purpose of deconstructing the parody/satire dichotomy is to help courts stimulate creativity and, ultimately, to serve justice.

I. Copyright Law: The Problematic Parody/Satire Dichotomy

The U.S. Constitution grants Congress the authority to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors … the exclusive Right to their [works.]”[14] Under Section 102 of the Copyright Act, copyright protection extends to “original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.”[15] The several exclusive rights to copyright holders, as defined in Section 106, include the rights “to reproduce the copyrighted work[,]” to prepare derivative works of the original, and to distribute its copies to the public by various means.[16] These rights, which are subject to a time limit, generally expire seventy years after the author’s death.[17]

A. Fair Use, Parody, and Satire

Section 107 of the Copyright Act imposes limitations on section 106, providing that the “fair use” of a copyrighted work does not constitute infringement.[18] While fair use explicitly applies to such uses as criticism, news reporting, teaching or research, the fair use defense is by no means limited to these areas.[19] A four-factor test determines whether a particular use is fair: “(1) the purpose and character of the use, including whether” it is for commercial or nonprofit educational purposes; “(2) the nature of the copyrighted work; (3) the amount and substantiality of the portion” of the original work used; and (4) the effect of the use upon the original’s market or potential market.[20] The Supreme Court defined parody for the first time in Campbell v. Acuff-Rose Music, Inc. Following the Sixth Circuit’s definition of parody as “the art of creating a new literary, musical, or other artistic work that both mimics and renders ludicrous the style and thought of an original[,]”[21] the Court held that a commercial parody may be fair use.[22] The inquiry concerning fair use generally turns on factor one of the fair use test, examining “whether the new work merely supersede[s]” the original, or whether and to what extent it is “transformative” by altering the original with “new expression, meaning, or message[.]”[23] The more transformative the work is, less will be the impact of other factors, “like commercialism, that may weigh against a finding of fair use.”[24] In contrast, a satire, which makes broad comments on society, “can stand on its own two feet and so requires justification for the very act of borrowing.”[25] Hence, it is more difficult for a defendant to prove fair use in a satirical work.[26] Throughout the years, courts continue to use the parody/satire distinction. However, Blanch v. Koons is an example of a recent case where a federal court deemphasized this distinction.[27] While affirming that artist Jeff Koons’ incorporation of a copyrighted photograph into a collage painting was fair use, the Second Circuit minimized the parodic justification for granting fair use.[28] The disputed painting “Niagara,” which was commissioned by Deutsche Bank and the Guggenheim Museum, depicted four pairs of women’s feet superimposed upon images of “confections … with a grassy field and Niagara Falls in the background,” borrowing one set of legs from the published work of the plaintiff, a professional photographer.[29] Koons explained that he aimed to use popular images as “commentary on the social and aesthetic consequences of mass media.”[30] The Court, analyzing the transformative nature of Koons’s work, held that the collage painting passed the transformative test “almost perfectly” by changing the original copyrighted picture’s “colors, the background against which it is portrayed, the medium, the size of the objects pictured, [and] the objects’ details[.]”[31] More “crucially,” the painting had an “entirely different purpose and meaning—as part of a massive painting commissioned for exhibition in a German art-gallery space.”[32] While addressing the distinction between parody and satire as laid down by Campbell, the Second Circuit minimized the parodic justification for granting fair use to Koons, stating that “[t]he question is whether Koons had a genuine creative rationale for borrowing Blanch’s image, rather than using it merely ‘to get attention or to avoid the drudgery in working up something fresh.’ ”[33] Nevertheless, by relying upon the same wordings that the Campbell Court employed to describe satire (“to get attention or to avoid the drudgery in working up something fresh”), and emphasizing that such uses would not be fair, the Second Circuit maintained the parody/satire distinction.[34]

B. Rethinking “Parodies”

The Supreme Court’s working definition of parody corresponds roughly to its understanding within popular conception.[35] However, scholars have not agreed on what works fall into the parody classification due to its antiquity and the range of practices to which it alludes, let alone its national and cultural usages.[36] In fact, the first reference to “parodia,” found in Aristotle’s Poetics, defines it as a “narrative poem … treating a light, satirical, or mocking-heroic subject.”[37] Scholars have also noted how parody and satire often intersect.[38] These scholars warn against any attempt to dichotomize parody and satire. Moreover, while some conceptions of parody insist that the work critiques the original (“target parodies”), other conceptions permit it to critique something other than the work itself (“weapon parodies”).[39] These different conceptions cast the Court’s definition in further doubt. Although copyright law aims to advance the public good by encouraging creativity and disseminating knowledge, the Court’s narrow definition of parody and its determination that satire is not protected to the same degree as parody, have arguably served to expand owners’ rights to the detriment of creative citizens. For example, it would be fair to say that Colting’s use of Salinger’s novel to critique the protagonist’s worldview and Salinger’s control over his own work is not something that Salinger would likely have done, and Colting’s new work cannot be said to supersede any potential sequel written by Salinger. Why, then, should the District Court and the Second Circuit rely upon a narrow definition of parody to determine that such use was not fair? The questions concerning what uses are fair, and how the fair use doctrine should be applied, hinge upon the very natures of copyright and authorship. It is helpful, therefore, to begin by examining copyright from natural law perspectives.

II. Natural Law Theories: The Copyright-Liberty Conflict

Natural law theories, whether derived from observations of nature, divine inspiration, or human reason, hold that there are universal principles of justice with which all individuals have a moral responsibility to comply.[40] In the secular natural law tradition, laws derived their validity from their promotion of natural rights, inherent and inalienable, enjoyed by all citizens.[41] English philosopher John Locke, for instance, contended that individuals are born “free, equal, and independent” in a “state of nature,” and that the government must protect their natural rights to life, liberty, and possessions.[42] Not only did the idea of natural rights as natural law inspire the American and French revolutions,[43] but Lockean natural rights also informed the Framers’ understanding of intellectual property law.[44]

A. Locke, Property, and Copyright

Locke was the most famous proponent of the natural law theory of property. Assuming that people possess their bodies and have a natural right of property in them, Locke reasoned that they also possess the labor of their bodies.[45] Hence, people claim rightful ownership in the fruits of their labor, regardless of whether their creative activities lead to any economic gain.[46] However, there is one important condition for the right to ownership: the fruits of labor must be capable of permanent and individual possession, meaning that they are not temporary usages, or something shared by all people, like the air or sunlight.[47] Although Locke did not mention intellectual property, scholars have noted that the modern American copyright regime evolved from Lockean thinking.[48] This is most obvious in the copyright doctrine of “originality” and its “idea/expression” dichotomy. Just as Locke regarded property as the necessary moral consequence of one’s creative labor, copyright law, by granting protection to all “original works of authorship,” also protects works of the most accidental or humble origin, and works for which there are no economic incentives for their creation.[49] Just as the natural law tradition limits the right of ownership to fruits that can be permanently and individually possessed, the idea/expression dichotomy restricts the reach of copyright law to expressions that are sufficiently concrete, while specifically excluding more abstract and incorporeal ideas from the concept of property.[50] One good example confirming the deep influences by natural law theory upon the idea/expression dichotomy is the judicial precedent that Judge Learned Hand relied on in Nichols v. Universal Pictures Corp. Explaining that copyright protection cannot be extended to the characteristics of stock characters in a story, Judge Hand cited to Holmes v. Hurst, in which the Supreme Court stated: “[t]he right thus secured by the copyright act is not a right to the use of certain words, because they are the common property of the human race, and are as little susceptible of private appropriation as air or sunlight.”[51] Although the modern intellectual property doctrine has been utilitarian in focus, attempting to disavow its association with natural law justifications leads many to question the ability of courts to adjudicate copyright claims without consulting natural law principles.[52] Yet Locke’s natural law theory of property, logical as it might seem, raises doubts when applied to less tangible goods. Given Locke’s belief in the natural right to liberty, one cannot help asking whether such a liberty would entitle people to use others’ fruits of labor without their permission, so long as such uses will not likely harm the owners or the public. This question is significant because copyright, and intellectual property in general, can protect the ownership of goods that are less tangible and can be enjoyed simultaneously by an indefinite number of people. Indeed, intellectual property can easily come into conflict with basic notions of liberty because the right in less tangible goods can restrict a wider range of actions, such as creating copies of copyrighted works for further distribution among peers and friends, and even actions taking place in the privacy of one’s own home. Further, as these goods are often informative, restricting the right to enjoy them may simultaneously limit free speech. The potential conflict between intellectual property and basic liberty, therefore, is a reminder that authors’ rights are not absolute.

B. Rawls, Basic Liberty, and Creativity

American natural law theorist John Rawls’ idea of “justice as fairness” offers more insight into the above conflict. Here, Rawls imagines a hypothetical situation – the “original position”—in which free and rational people choose behind a “veil of ignorance,” without knowing their place in society or natural assets and abilities.[53] Their choices lead to two principles of justice: first, each person would have an equal right to basic liberty; second, although social and economic inequalities exist, the distribution of wealth and income must be to everyone’s advantage, and positions of authority and offices of command must be accessible to all.[54] Basic liberties enjoyed by all citizens include political liberty, freedom of speech and assembly, freedom of the person, along with the right to hold (private) property and freedom from arbitrary arrest and seizure.[55] While the second principle – the “difference principle” – does not ask society to even out resources among citizens, it does demand that those who have been socially or economically favored gain from their good fortune only on terms that improve the situations of the less favored.[56] The privileged, by improving the lives of the less privileged, thereby contribute to the public good. Would those in Rawls’ “original position” have chosen copyright as a basic right? On the one hand, those behind the “veil of ignorance” may imagine that benefits derived from creative endeavors would fall quite disproportionally, if not exclusively, upon those who work in creative professions. Thus, even though they will consider the right to create a basic liberty, they may be far less inclined to consider copyright that “basic” as a right. On the other hand, people in this hypothetical position may reason that even granting copyright to a limited group of creative professionals would stimulate creativity and contribute to a better society.[57] Moreover, because the “difference principle” does not require society to even out resources among privileged and less privileged citizens, the fact that copyright may initially benefit a small group of creative professionals would not make society unjust or unfair, so long as these professionals exercise their creativity to benefit citizens not as talented or privileged as they are. Rawls, nonetheless, would have cautioned against an infinite expansion of copyright. While emphasizing the right to hold (private) property, he does not specifically refer to the ownership of intangible goods and therefore does not specify any special conditions that should exist for such ownerships. Moreover, Rawls’ prioritization of personal freedom and free speech as basic liberties implies that such liberties would entitle citizens to appropriate intangible creations by others for speech purposes, so long as such uses do not harm the owners or society. In addition, because the “difference principle” requires that privileged citizens contribute to the greater good, creative professionals, while reaping benefits from their creative endeavors, should allow other people to appropriate their works for productive purposes. Endlessly expanding copyright to the detriment of the public, such as by raising the “fair use” standard and by creating narrow, unrealistic definitions of parody, must go against the Rawlsian principles and the public good.

III. Feminist Legal Theories: “Relational Author” and Transformative Works

Having explored copyright from natural law perspectives, this article now turns to feminist legal theories and their implications for fair use. The two focuses are seemingly unrelated, as copyright law governs the right to intangible properties, while feminist legal criticism addresses the gendered aspects of legal systems. Yet, copyright law’s theoretical framework is premised upon certain assumptions about the self. If some feminist legal theorists posit a different and more realistic conceptualization of the self, then this could inspire lawmakers to re-think what authorship is and accordingly reform the copyright regime.

A. Relational Feminism and Authorship

Copyright scholar Carys Craig offers interesting perspectives on the idea of authorship by bringing these two seemingly unrelated fields together. As Craig explains, at the core of copyright law are concepts of individualism, private rights, property, ownership, and exclusion.[58] Even though copyright attaches to the most mundane of works without any concern for their quality or creativity, the romantic idea of an individuated and independent author entitles “authors-as-originators” to rightful ownerships of their “original, stable, and propertizable” intellectual labors.[59] This idea of authorship has persisted over the years, despite Roland Barthes’ pronouncement of the “death of the author” in 1968, which demystified authorship by declaring all new expressions as reproductions of old ones.[60] Yet, the idea of the author as the sole origin of her labor is not merely outdated. It has perpetuated simplistic “dichotomies of creation/reproduction, author/user, laborer/free-rider,” glorifying authors while stigmatizing those who copy substantially from authors as “infringers.”[61] Craig thus criticizes the copyright regime for failing to recognize the communal and communicative nature of cultural expressions and to fulfill its original goal in fostering creativity among citizens.[62] Craig contends that copyright theory should get inspiration from feminist scholarship to re-imagine the author/self and the nature of copyright itself.[63] Drawing upon relational feminism, she fashions the concept of the “relational author,” who is never isolated but “always-already situated within, and constituted by” her communities.[64] Entering a cultural conversation that has been going on long before she appeared and will continue long after she leaves, this “relational author” necessarily works from within a network of social relations and discourses through the processes of “reinterpretation, recombination, and . . . transformation,” both to connect with others and to establish her own identity.[65] Because authorship is participatory and dialogic, the normative copyright regime should focus less on the rights of authors as owners, and more on ways to structure relations amongst authors and between authors and the public, so as to foster creativity among citizens.[66] In addition, because authors can in fact generate meaning only by using the texts, discourses, and experiences that they have encountered, copyright law should recognize the transformation of pre-existing texts as an important component of original authorship.[67] Craig borrows heavily from relational feminist Jennifer Nedelsky in her thesis concerning on the relational author. Fellow relational feminist Robin West adds further depth to Craig’s concepts. West’s argument differs slightly from Nedelsky’s analysis of autonomy-via-relationships in that it explores the fundamental “contradiction” in women’s subjective life.[68] Reconciling the views of cultural feminists and radical feminists, West points out that women value intimacy and nurturance, yet crave privacy and fear intrusion.[69] However, the legal system, which privileges autonomy, neglects women’s needs that arise out of their appreciation for nurturance.[70] Moreover, its male-centric version of autonomy fails to adequately protect women from intrusion.[71] West’s call for a reconstruction of the “masculine jurisprudence” can be analogized to a call for a reconstruction of the copyright regime:[72] A copyright regime that upholds a narrow vision of creativity resembles a “masculine” legal system that neglects traditionally feminine values in favor of an “autonomy” that fails to accommodate the full spectrum of experiences of all citizens. All the while, the “relational author,” like the silenced and objectified woman of West’s “masculine jurisprudence,” remains unrecognized and mistreated. Both the outdated copyright regime and the “masculine” legal system therefore require reform.

B. “Connection,” Other Feminists’ Support, and Implications

While Craig’s “relational author” theory is based upon relational feminism, some other schools of feminism arguably lend support to this idea. West argues that, because women’s “subjective, phenomenological and existential state” is grounded in their “potential for physical, material connection to human life,” this shared conception of women’s experience draws together feminists whose views otherwise differ markedly.[73] Radical feminists regard such a “connection” as intrusive, while cultural feminists wholeheartedly embrace it. One should note that liberal feminists,[74] unlike their radical counterparts, do value this “connection” and seek to accommodate it. As the rest of this subsection will explain, liberal feminists impliedly support the idea of the “relational author,” rather than unquestionably accepting the “autonomy” privileged by the legal system. In view of Craig’s emphasis on human relations and West’s idea of “connection”—which derives substantially from motherhood and childrearing—the likelihood that liberal feminism supports the idea of the “relational author” is apparent in Wendy W. Williams’ advocacy of an “equal treatment model” for pregnancy and work place discrimination issues.[75] People who support “special treatment” for women believe that an “equal treatment model” precludes recognition of pregnancy’s uniqueness. Williams, in contrast, contends that the “equal treatment” model redefines pregnancy as a basic need that the legal system must accommodate.[76] In other words, though liberal feminists do not embrace childbearing and rearing as cultural feminists do, they believe that the system should accommodate traditionally female duties by recasting them as responsibilities that penetrate the “core of the workplace” and thus, that should be shared by all citizens.[77] In both Williams’ view and the liberal feminist perspective, the legal system – and a normative copyright regime – should value both human connections and autonomy. By virtue of such, liberal feminism then supports Craig’s notion of the nature of authorship. In seeking to substitute the “relational author” for the isolated and individuated author, Craig seeks not to disparage the merit of authorship itself, but rather to more accurately describe the creative process that copyright law is meant to encourage.[78] She is correct that the copyright regime should embrace creative transformations of pre-existing texts as examples of original authorship.[79] Indeed, not only parody imitates older works, but satire, a great literary genre in the Anglo-American tradition, has often – or “always” – borrowed from art and from life.[80] Craig nonetheless does not explain further where the new boundary should lie between lawful and unlawful borrowings.

IV. Law and Economics: Flawed Models and New Directions

While seemingly bearing no relation to feminist legal theories, law and economics provide strong rationales for justifying a more inclusive fair use application, by urging courts to rethink current case law definitions of parody and satire, to tip the balance in favor of transformative works, and to better accommodate the “relational author” and transformative works produced by such authors. Copyright ownership is, among other things, an economic matter. When dealing with copyright disputes, judges have often relied upon their intuitive cost-benefit reasoning to determine whether granting an author’s fair use claim will foster more creativity. In contrast, the utility of two commonly adopted economic models, Pareto efficiency and wealth maximization (derived from the Kaldor-Hicks efficiency principle),[81] have often been doubted. This section argues that, while economic theories have flaws, what is known as intuitive reasoning also fails to adequately balance the rights of owners and the public. By identifying their common mistake in reinforcing the Supreme Court’s narrow parody definition, this section suggests how courts should re-interpret and re-apply copyright law to fully accommodate Craig’s “relational author” and his/her transformative works.

A. Intuitive Cost-Benefit Analysis vs Efficiency Principles

Copyright scholar Alfred Yen explains the process in which courts, generally lacking empirical evidence, engage in intuitive cost-benefit reasoning to apply the fair use doctrine. According to cost-benefit reasoning, in order to qualify as a parody, the new work must contain some criticism of the original work and must not function as a substitute for it.[82] The first requirement ensures that the fair use treatment reaps a positive benefit for the public, while the second requirement lessens the harm posed by the fair use doctrine to the financial incentives of production.[83] Convinced that granting the fair use claim will foster rather than hinder creativity, courts would then allow the parodist to freely borrow materials “reasonably necessary to conjure up the original.”[84] It is believed that such a cost-benefit analysis has yielded efficient results.[85] Yen contends that intuitive reasoning is not translatable into efficiency models, namely Pareto efficiency and Kaldo-Hicks efficiency, neither of which help to adjudicate fair use disputes.[86] A fundamental proposition of modern economics is that rational and self-interested individuals in a free market will pursue mutually beneficial transactions until they reach a Pareto efficient state of affairs, in which no individual will gain without harming others’ welfare.[87] Courts thus simply need to enforce the status quo in fair use claims to avoid presumptively undesirable interference with the market, and consider a fair use defense only when they identify imperfect market conditions.[88] Shifting to the Kaldor-Hicks efficiency principle, courts would declare that certain use is “fair” if the gains by society through fair use outweigh any losses imposed upon authors, so that “winners,” meaning parodists and whoever benefits from the parody, could fully compensate “losers,” or authors, in dollar terms.[89] However, Yen cites to empirical evidence to argue that authors very likely prefer good reputation and freedom from the emotional stress caused by parodies to any amount of monetary compensation.[90] Due to problems with compensation, parody as fair use cannot be justified by efficiency principles.[91]

B. Wealth Maximization and Its Flawed Assumptions

Interestingly, Richard Posner’s economic analysis of fair use, based upon his wealth-maximization model, differs from Yen’s by assuming that copyright owners would be willing to accept monetary compensations from parodists for all their losses, including harmed reputations and emotional damages. He contends that courts should consider parody as fair use because it must quote extensively from the original to be recognizable as such, and authors who fear ridicule of their works will not permit parodists to use them without paying high fees.[92] Should the law require prospective parodists to seek prior permission from copyright owners, the costs of transaction would reduce incentives to produce this valuable art form.[93] Likewise, forcing parodists to later compensate owners for losses incurred would discourage their original production.[94] By making a different assumption about owners’ willingness to accept monetary compensations, Posner thus apparently eliminates the biggest flaw in the economic model. Even if Posner’s assumption about compensation is correct, his economic analysis of fair use is nonetheless rendered inadequate by insistence upon a narrow definition of parody based on a flawed rationale. He carefully distinguishes between a parody that uses a copyrighted work as a “weapon” to criticize a third-party, and one that uses the copyrighted work itself as a “target.”[95] Posner assumes that owners would not mind licensing those works that borrow their originals as “weapons” aimed at something else, and so no parody defense should be invoked in the absence of a license.[96] Although owners tend to disapprove of parodies that target their works, the likelihood that these parodies provide useful commentaries justifies their coerced transfer when owners refuse to grant licenses.[97] Therefore, Posner agrees with the Supreme Court’s reasoning, that the fair use doctrine should provide a defense to infringement only if the new work targets the original and does not substitute it – two criteria that define a true parody.[98] Posner’s narrow definition of parody and his rationale behind it are based upon a flawed assumption about copyright owners that they would only prohibit derivative works that directly criticize their original works and therefore would find no reason to prohibit other works. Although they should have less reason to prohibit the public from borrowing their works as “weapons” against third-parties, they may refuse to grant licenses for other reasons. One reason would be the fear that their works will not be shielded from criticism. After all, artistic or literary works have multilayered meanings open to different interpretations, and works that intend to make broad criticisms of society – what the Supreme Court regarded as pure “satires” – may end up criticizing the originals, at least from readers’ perspectives. Take seventeenth-century English poet John Milton’s Paradise Lost as an example: while Paradise Lost is generally regarded as a social satire, some readers have interpreted it also as a parody of the Christian Bible due to its extensive appropriations of Biblical stories. That new works, despite targeting third-parties, may end up criticizing the originals puts Posner’s narrow definition of parody in doubt. One cannot help but ask: should courts consider as fair use works that inadvertently criticize the originals and works that do so in very subtle manners? If the answer is indeterminate, then parody needs to be redefined, and the clear boundary between parody and satire no longer holds. Further, owners who do agree to let borrowers use their works may charge exorbitant fees, which then discourage the appropriation of existing works for social criticism. Hence, it will not be in society’s interest to insist that writers obtain prior approval from copyright owners before appropriating their works for broad social criticisms.

C. Fair-Use Test and Its New Emphases

While popular economic models are flawed, intuitive cost-benefit analysis that courts have relied upon to resolve fair use claims has also fallen short of its purpose. Certainly, the threshold criterion that the new work must not supersede the original is reasonable, for it minimizes any harm posed by the fair use doctrine to the financial incentives for creative productions. Yet, the other threshold criterion that the new work must target the original was not necessary, because it has no bearing at all on the social benefits of the works. It is this flawed intuitive reasoning that led courts to dichotomize parody and satire. Intuitive cost-benefit reasoning and economic analysis thus converge at their common mistake of narrowly defining parody and of treating parody and satire as disparate literary forms. This convergence points to better ways to interpret copyright law that can fully accommodate Craig’s “relational author.” As Craig suggests, the copyright regime should recognize creative transformations of pre-existing texts as original works.[99] Courts, rather than trying to fit allegedly infringing works into categories like parody or “satire,” should focus more heavily on factor four of the fair-use test: whether the new works undermine current or potential markets for their copyrighted originals. Here, one should return to Salinger’s claims against Colting. Despite the holdings of both Courts (the District Court and the Second Circuit), Colting’s new work is arguably a parody according to the law, because it critiques Salinger’s original novel, his protagonist, and Salinger himself. Yet, a far more important question should have been the harm that Colting’s work would pose to Salinger and the copyright’s system of financial incentives, versus the potential benefits that it would offer the public. Nevertheless, both Courts should have easily found that Colting’s work did not supersede Salinger’s original and, moreover, would very unlikely undermine a potential market for a real sequel of Salinger’s work. Moreover, because its use of Salinger’s novel to critique the protagonist’s worldview and Salinger’s control over his own work is not something that Salinger would likely have done, it would very unlikely undermine a potential market for a real sequel by Salinger. The question of whether it is parody or satire thus becomes far less significant.

V. Legal Realism: Copyright Law in Action

The public, nonetheless, is stuck with the Supreme Court’s narrow definition of “parody,” at least for the present. Hence, this section adopts legal realist perspectives not only to shed light on how courts decided wrongly on fair use claims, but also to offer suggestions on how they may reach better, or more just, decisions on similar disputes. Contending that law is not a system of rules but rather a multidisciplinary project, legal realists are skeptical about the usefulness of formal rules, abstracted from the real world, in predicting what problem-solvers would do and prescribing what they should do.[100] When judicial decision-making is subject to an array of extralegal factors, is uncertainty all that remains? What could have motivated the Courts to rule in favor of Salinger instead of Colting? Imagine Beastie Boys’ lawsuit against GoldieBlox had gone forward – how would/should the Court rule?

A. Salinger’s Victory and Literary Experts’ Opinion

Legal realist Jerome Frank offers an inspiring perspective on judicial decision-making. Quoting Justice Holmes, Frank contends that law does not consist of rules and principles, but is better characterized as “specific decisions in concrete cases.”[101] To illuminate that there is not much correspondence between “artificial, rule-worded, published opinions” and “undisclosed,” “real” reasons for these opinions, he cites as an example, In re Hang Kie, which involved the first victory of a zoning ordinance in California.[102] Although, as Frank argues, racial prejudice against Chinese laundry owners was the true basis of the holding, the opinion states “in due form, rules which are syllogistically linked to facts so as seemingly to compel the decision.”[103] Later on, these same published reasons were used by other judges to sustain zoning ordinances that were not motivated by prejudice against Asians.[104] Frank concludes that, because judges are “humans” and have different abilities, temperaments, and even moral standards, the relation between the exactness of legal rules and its predictability of future decision can only remain uncertain.[105] The tendency for conventionally popular litigants to win in fair use disputes makes one wonder if Salinger’s victory was, in large part, due to his legendary status in the American literary scene, as compared to his unestablished and no-name opponent.[106] As explained already, despite the Supreme Court’s rather restrictive definition of parody, Colting’s critique of Salinger’s novel and the author himself – similar to how Randall’s The Wind Done Gone critiques Mitchell’s Gone with the Wind – may well have qualified as parody and fair use according to the law. Thus, the holding that it is a “satire,” not “parody,” compels a “rule-skeptic” perspective. The Court, in its “rule-worded” opinion, held that Colting’s new work, rather than critiquing the original, targeted Salinger’s alleged “iron-clad control” over his work and so was not a parody.[107] In similarly rule-laden language, the Court held that Colting’s work was not “transformative” enough to pass the fair use test, because the amount and substantiality of the original work borrowed was more than necessary to criticize Salinger and his character.[108] In doing so, the Court ignored the fact that Colting’s novel did not copy the original’s language beyond the use of certain catchphrase and that only four characters from the original reappeared in his new work, which has a host of other characters.[109] If Salinger’s fame really played a significant role in the outcome,[110] then the published opinions do not correspond to, but only camouflage the real reasons for his victory. Given law’s multidisciplinary nature, the District Court should have given more weight to relevant extralegal factors available. Because this case involves literature, for example, it could have weighed heavily the advice of literary experts Martha Woodmansee, an English Professor, and Robert Spoo, a lawyer with a PhD degree in English Literature. When asked to assist Colting’s attorneys in assessing the extent to which his work had made “creative and transformative” use of the original, both declared that it was a critical commentary on Salinger’s novel similar to conventional scholarly articles.[111] Similarly, the Second Circuit should have heeded these experts’ advice, considered the lack of evidence that the publication of Colting’s work – merely a critical commentary – would do any harm to Salinger, and reversed the injunction against its publication. While plaintiff’s fame and status might have been difficult to dismiss, openness to expert advice and awareness that any harm done to plaintiff would be minimal would have persuaded the Courts to hold for defendant.

B. Imagining Beastie Boys v. GoldieBlox

The literary experts’ advice, overlooked by the Salinger Courts, nevertheless points to a positive direction in judicial decision-making. The uncertainty within formal legal rules can become beneficial in cases where courts must interpret and apply flawed laws. On the one hand, what Frank calls “human” judges may not recognize a flawed law or a badly decided precedent. On the other hand, given law’s multidisciplinary nature, judges whom Frank describes as “strong” and “honest” may choose to interpret and apply bad laws, or flawed legal concepts, by drawing upon multidisciplinary resources and with creativity and flexibility so as to arrive at just holdings.[112] Hence, the fact that the law does not dictate judicial decision-making offers certain leeway for capable judges to steer towards just decisions as they turn “law-in-the-books” to “law-in-action.”[113] If the dispute between GoldieBlox and the Beastie Boys had gone forward, how would or should the Court rule? GoldieBlox’s commercial featured three little girls assembling a huge Rube Goldberg machine out of a disparate collection of toys and household items, while singing to the tune of the Beastie Boys’ 1987 track “Girls,” changing the lyrics to say, “Don’t underestimate girls.”[114] The company argued that this video is a parody aimed to “make fun of the Beastie Boys song, and to further the company’s goal to break down gender stereotypes and to encourage young girls to engage in activities that challenge their intellect, particularly in the fields of science, technology, engineering and math.”[115] Because the Supreme Court in Campbell held that a commercial parody may qualify as fair use, GoldieBlox’s appropriation of the Beastie Boys’ sexist song to convey a strong feminist message should indeed be “fair” according to the law.[116] Yet, a number of extralegal factors might well come into play. If popular litigants have a tendency to win in such disputes, the Beastie Boys would benefit from its contribution to American popular music, with seven platinum albums and three Grammy Awards and admission into the Rock and Roll Hall of Fame.[117] Moreover, the Beastie Boys explained in an open letter to GoldieBlox that they made a conscious decision to respect the wishes of Adam Yauch, their late member who died in 2012, not to permit their music and/or name to be used in commercials.[118] This letter, which had no bearing at all on whether the video’s use of the old song would pass the fair-use test would nonetheless cast GoldieBlox, a relatively new startup company, in a negative light. The “fame” factor aside, the Court might find that GoldieBlox’s strong commercial motivation in using the Beastie Boys’ track to promote its toy products outweighed its purported comment on the original. Yet, the Court could, and should, take a far broader view of parody and apply the fair use test by focusing on the economic harm that GoldieBlox would pose to the Beastie Boys and the financial incentives of the copyright regime. Certainly, GoldieBlox’s commercial aimed more at selling products rather than at presenting its parody as an artwork. However, the Supreme Court’s definition and examples of parody, though making no mention at all of parodies that are set in commercials, do not expressly exclude them from fair use.[119] Moreover, the Court should find that parodies are mostly commercial. With this conclusion, the Court should focus more heavily on the likelihood that GoldieBlox’s commercial would supersede the Beastie Boys’ work. Because the new song, with its girl-power lyrics, would very unlikely supersede the band’s original and harm their current or future market,[120] it should qualify as fair use. A “strong” and “honest” judge would find it unjust to deny GoldieBlox’s fair use claim and to hold for the Beastie Boys instead, because of their fame, their late member’s wish, or both.

Conclusion: Two Literary Concepts and One Logos

This article has argued that to balance copyright with basic liberty and to accommodate the “relational author,” courts should determine whether a work is fair use, not with reference to the dual parody/satire categories, but by looking at its possible harm to the copyright owner and society. This new approach, which subverts the Court’s ruling and blurs the parody/satire boundary, is reminiscent of the deconstructive strategies that many disparage as nihilist and useless. Thus, this article draws to a close by bringing in Jack Balkin’s inspiring view on deconstruction and tradition. Balkin contends that to respect tradition is to “betray,” “submerge,” or even “extinguish” other existing and competing traditions, and the enshrinement of one respectable tradition means the submergence of its “less respectable opposite.”[121] In the same vein, it would be fair to say that courts, by upholding one narrow, traditional conception of parody, betray other broader, equally valid definitions of parody. Further, they marginalize the long-standing tradition of satire by rendering it less respectable and excluding it from legal protection. If, as Balkin argues, to deconstruct is a form of logocentric practice with a “logos,” or rationale behind it,[122] then there is nothing nihilistic in deconstructing parody and to redeem satire from submersion – because doing so would facilitate better applications of the fair use doctrine, encourage more creativity, and enable just rulings by courts. Justice then becomes the “logos.”
* First-year PhD Student with the Faculty of Law, University of British Columbia; JD, Boston College; PhD, University of Cambridge. Other works have appeared in the Michigan Journal of Gender & Law, UCLA Entertainment Law Review, and Journal of Church and State, and others. The author would like to thank Professors Joost Blom, Graham Reynolds, and Galit Sarfaty of the Faculty of Law, University of British Columbia for their encouragement and comments on drafts of this article.
[1] See, e.g., Indira Karamcheti, Re: Wind, 18 Women’s Rev. Books 22 (2001) (reviewing Randall’s novel).
[2] See, e.g., id.
[3] SunTrust Bank v. Houghton Mifflin Co., 268 F.3d 1257, 1270, 1279–80 (11th Cir. 2001).
[4] E.g., David D. Kirkpatrick, Mitchell Estate Settles Gone With the Wind Suit, N.Y. Times, May 10, 2002, at C6, available at (describing details of the lawsuit and its eventual settlement).
[5] John David California, 60 Years Later: Coming Through the Rye (2009); see also Amy Lai, The Death of the Author: Reconceptualizing 60 Years Later: Coming through the Rye as Metafiction in Salinger v. Colting, 15 Intell. Prop. L. Bull. 19 (2010) (providing a detailed analysis of this lawsuit by taking a very different—though not contradictory—approach from the one in this article).
[6] E.g., Lai supra note 5, at 20 n.8 (giving as an example the fact that Salinger prohibited any attempt to make his novel into a movie).
[7] Salinger v. Colting, 641 F. Supp. 2d 250, 258-59, 261 (S.D.N.Y. 2009).
[8] Id. at 262.
[9] Salinger v. Colting, 607 F.3d 68, 83-84 (2d Cir. 2010).
[10] E.g., Andrew Albanese, J.D. Salinger Estate, Swedish Author Settle Copyright Suit, Publisher Wkly. (Jan. 11, 2011), (describing the settlement terms ending the dispute).
[11] E.g., Jon Blistein, Beastie Boys Settle Lawsuit Over ‘Girls’ Toy Commercial, Rolling Stone (Mar. 18, 2014), (providing the background of the lawsuit and the settlement terms).
[12] E.g., id.
[13] E.g., id.
[14] U.S. Const. art. I, § 8, cl. 8.
[15] Copyright Act, 17. U.S.C. § 102(a) (2006).
[16] Id. § 106.
[17] Id. § 302(a).
[18] Id. § 107.
[19] Id.
[20] Id.
[21] Acuff-Rose Music, Inc. v. Campbell, 972 F.2d 1429, 1441 n.4 (6th Cir. 1992).
[22] Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994).
[23] Id. at 579.
[24] Id.
[25] Id. at 581.
[26] Id. at 580 n.14.
[27] Blanch v. Koons, 467 F.3d 244 (2d Cir. 2006).
[28] Id.
[29] Id. at 247.
[30] Id. at 253.
[31] Id.
[32] Id.
[33] Id. at 255 (citation omitted).
[34] See Campbell, 510 U.S. at 580–81.
[35] See, e.g., Graham Reynolds, Necessarily Critical? The Adoption of a Parody Defence to Copyright Infringement in Canada, 33 MANITOBA L. J. 243, 245 (2009).
[36] E.g., id. at 246.
[37] E.g., id.
[38] E.g., Paul Simpson, On the Discourse of Satire: Towards a Stylistic Model of Satirical Humour 219 (2003).
[39] E.g., Reynolds, supra note 35, at 245.
[40] Robert L Hayman, Jr., Nancy Levit & Richard Delgado, Jurisprudence Classical and Contemporary: From Natural Law to Postmodernism 1–2 (2d ed. 2002).
[41] Id. at 7.
[42] Id. at 5.
[43] Id. at 5–6.
[44] E.g., Benjamin G. Damstedt, Limiting Locke: A Natural Law Justification for the Fair Use Doctrine, 112 Yale L. J. 1179, 1179 (2003).
[45] John Locke, The Second Treatise of Civil Government § 27, in Two Treatises of Government (1698) (P. Laslett ed. 1970); e.g., Alfred C. Yen, Restoring the Natural Law: Copyright as Labor and Possession, 51 OHIO St. L. J. 517, 523 (1990).
[46] Id.
[47] Id.
[48] E.g., Yen, supra note 45, at 536–37.
[49] Id.
[50] Id. at 538–39.
[51] Id.; Nichols v. Universal Pictures Corp., 45 F.2d 119, 121 (2d Cir. 1930), cert. denied, 292 U.S. 902 (1931), which cited to Holmes v. Hurst, 174 U.S. 82, 86 (1898).
[52] John Tehranian, for instance, goes so far as to argue that the fair use doctrine, far from protecting the public common, has played a key role in the triumph of a natural law vision of copyright that privileges the authors’ inherent property interests over the utilitarian goal of progress in the arts. John Tehranian, Et Tu, Fair Use? The Triumph of Natural Law Copyright, 38 U.C. Davis L. Rev. 465, 466 (2005).
[53] John Rawls, A Theory of Justice 118 (1999).
[54] Id. at 266.
[55] Id.
[56] Id.
[57] Robert P. Merges, Justifying Intellectual Property 110–12 (2012).
[58] Carys J. Craig, Reconstructing the Author-Self: Some Feminist Lessons for Copyright Law, 15 J. GENDER, SOC. POL’Y & L. 207, 208 (2007).
[59] Id. at 208, 213–15; see The Construction of Authorship: Textual Appropriation in Law and Literature (Martha Woodmansee & Peter Jaszi ed., 1994) (a collection of works by legal scholars and post structural literary critics calling into question the validity of the traditional romantic concept of authorship).
[60] Id. at 216–17.
[61] Id. at 233.
[62] Id. at 250.
[63] Id. at 252–253, 262–263.
[64] Craig, supra note 58, at 261–63.
[65] Id. at 263, 265.
[66] Id. at 263–64.
[67] Id. at 265–66.
[68] See Robin West, Jurisprudence and Gender, 55 U. Chi. L. Rev. 1, 15, 55 (1988).
[69] Id.
[70] Id. at 58–59.
[71] Id. at 58–61.
[72] See id. at 68–70.
[73] Id. at 14.
[74] Liberal feminists aim to reform the legal system to achieve greater gender equality, in contrast to radical feminists who, regarding the oppression women face as the most fundamental kind of social oppression, aim for more revolutionary changes to eliminate gender categories. See, e.g., West, supra note 68, at 13; see also Catharine A. Mackinnon, Toward a Feminist Theory of the State (1989).
[75] See Wendy Williams, Equality’s Riddle: Pregnancy and the Equal Treatment Special Treatment Debate, 13 N.Y.U. Rev. L. & Soc. Change 325, 326–28 (1985).
[76] Id. at 351–52.
[77] See id. at 353.
[78] Craig, supra note 58, at 208–09.
[79] See id. at 265–66.
[80] E.g., Charles A. Knight, The Literature of Satire 32 (2007).
[81] Hayman, Levit & Delgado, supra note 40, at 304. Richard Posner proposed the wealth-maximization model by adopting the Kaldor-Hicks efficiency criterion.
[82] Alfred C. Yen, When Authors Won’t Sell: Parody, Fair Use, and Efficiency in Copyright Law, 62 U. Colo. L. Rev. 79, 87 (1991).
[83] Id. at 88–89.
[84] Id. at 94.
[85] Id. at 84.
[86] Id. at 94-98, 103–06.
[87] Id. at 94–95; see also Guido Calabresi, The Pointlessness of Pareto: Carrying Coase Further, 100 Yale L.J. 1211, 1216 (1991) (arguing that strict Pareto “superior changes,” or those which make no one worse off and at least one person better off, are of no general use as a normative guide to social and legal policy: “For if strict or fanatical Pareto is the criterion, why wouldn’t any change that belonged in the set have already been made? . . . . [I]f Pareto optimality means a place where no improvement can be made without ex ante creating the possibility that there will be some losers, then we are always there.”).
[88] Yen, supra note 82, at 96–98.
[89] Id. at 103–04.
[90] Id. at 105.
[91] Id. at 105–06.
[92] Richard Posner, Intellectual Property: The Law and Economics Approach, 19 J. Econ. Persp. 57, 63 (2005).
[93] Id.
[94] Id.
[95] Richard Posner, When Is Parody Fair Use?, 21 J. Legal Stud. 67, 71 (1992).
[96] Id. at 72.
[97] Id. at 72–73.
[98] See Campbell, 510 U.S. 569, 580–81 (1994).
[99] Craig, supra note 58, at 263–65.
[100] Hayman, Levit & Delgado, supra note 40, at 157.
[101] Jerome Frank, Are Judges Human? Part One: The Effect on Legal Thinking of the Assumption that Judges Behave Like Human Beings, 80 U. Pa. L. Rev. 17, 18 (1931).
[102] Id. at 37.
[103] Id.
[104] Id.
[105] Id. at 42, 48.
[106] See Andrew Giden & Timothy Greene, Fair Use for the Rich and Fabulous? 80 U. Chi. L. Rev. Dialogue 88 (2013).
[107] See Salinger v. Colting, 641 F. Supp. 2d 250, 261 (S.D.N.Y. 2009).
[108] See id. at 261–62.
[109] See California, supra note 5 at 18, 89-97, 249-72; 125-33. See also Lai, supra note 4 at 25-30.
[110] See Giden & Greene, supra note 105 at 42, 48.
[111] Decl. of Martha Woodmansee at 3, Salinger, 641 F. Supp. 2d 250 (No. 09 Civ. 05095); Decl. of Robert Spoo at 5–7, Salinger, 641 F. Supp. 2d 250 (No. 09 Civ. 05095).
[112] See Frank, supra note 100, at 35, 42. .
[113] Originating from Roscoe Pound’s 1910 essay, the “law in the books” vs. “law in action” has been evoked many times. One example is Sanford Levinson & J. M. Balkin, Law, Music, and Other Performing Arts, 139 U. PA. L. REV. 1597 (1991).
[114] E.g., Eriq Gardner, Beastie Boys, ‘Girls’ Viral Video in Copyright Infringement Fight, Hollywood Rep. (Nov. 22, 2013, 2:22 P.M),
[115] Id.
[116] See Campbell, 510 U.S. 569.
[117] Obituary: Adam ‘MCA’ Yauch, BBC News (May 4, 2012),
[118] Goldie Blox, Our Letter to the Beastie Boys, Goldie’s Field Notes (Nov. 27, 2013),
[119] See Campbell, 510 U.S. 569.
[120] Concerning whether the video’s use of the song would harm Beastie Boys’ future market for licensing the song for use in commercials, users who do not make fair use of the song, such as by parodying it in some ways, would still need to obtain licenses from the band.
[121] J.M. Balkin, Tradition, Betrayal, and the Politics of Deconstruction, 11 Cardozo L. Rev. 1613, 1620, 1623, 1630 (1990).
[122] Id. at 1627, 1636.

Establishing an Indirect Liability System for Digital Copyright Infringement in China: Experience from the United States’ Approach

Establishing an Indirect Liability System for Digital Copyright Infringement in China: Experience from the United States’ Approach
By Xiao Ma* Download a PDF version of this interview here.  


Indirect copyright liability is a term used to describe the liability imposed upon a defendant who is not the direct infringer,[1] but whom the law nonetheless holds liable for damages which the copyright owner suffers from the infringement.[2] Indirect liability requires that the defendant (also referred to as the “indirect infringer” below) assist, promote, facilitate or benefit from the direct infringement.[3] The indirect copyright liability rule has different names such as secondary liability or derived liability,[4] and has various forms across jurisdictions.[5] For instance, the United Kingdom adopts the notion of “authorisation” in its copyright legislation to deal with intermediaries who authorise the infringing acts done by the third party.[6] The United States, on the other hand, has developed doctrines of contributory liability, vicarious liability and inducement liability through case law.[7] In China, however, there has been no notion of “indirect liability” in the copyright law regime. The issue of indirect copyright liability has been dealt with under the joint tort liability regime.[8] In order to address digital challenges, especially the increasing use of peer-to-peer (P2P) technologies, China has developed a series of instruments—including laws, regulations, judiciary interpretations and administrative measures—to regulate Internet intermediaries’ copyright liability for infringement committed by users. These legal documents establish a joint tort liability system under which network service providers (“NSPs”)[9] share joint liability with direct infringing users under certain conditions. The most notable of these legal instruments includes: the Copyright Law of the People’s Republic of China 1990[10] which was revised in 2001[11]and 2010;[12] the 2000 Networks Copyright Interpretation issued by the Chinese Supreme People’s Court, which was amended twice in 2004 and 2006;[13] the Regulations for the Protection of the Right of Communication through Information Network, which embodies a set of so called “safe harbor” provisions;[14] the Tort Liability Law of the People’s Republic of China[15] with one specific provision regulating ISP liability;[16] and the Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in Hearing Civil Dispute Cases Involving Infringement of the Right of Dissemination on Information Networks.[17] However, in China, debates surrounding intermediary liability issues have never stopped. First, the judiciary and scholars have been confronted with an obscure legal underpinning of indirect copyright liability due to the lack of an independent category of indirect infringement in the tort law. The success of an indirect copyright liability claim under the joint tort liability principle without the existence of joint intent or knowledge is questionable. It is equally problematic to impose indirect liability on a separate tort basis. To overcome this lacuna, a survey of current tort law is required to test the viability of engaging indirect copyright liability under the guidance of the general tort law regime. Second, courts have been struggling with the incompleteness of liability attribution rules, especially the constitutive element that has been used to establish the culpability of the defendant. The issue in the spotlight is the inconsistent knowledge standard. Current rules that are used to define and interpret whether someone “knows,” “has reason to know” and “should know” have been the subject of contention. Third, the Chinese safe harbor provisions, inspired by the United States DMCA safe harbors, fail to accommodate the specific conditions in China. The 2006 Regulation adopted the legislative model of ruling on both liability attribution and liability exemption, which caused confusion as to the nature of the safe harbors. Unlike the United States’ approach that has provided specific guidance on the interpretation of the safe harbors through case law, Chinese legislation has failed to correctly address the knowledge standard or control and benefit standard. In addition to addressing the above-mentioned debates, this article thoroughly reviews current laws and cases in China and compares them with United States laws on indirect copyright liability. In the United States, liability attribution rules have evolved and formed three categories: contributory liability, which stresses elements of constructive knowledge and material contribution; vicarious liability, which emphasizes factors of ability to control and direct financial interest; and inducement liability, which focuses on purposeful, culpable conduct and expression. China has adopted the aiding and abetting liabilities which correspond to the United States’ contributory and inducement liabilities. However, the one-sided emphasis on applicable knowledge has impaired the importance of other constitutive elements such as the intent, the relationship with direct infringers, the ability to control direct activities, the means that are used for infringement, and due care. The United States has developed concrete explanations for the application of exemption rules in indirect copyright liability in case laws.[18] In China, however, safe harbors have set a higher standard to exempt liability for NSPs, compared with the standards of the United States.[19] This article begins by exploring three major debates concerning Chinese NSP liability rules. The issues in these debates are factors that have hampered the establishment of an indirect copyright liability system in China. Through an analysis of recent efforts that China has taken to construct a set of NSP liability rules, this study highlights the incompatibility of safe harbor rules, provides an overview of comprehensive liability factors, and calls for remolding and updating China’s relevant regulatory instruments by reexamining the United States’ experience. Part II revisits the key doctrines of indirect copyright liability in the United States, finding that judicial practice has stepped out of the traditional analysis of knowledge and material contribution elements in contributory liability and of the control and financial benefit factors in vicarious liability. Instead, a series of subjective and objective factors—including the relationship, control, knowledge, means and due care—have all invited consideration. Part III proposes guidelines and specific suggestions in establishing an indirect liability system for digital copyright infringement in China. This article concludes with a strong recommendation that, to construct an efficient, well-balanced and predictable indirect copyright liability system for dealing with digital copyright infringement in China, an independent tort theory-oriented, culpable conduct-based indirect copyright liability system, with modified safe harbor provisions, is needed.

I. Debates on NSP Liability Rules in China

In China, there have been no systematic rules on the issue of indirect liability for copyright infringement in legislation. This was compatible with the original focus of copyright protection in China, because the legislative and applicative focus had been the act of direct infringement since establishing the copyright system. This focus can partly be explained by the previous technological conditions where the general public could not afford to copy technologies and only a select few, with certain financial and material resources, were capable of conducting severe direct infringement. In this light, the copyright owners could gain sufficient remedies through chasing legal liabilities from those direct infringers. With fast developments in copying and disseminating technology, however, individuals are now capable of conducting severe copyright infringement. Nevertheless, it is not easy for copyright owners to locate the infringers, nor to gain sufficient compensation from chasing individual liability. Moreover, if they are not immediately restrained, some expanding infringements will produce very serious outcomes for copyright owners. In practice, the uniformity of court judgments at different levels is not guaranteed.[20] Therefore, the copyright laws in China should not only introduce fundamental principles guiding indirect infringement of copyright, but also make concrete and detailed provisions to construct a comprehensive and systematic indirect liability system for copyright infringement online. Civil liability for copyright infringement is stipulated in relevant articles of the General Principles of the Civil Law (“GPCC”), which prescribes that “citizens and legal persons shall enjoy rights of authorship (copyrights) and shall be entitled to sign their names as authors, issue and publish their works and obtain remuneration in accordance with the law.”[21] When dealing with infringement, it provides joint liability for joint infringements.[22] The Supreme Court’s Opinion of the Civil Law further states that “any person who incites or assists another to commit a tort is the joint tortfeasor.”[23] Relevant articles in the 2010 Tort Liability Law can be applied when dealing with copyright liabilities,[24] including strict liability, fault-based liability, and joint and several liabilities.[25] It is noteworthy that the 2010 Tort Liability Law prescribes defines abetting and assisting activities as two forms of infringing acts which lead to joint and several liabilities.[26] Article 36, which specifically deals with NSP liability in the network environment,[27] affirms the notice and takedown provisions[28] provided in the 2006 Regulation[29] and makes clear that a fault-based liability is applied to the NSP who has knowledge of a third party’s infringement.[30] This article is a principled stipulation for indirect liability that needs to be further interpreted. The main problems involve the interpretation of certain terms in this article such as “necessary measures,” “in a timely manner” and “know.” For example, whether “know” is perceived as actual knowledge, or as knowledge including “should know,” was under hot debate.[31] The recently issued 2013 Provision has absorbed recent judiciary practice as well as recent academic research.[32] By distinguishing direct and indirect infringement of network service providers,[33] especially stipulating the abetting and aiding infringement[34] with a specific knowledge standard,[35] the 2013 Provision has provided a consistent framework for evaluating and assessing NSP infringement with regard to the relevant issues over online copyright disputes. The imputing and limiting of online copyright liabilities are embodied and the balancing of interests is reflected. Based on the investigation of cases and consultation from academes and different sectors, the promulgation of the 2013 Provision will help courts at all levels in China to keep pace with the times and be more scientific and normalized in adjudicating copyright cases in the future. However, for several reasons, the 2013 Provision does not provide total clarity on attribution rules. First, it has been established that fault is a determinative factor in deciding whether the NSP is liable for infringement as an abettor or aider.[36] However, the 2013 Provision defines fault as knowledge, which overlooks other types of intentional fault including inducing or encouraging.[37] Second, the 2013 Provision takes an approach that stresses only the subjective element rather than the objective element. Knowledge (know or should have known)[38] becomes the key deciding factor; the objective factors, such as nature of the services provided and the NSP’s capability of information management, are treated as factors to be taken into account in deciding the knowledge.[39] Third, the factors in deciding fault of an NSP are enumerated with examples, which limit judges’ discretion.[40] This legislative technique becomes disadvantageous when facing new technologies. Last but not least, the provisions relating to copyright liabilities in various legal instruments have not yet been unified, especially considering that the Copyright Law is currently under the third revision. Therefore, the effect of application of the 2013 Provision remains to be seen.

A. Debate on the Tort Basis for NSP Copyright Liability

Generally speaking, tort infringement acts lead to tort liability. However, under current tort theory, debates among scholars on the tort infringement basis of NSP copyright liability have been getting heated. Some argue for joint infringement,[41] while others argue that NSPs are severally liable.[42] Prior to the promulgation of the 2010 Tort Liability Law, the act of joint infringement was used to define the relationship between the NSP and the network users; for instance, the 2006 Network Interpretation provides that the NSP shall bear joint liability with the users.[43] The same approach was adopted in Article 23 of the 2006 Regulation.[44] However, the 2010 Tort Liability Law recognizes joint and several liabilities for aiding and abetting torts, without referring to its liability basis.[45] In judicial practice, Chinese courts have been employing the joint infringement theory. For instance, in the case Zhongkai Culture v. Guangzhou Shulian[46], the court applied the 2006 Network Interpretation, stating that the defendant, who did not upload a film for direct downloading, had abetted and assisted the users in committing the infringement and should bear joint infringement liability with direct infringers.[47] Among academics, Professor Ming Yang argues for joint infringement as a basis for NSP liability in China.[48] He points out that unlike the criminal law, joint infringement in civil law tort theory stresses an objective infringement act, rather than the existence of conspiracy or joint intent or knowledge.[49] If the indirect infringement system is used to define NSP liability in the form of assisting infringement, major confusion will occur surrounding the nature of the relationship between a direct and indirect infringer.[50] Based on this observation, he claims that it is unnecessary to import an indirect infringement system in China.[51] However, the above point of view has been challenged by Wei Xu, whose argument stems from the concept of joint infringement itself.[52] The major disagreement concerns the question of whether the infringements committed by multiple persons without connected intent constitute joint infringement. For a start, he suggests a systematic reading of articles 8 through 12 of the 2010 Tort Liability Law, and finds that the answer to the above question is no.[53] He advises assisting infringement liability rather than joint infringement liability in a situation without connected intent between NSP and its users.[54] Next, he analyzes a dilemma in practice if the NSP is considered as a joint tortfeasor. Under the joint infringement theory, the joint tortfeasor is required to participate in the necessary joint action as a necessary party to the litigation.[55] However, in practice, users who commit direct infringement are highly impossible to locate, or the cost is too high to be added as a party to the litigation.[56] In addition, the NSP that bears liability has a right to pursue recovery from direct infringers, but it is difficult and impractical for an NSP to do so.[57] Accordingly, Xu proposes that the NSP shall be severally rather than jointly liable.[58] Tort law Professor Lixin Yang provides a third opinion.[59] Professor Yang describes a logic gap between the infringement committed by multiple parties and respective liability forms in traditional tort law theory in China.[60] The unresolved question is whether the combination of direct infringement and indirect infringement constitutes joint infringement. He advises that it is not joint infringement but joint and several liabilities based on consideration of public policy.[61] From his point of view, infringement activity leads to corresponding infringement liability. Given that, joint infringement leads to joint and several liability, the independent infringement act leads to proportionate liability, and the third party infringement leads to third party liability. A gap, consequently, is generated concerning the correspondent form of infringement, which leads to unreal joint liability.[62] He proposes a concept of “overlapping infringement,”[63] constituted by multiple infringement activity, which has direct or indirect causation of the damage. The infringer bears the unreal joint liability. When the concept of overlapping infringement comes into play, the logic gap that has long existed in tort law theory is filled. In this light, the theoretical basis for NSP liability can be initially established.[64]

B. Debate on the NSP’s Knowledge Standard

The requisite level of knowledge possessed by the NSP in determining its liability of online copyright infringement committed by its users has also been one of the major controversies in China. The 2000 Network Interpretation raises the “explicit knowledge” requirement in Article 5.[65] The 2006 Regulation sets forth the requisite knowledge requirement for limiting the liability of NSPs that provide services related to information storage and searching or linking. Article 22(3) employs the terms “knows” or “has reasonable ground to know” for limiting liability of an NSP that provides storage space,[66] while Article 23 uses the phrase “explicitly knows” and “should have known” for an NSP that provides searching or linking services.[67] Prior to the promulgation of the 2013 Provision, it was unclear what “should have known” means. For instance, compare IFPI v. Baidu[68] and IFPI v. Yahoo.[69] Both cases are very similar in that they concern recording labels suing search engines and linking service providers. Nevertheless, they produced different results. In IFPI v Baidu, the IFPI sued Baidu on behalf of seven music companies for providing links to a website that offered free downloading of infringing songs.[70] The Beijing First Intermediate People’s Court ruled in favour of Baidu, holding that the plaintiff failed to notify Baidu of the infringing files, and Baidu had no fault for searching and linking to the other websites because it ‘should not have known’ of the infringing material.[71] The Beijing Higher People’s Court upheld the decision. However, in a similar case IFPI v Yahoo, the defendant Yahoo who provided links to the third websites for free music downloading, was held liable for aiding infringement.[72] It is notable that though the defendants in both cases provided the same service, there were different facts that were essential for the decision. The music labels sent notices to the defendant including the name of the song, the name of the album and the singer of each infringing file. The court held that the above three pieces of information were enough to locate the copyrighted music However, Yahoo refused to disconnect the access to the infringing material.[73] Yahoo should have known of the infringement, therefore it constituted aiding infringement.[74] In another case Fanya v Baidu,[75] the right holder also sent notices to the defendant, demanding the defendant to disconnect access to the infringing material. However, these notices were different from the notices sent in IFPI v Yahoo that were sufficient for locating the illegal music files. Instead, the notices from Fanya only provided the name of the song, with which alone would be very difficult to locate the copyrighted material enjoyed by the copyright holders.[76] In order to understand what constitutes “know” or “should have known” for a searching or linking service provider, first, a notice that is sufficient to locate the infringing material is required. An noncompliance notice will not constitute explicit knowledge; but, if it is sufficient to locate the infringing material, the “red flag” test is met.[77] Second, there are different types of service provided by the searching or linking NSPs. One is the search box, which has no bias towards the content it linked when the key words are being typed in. The other is the list provided by some search engines. By clicking song or singer’s names in the list such as ‘top 100’ songs, users can reach the same result as typing the name in the search box. However, the culpability of the search engine provider under the two situations is different. By providing the list, the search engine providers are supposed to have higher duty of care. When infringing material is apparent like a ‘red flag’ from a glance of the list, the service provider is required to disconnect it, rather than turning a blind eye to the infringement.[78] The NSP knowledge standard has also been uncertain since the drafting of Article 36[79] of the 2010 Tort Liability Law.[80] There is no doubt that “know” includes “explicitly know.” However, whether it also includes “should have known” or “have reason to know” generates fierce debate. Some legal professionals maintain that “know” includes “should have known” because “many culpable internet service providers might escape liability if their liabilities are only based on actual knowledge,”[81] while some disagree because “it would incur a considerable duty of care for website operators.”[82] The third opinion suggests that the knowledge requirement includes “have reason to know” instead of “should have known,” because the latter may increase the level of care for internet service providers, whereas the former is equal to “awareness of facts or circumstances” under the DMCA.[83] Though the two terms both relate to the term “constructive knowledge,” and vaguely to the duty of care under the tort of negligence at common law, they have a slight difference:
The term “had reason to know” has a slight difference with “should have known”. The first centers on the “reason”, while, the second emphasizes the “duty” which could be a legal duty of care under a statute or based on an agreement. The “has reason to know” is more like a factual determination based upon the circumstances and information available to the parties, while, the “should have known” is more like a judicial determination of what is a reasonable level of knowledge given the parties and the circumstances. Hence, the first is a party-specific objectivity, and the second is a community-focused objectivity.[84]
Tao disagrees with all above opinions in interpreting “know” in the 2010 Tort Liability Law and instead proposes the United States’ approach in the DMCA.[85] Since China has enacted no rule preventing the imposition of a monitoring obligation,[86] the first and third approaches would result in disproportionate burdens on intermediaries. In addition, Tao argues that the adaptation of the term “reason to know” and “should have known” in Article 22 of the 2006 Regulation is a misunderstanding by legislators[87] and that an interpretation consistent with the DMCA would avoid more confusion and legal uncertainty.[88] Prior to the promulgation of the 2013 Provision, Tao’s interpretation of “know” in Article 36 of the 2010 Tort Liability Law was of great significance, because a broad interpretation of the knowledge standard would lead to an excessive burden for the NSP. However, since 2013, the status of NSP liability has changed. Indirect copyright liability attribution rules, which employ “know” or “should have known” have been introduced based on the knowledge of an NSP.[89] Under the rudimentary framework of indirect liability for digital copyright infringement, the knowledge requirement in different legislation needs to be re-examined. Article 36 of the 2010 Tort Liability Law adopts a horizontal approach which is applicable to both intellectual property infringement and other civil claims governing content including copyright, and defamatory and obscene content.[90] It is advisable to interpret this article in a broad way, because it “is not only fatal to the imposition of copyright liability on [NSPs] but also important for other kinds of content-related liability for [NSPs] such as liability for defamatory content.”[91] Further, as a liability attribution rule rather than liability exemption rule, the knowledge requirement in Article 36 is obviously broader than that of the safe harbor provisions under the 2006 Regulation. It is therefore concluded that the term “know” in article 36 of the 2010 Tort Liability Law embraces the meaning of “explicitly know” and “should have known” to determine the NSP’s knowledge of copyright infringements committed by the third party.

C. Debate on the Nature of Safe Harbors

There have been passionate and polarized debates on the nature of the Chinese “safe harbor” provisions[92] provided in the 2006 Regulation.[93] A contextual analysis suggests the language used in the 2006 Regulation reflects divergent approaches towards the liability model. For instance, the safe harbors all use the language of liability limitation, such as “shall not be liable for damages”;[94] however, the Regulation provides for liability attribution in the second section: “where [the NSP] knows or has reasonable grounds to know that the linked works, performances, sound recordings or video recordings infringe another person’s right, it shall be jointly liable for the infringement.”[95] Given the ambiguity of what is prescribed in the legislation, both courts and academics suggest clarifying the nature of the provisions.[96] Although the safe harbors have generally been considered by academic circles as liability exemptions, some disagree.[97] There is general international consensus that the purpose of safe harbors is to be a “limitation of liability” or an “exemption from liability.” For instance, the European Union Directive on Electronic Commerce[98] defines the safe harbors as a “limitation of liability” or as constituting an “exemption from liability.”[99] The same approach is adopted in the United States.[100] In China, the 2010 Guiding Opinion issued by the Beijing Higher People’s Court referred to Articles 20 to 23 of the 2006 Provision as constituting a “liability exemption.”[101] Similarly, the mainstream academic view is that the major purpose of the notice and take down procedure is to exempt NSPs from indirect liability for direct infringement committed by network users; that the nature of the NSP safe harbors is not liability attribution but exemption; and that the safe harbors are not the final establishment of liability but the defenses.[102] However, Wei Xu disagrees with the academic consensus.[103] He argues that adopting the theory of liability exemption contradicts the NSP’s fault-based liability for third party copyright infringement.[104] He proposes the following inferences, based on the theory of liability exemption. First, infringement liability is established before the notice is received by the NSP, and the NSP is exempted from liability as soon as it deletes the infringing content.[105] Alternatively, infringement liability is not established before the notice is received by the NSP but after, and as soon as the NSP deletes the infringing content, it is exempted from liability.[106] He indicates that the first inference contradicts fault-based liability because before the notice is received, the NSP bears no fault.[107] The second inference, according to Xu, is also incorrect because if receiving the notice means fault, this would contradict Article 36(3) of the 2010 Tort Liability Law,[108] which suggests that fault means knowledge and failing to delete.[109] However, this inference has severe defects. First, the author falsely states that the fault-based liability requires that before the notice is received there has been no fault with the NSP. This statement equates fault with notice, leaving out the possibility of other forms of knowledge of an NSP including an email from a third party, actual knowledge obtained before receiving the notice, or red flag knowledge.[110] Second, the author misunderstands the meaning of fault as knowledge plus failing-to-delete. It has been made clear under Article 8 of the 2013 Provision that fault of the NSP means knowledge of a network user’s infringement.[111] Qian Wang, a leading professor in the area of NSP copyright liability, argues that the safe harbor provisions are actually two sides of the same coin—serving as both the attribution and limitation of NSP liability.[112] By analyzing each condition in the safe harbor provisions, he suggests that some liability exemption provisions correspond to direct liability and some correspond to aiding liability.[113] For instance, Article 22(3) provides that the NSP shall not be liable for damages if “it does not know or has no reasonable grounds to know that the works, performances, sound recordings or video recordings provided by its subscribers infringe any other persons’ rights.”[114] This is obviously an expression of liability attribution. Expressing this article another way—as “knows or has reasonable ground to know”—forms the attribution of aiding liability. Prior to the promulgation of the 2013 Provision, this “two sides of the same coin” approach facilitated the understanding of the NSP’s copyright liability for infringement committed by users under circumstances for which there were no relevant laws regarding indirect liability. Since the 2013 Provision has been issued, Wang’s approach, which has been adopted by China’s courts for years, is no longer compatible. First, not all safe harbor provisions correspond to a form of liability attribution. Distinguishing these provisions becomes a difficult task when applying the safe harbors. Second, problems occur with applying the conditions of each safe harbor: Are the conditions necessary, sufficient or both? An in-depth analysis of United States’ safe harbor provisions below will facilitate an understanding of the changes in China’s safe harbor provisions. An analysis of laws, cases, and academic debates over recent years in China shows that the absence of systematic indirect copyright liabilities is the root of confusion and chaos in the Chinese copyright regime. The lack of a comprehensive indirect copyright liability scheme not only leaves a degree of uncertainty to the issue of digital copyright infringement, but also creates a loophole in Chinese tort law. Unlike the United States, which has established indirect liability for intellectual property infringement through legislation and the common law, China has been left behind—although a significant body of research has contributed to this area. It is reasonable to speculate that the inconsistency in the copyright regime, even in the tort law regime, has posed a significant threat to the interpretation and application of digital copyright infringement in judicial practice.

II. Experience from the United States

China, as a developing country, has gained some nutrition from the existing body of law in the United States. For instance, China’s 2006 Regulation was a result of learning from the United States’ DMCA safe harbor provisions. However, due to the different legal system, the attribution rules of indirect copyright liability in the United States have been ignored by China. The United States’ indirect copyright liability doctrines were developed through precedent; . accordingly, there have been no codified rules on the attribution of indirect liability for China to borrow. Thus China has stepped into a dilemma: on the one hand, the safe harbor rules play important roles in both attribution and exemption of liabilities; on the other hand, the 2010 Tort Liability Law and 2013 Provision also seek to serve as liability attribution rules. Since these rules have not been systematically organized and interpreted, a thorough reading of United States’ doctrines is helpful.

A. Fault-Based Liability Attribution Rules Developed from Common Law Cases

As a pioneer in the development of copyright laws based on the “early, rapid and widespread development of computer-based commerce”,[115] the United States occupies a dominant position in the development of indirect copyright liability laws which has impacted many other jurisdictions. Indirect (or secondary) liability[116] of service providers for online copyright infringement continues to be a highly controversial issue in the United States. Since Congress enacted its first copyright law in 1790[117], copyright law has been in constant conflict with evolving technological trends because technology reduces the ability of copyright holders to control their property.[118] This significant judicial dilemma led to the development of three indirect liabilities in the United States copyright regime: contributory liability and vicarious liability, which have been applied in a long line of cases, and inducement liability, which developed only in the last ten years.[119]
1. Is the Sony Rule Still Applicable in a Digital World? The Implied Factors in Contributory Liability
Contributory infringement in the United States is a common law liability regime. A defendant who engages in “personal conduct that encourages or assists the infringement” may be held liable for contributory infringement.[120] Courts began recognizing claims of contributory liability for infringment in the late nineteeth century, but only on the basis of intentional acts.[121] In one of the earliest cases involving contributory copyright infringement, Harper v. Shoppell,[122] the defendant was held liable as a joint tortfeasor for selling a printing plate, knowing that the purchaser would use it to make infringing copies. Later, in Kalem Co. v. Harper Bros,[123] the owner of a motion picture was held liable for authorizing the infringing activity by selling copies to exhibitors and supplying advertisements for the infringing exhibitions based on his knowledge that the illegal use would constitute an infringement. These early cases reflect the knowledge requirement to impose copyright liability. Gershwin Publishing Corp. v. Columbia Artists Management[124] developed a two-prong test for contributory infringement: “one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a ‘contributory’ infringer.”[125] In the 1980s, the Supreme Court again confronted the issue of contributory infringement in Sony Corp. v. Universal City Studios, Inc. (Betamax), which has been considered a conundrum in balancing conflicting interests between copyright holders and technology innovators.[126] In Sony, the District Court borrowed the “staple article of commerce” doctrine from patent law,[127] expressing the concern that commerce might be hampered if a mere constructive knowledge of possible infringement rendered the product distributor liable.[128] After a lengthy review of Constitutional provisions and case law.[129] the Supreme Court also recognized the role that the staple article of commerce doctrine played in balancing the interests of copyright holders and others’ freedom of commerce, holding that “the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses.”[130] The Sony doctrine was tested in the landmark case of A&M Records, Inc. v. Napster, Inc. (“Napster”),[131] in which the Ninth Circuit refused to apply the Sony “staple article of commerce” doctrine to Napster for two reasons: (i) Napster had both the continuous ability to limit copyright infringement in ways that VCR manufacturers did not;[132] and (ii) actual knowledge of direct infringement rendered the Sony rule inapplicable.[133] The application of the Sony doctrine in Napster revealed that, in future cases with respect to mass-market means of copying, courts should “inquire into non-infringing uses when the distributor of the device lacks actual knowledge of and control over specific infringements.”[134] In addition, when adjudicating a case involving a dual-purpose product (one capable of substantial non-infringing uses), factors such as actual knowledge of the direct infringement and the ability to control direct infringement should also be taken into account. Sony was further tested in Aimster,[135] in which the Seventh Circuit disagreed with the interpretation of the Sony Rule by the district court and with Napster’s approach in application of the Sony Rule on the element of control.[136] Judge Posner reasoned from an economic perspective, recognizing that although control is a factor to be considered in determining contributory infringement,[137] the preliminary injunction the district court granted to the recording industry based on Aimster’s ability to control its users could result in the shutting down of the Aimster service, contrary to the clear meaning of the Sony decision.[138] The biggest challenge that the Sony rule and the doctrine of contributory liability encountered was the Grokster case, in which Grokster was sued by MGM for distributing free software products that allowed computer users to share copyrighted works through de-centralized peer-to-peer networks.[139] According to Grokster, under the Sony rule, the software it distributed was capable of substantial non-infringing uses.[140] Additionally, the remaining areas of uncertainty regarding the Sony “staple article of commerce” doctrine became the core of the case. Unlike Napster, which had actual knowledge of specific infringement and the ability to control direct infringement by operating a centralized system,[141] Grokster’s decentralized structure disclaimed its ability to obtain actual knowledge and prevent infringements once the product was distributed.[142] Without the two key elements established in the Napster decision, it seemed that Grokster was able to shield itself with the Sony defense. However, the Supreme Court disagreed on multiple grounds. Major disputes arose as to the interpretation and application of the Sony doctrine. Justice Souter refused to visit Sony further, but employed an inducement rule, holding that Sony did not apply when clear intent to infringe was demonstrated.[143] Justice Ginsburg argued that the Sony rule still applied, but not in this case, which “differ[ed] markedly from Sony,”[144] and the Ninth Circuit needed to reconsider the meaning of Sony.[145] Justice Breyer insisted on maintaining Sony, arguing that neither should it be strictly interpreted, nor should it be modified.[146] There have been a number of criticisms regarding the Sony “staple article of commerce” doctrine. The first is that the transplant of the Sony doctrine from patent law is a diversion from general tort law principles.[147] Some argue that the Supreme Court abused its discretion by extending its analysis of contributory and vicarious liability when the finding of fair use did not stop their analysis, which is possibly “out of context with the tradition of the Court not to engage in rule making beyond the case before it.”[148] Furthermore, articulating a standard from the Patent Act was “unfortunate and inapposite” for the readiness of technology assessment.[149] It was observed that two major problems arose with the application of the “staple article of commerce” equation in the digital world. First, there were no objective standards for the construction of the doctrine that would “prevent an inference of intent to result in infringement by the end user”.[150] Second, safe harbors provided the same function.[151] Accordingly, the objective of the “staple article of commerce” doctrine was misread. The purpose of the doctrine was for the protection of technology, and for ensuring that lawful use of a patent is not excluded, rather than “to create an inference of intent to infringe”.[152] The second criticism concerns the vague meanings of “capable of” and “substantial”. There has been debate as to whether “capable of” simply means current use of technology or also includes potential uses.[153] After all, “only the most unimaginative manufacturer would be unable to demonstrate that an image-duplicating product is ‘capable’ of substantial non-infringing uses.”[154] It is also evident, as some suggested, that eBay, Amazon, or Google and the multiple of other Internet and Information technologies be categorized as staples of commerce.[155] As for the meaning of “substantial”, it is arguable whether a minority non-infringing use would nonetheless be “substantial”.[156] Like Grokster suggested, if 10% of non-infringing uses in Sony were regarded as “substantial”, how about the 9% non-infringing uses in Grokster?[157] The questions such as how to identify the doctrine, what constitutes non-infringing use, and the time frame of measurement, are left open, which create fears of uncertain futures for innovators of new technologies.[158] Therefore, one may argue that a mature technology analysis is needed in order to conduct inquiries regarding the assessment of new technologies. Put another way, the problems raised by technology are better solved by technology itself. The third and the most important criticism is whether the Sony rule remains applicable in the digital world at all. Copyright law, the Court wrote, must “strike a balance between a copyright holder’s legitimate demand for effective . . . protection, and the rights of others to freely engage in substantially unrelated areas of commerce.”[159] That is why it was observed that “copyright law is important, but at some point copyright incentives must take a backseat to other societal interests, including an interest in promoting the development of new technologies and an interest in experimenting with new business opportunities and market structures.”[160] The driving concern in Sony was “a fear that indirect liability would have given copyright holders control over what was then a new and still-developing technology”.[161] That concern is why the Sony rule has played an important role in balancing the interest between copyright holders and technology innovators.[162] However, Grokster was substantially different from Sony in that the latter was used for individual non-commercial copying and the former was an unlimited copying tool without any restriction, which made mass-production possible. This difference demonstrates that the Sony rule, which was produced in the traditional dissemination world, is not suitable in the digital world anymore. More importantly, the vague and undefined wording in the Sony rule has triggered divergence in its interpretation. This was apparent in Grokster, where the Court had to apply inducing infringement in order to escape the difficulty of applying the Sony rule.[163] Creating a Sony rule might only be a temporary solution concerning the protection of a new technology. When challenged by new cases such as Grokster, it is time to consider whether the Sony rule is still applicable, and if not, what the alternatives are. Since the Grokster case, “ ‘inducement’ and ‘substantial non-infringing use’ will become legal conclusions, separating the Sony (good technology) sheep from the Grokster (evil entrepreneur) goats.”[164] While Robert I. Reis argued that “Sony left us with doctrine and dicta that obscured the need for rigorous methods of evaluation and assessment of new technologies that ensure reasonable standards and transparency”,[165] the interpretation of the Sony role has been evolving though cases, especially those with respect to new technologies. Since copyright holders started to target intermediaries such as ISPs as a shifting strategy under the digital environment, the scope of contributory copyright liability has been expanding with the development of technology with fear that technology would “unjustly enrich secondary actors at the expense of originators and destroy the latter’s creative incentives”.[166] The key factors to determine contributory liability are the defendant’s knowledge of direct infringement conducted by the third person and the material contribution to the infringement.[167] These two criteria have changed over time and continue to evolve, yet still remain “confusingly opaque” and not “suitably apportioned”,[168] especially under the challenge of P2P file sharing cases.[169] In order to determine the culpability of intermediaries, Dixon proposes a common set of elements to be considered by courts, including the relationship of the third party with the user, the extent of the third party’s involvement, knowledge of infringing activities, intention of the third party, extent of infringement and lawful activities, financial or other benefit of third party, ability to prevent or deter infringement, due care of third party and cost-benefit analysis.[170] Through presenting these elements and analyzing factors in different cases,[171] Dixon points out that “no one factor itself will impute liability, but the strong presence of two or more accumulated elements ties a third party more closely to the infringement in ways that courts may find sufficient to impose liability on the third party.”[172] The above elements were not expressly stressed by United States courts but have been taken into account in many occasions. For example, though the relationship between the direct infringer and the third party was not considered as an essential element of contributory liability in any United States court, it was brought about several times. In Sony, the district court noted that “Sony had no direct involvement with any Betamax purchasers who recorded copyrighted works off the air.”[173] In the dissenting opinion of the Supreme Court, Justice Blackmun argued that “the District Court reasoned that Sony had no direct involvement with individual Betamax users, did not participate in any off-the-air copying, and did not know that such copying was an infringement of the Studios’ copyright”, however, the Court stated that the contributory liability “may be imposed even when the defendant has no formal control over the infringer.”[174] In Napster, the court emphasized Napster’s ongoing relationship with its customers.[175] At any time, Napster could have refused service to users who were violating copyright law. VCR manufacturers, by contrast, had no such power; their relationship with any customer ended at the moment of sale. The element of control has not been officially recognized as a constituting element in deciding indirect copyright liability cases. However, it has functioned as an important nexus between primary and secondary infringers. The element of control is justified not only theoretically, based on fault, as a duty of care exists on the indirect infringer who has the ability to control, but also practically, based on the consideration for cost-efficient litigation.[176] In practice, courts have considered the factor of control not only in contributory infringement cases, through “the knowledgeable giving or withholding of a material contribution necessary to carrying out the infringing activity,” but also in vicarious liability cases, exercised “directly through the supervisory powers of the secondary over the subordinate primary”.[177] From the above analysis, it can be seen that the key factors analyzed in different liability forms should be interpreted under the specific circumstances. Other factors, such as relationship between direct and indirect infringers or due care of third party, are all invited into consideration.
2. The Expansion of Vicarious Liability in Copyright Law: Why It Does Not Apply in China?
Vicarious liability was developed out of the doctrine of respondeat superior, which provides that employers can be held strictly liable in general tort law for torts committed by their employees in the course of their employment.[178] The traditional formula states that:
When the right and ability to supervise coalesce with an obvious and direct financial interest in the exploitation of copyrighted materials –even in the absence of actual knowledge that the copyright monopoly is being impaired-the purposes of copyright law may be best effectuated by the imposition of liability upon the beneficiary of that exploitation.[179]
As a form of risk allocation,[180]the rationale for this form of liability is the incentive theory, which suggests that the employer is in a position to supervise and control the employee.[181]This liability was first extended[182]beyond an employer/employee relationship to cover the “dance hall” cases,[183]in which an independent contractor was found liable because the general contractor was in a better position to supervise and knew the identity of the subcontractor.[184]Gershwin extended the formula of vicarious liability in copyright case, in which a defendant “has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities”.[185] In Napster, the district court determined that Napster had the right and ability to supervise its users’ conduct, because the evidence showed that Napster had the ability to block infringers’ access, retained the right to control access to its system, and had the ability to locate infringing material listed on its search indices as well as the right to terminate users’ access to the system.[186] This approach was challenged by Aimster, in which a cost-benefit analysis was conducted to prove that the meaning of control should not include the means to exclude the technology from the market.[187] Similarly, Grokster stated that one “infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.”[188] Grokster further explained the “control” element of the vicarious liability test as the defendant’s “right and ability to supervise the direct infringer.”[189] Thus, under Grokster, a defendant exercises control over a direct infringer when he has both a legal right to stop or limit the directly infringing conduct, as well as the practical ability to do so.[190] In analyzing Perfect 10, the Circuit Court held the evidence did not support Google’s right and ability to limit the direct infringement of third-party websites.[191] Google’s ability to control was even weaker than Napster, which could terminate its users’ accounts and block their access to the Napster system.[192] On the element of direct financial interest, both the district court and the appellate court agreed that Napster had a direct financial interest in the infringing activity based on the finding that by attracting more users through the availability of protected works on its system, “Napster’s future revenue is directly dependent upon ‘increases in user base.’”[193] The tort law doctrine of vicarious liability, once applied in indirect copyright infringement cases, has expanded, with a broad interpretation of “control” and “financial benefit.” This liability approach would easily disturb many service providers that have certain ability to control their users activities and gain revenue based on advertisement or other business models. For China, vicarious liability does not apply for two reasons. First, there has been no basis or precedent in copyright law for vicarious liability, which is strictly restrained in the tort law regime of employer/employee relationship. Second, current development of vicarious liability in the United States shows that the interpretation of the constituting elements have not reached a stable status, which, if being transplanted to China’s copyright law, could easily become a problem.
3. Inducement Liability: What Could be Learned for China?
After the shutting down of Napster, Grokster made an architectural modification from Napster’s centralized file sharing function to a decentralized model, in order to not only avert actual knowledge, but also eliminate its ability to control. By dissatisfying both the knowledge and control elements, Grokster attempted to defeat both contributory and vicarious liability claims.[194] However, the Supreme Court borrowed an “inducement” theory of liability from patent law and held that:
One who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, going beyond mere distribution with knowledge of third-party action, is liable for the resulting acts of infringement by third parties using the device, regardless of the device’s lawful uses.[195]
What conduct may be sufficient to render a defendant liable for inducement? The Supreme Court pointed out that the Sony rule limits imputing culpable intent rather than ignoring evidence of intent.[196] Thus, if evidence shows statements or actions directed to promoting infringement, the Sony rule will not preclude liability.[197] Grokster and Sony had different bases of liability for distributing a product open to alternative uses. Grokster emphasized the illegal objective from concrete evidence, while Sony stressed prohibiting the imputation of fault.[198] The classic case of direct evidence of unlawful purpose occurs when one induces commission of infringement by another, as by advertising. Under common law, one who “not only expected but invoked infringing use by advertisement” is liable for infringement “on principles recognized in every part of the law.”[199] According to the court, mental element or conduct alone is insufficient for a finding of indirect liability; an analysis must be based on all relevant factors.[200] Here, the summary judgment record was replete with other evidence that Grokster and StreamCast, unlike the manufacturer and distributor in Sony, acted with a purpose to cause copyright violations by illegal use of the software.[201] The Court looked to factors to determine inducement including “advertisement or solicitation that broadcasts a message designed to stimulate others to commit violations.”[202] To this end, the court declared that the respondents’“unlawful objective is unmistakable.”[203] Through importing the inducement rule from patent law, however, the Court failed to make further clarification on how far this rule should be stretched for future P2P illegal file sharing cases, especially on the question of “whether an inducer must have an intent to induce the acts that constitute infringement or an intent to induce infringement.”[204] Given the statutory structure in the patent law, a narrower standard was proposed, which required that the “inducer have an intent to induce infringement, not merely intent to induce acts that constitute infringement.”[205] This was a pro-competitive standard that encouraged newcomers to enter the market if they obtain a good faith belief in fair competition.[206] This approach solved the spiny Grokster case, and more importantly, cleared the path for the future application of indirect copyright liability rules on other P2P file sharing cases. China’s current legislation on online copyright infringement has been focusing on fault of a service provider, which was interpreted as actual or constructive knowledge.[207] However, this interpretation overlooked the culpable conduct of an abetting infringer. In its United States counterpart, the culpable conduct of an inducer is the purposeful, culpable expression and conduct, demonstrated by subjective and objective evidence. The ignorance of abetting infringement evidence in China’s legislation will cause trouble in deciding P2P file sharing cases when the P2P service providers have no knowledge and no control over the direct infringement. If elements of inducement infringement are to be imported to China, the service providers will not only avoid presenting unlawful objectives, but also take precautions and pay attention to the due care obligation such as implementing filter technologies.

B. Strict Interpretation of DMCA Safe Harbors

Designed as a balance between protecting the rights of copyright holders and promoting technology development, DMCA safe harbors have played a significant role in U.S. copyright law.[208] For technology developers, efficiency of internet services is assured and the variety and quality of the services continues to improve.[209] For copyright owners, an efficient remedy is provided without incurring substantial litigation fees.[210] There has been a significant amount of scholarly literature and judiciary opinions on the interpretation of the DMCA safe harbor rules, especially on the meaning of the knowledge and control requirements.[211] However, recent developments in American copyright litigation make it highly doubtful that the current interpretation is sufficiently clear. For one thing, Circuit Courts demonstrate split judiciary opinions on the content of knowledge, the specificity of the knowledge requirement, the qualifications of actual and red flag knowledge, the willful blindness doctrine, and the relationship between the knowledge requirement and the common law contributory infringement doctrine.[212] Similar questions arise when courts deal with the interpretation of the control requirement, e.g., whether item specific knowledge is required, whether the control requirement codifies vicarious liability, and what “something more” means in the application. These uncertainties have caused major confusion in litigations, which threatened to undermine the purpose of the DMCA safe harbors. In practice, after years of their application in litigations, the safe harbors have been under severe criticism as “a confusing and illogical patchwork” which “makes no sense;”[213] as very old;[214] and as baring deficiencies in vague and ambiguous language, which reflect the political compromise.[215] It is crucial to clear up the uncertainties in order to encourage both the protection of copyright and the development of new technologies.
1. Clarifying the Knowledge Requirement under § 512(c) and (d) of DMCA: Actual or Apparent Knowledge of Specific Infringement
Section 512(c)(1)(A) and section 512(d)(1) of the DMCA are similar, both providing that a service provider who stores “information residing on systems or networks at direction of users” or provides “information location tools” shall not be liable for monetary relief, if the service provider “does not have actual knowledge that the material or an activity using the material on the system or network is infringing”; and “in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent”; or “upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity”.[216] “Knowledge” may refer either to knowledge of the activity itself or knowledge that the activity constitutes infringement. The latter argument is supported by an analysis of the statutory language, legislative history and case interpretation.[217] First, from the plain reading of the legislative language, it is evident that relevant provisions clearly require that the provider knows not only of the existence of the infringing material or activity, but also that it is infringing.[218] Second, with regard to the red flag test,[219] the committee reports reflecting legislative history made clear that “the red flag must signal to the provider not just that the activity is occurring, but that the activity is infringing”.[220] In other words, knowledge depends on whether the facts and circumstances make apparent the infringing nature of the user’s activity.[221] Case law has strengthened the above arguments. For instance, the Ninth Circuit in Perfect 10, Inc. v. CCBill LLC rejected the copyright owner’s allegation that the defendants must have been aware of apparent infringing activity because of the obvious nature of the domain names such as “” and “”.[222] According to the court, the infringing nature could not be certain because the burden of determining whether photographs were illegal could not be placed on the service provider.[223] Thus, the relevant question was not “whether the defendants knew about the photographs, but whether they knew of the photos’ infringing nature”.[224] Another example is Corbis Corp. v.,[225] in which the court concluded that although Corbis sent Amazon notices, they did not constitute red flags, because Corbis was silent regarding the content of the complained listings, which meant Amazon had no clue of the infringing nature of those sales.[226] In this light, the court thus articulated the statutory “awareness” standard as more demanding than the common law “should have known” standard.[227] The second concern of the knowledge requirement of safe harbors is whether general or specific knowledge is required. This issue was dealt with in the lengthy Viacom v. YouTube case.[228] The court reached its finding from contextual analysis, structural analysis, legislative intent analysis, and case law analysis. First, the court read from the context of the statute.[229] In practice, service providers must expeditiously remove or disable access to the infringing material only if they can locate the material, which requires specific knowledge of the infringement.[230] Second, the structure and operation of the statute require the “specific knowledge” construction of the safe harbors. As pointed out by Judge Fisher in UMG Recordings, Inc. v. Shelter Capital Partners, LLC,[231] considerations of requiring specific knowledge of particular infringing activity were reflected in Congress’s decision to enact a notice and takedown protocol, and in the “exclusionary rule” that prohibited consideration of substantially deficient §512(c)(3)(A) notices which encourage the copyright holders to clearly identify specific infringing material,[232] rather than putting the monitoring obligation on service providers. This leads to the second consideration: the requirement of general knowledge would impose an obligation of policing infringement on service providers, which contradicts §512(m) of DMCA.[233] The view that requiring expeditious removal in the absence of specific knowledge or awareness would be “to mandate an amorphous obligation” and cannot be reconciled with the language of the statute.[234] Third, the legislative intent reflected in the Committee Reports also requires specificity of the knowledge. Both the Senate and House Reports noted that the Online Copyright Infringement Liability Limitation Act (OCILLA) was intended to provide “strong incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements.”[235] Copyright holders are better able to efficiently identify infringing copies than service providers “who cannot readily ascertain what material is copyrighted and what is not.”[236] The Reports also cleared the cloud in the construction of the actual and red flag knowledge by indicating that their difference is not between specific and general knowledge, but between a subjective and objective standard.[237] Case law also comports with the specific knowledge requirement. For instance, in UMG Recordings, Inc. v. Veoh Networks, Inc.[238], the district court concluded that “CCBill teaches that if investigation of ‘facts and circumstances’ is required to identify material as infringing, then those facts and circumstances are not ‘red flags’.”[239] The Court of Appeals reached the same conclusion by noting that “we do not place the burden of determining whether materials are actually illegal on a service provider.”[240] While the Ninth Circuit opinion in UMG III superseded UMG II, the argument regarding the specificity of knowledge remains the same: general knowledge is insufficient to meet both the actual and red flag knowledge requirement under §512 (c)(1)(A).[241] There have been two different approaches in interpreting the DMCA knowledge standard. One is the parallel or co-extensive approach that codifies the contributory infringement knowledge standard; the other is the independent approach that is different from, and more stringent than, the contributory infringement knowledge requirement. The copyright holder in litigation usually argues for the first approach, which sets up a lower standard of DMCA knowledge, under which the service provider will probably lose the benefits of the DMCA safe harbors. The service provider, on the contrary, argues for the latter approach, because a higher standard helps it become immune from contributory liability. In order to decide which approach should be applied, extensive consideration, including structural analysis of the legislation, the purpose of the legislators, and economic analysis is recommended, if possible. It was argued that the safe harbors and the common law contributory liability principle differ in their treatment of knowledge that comes by way of notice from a copyright owner. Contributory infringement recognizes notice as necessary knowledge for imposing secondary liability. However, safe harbor provisions provide a notice-and-takedown system that imposes more stringent requirements and differ from contributory infringement in operational detail. The form of notice decides whether the obligation of removing is triggered; thus, a noncompliant notice cannot create actual knowledge, according to the requirements of section 512. However, the common law contributory liability principle recognizes a noncompliant notice as sufficient to meet the knowledge requirement.[242] Regarding the “red flags” theory of liability, beyond the actual knowledge such as notice received from the copyright holder, under what circumstances must an ISP remove potentially infringing material in order to invoke the DMCA safe harbor? Under contributory liability, a defendant could be liable if he “knew or had reason to know of another’s direct infringement and materially contributed to it.”[243] However, under the DMCA safe harbor, possession of the knowledge will attract liability only if the ISP did not act “expeditiously to remove, or disable access to, the material.”[244] Is the level of knowledge between “should know” in contributory liability and “awareness” under the safe harbor equivalent? In order to determine the answer, Edward Lee conducted an analysis of DMCA text, structure, legislative history and case law.[245] First, from the plain language of the legislation, infringing activity must be “apparent”, which means it is “plain, clear, or obvious.”[246] This is a high standard of knowledge. Second, the structure of the DMCA safe harbors also supports adopting a high standard of awareness of “obvious” or “blatant” infringement, because a low standard would invite constant litigation against Internet companies and turn ISPs into censors, which Congress has expressly avoided.[247] Third, legislative history shows in the explanation by the Committee Report that the red flags are apparent from even a brief and casual viewing, with an important policy reason that the Congress “did not want to saddle Internet sites with the impossible burden of trying to differentiate what constitutes copyright infringement in the myriad of situations on the Internet.”[248] Fourth, all cases concerning the ISP safe harbors have applied a high standard of particularized knowledge, consistent with the above interpretation.[249] From the analysis above, section 512(c) and (d) of DMCA do not codify the common law principle of contributory liability for copyright infringement, because first, the knowledge requirement is different between statutory and common law principle in that the former requires not only knowledge itself but also knowledge of the infringing nature of the activity. Second, the common law and the statute treat notice differently in that the latter requires compliance in form. Third, the level of knowledge requirement is different between the common law contributory liability and the statute’s safe harbor provisions. Therefore, in interpreting the knowledge requirement in the DMCA safe harbors, an independent and narrow approach, rather than a paralleled and broad approach, is adopted.
2. “Control” and “Benefit” under § 512(c) and (d) of DMCA
The §512 safe harbor provides that an eligible service provider must “not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.”[250] What does “right and ability to control” exactly mean? Three questions arise as to the concept of control under the safe harbor provisions. First, is “item-specific” knowledge of infringement required in its interpretation of the “right and ability to control” infringing activity under 17 U.S.C. §512(c)(1)(B)? Second, does the control element in safe harbors codify the common law vicarious liability? Third, if not, what more does control exactly mean? As to the first question, in Viacom, the district court concluded that “the ‘right and ability to control’ the activity requires knowledge of it, which must be item-specific.”[251] In any event, the provider must know of the particular case before he can control it. If infringing material with sufficient particularity is identified as “red flags”, it must be taken down.”[252] However, on appeal, the court held that two competing constructions of the “right and ability to control” infringing activity were both fatally flawed.[253] The first construction that “the provider must know of the particular case before he can control it” was adopted by the district court in favor of the defendants.[254] The Ninth Circuit in UMG took a similar position that “until the service provider becomes aware of specific unauthorized material, it cannot exercise its “power or authority” over the specific infringing item.”[255] But the Second Circuit in Viacom held that the district court “erred by importing a specific knowledge requirement into the control and benefit provision,” and the case was remanded for further fact finding.[256] They disagreed on the aspect of literal interpretation of the statute and concluded that “importing a specific knowledge requirement into §512(c)(1)(B) renders the control provision duplicative of § 512(c)(1)(A).”[257] According to §512(c)(1)(A), a service provider that has specific knowledge of infringing material and fails to effect expeditious removal would be excluded from the safe harbor protection, and therefore the existence of §512(c)(1)(B) would be superfluous. The second construction of the “right and ability to control” was that it codifies the common law doctrine of vicarious copyright liability, evidenced by the House Report relating to a preliminary version of the DMCA:
The “right and ability to control” language . . . codifies the second element of vicarious liability . . . Subparagraph (B) is intended to preserve existing case law that examines all relevant aspects of the relationship between the primary and secondary infringer.[258]
However, this codification reference was omitted from the committee reports describing the final legislation. Before the district court on remand gave its decision in Viacom v. YouTube, the Ninth Circuit issued a decision on the same issue in UMG III, following the Viacom opinion by the Second Circuit, holding that there were several reasons for a stricter interpretation of the “right and ability to control” than vicarious liability, in light of the DMCA’s language, structure, purpose and legislative history. First, the term “vicarious liability” is mentioned nowhere in §512(c), and the language used in common law standard “is loose and has varied”.[259] Second, considering the structure of §512(c), if the ability to control is being read as the ability to remove or block access, “the prerequisite to §512(c) protection under§512(c)(1)(A)(iii) and (C), would at the same time be a disqualifier under§512(c)(1)(B) where the ‘financial benefit’ condition is met”, which means that a catch-22 is created by Congress.[260] Applying this interpretation would “defeat the purpose of the DMCA and render the statute internally inconsistent.”[261] Third, according to the legislative history, though it was not suggested to codify the element of control as vicarious infringement, this suggestion was omitted from later reports.[262] Fourth, Congress explicitly stated that “the DMCA was intended to protect qualifying service providers from liability for all monetary relief for direct, vicarious and contributory infringement.”[263] In addition, it was clear that “the Committee decided to leave current law in its evolving state and, instead, to create a series of ‘safe harbors,’ for certain common activities of service providers.”[264] Furthermore, if Congress had intended the control element be coextensive with vicarious liability law, “the statute could have accomplished that result in a more direct manner.”[265] According to above analysis, the “right and ability to control” infringing activity under §512(c)(1)(B) “requires something more than the ability to remove or block access to materials posted on a service providers [website].”[266] Courts tended to interpret the phrase “right and ability to control” as “exerting substantial influence on the activities of users, without necessarily—or even frequently—acquiring knowledge of specific infringing activity.”[267] Therefore, the case was remanded to the district court to consider whether YouTube had the right and ability to control the infringing activity and received a financial benefit directly attributable to that activity.[268] Since the Ninth Circuit held that the “right and ability of control” does not codify the common law vicarious liability and requires “something more” than “just ordinary power over what appears on the provider’s website,”[269] what constitutes “something more?” In UMG III, the Court addressed “high levels of control” and “purposeful conduct” as two standards of “substantial influence” that the service provider must exert on the activity of users.[270] In this case, the evidence presented was not enough to create the issue equivalent to the activities found to constitute substantial influence. Accordingly, the element of “right and ability to control” was not applied to Veoh Networks, which met all of the §512(c) requirements. In Viacom IV, the plaintiffs claimed that “something more” was established by both YouTube’s willingness and ultimate editorial judgment and control over infringing content. This was shown by YouTube’s decisions “to remove some but not all infringing material, by its efforts to organize and facilitate search of the videos appearing on the site, and by its enforcement of rules prohibiting, e.g., pornographic content.”[271] The court took a very strict approach in interpreting the evidence that alleged YouTube’s influence or participation in the infringing activity occuring on its site. The court found that “something more” required by the “right and ability to control” must only be fulfilled when the defendant exercises substantial participation or ultimate editorial judgment over the infringing activity.[272] Evidence provided by the plaintiffs demonstrated neither participation in, nor coercion of, user infringement activity. Therefore, YouTube did not have the right and ability to control infringing activity within the context of §512(c)(1)(B). As discussed, the question arises in Viacom v. YouTube as to whether the safe harbor provision in DMCA codifies the common law principle of vicarious liability for copyright infringement. The court’s answer was no, and some commentators agree.[273] The resemblance of factors such as “right and ability to control” and “direct financial interest/benefit” between vicarious liability and safe harbors leads to a loophole theory that the DMCA safe harbors provide no immunity from vicarious liability at all, because safe harbors and vicarious liability share the exact same standard.[274] Mark Lemley indicates that the language of DMCA safe harbors suggests that it provides a safe harbor under section 512(c) only against claims of direct and contributory infringement, rather than vicarious liability. However, the legislative history suggests the opposite. Thus, a digital hole is created.[275] However, Edward Lee provided the interpretation that the DMCA safe harbors provide partial immunity from some, but not all vicarious infringement claims. He explained that “the term “receive a financial benefit directly attributable to the infringing activity” requires a closer causal connection between the infringing activity and the ISP’s actual receipt of a financial benefit. It must be “directly attributable” to the infringing activity, which is a higher level of proof and causation than required under the common law”.[276]

III. Establishing Indirect Liability System for Digital Copyright Infringement in China

Current Chinese tort law has a logic gap that had existed long before the promulgation of the 2010 Tort Liability Law. Unfortunately, the new legislation has not yet recognized the concept of indirect liability, nor has it developed an independent basis for indirect infringement. Therefore, the tort law needs to be amended, adding an “overlapping tort” as one of the liability forms and theoretical bases for indirect liability. Constructing indirect liability forms and standards for online copyright infringement involves three steps. The first step is to establish a general rule for indirect copyright liability. This rule requires three key components: direct infringement as a prerequisite, because indirect infringement does not exist without direct infringement; a subjective fault including intent or knowledge; and enablement, that the indirect infringer provides means for direct infringement. The second step constructs two types of indirect liability. Contributory liability is mainly designed for ISPs that provide services such as hosting and information locating, while inducement liability can solve many problems with the issue of P2P infringement, especially for ISPs that provide decentralized software. The third step requires strict interpretation and application of safe harbor provisions. These liability limitation rules should not unduly impede legitimate digital communications, nor should they unreasonably influence the Internet, which has been an effective communications platform, commercial channel and educational tool. Specifically speaking, it is proposed that China’s legal framework for indirect copyright infringement consists of relevant articles in the 2010 Copyright Law, the 2010 Tort Liability Law and the 2013 Provision as liability attribution, and related rules in the 2006 Regulation work as copyright liability limitation. However, considering the ambiguities in current laws, I make the following recommendations. To begin with, the 2010 Copyright Law shall explicitly recognize indirect copyright liability. Unlike the United States, which has developed indirect copyright liability in case laws, judicial decisions in China have no binding effects.[277] In this light, it is essential for legislators to codify this theory and put it into the statute, as long as the theory matures in tort law as well. Next, China has transplanted the United States safe harbor provisions, which have served as both attribution and exemption of liabilities, owning to the misunderstanding of safe harbor provisions. This article suggests a strict interpretation of safe harbors, rather than considering safe harbors as a codification of common law principles, based on analysis of legislative history, legislators intent and context reading. Investigating into the nature, role and true meaning of the DMCA safe harbors resolves the confusion that exists in China’s legislation, such as the nature of safe harbor provisions, contradictable knowledge standards, and contested control and benefit requirements. I therefore propose a revision of current Chinese safe harbor provisions. The second paragraph of article 23[278] should be removed for two reasons: first, it is an expression of liability attribution rather than liability limitation. Since the 2006 Regulation shall serve as a safe harbor for NSPs, there is no need for the paragraph to exist. Second, it has been proved that NSPs assume independent liability based on the overlapping tort theory rather than joint liability. The existence of this article will create confusion in the future application of law. The other proposition for the modification of the 2006 Regulation is that the article 22(4)[279] should be removed. As demonstrated previously, vicarious liability lacks root in Chinese copyright law system, and the stipulation on financial benefit as one limitation to the liability renders a higher copyright liability for NSPs than that in the United States. This is disproportionate for NSPs in China. Lastly, concern has been raised towards the culpability of NSPs, especially the inconsistency of the knowledge standard. It is vital for both courts and scholars to reach the consensus as to the interpretation and application of the knowledge requirement such as “know,” “should have known” and “have reasonable ground to know.” Great achievement has been made in United States on the theory of knowledge, such as the content of knowledge, the generality of knowledge and the meaning of “red flag” knowledge. China can benefit from the United States experience. In addition, China’s laws have been partially emphasizing the mental element of the defendant, but have overlooked the objective aspects such as culpable conduct.


Ever-improving technological advances, especially the development of the Internet and digital technology, have provided impetuses as well as challenges for the application of traditional copyright law principles, which have been tested within the digital environment to see whether the balance between copyright and commerce has been interrupted and whether changes are needed. The indirect copyright liability regime becomes the crux of the contradiction between copyright law and technology by imposing liability on intermediaries who do not commit copyright infringement directly but are held liable for infringement committed by others, based on efficiency and moral grounds. Within the digital environment, ISPs are facing potential liability for the acts of subscribers who are using their services to access, upload or download information. However, a lack of certainty of ISP liability in current digital legislation will inevitably decrease ISPs’ incentives for utilizing new technology and participating in e-commerce. Consequently, this may have a negative impact on the progress of science and on economic development in China. China has been importing the United States’ safe harbor models into its own legislation, which, however, has caused confusion from two aspects. First, China and the United States have different legal systems, which makes the transplant inapplicable in certain ways. Second, unlike the United States’ safe harbor rules that supplement the attribution of indirect liability principles, such as contributory and vicarious infringements developed in case law, China has not fully developed its own attribution of liability principles, just like water without a source and a tree without roots. This study finds that in the United States, judicial practice of applying the doctrine of contributory infringement liability has abrogated the Sony rule by applying relevant factors, which have displaced the “substantial non-infringing uses” standard. Additionally, courts have been considering all relevant factors—including the relationship, control, means, knowledge, due care and inevitability of infringement, allowing for a wide spectrum of evaluation that work in a correlative pattern. Further, this study argues for a strict interpretation which considers integrity, clarity and uniformity as guiding principles for the efficient application of safe harbors. With a deep understanding of the United States’ approach in constructing the indirect copyright liability doctrines and safe harbors, a suitable approach for China could be found. In conclusion, this article proposes to establish a tort law-oriented, culpable conduct-based indirect copyright liability system, with modified safe harbor provisions, in China. In this way, a justified and compatible indirect liability system can be optimized with equilibrium among relevant parties.
* Dr. Ma received her PhD in Law from Bangor University in 2015 with financial support from the China Scholarship Council and the Bangor Law School. She also received an LLM in Commercial Law from Bangor University and an LLM in Constitutional and Administrative Law from Shandong University. Her gratitude goes to Dr. Wei Shi for his suggestions on an earlier draft of this article and to JIPEL members for their editing work and support in publishing this article.
[1] Copyright law prescribes “acts restricted by copyright” that are enjoyed by copyright owners. (See, e.g., Section 16(1) of The Copyright, Designs and Patents Act of 1988 (“CDPA”)) Direct (or primary) copyright infringement takes place when an infringer conducts a restricted act that he is not entitled to, such as communicating the work to the public. Indirect copyright liability is premised on direct copyright liability. See Paul Goldstein & Bernt Hugenholtz, international copyright 338 (3rd ed. 2012) (“For a defendant to be held contributorily or vicariously liable, a direct infringement must have occurred.”).
[2] See Goldstein & Hugenholtz, supra note 1, at 337. (“The law in most countries will, under prescribed conditions, impose secondary liability on those who, though not directly infringing copyright, have materially contributed to the infringement.”).
[3] These are requirements under the different forms of indirect liabilities such as contributory liability, inducement liability and vicarious liability.
[4] Peer-to-Peer File Sharing And Secondary Liability in Copyright Law 1 (Alain Strowel ed., 2009); see also Jane C. Ginsburg, Separating the Sony Sheep From the Grokster Goats: Reckoning the Future Business Plans of Copyright-Dependent Technology Entrepreneurs, 50 Ariz. L. Rev. 577, 580 (2008) (referring to indirect liability as “derivative liability”).
[5] See david bainbridge, intellectual property, at 182-185 (9th ed. 2012).
[6] Section 16(2) of CDPA provides that “[c]opyright in a work is infringed by a person who without the license of the copyright owner does, or authorises another to do, any of the acts restricted by copyright” (emphasis added).
[7] See Allen N Dixon, Liability of Users and Third Parties for Copyright Infringement on the Internet: Overview of International Development, in Peer-to-Peer File Sharing And Secondary Liability in Copyright Law 12, 15 (Alain Strowel ed., 2009).
[8] See Yiman Zhang, Establishing Secondary Liability With a Higher Degree of Culpability: Redefining Chinese Internet Copyright Law to Encourage Technology Development, 16(1) Pac. Rim L. & Pol’y J. 257 (2007) (“The current legal framework, which premises copyright liability upon a direct infringement and joint liability theory, unfortunately has produced considerable ambiguity both within the judiciary and the affected industries.”).
[9] The term Network Service Provider has not been defined in Chinese copyright law, but this term has been used in all relevant laws regulating network service providers in information networks. The services include automatic access services, autonmatic transmission services, automatic storage services, storage space services, and searching and linking services. See Regulations for the Protection of the Right of Communication through Information Network, (promulgated by the State Council, May 10, 2006, effective July 1, 2006, revised on January 16th, 2013), art. 6 (China) [hereinafter 2006 Regulation], translation available at
[10] Zhonghua Renmin Gongheguo Zhuzuo Quanfa [Copyright Law of the People’s Republic of China] (promulgated by the Standing Comm. Nat’l People’s Cong., Sept. 7, 1990, effective June 1, 1991) (China) [hereinafter 1990 Copyright Law], translated in Zheng Chengsi and Michael Pendleton, Copyright Law in China 215 (1991).
[11] Zhonghua Renmin Gongheguo Zhuzuoquan Fa [Copyright Law of the People’s Republic of China] (promulgated by the Standing Comm. Nat’l People’s Cong., Oct. 27, 2001, effective Oct. 27, 2001), art. 10 (China) [hereinafter 2001 Copyright Law], translated in World Intell. Prop. Org. (2014), available at A new right of “communication of information on networks” was added to the list of exclusive rights. See 2001 Copyright Law, art. 10(12).
[12] Zhonghua Renmin Gongheguo Zhuzuoquan Fa [Copyright Law of the People’s Republic of China] (promulgated by the Standing Comm. Nat’l People’s Cong., Feb. 26, 2010, effective Apr. 1, 2010), art. 48 (China) [hereinafter 2010 Copyright Law], translated in World Intell. Prop. Org. (2014), available at
[13] Hereinafter the Network Interpretations are respectively referred to as the 2000, 2004, and 2006 Network Interpretation. The 2006 Interpretation was repealed by the 2013 Provision.
[14] 2006 Regulation, supra note 9.
[15] Zhonghua Renmin Gongheguo Qinquan Zeren Fa [Tort Law of the People’s Republic of China] (promulgated by the Standing Comm. Nat’l People’s Cong., Dec. 26, 2009, effective July 1, 2010) (China) [hereinafter 2010 Tort Liability Law], translated in World Intell. Prop. Org. (2014), available at The notes provide that “[t]his Law is the basic tort legislation of China and provides general provisions for determining liability, assumption of liability, and mitigation of liability as well as special provisions concerning joint tortfeasors and seven special torts.” Id.
[16] Id., art. 36.
[17] Zuigao Renmin Fayuan Guanyu Shenli Qinhai Xinxi Wangluo Chuanboquan Minshi Jiufen Anjian Shiyong Falv Ruogan Wenti de Guiding [Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in Hearing Civil Dispute Cases Involving Infringement of the Right of Dissemination on Information Networks] (issued by the Supreme People’s Court, Dec. 17, 2012, effective Jan. 1, 2013) (China) [hereinafter 2013 Provision], translation available at
[18] See, e.g., UMG Recordings, Inc. v. Shelter Capital Partner LLC, 718 F.3d 1006 (9th Cir. 2013); Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007); Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012); Viacom Int’l, Inc. v. YouTube, Inc., 07 Civ. 2103 (S.D.N.Y. 2013); Viacom Int’l, Inc. v. YouTube, Inc., 718 F. Supp. 2d 514 (S.D.N.Y. 2010).
[19] The liability provided in Article 22 of the 2006 Regulation is actually stricter than that imposed by the DMCA because it requires only financial benefit as immunity rather than the two indispensable requirements of both financial benefit and right and ability to control the infringing activity in section 512(c) and (d) of the DMCA. A higher threshold for liability exemption is therefore established in the 2006 Regulation.
[T]here are two indispensable constitutive requirements for the ‘vicarious liability’ in DMCA: The financial benefit directly attributable to the infringing activity, and the network service provider’s right and ability to control the infringing activity. But there is only one requirement in the Regulations. If the Regulations are implemented by word, a stricter liability will be imposed on the network service provider than in the US, which is not tenable.
Qian Wang, Study on Copyright Infringement of Video-Sharing Websites, 5(2) Front. L. China 275, 299 (2009).
[20] Jessica Haixia Jia, Copyright Infringement in the Network Environment–China’s Perspective, 19(2) Computer L. & Sec. Rep. 101 (2003).
[21] Zhonghua Renmin Gongheguo Minfa Tongze [General Principles of the Civil Law of the People’s Republic of China], (adopted at the Nat’l People’s Cong., April 12, 1986), art. 94 (China) [hereinafter GPCC], translation available at
[22] Id., art. 130 (“[I]f two or more persons jointly infringe upon another person’s rights and cause him damage, they shall bear joint liability.”)
[23] Opinion of the Supreme People’s Court on Questions Concrning the Implementation of the General Principles of the Civil Law of the People’s Republic of China (issued by the Supreme People’s Court, Jan. 26, 1988) art. 148 (China), translated in Whitmore Gray & Henry Ruiheng Zhen, 52 Law & Contemp. Problems 59 (1989).
[24] 2010 Tort Liability Law, supra note 15, art. 2 (“Those who infringe upon civil rights and interests shall be subject to the tort liability according to this Law. ‘Civil rights and interests’ used in this Law shall include . . . copyright . . . .”).
[25] Id., art. 6. (“One who is at fault for infringement upon a civil right or interest of another person shall be subject to the tort liability. One who is at fault as construed according to legal provisions and cannot prove otherwise shall be subject to the tort liability.”); Id., art. 7. (“One shall assume the tort liability for infringing upon a civil right or interest of another person, whether at fault or not, as provided for by law, shall be subject to such legal provisions.”); Id., art. 8 (“Where two or more persons jointly commit a tort, causing harm to another person, they shall be liable jointly and severally.”).
[26] “One who abets or assists another person in committing a tort shall be liable jointly and severally with the tortfeasor.” Id., art. 9.
[27] Id., art. 36(1) (“A network user or network service provider who infringes upon the civil right or interest of another person through network shall assume the tort liability.”).
[28] Id., art. 36(2) (“Where a network user commits a tort through the network services, the victim of the tort shall be entitled to notify the network service provider to take such necessary measures as deletion, block or disconnection. If, after being notified, the network service provider fails to take necessary measures in a timely manner, it shall be jointly and severally liable for any additional harm with the network user.”).
[29] 2006 Regulation, supra note 9, art. 14–17.
[30] 2010 Tort Liability Law, supra note 15, art. 36(3) (“Where a network service provider knows that a network user is infringing upon a civil right or interest of another person through its network services, and fails to take necessary measures, it shall be jointly and severally liable for any additional harm with the network user.”).
[31] See, e.g., Weixiao Wei, ISP Copyright Liability in China: Collision of the Knowledge Standard and the New Tort Liability Act, 33(8) Eur. Intell. Prop. Rev. 507 (2011); see also Qian Tao, The Knowledge Standard for the Internet Intermediary Liability in China, 20(1) Int’l. J.L. & Info. Tech. 1 (2011).
[32] For instance, Article 11 of the 2013 Provision, which agrees with Qian Wang’s suggestion, avoids creating the vicarious liability that corresponds to the United States’ copyright law out of nowhere. It prescribes that
[w]here a network service provider directly gains economic benefits from the work, performance, or audio or video recording provided by a network user, the people’s court shall determine that the network service provider has a higher duty of care for the network user’s infringement of the right of dissemination on information networks. If a network service provider gains benefits from inserting advertisements into a specific work, performance, or audio or video recording or gains economic benefits otherwise related to the disseminated work, performance, or audio or video recording, it shall be determined that the network service provider directly gains economic benefits as mentioned in the preceding paragraph, however, excluding the general advertising and service charges, among others, collected by a network service provider for providing network services.
2013 Provision, art. 13. Cf. Wang, supra note 19.
[33] Article 3 of the 2013 Provision differentiates two acts of provision: (i) the providing of works and (ii) the providing of network services. This differentiation actually broadens the meaning of “the right of dissemination on information networks.” In this light, the distinction between direct and indirect infringement occurs – the former corresponds the providing of works and the latter corresponds the providing of network services. This is a breakthrough in the understanding of the infringement of dissemination right, which clears the fog in questions as to whether to use “server standard” or any other standards to determine the right of dissemination on information networks, and the legal nature of the act of providing network technology and facility service.
[34] See id., art. 7 (“Where a [NSP] abets or aids any network user in infringing upon the right of dissemination on information networks when providing network services, the people’s court shall hold the network service provider liable for the infringement. Where a [NSP] induces or encourages any network user to infringe upon the right of dissemination on information networks . . . the people’s court shall determine that the [NSP] has abetted the infringement. Where a [NSP] which knows or should have known that a network user is using its network services to infringe upon the right of network dissemination of information fails to take necessary measures . . . the people’s court shall determine that [NSP] has aided in the infringement.”).
[35] See id., art. 9 (“The people’s court shall determine whether a [NSP] should have known an infringement based on a clear fact that a network user has infringed upon the right of dissemination on information networks and by taking into account the following factors . . . .”); see also id., arts. 10–14.
[36] Id., art. 8; see also id., art. 6 (“Where . . . the network service provider is able to prove that it only provides network services and is not at fault, the people’s court shall not determine that the network service provider has committed an infringement.”).
[37] Id., art. 8 (“The fault of a [NSP] means whether the network service provide knows or should have known a network user’s infringement of the right of dissemination on information networks”). But see A Samuel Oddi, Contributory Copyright Infringement: The Tort and Technological Tensions, 64 Notre Dame L. Rev. 47, 64 (1989) (indicating that fault encompasses different categories such as intent and negligence).
[38] Id., art. 8.
[39] Id., art. 9 (“The people’s court shall determine whether a [NSP] should have known an infringement based on a clear fact that a network user has infringed upon the right of dissemination on information networks and by taking into account the following factors: (1) The [NSP]’s capability of information management, as required according to the nature of services provided, manners of provision of services, and possibility of infringement attributable thereto.”).
[40] See, e.g., id., art. 9 (prescribing that clear facts, combined with certain factors, are required to be taken into account in determining whether the network service providers “should have known” the direct infringement).
[41] See, e.g., Yang Ming (杨明), “Jianjie Qinquan” Bian: Cong “Baidu, Yahu An” Shuo Kai Qu (“间接侵权”辨:从“百度、雅虎案”说开去) [Discussion on “Indirect Infringement”: Taking “Baidu & Yahoo” Cases as the Beginning], 10 Wangluo Falv Pinglun (网络法律评论) [Int. L. Rev.], no.1, 2009, at 11; see also Wu Handong (吴汉东), Qinquan Zeren Fa Shiye Xia De Wangluo Qinquan Zeren Jiexi (侵权责任法视野下的网络侵权责任解析) [Analysis of the Online Infringement Liability from the Perspective of Tort Law], 140 Fashang Yanjiu (法商研究) [Stud. L. & Bus.], no. 6, 2010, at 28.; Wu Handong (吴汉东), Lun Wangluo Fuwu Tigongzhe de Zhuzuoquan Qinquan Zeren (论网络服务提供者的著作权侵权责任) [Tort Liability for Indirect Infringement of Copyright in the Internet According to Article 36 of the Tort Law PRC], Zhongguo Faxue (中国法学)[China Legal Sci.], no.2, 2011, at 38.
[42] See, e.g., Lixin Yang(杨立新), Lun Jinhe Qinquan Xingwei (论竞合侵权行为) [On Overlapping Torts], Qinghua Faxue (清华法学) [Tsinghua L. Rev.], no. 1, 2013, at 119; Lixin Yang (杨立新), Qinquan Zeren Fa Guiding de Wangluo Qinquan Zeren de Lijie yu Jieshi (<<侵权责任法>>规定的网络侵权责任的理解与解释) [Comprehension and Interpretation of Internet Infringement Liability Regulated in the Tort Law], 18 Guojia Jianchaguan Xueyuan Xuebao (国家检察官学院学报) [J. Nat’l Prosecutors C.], no. 2, 2010, at 3; see also Xu Wei (徐伟), Tongzhi Yichu Zhidu de Chongxin Dingxing Jiqi Tixi Xiaoying (通知移除制度的重新定性及其体系效应) [The Redefinition and Systematic Influence of Notice and Takedown Regime], 35 Xiandai Faxue (现代法学) [Mod. L. Sci.], no. 1, 2013, at 58.
[43] 2006 Network Interpretation, supra note 13, art. 4 (“[W]here an internet service provider participates in any act of another person to infringe copyright through network, or aids and abets, on the internet, others to carry out any act of copyright infringement, the people’s court shall, pursuant to the provision of Article 130 of the General Principles of the Civil law, investigate it and other actors or any other person having directly carried out the infringement, and impose joint liability thereon.”).
[44] 2006 Regulation, supra note 9, art. 23 (“[W]here a network service provider that provides searching or linking service to its subscribers, disconnects the link to the infringing works, performances, sound recordings or video recordings upon receipt of the right owner’s notification according to these Regulations, it shall not be liable for damages; where it knows or has reasonable grounds to know that the linked works, performances, sound recordings or video recordings infringe another person’s right, it shall be jointly liable for the infringement.”).
[45] See 2010 Tort Liability Law, supra note 15, art. 8 (“where two or more persons jointly commit a tort, causing harm to another person, they shall be liable jointly and severally.”); Id., art. 9 (“[O]ne who abets or assists another person in committing a tort shall be liable jointly and severally with the tortfeasor.”).
[46] Guangdong Zhong Kai Wenhua Fazhan Youxiangongsi Su Guangzhou Shu Lian Ruanjianjishu Youxiangongsi, Shanghai Ka Fu Guanggao Youxiangongsi Guangdong (广东中凯文化发展有限公司诉广州数联软件技术有限公司、上海卡芙广告有限公司) [Zhongkai Culture Development Ltd. v. Guangzhou Shulian Software Technology Ltd., Shanghai CAV] (Shanghai No.1 Interm. People’s Ct., Nov. 22, 2007).
[47] Id.
[48] See Yang Ming, supra note NOTEREF _Ref411680257 \h 41.
[49] Id. at 23.
[50] Id.
[51] Id. at 28.
[52] Xu Wei (徐伟), Wangluo Fuwu Tigongzhe Liandai Zeren Zhi Zhiyi ( 网络服务提供者连带责任之质疑) [Questioning the Joint Liability of Internet Service Providers], Faxue (法学) [Legal Sci. Monthly], no. 5, 2012, at 82.
[53] Id. at 83.
[54] Id. at 84.
[55] Id. at 85.
[56] Id. at 86.
[57] Id.
[58] Id.
[59] See Lixin Yang, On Overlapping Torts, supra note 42, at 9.
[60] Id. at 120.
[61] Lixin Yang, Ruhe Lijie Qinquan Zeren Fa Zhong Wangluo Qinquan Zeren (如何理解侵权责任法中网络侵权责任) [How to Understand Online Infringement Liability Under the Tort Liability Law], jiancharibao (检察日报) [The procuratorate daily], March 31, 2010. Available at
[62] Professor Lixin Yang explains that “unreal joint liability refers to the act conducted by multiple tort-feasors, in violation of the statutory obligations, which results in damage of one victim, or different acts conducted by different tort-feasors, which rusult in the same tort liability. In each case, any tort-feasor bears full liability for the performance of the others, whose liability are thus eliminated. It also refers to the liability in accordance with the provisions of the special form of torts.” See Lixin Yang, Tort Liability Law 125 (2d ed, China Law Press 2012).
[63] See Lixin Yang, On Overlapping Torts, 1 Tsinghua Law Review 119, 123 (2013).
[64] Id.
[65] See 2000 Network Interpretation, supra note 13, art. 5 (“a network service provider that provides content service explicitly knows that network users use its network to infringe copyright of others, or after receiving a substantiated warning from copyright owners but fails to take measures such as removing the infringing content to eliminate consequence of the infringement, the People’s Courts shall pursue joint liability of the network service provider for infringement with network users, pursuant to Article 130 of the General Principles of the Civil Code.” (emphasis added)).
[66] 2006 Regulation, supra note 9, art. 22 (“[A] [NSP] that provides its subscribers with network storage space for them to make works, performances, sound recordings or video recordings available to the public, and meets the following conditions shall not be liable for damages: . . . it does not know or has no reasonable grounds to know that the works, performances, sound recordings or video recordings provided by its subscribers infringe any other persons’ rights . . . .”).
[67] Id., art. 23 (“[W]here a [NSP] that provides searching or linking service to its subscribers, disconnects the link to the infringing works, performances, sound recordings or video recordings upon receipt of the right owner’s notification according to these Regulations, it shall not be liable for damages; where it knows or should have known that the linked works, performances, sound recordings or video recordings infringe another person’s right, it shall be jointly liable for the infringement.”).
[68] Jinpai Yule Shiye Youxiangongsi Yu Beijing Baidu Wang Xun Keji Youxiangongsi Qinfan Xinxi Wangluo Chuanbo Quan Jiufen Shangsu An (金牌娱乐事业有限公司(Gold Label Entertainment Limited)与北京百度网讯科技有限公司侵犯信息网络传播权纠纷上诉案) [IFPI v. Baidu] (Beijing Higher People’s Ct. Apr. 28, 2007); Jinpai Yule Shiye Youxiangongsi Su Beijing Baidu Wang Xun Keji Youxiangongsi Qinfan Xinxi Wangluo Chuanbo Quan Jiufen An (金牌娱乐事业有限公司诉北京百度网讯科技有限公司侵犯信息网络传播权纠纷案) [IFPI v. Baidu] (Beijing No. 1 Interm. People’s Ct. Nov. 17, 2006).
[69] IFPI v. Alibaba, the Beijing No. 2 Intermediate People’s Court, No. Erzhongminchuzi 2626/2007; the Beijing Higher People’s Court, No. Gaominzhongzi 1990/2007.
[70] IFPI v. Baidu (Beijing No. 1 Interm. People’s Ct. 2006).
[71] Id.
[72] IFPI v. Alibaba, the Beijing No.2 Intermediate People’s Court, No. Erzhongminchuzi 2626/2007; the Beijing Higher People’s Court, No. Gaominzhongzi 1990/2007.
[73] Id.
[74] Id.
[75] Zhejiang Fan Ya Dianzishangwu Youxiangongsi Su Beijing baidu Wang Xun Keji Youxiangongsi Deng Qinfan Zhu Zuo Quan Jiufen An (浙江泛亚电子商务有限公司诉北京百度网讯科技有限公司等侵犯著作权纠纷案) [Fanya v. Baidu] (Beijing Higher People’s Ct. Dec. 19, 2008).
[76] Fanya v. Baidu (Beijing Higher People’s Ct. 2008).
[77] The term “red flag,” referring to apparent knowledge, was borrowed from the United States safe harbour knowledge standard. See S. Rep. No. 105-190, at 44 (1998) (“ Subsection (c)(1)(A)(ii) can best be described as a “red flag” test. As stated in subsection (1), a service provider need not monitor its service or affirmatively seek facts indicating infringing activity (except to the extent consistent with a standard technical measure complying with subsection (h)), in order to claim this limitation on liability (or, indeed any other limitation provided by the legislation). However, if the service provider becomes aware of a ‘red flag’ from which infringing activity is apparent, it will lose the limitation of liability if it takes no action.”); see Cao Yang (曹阳), Zhishichanquan Jianjie Qinquan Zeren de Zhuguan Yao Jian Fenxi (知识产权间接侵权责任的主观要件分析) [The State of Mind of Infringers in Rendering Intellectual Property Indirect Infringement Liability: Take ISP As the Main Object], Wangluo Falv Pinglun (网络法律评论) [Int. L. Rev.], no. 11, 2012, 24, for relevant discussion in China.
[78] Qian Wang, On the Determination of Indirect Liability of Information Location Service Providers, 2 Intell. Prop. 3 (2009).
[79] 2010 Tort Liability Law, supra note 15, art. 36(3) (“[W]here a [NSP] knows that a network user is infringing upon a civil right or interest of another person through its network services, and fails to take necessary measures, it shall be jointly and severally liable for any additional harm with the network user.”).
[80] Qian Tao, The Knowledge Standard for the Internet Intermediary Liability in China, 20 Int. J. L. & Info. Tech. 1, 1, 2–3 (2011) (“In the preliminary draft and the second draft of the Tort Liability Law, the term used was “actually knew”, then the legislators changed it to “knew” in the third draft, and it was “knew or should have known” in the fourth draft, ultimately “knew” is used in the final version.”) (emphasis added).
[81] Id. at 3.
[82] Id. at 4.
[83] Id.
[84] Id. at 13.
[85] Id. at 14.
[86] The 2013 Provision implies that the NSP has no monitoring obligation to seek out facts and circumstances indicating illegal activities. See 2013 Provision, supra note 17, art. 8 (“Where a network service provider fails to conduct proactive examination regarding a network user’s infringement on the right of dissemination on information networks, the people’s court shall not determine on this basis that the network service provider is at fault. Where a network service provider is able to prove that is has taken reasonable and effective technical measures but it is still difficult for it to discover a network user’s infringement . . . the court shall determine that the network service provider is not at fault.”).
[87] Qian Tao, The Knowledge Standard for the Internet Intermediary Liability in China, 20(1) Int’l J.L. & Info. Tech. 1, 14 (2011).
[88] Id. at 17.
[89] 2013 Provision, supra note 17, art. 8 (“The fault of a network service provider means whether the network service provide [sic] knows or should have known a network user’s infringement of the right of dissemination on information networks.”).
[90] 2010 Tort Liability Law, supra note 15, art. 36 (“[a] network user or network service provider who infringes upon the civil right or interest of another person through network shall assume the tort liability.”); id. art. 2 (“civil rights and interests” include “the right to life, the right to health, the right to name, the right to reputation, the right to . . . copyright . . . and other personal and property rights and interests.”).
[91] Weixiao Wei, supra note 31, at 516.
[92] 2006 Regulation, supra note 9, art. 20–23.
[93] See, e.g., Wei Xu, The Redefinition and Systematic Influence of Notice and Takedown Regime, 1 Mod. L. Sci. 58 (2013); Jiarui Liu, The Safe Harbor Rules of the Chinese Network Service Providers: a Comment on the Yahoo Case, 19 Intell. Prop. 13 (2009); Qian Wang, Effect of the Safe Harbor Provisions Under the Communication Regulations, 6 Legal Sci. Monthly 128 (2010) [hereinafter Effect of the Safe Harbor Provisions].
[94] 2006 Regulation, supra note 9, art. 20–23.
[95] 2006 Regulation, supra note 9, art. 23.
[96] See, e.g., Qian Wang, Study on Copyright Infringement of Video-Sharing Websites, 5 Frontiers L. in China 275 (2009); Xue Snow Dong & Krishna Jayakar, The Baidu Music Settlement: A Turning Point for Copyright Reform in China?, 3 J. Info. Pol’y. 77 (2013); Huaiwen He, Safe Harbor Provisions of Chinese Law: How Clear are Search Engines from Liability?, 24 Computer L. & Security Rep. 454 (2008); Ke Steven Wan, Internet Service Providers’ Vicarious Liability Versus Regulation of Copyright Infringement in China, 2 J.L., Tech. & Pol’y 376 (2011); Qian Tao, Legal Framework of Online Intermediaries’ Liability in China, 14 Info. 59 (2012).
[97] See Wei Xu, supra note 93.
[98] Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on Certain Legal Aspects of Information Society Services, in Particular Electronic Commerce, in the Internal Market, 2000 O.J. (L 178) 1 [hereinafter E-Commerce Directive].
[99] See id. (“In order to benefit from a limitation of liability, the provider of an information society service, consisting of the storage of information, upon obtaining actual knowledge or awareness of illegal activities has to act expeditiously to remove or to disable access to the information concerned . . . .”).
[100] See also 17 U.S.C. § 512 (2006) (entitled “Limitations on liability relating to material online”).
[101] The Beijing Higher People’s Court’s Guiding Opinions on Several Issues Relating to Trial of Cases of Network Copyright Dispute, effective May 17, 2010, translation available at (last visited Sept. 14, 2014).
[102] See academic opinions summed up in part 1(1) of Wei Xu, The Redefinition and Systematic Influence of Notice and Takedown Regime, 1 Mod. L Sci. 58 (2013); see also Jiarui Liu, The Safe Harbor Rules of the Chinese Network Service Providers: a Comment on the Yahoo Case, 19 Intell. Prop. 13, 14 (2009).
[103] Wei Xu, supra note 93, at 59.
[104] Id. at 61–62.
[105] Id. at 62.
[106] Id.
[107] Id.
[108] 2010 Tort Liability Law, supra note 15, art. 36 (“[w]here a network service provider knows that a network user is infringing upon a civil right or interest of another person through its network services, and fails to take necessary measures, it shall be jointly and severally liable for any additional harm with the network user.”).
[109] See Wei Xu, supra note 93, at 62.
[110] For a defintion of “red flag” knowledge, see note 77 supra.
[111] 2013 Provision, supra note 17, art. 8(1) (“The people’s court shall determine whether a network service provider is liable for infringement as an abettor or aider according to the fault of the network service provider. The fault of a network service provider means whether the network service provide [sic] knows or should have known a network user’s infringement of the right of dissemination on information networks.”).
[112] Effect of the Safe Harbor Provisions Under the Communication Regulations, supra note 93.
[113] Id. at 136.
[114] Id.
[115] Thomas Hays, The Evolution and Decentralization of Secondary Liability for Infringements of Copyright-Protected Works: Part 1, 28(12) Eur. Intell. Prop. Rev. 617, 617 (2006).
[116] Unlike in the United Kingdom, where the secondary infringement refers to the unauthorized dealing of infringing copyrighted materials, the term “secondary liability” in the US usually means contributory, vicarious or inducing liabilities. This article adopted “indirect liability” instead of “secondary liability” to avoid the confusion. See Bainbridge, supra note 5, at 182-185.
[117] Act of May 31, 1790, ch. 15, 1 Stat. 124 (1790) (repealed 1831).
[118] See Jessica Litman, Real Copyright Reform, 96 Iowa L. Rev. 1, 3 (2010) (discussing the conflict between copyright regimes and technological evolution).
[119] Allen N. Dixon, Liability of Users and Third Parties for Copyright Infringements on the Internet: Overview of International Developments, in Peer-to-Peer File Sharing And Secondary Liability in Copyright Law 12, 15 (Alain Strowel ed., 2009).
[120] Matthew Bender & Co. v. West Publ’g Co., 158 F.3d 693, 706 (2d Cir. 1998).
[121] Mark Bartholomew & Patrick F. McArdle, Causing Infringement, 64 Vand. L. Rev. 675, 683–84 (2011) (describing the development of contributory liability for intellectual property infringement in the United States).
[122] Harper v. Shoppell, 28 F. 613, 615 (S.D.N.Y. 1886) ([T]he defendant is in no better position than he would be if he had himself printed and published the copyrighted matter . . . he is to be regarded as having sanctioned the appropriation of the plaintiffs’ copyrighted matter . . . .”).
[123] Kalem Co. v. Harper Bros., 222 U.S. 55, 62 (1911).
[124] Gershwin Publ’g Corp. v. Columbia Artists Mgmt., 443 F.2d 1159 (2d Cir. 1971).
[125] Id. at 1162.
[126] Sony Corp. v. Universal City Studios, Inc. (Betamax), 464 U.S. 417 (1984); see Robert I. Reis, The Sony Legacy: Secondary Liability Perspectives, 183 Akron Intell. Prop. J. 205 (2009) (discussing the background of Sony).
[127] See 35 U.S.C. § 271 (2006); see also Sony, 464 U.S. at 417 n.41 (“The ‘staple article of commerce’ doctrine protects those who manufacture products incorporated into or used with patented inventions . . . . Because a patent holder has the right to control the use of the patented item as well as its manufacture, such protection for the manufacturer of the incorporated product is necessary to prevent patent holders from extending their monopolies by suppressing competition in unpatented components and supplies suitable for use with the patented item. The doctrine of contributory patent infringement has been the subject of attention by the courts and by Congress, and has been codified since 1952, but was never mentioned during the copyright law revision process as having any relevance to contributory copyright infringement.” (citation omitted)).
[128] Sony, 464 U.S. at 426–27.
[129] Id. at 428–34.
[130] Id. at 442.
[131] A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). Plaintiffs alleged both contributory and vicarious copyright infringement because Napster promoted the unauthorized distribution and duplication of copyrighted music. At the trial court level, Napster relied on the Sony defense, alleging that its service, like a VCR, was capable of both legal and illegal uses. See A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, 912 (N.D. Cal. 2000). .
[132] A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir. 2001) (noting that Napster “could block access to the system by suppliers of infringing material, and that it failed to remove the material”); see also, Rebecca Giblin-Chen, Rewinding Sony: An Inducement Theory of Secondary Liability, 27 Eur. Intell. Prop. Rev. 428, 429 (“Unlike Sony, Napster had a continuing ability to control its users.”).
[133] Napster, 239 F.3d at 1020 (“We observe that Napster’s actual, specific knowledge of direct infringement render’s Sony’s holding of limited assistance to Napster.”) Although contributory infringement is based on actual or constructive knowledge of specific infringement cases, the defendant will be contributorily liable even if the product is capable of substantial non-infringing uses. See Giblin-Chen supra note 132, at 429.
[134] Ginsburg, supra note 4, at 582.
[135] In this case, the recording industry sued the Internet service Aimster for facilitating the swapping of digital copies of popular music over the Internet. The district court entered a broad preliminary injunction that “had the effect of shutting down the Aimster service.” In re Aimster Copyright Litigation, 334 F.3d 643, 645 (7th Cir. 2003).
[136] Id. at 649.
[137] Id. at 648–49.
[138] Id.
[139] Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., 545 U.S. 913 (2005).
[140] Id. at 933.
[141] Rebecca Gilbin-Chen, Rewinding Sony: an Inducement Theory of Secondary Liability, 27 Eur. Intell. Prop. Rev. 428, 431 (2005).
[142] Ginsburg, supra note 4, at 583.
[143] Grokster, 545 U.S. at 915.
[144] Id. at 945.
[145] Id. at 944.
[146] Id. at 957.
[147] See Reis, supra note 126, at 206 (pointing out that the adoption of patent law doctrine “obscured the need for transparent means of technology readiness, utility and risk assessment in the determination of present and potential uses of technology”).
[148] Id. at 214–15.
[149] Id. at 215 (“[T]he analogy to the Staple Article of Commerce provision in the Patent Act was unfortunate and inapposite to copyright and may be a factor that retarded the development of technology readiness assessments and other analytical processes that hold the promise of objectivity and transparency in the evaluation of use and intent inferences in new technologies.”).
[150] Id.
[151] Id. Any article which satisfies the doctrine would enjoy “the safe harbor for any infringement that later occurred, whether intentional or not.”
[152] Id. at 219.
[153] See e.g., Ginsburg, supra note 4, at 581; Craig A. Grossman, From Sony to Grokster, the Failure of the Copyright Doctrines of Contributory Infringement and Vicarious Liability to Resolve the War Between Content and Destructive Technologies, 53 Buff. L. Rev. 141, 173 (2005).
[154] Sony, 464 U.S. at 498.
[155] Reis, supra note 126, at 244.
[156] Gisburg, supra note 4, at 581.
[157] See Grokster, 545 U.S. at 933.
[158] Reis, supra note 126, at 220–21.
[159] Sony, 464 U.S. at 432.
[160] William Landes & Douglas Lichtman, Indirect Liability for Copyright Infringement: Napster and Beyond, 17 J. Econ. Perspectives 113, 118 (2003).
[161] Id.
[162] Reis, supra note 126, at 205 (“Sony seeded the ongoing conundrum of balancing protected intellectual property rights with the potential of technologies that enhance the use of intellectual content.”).
[163] Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., 545 U.S. 913 (2005).
[164] Jane C. Ginsburg & Sam Ricketson, Inducers and Authorizers: a Comparison of the US Supreme Court’s Grokster Decision and the Australian Federal Court’s KaZaa Ruling, 11 Media & Arts L. Rev. 1, 7 (2006).
[165] Reis, supra note 126, at 208.
[166] Bartholomew, supra note 121, at 684.
[167] Id. at 683.
[168] Id.
[169] Hays, supra note 115, at 618.
[170] See Dixon, supra note 119, at 37–39.
[171] Id. at 39.
[172] Id. at 39–40.
[173] Sony, 464 U.S. at 426.
[174] Id. at 487.
[175] Napster, 239 F.3d at 1023.
[176] Hays, supra note 115, at 619.
[177] Id.
[178] Matt Jackson, One Step Forward, Two Steps Back: a Historical Analysis of Copyright Liability, 20 Cardozo Arts & Ent. L.J. 367, 392 (2002).
[179] Shapiro, Bernstein & Co. v. HL Green Co., 316 F. 2d 304, 307 (2d Cir. 1963).
[180] See Polygram Int”l Publ”g, Inc. v. Nevada/TIG, Inc., 855 F. Supp. 1314, 1325–26 (D. Mass. 1994) (citing Napster, 239 F. 3d. 1004, 1022 (9th Cir. 2001)).
[181] Jackson, supra note 178, at 392 (“One rationale for vicarious liability (and deep pockets in general) is that a judgment-proof defendant does not feel the incentive created by the imposition of liability, whereas the employer can induce the employee to be careful. Furthermore, the employer is in a position to supervise and control the actions of the employee. It is seen as the employer’s responsibility to make sure that the employee acts properly in pursuing the company’s interests.”).
[182] See Napster, 239 F. 3d. 1004, 1022 (9th Cir. 2001) (citing Fonovisa, Inc., v. Cherry Auction, Inc., 76 F. 3d 262 (D.C. Cir. 2001)).
[183] Dreamland Ball Room v. Shapiro, Bernstein & Co., 36 F. 2d 354 (7th Cir. 1929).
[184] Jackson, supra note 178, at 393.
[185] Gershwin Publ’g Corp. v. Columbia Artists Mgmt., 443 F.2d 1159 (2d Cir. 1971) (citing Napster, 239 F. 3d. 1004, 1022 (9th Cir. 2001)).
[186] Id. at 1023–24.
[187] In re Aimster Copyright Litigation, 334 F.3d 643, 645 (7th Cir. 2003).
[188] Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., 545 U.S. 913 (2005).
[189] Id. at 930 n.9.
[190] See Perfect 10, Inc. v. Google, Inc., 508 F.3d 1146, 1173 (9th Cir. 2007).
[191] Id. (“Perfect 10 has not shown that Google has contracts with third-party websites that empower Google to stop or limit them from reproducing, displaying, and distributing infringing copies of Perfect 10’s images on the Internet.”).
[192] Id. at 1174. Practically speaking, Google could not stop any of the third party websites from infringing Perfect 10’s copyrights because the infringing conduct took place on the third-party websites. The district court found that Google lacked the practical ability to police the third-party websites’ infringing conduct. While Napster had the ability to identify and police infringing conduct by searching its index for song titles, Google could not implement measures, as Perfect 10 suggested, to prevent its web crawler from indexing infringing websites and to block access to infringing images, because they were “imprecision and over breadth,” and not “workable”.
[193] Napster, 239 F.3d 1004, 1023 (9th Cir. 2001).
[194] See Bryan H. Choi, The Grokster Dead-End, 19 Harv. J.L. & Tech. 393, 396 (2006).
[195] Grokster, 545 U.S. at 936–37.
[196] Id. at 934.
[197] Id. at 935.
[198] Id. at 941 (“If liability for inducing infringement is ultimately found, it will not be on the basis of presuming or imputing fault, but from inferring a patently illegal objective from statements and actions showing what that objective was.”).
[199] Id. at 935–36 (“The rule on inducement of infringement as developed in the early cases is no different today. Evidence of active steps taken to encourage direct infringement, such as advertising an infringing use or instructing how to engage in an infringing use, shows an affirmative intent that the product be used to infringe, and overcomes the law’s reluctance to find liability when a defendant merely sells a commercial product suitable for some lawful use.).
[200] Id. at 937 (holding that “mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability. Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves. The inducement rule, instead, premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise.”).
[201] Id. at 938.
[202] See id. at 937–38.
[203] Id.
[204] Timothy R Holbrook, The Intent Element of Induced Infringement, 22 Santa Clara Computer & High Technology Law Journal 399, 404 (2006).
[205] Id. at 400; see also Sverker K Hogberg, The Search for Intent-Based Doctrines of Secondary Liability in Copyright Law, 106 Colum. L. Rev. 909, 958 (2006) (supporting narrowly circumscribing the reach of inducement liability by the court and advocating to abandon the expansion of the intent inquiry in other two forms of indirect copyright liability).
[206] Holbrook, supra note 204, at 408, 411.
[207] 2013 Provision, supra note 17, art. 8 (“[T]he people’s court shall determine whether a network service provider is liable for infringement as an abettor or aider according to the fault of the network service provider. The fault of a network service provider means whether the network service provider knows or should have known a network user’s infringement of the right of dissemination on information networks.”).
[208] With the object of adapting to the new technologies at the turn of the century and satisfying America’s commitment to WIPO, the Digital Millennium Copyright Act was enacted by the United States Congress in 1998 to “implement the World Intellectual Property Organization Copyright Treaty”, and to “update domestic copyright law for the digital age”. The DMCA is divided into five titles, among which Title II provides the Online Copyright Infringement Liability Limitation Act (“OCILLA”) in adding a new § 512 to the Copyright Act, which creates a series of safe harbors by placing limitations on liabilities for copyright infringement by Online Service Providers (“OSPs”). Digital Millennium Copyright Act, 17 U.S.C. § 512 (2013).
[209] S. Rep. No. 105-190, at 8 (“without clarification of their liability, service providers may hesitate to make the necessary investment in the expansion of the speed and capacity of the Internet . . . By protecting service providers, the DMCA ensures that the efficiency of the Internet will continue to improve and that the variety and quality of services on the Internet will continue to expand.”).
[210] Amir Hassanabadi, Viacom v. YouTube – All Eyes Blind: the Limits of the DMCA in a Web 2.0 World, 26 Berkeley Tech. L.J. 405, 412 (2011).
[211] See, e.g., Mark A Lemley, Rationalizing Internet Safe Harbors, 6 J. Telecomm. & High Tech. L. 101 (2007); Edward Lee, Decoding the DMCA Safe Harbors, 32 Colum. J.L. & Arts 233, 238 (2009); Peter Leonard, Safe Harbors in Choppy Waters – Building a Sensible Approach to Liability of Internet Intermediaries in Australia, 3 J. Int’l Media & Ent. L. 221 (2010-2011); R. Anthony Reese, The Relationship Between the ISP Safe Harbors and the Ordinary Rules of Copyright Liability, 32(4) Colum. J.L. & Arts 426 (2009); Hassanabadi, supra note 210.
[212] The Ninth Circuit in UMG and the Second Circuit in Viacom took different positions in interpreting whether to import a specific knowledge requirement into the control and benefit provision. Compare UMG Recordings, Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022, 1041 (9th Cir. 2011), with Viacom International, Inc. v YouTube, Inc., 676 F.3d 19, 25 (2d Cir. 2012).
[213] Lemley, supra note 211, at 102.
[214] Lee, supra note 211, at 233.
[215] “A safe harbor generally was the outcome of a political compromise effected after heavy lobbying between rights holders or others and the internet industry. Sometimes the drafting deficiency reflects a political compromise that is reflected in vague or open language.” Leonard, supra note 211, at 235.
[216] 17 U.S.C. §§ 512(c)(1)(A), 512(d)(1).
[217] Reese, supra note 211, at 433–36.
[218] 17 U.S.C. § 512(c)(1)(A)(i) (prescribing that a service provider “does not have actual knowledge that the material or an activity using the material on the system or network is infringing”); see also 17 U.S.C. § 512(d)(1)(A) (prescribing the same standard).
[219] S. Rep. No. 105-190, at 44 (“Subsection (c)(1)(A)(ii) can best be described as a “red flag” test.”).
[220] Mere knowledge of the activity’s existence is not enough, the infringing nature of the activity must be known to the service provider. H.R. Rep. No. 105-551, pt. 2, at 57–58 (1998) (“Absent such “red flags” . . ., a directory provider would not be . . . aware merely because it saw one or more well known photographs of a celebrity at a site devoted to that person. The provider could not be expected, during the course of its brief cataloguing visit, to determine whether the photograph was still protected by copyright or was in the public domain; if the photograph was still protected by copyright, whether the use was licensed; and if the use was not licensed, whether it was permitted under the fair use doctrine.”).
[221] Reese, supra note 211, at 434.
[222] Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007).
[223] Id. at 1114.
[224] Reese, supra note 211, at 435.
[225] Corbis Corp. v., 351 F. Supp. 2d 1090 (W.D. Wash. 2004).
[226] Id. at 1108 (“In determining whether a service provider is ‘aware of facts or circumstances from which infringing activity was apparent,’ . . . the question is not ‘what a reasonable person would have deduced given all of the circumstances.’ . . . Instead, the question is ‘whether the service provider deliberately proceeded in the face of blatant factors of which it was aware.’ . . . As articulated by Congress, apparent knowledge requires evidence that a service provider ‘turned a blind eye to red flags of obvious infringement.’”).
[227] Reese, supra note 211, at 436.
[228] Viacom Int’l., Inc. v. YouTube, Inc., 540 F. Supp. 2d 461 (S.D.N.Y. 2008) [hereinafter Viacom I]; Viacom Int’l, Inc. v. YouTube, Inc., 718 F. Supp. 2d 514 (S.D.N.Y. 2010) [hereinafter Viacom II]; Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012) [hereinafter Viacom III]; Viacom Int’l, Inc. v. YouTube, Inc., 940 F. Supp. 2d 110 (S.D.N.Y. 2013) [hereinafter Viacom IV]. YouTube, owned by Google, is a video-sharing website that allows users to upload videos free of charge. In 2008, Viacom, a copyright holder of many video files that had been uploaded to YouTube, sued YouTube for both direct and indirect copyright infringement, alleging that YouTube had actual knowledge of ongoing infringement and had received a financial benefit from the infringement in the form of advertising revenue from the resulting web traffic. Viacom also alleged that YouTube’s infringing activity was outside the scope of safe harbor provision of DMCA. See Viacom II, 718 F.Supp.2d at 526.
[229] Viacom III, 676 F.3d at 30.
[230] Id. at 30 (stating that “under§512 (c)(1)(A), knowledge or awareness alone does not disqualify the service provider; rather, the provider that gains knowledge or awareness of infringing activity retains safe-harbor protection if it ‘acts expeditiously to remove, or disable access to, the material.’” (citing 17 U.S.C. §512 (c)(1)(A)(iii))).
[231] UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006 (9th Cir. 2013) [hereinafter UMG III].
[232] Id. at 1022.
[233] 17 U.S.C. § 512(m) (“[N]othing in this section shall be construed to condition the applicability of subsections (a) through (d) on . . . a service provider monitoring its service or affirmatively seeking facts indicating infringing activity.”).
[234] Viacom III, 676 F.3d at 31.
[235] See S. Rep. No. 105-190, at 20; H.R. Rep. No. 105-551, pt. 2, at 49.
[236] UMG III, 718 F.3d at 1022.
[237] Id. at 1025 (“[T]he actual knowledge provision turns on whether the provider actually or “subjectively” knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement “obviously” obvious to a reasonable person.”).
[238] UMG Recordings, Inc. v. Veoh Networks, Inc., 665 F. Supp. 2d 1099 (C.D. Cal. 2009) [hereinafter UMG II].
[239] Id. at 1108.
[240] UMG Recordings, Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022, 1038 (9th Cir. 2011).
[241] Id. at 1022–23.
[242] Reese, supra note 211, at 437–38.
[243] Lee, supra note 211, at 252.
[244] 17 U.S.C. §§ 512(c)(1)(C), 512 (d)(3).
[245] Lee, supra note 211, at 252–58.
[246] Id. at 253.
[247] Id.
[248] Id. at 256.
[249] Id.
[250] 17 U.S.C. § 512 (c)(1)(B).
[251] Viacom II, 718 F. Supp. 2d at 527.
[252] Id.
[253] Viacom III, 676 F.3d at 36.
[254] Id. at 30.
[255] UMG Recordings, Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022, 1041 (9th Cir. 2011) (citing Viacom International, Inc. v. YouTube, Inc., 676 F.3d 19, 25 (2d Cir. 2012)).
[256] Viacom III, 676 F.3d at 36.
[257] Id.
[258] H.R. Rep. No. 105-551, pt. 1, at 26 (citing Viacom International, Inc. v. YouTube, Inc., 676 F.3d 19, 26 (2d Cir. 2012)).
[259] UMG III, 718 F.3d at 1027.
[260] Id. at 1029.
[261] Id. at 1027 n.17.
[262] Id. at 1028.
[263] H.R. Rep. No. 105-551, pt. 2, at 54; S. Rep. No. 105-190, at 44–45.
[264] S. Rep. No. 105-190, at 19.
[265] UMG III, 718 F.3d at 1029.
[266] Viacom III, 676 F.3d at 38.
[267] Id. at 38.
[268] Id.
[269] Viacom IV, 940 F. Supp. 2d at 111.
[270] UMG III, 718 F.3d at 1030.
[271] Viacom IV, 940 F. Supp. 2d at 119.
[272] See id. at 121.
[273] See Lee, supra note 211; Reese, supra note 211.
[274] Lee, supra note 211, at 238. “[B]asically, the DMCA provides no safe harbor for vicarious infringement because it codifies both elements of vicarious liability.” Costar Group Inc., v. Loop Net, Inc., 164 F. Supp. 2d 688, 704 (D. Md. 2001), aff”d at 373 F.3d 544 (4th Cir. 2004).
[275] Lemley, supra note 211, at 104 n.23.
[276] Lee, supra note 211.
[277] Influenced by Continental European legal systems since the Qing dynasty, China has adopted the civil law tradition and sources of law are written. Unlike common law jurisdictions such as the United States or England, there is no strict precedential concept of case law in China. In theory, each case ruling stands as its own decision and will not bind the decisions of another court. However, in practice, the judges of lower people’s courts often attempt to follow the interpretations of laws issued by the Supreme People’s Court, which—as a common practice—issues judicial interpretations, opinions, or replies which are ultimately followed by the lower courts. See Donald C. Clarke, The Chinese Legal System (July 4, 2005),; see also Ronald C. Brown, Understanding Chinese Courts and Legal Process: Law with Chinese Characteristics 82 (Kluwer Law International 1997).
[278] 2006 Regulation, supra note 9. Paragraph 2 of Article 23 of the 2006 Regulation stipulates that “where it knows or should have known that the linked works, performances, sound recordings or video recordings infringe another person’s right, it shall be jointly liable for the infringement.”
[279] Id., art. 22(4) (providing that a network service provider will not be liable for damages if ‘it does not seek financial benefits directly from the works, performances, sound recordings or video recordings provided by its subscribers’.).

A Critical Look at “Use” under the Lanham Act

A Critical Look at “Use” under the Lanham Act
By Krystil McDowall* A PDF version of this article is available here.  


There is an old adage in trademark law: “Use it or lose it.”[1] Whilst use of a mark may appear to be an uncomplicated idea, the concept of “use” is somewhat elusive.[2] In order to obtain and maintain a federal registration the “use in commerce” requirement[3] demands a bona fide “sale” or “transportation” of a good bearing the mark,[4] and subsequent activity of the mark owner, which evidences a continuous effort to use the mark in the ordinary course of trade.[5] But not all activities undertaken in connection with a mark are relevant “uses.” For example, various activities, which are often necessary to launch a brand, lie outside the scope of permissible use. Once one delineates what conduct constitutes the requisite use, the question then becomes what use suffices as a “continuous” effort to use the mark. For many years, courts have held that more than de minimis use is required to satisfy the requirement.[6] One of the biggest grey areas in trademark law, and a continual focus of litigation, is how much use will be “continuous use.” The line between what use is de minimis and what use is continuous is a murky one. Trademark owners continue to litigate the use issue because there is little statutory clarity regarding what quantum of use constitutes a sufficient use in commerce and because the current use inquiry does not reflect the commercial realities of many business owners. Particularly affected are start-ups and new market entrants with little capital, and those in industries where there are high barriers to entry or in which products are expensive and sales are therefore infrequent. The difficulty trademark owners face in satisfying the use requirement is not a new issue.[7] Two recent decisions serve as examples of the recurring and frequent difficulties that some trademark owners face when they attempt to persuade a court that the relevant use has been made. In the 2013 decision, Clorox Co. v. Salazar, the trademark owner had used the mark in pre-sale activities, but had not yet sold a mark-bearing product; the Trademark Trial and Appeal Board refused to find a triable issue of fact regarding whether sufficient use of the mark had been made.[8] Similarly, in the 2011 decision, Gameologist Group, LLC v Sci. Games Int’l, Inc., a court refused to find that there were triable issues of fact sufficient to survive a summary judgment motion despite the owner putting forth four documented sales of its product bearing the trademark.[9] The decisions serve as reminders of how volatile certain trademarks are under the current use requirement, which is uniform on its face but unequal in its application. This note explores the use requirement under the Lanham Act.[10] Part I of this note discusses the historical context of the use in commerce requirement under the Act and how trademark owners are required to prove use sufficient to obtain and maintain a federal trademark registration. Part II considers how the use inquiry was applied in Clorox and Gameologist to deny the validity of the marks in issue. Part III critically analyzes the current use standard and, in particular, how the lack of uniformity under the use requirement causes inequity to certain trademark owners. Lastly, Part IV of this note canvasses the Australian concept of use and examines how the standard under Australian law would have produced different, and more favorable, outcomes for the plaintiffs in Clorox and Gameologist. Ultimately, this note argues that congressional amendment to the Lanham Act, to bring it closer to the Australian use standard, would be the most effective way to correct the inequity in the use requirement, make the use standard more predictable, and better protect all trademark owners.

I. The Prerequisites for Federal Trademark Rights

A. Historical Context of “Use in Commerce”

It is a fundamental rule of trademark law that creating or merely adopting a mark, on its own, is insufficient to create trademark rights.[11] In order to obtain registration under federal trademark law, the owner must make “use” of its trademark “in commerce.”[12] The basis for rights under the federal trademark registration regime is not the ingenuity or invention that may accompany the creation of the trademark, but rather making sufficient public use of the mark in the marketplace.[13] It therefore follows that use in commerce of a trademark is one of the prerequisites in order to gain, and maintain, protectable rights in a trademark under the Lanham Act.[14] If a federal registration is issued in circumstances where a trademark has not been properly used, the registration is void ab initio.[15] The Act defines the term “use in commerce” to mean “the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.”[16] This definition has been in effect for some 27 years and was introduced by the Trademark Law Revision Act of 1988 which implemented a radical change to the concept of use as it was then understood.[17] The revised definition of use in commerce abandoned the practice of “token” use and introduced the concept of “bona fide” use “in the ordinary course of trade” — resulting in a more rigorous use standard.[18] Regarding the shift to bona fide use, the Federal Circuit recently remarked that the “bona fide use language was intended to eliminate token uses, which occurred when applicants used marks in conjunction with selling goods or offering services for the sole purpose of obtaining registration, and with no intention of legitimately using the mark in commerce until a later date.”[19] Under the token use concept, a trademark owner was able to use a mark solely for the purpose of reserving rights in the mark as there was no intent-to-use system.[20] Under the current use standard, a bona fide use of a mark must be made before federal registration will issue and in order to maintain a registration if challenged.[21]

B. Proving “Use in Commerce”

At the outset, it is useful to note that a claimant’s ability to prove it has made a use in commerce of a trademark depends on what type of use is in issue, as the type of use, including the standard applied by the court and the evidence it will consider, may differ depending on the context of the dispute and the claims made by the parties.[22] Of specific relevance to this note is the use required to obtain and maintain a valid federal registration, in which the framework for analyzing use hinges on the definition of “use in commerce.” The current use standard has two aspects: that a bona fide use occur by way of a “sale” or “transportation,” and that continuous use be made of the mark after the initial sale or transportation.[23] Satisfying the “sale” or “transportation” aspect of the use standard requires a technical use, which is use of the relevant mark on, or in connection with, the goods.[24] The affixation requirement was liberalized with the passage of the TRLA, making it easier to satisfy.[25] Generally, the requirement is satisfied by an owner affixing the mark to the goods in question “in any manner” and selling the goods with the mark so affixed.[26] However, the law acknowledges that it is not always practicable to put a mark on goods and, in such circumstances, the trademark owner may place the mark on documents associated with the sale of the goods.[27] A further aspect of the use in commerce requirement is that the sale or transportation be open and public.[28] The logic behind the requirement is that sale or transport will lead intended consumers of the relevant product to become aware of both the availability of the goods and the mark.[29] The terms “sale” and “transportation” do not correspond to ordinary dictionary definitions, as the meaning of both terms in trademark law is influenced by the necessity that the use be open and public. As such, “[s]ecret, undisclosed internal shipments are generally inadequate to support use.”[30] Consequently, there are limitations on what constitutes a sale or a transportation under the Act. For example, intra-company shipments are not a transportation because such transactions are neither arms-length, nor public, and are likely to be considered sham shipments.[31] Lastly, in order to file an application that meets the requirements for registration, a single sale or transportation of a good will suffice.[32] However, in order to maintain registration, the Act requires more than a single public sale or transportation of the good bearing the mark.[33] A mark owner must be able to demonstrate that it has made continuous use of its mark since the initial sale or transportation.[34] The Act, however, does not state how much use constitutes continuous use. The continuous use requirement is therefore one of trademark law’s fuzziest requirements. Despite the lack of a specific statutory threshold regarding the quantum of continuous use, the legislative history and the case law provide some limited assistance in answering the quantum question.[35]

C. Nature and Quantum of Use Necessary to Prove Continuous Use

The Act does not explicitly mandate a specific quantum of use in order to maintain federal registration. The Act’s legislative history, however, states that use adopts a measure of flexibility, with the sufficient amount of use viewed in the context of the trademark owner’s industry. Specifically, Congress has said that use should be interpreted to mean “commercial use which is typical in a particular industry.”[36] Congress, quite rightly, recognized that sales patterns and use vary from industry to industry — indeed, infrequent sales may be part of the ordinary course of trade in some industries, but not in others.[37] The acknowledgement that use differs from industry to industry is the reason Congress urged that the revised definition be interpreted with some flexibility, encompassing “various genuine, but less traditional, trademark uses.”[38] Less frequently cited in literature concerning trademark use is Congress’ intent to preserve ownership rights if a unique situation disrupts the use. Specifically, the Senate Report states that ownership rights should be preserved “if, absent an intent to abandon, use of a mark is interrupted due to special circumstances.”[39] Congress, however, did not elaborate on what type of special circumstances may be encompassed under this concept, and it appears the courts have not considered the passage of the report in case law at any length.[40] Whilst the legislative history provides some guidance as to how the use standard is to be interpreted by the courts, the case law provides insight as to how courts evaluate the quantum issue and whether such use meets the continuous use threshold. A continuous use has been held to mean use that is “maintained without interruption.”[41] Additionally, the case law clearly says that de minimis use of a mark is not continuous use.[42] Nonetheless, de minimis use is not a defined concept, and whether use is de minimis is considered on a case-by-case basis.[43] Despite the lack of definition, the courts hold that some use may be deemed so isolated or minimal that rights are never created in the mark. For example, in Momentum Luggage & Leisure Bags v. Jansport, Inc., a single sale of eight pieces of luggage for $760 in two years was de minimis and insufficient to prove use as a mark.[44] The following examples are other cases in which federal courts have held that the alleged use was insufficient because it was minimal, de minimis, or too sporadic; they demonstrate that attempts at proving use are surrounded with seemingly insurmountable difficulties: · LeBlume Import Co. v. Coty (1923): Occasional casual importations of perfume considered so infrequent that the perfume producer was not entitled to trademark protection.[45] · Vapon, Inc. v. Dreyfuss (1957): Evidence of customer orders, shipping orders and invoices showing one shipment of the product bearing the mark each year between 1944 to 1953 to customers in Connecticut, Massachusetts, New Jersey and Pennsylvania, with a total sales value of $478.44 held to be sporadic and inconsequential use.[46] · United Plywoods Corp. v. Congoleum-Nairn, Inc. (1959): During a period of upwards of two years, the applicant had made two sales of goods bearing the mark; which was held to be sporadic.[47] · Philip Morris, Inc. v. Imperial Tobacco Co. (1965): Sales of cigarettes and tobacco bearing the trademark were considered over a 55 year period. The largest amount of tobacco sold in a year did not exceed 300 pounds and cigarette sales did not exceed $51,000. Sales were considered sporadic, casual and nominal in character and thus created no trademark rights.[48] · D. M. & Antique Import Corp. v. Royal Saxe Corp. (1969): Use relating to one sale was held transitory and minimal.[49] · La Societe Anonyme des Parfums Le Galion v. Jean Patou, Inc. (1974): Holding that 89 sales of perfume bottles over a 20 year period was held as a “meager trickle of business” and that could not constitute bona fide use to afford trademark protection.[50] · Paramount Pictures Corp. v. White (1994): Affixing mark to a game consisting of three pieces of paper and distributing the game to promote a musical group was de minimis use.[51] · WarnerVision Entm’t Inc. v. Empire of Carolina Inc. (1996): The plaintiff’s promotional efforts failed to establish sufficient use where only a few presentations were made to industry buyers, even though one resulted in a sale to a major retailer.[52] · S. Indus., Inc. v. Diamond Multimedia Sys., Inc., (1998): Denying summary judgment to the mark owner because sales of five computers for $5,301 over three years were de minimis sales did not establish continuous use under the Act.[53] · Lucent Info. Mgmt. Inc. v. Lucent Techs. Inc. (1999): A single sale and no advertising was held to be inadequate to demonstrate sufficient use.[54] · Harod v. Sage Prods., Inc. (2002): A low level sales of samples to distributors, followed by sporadic sales thereafter, did not establish trademark rights ($70 of sales to distributors in 1996 and sales of $75 in 2000 and $60 in 2001 with no advertising).[55] In Momentum Luggage the court held “a single use in trade may sustain trademark rights if followed by continuous commercial utilization.”[56] However, even where subsequent use is made of the mark by the trademark owner after an initial sale, it may be difficult to satisfy the continuous use requirement as courts interpret use strictly, denying rights in a mark if subsequent use appears objectively haphazard or random. The rationale, as one court observed, is that a single sale of a product followed by “frenetic but futile efforts to make a second sale” does not justify the grant of trademark rights by “denying its use to sellers who can actually sell.”[57] The theory behind such reasoning is that trademark rights become stronger with public acceptance and recognition of the mark, which occurs as the owner makes greater bona fide public use of the mark.[58] As one scholar notes, “[i]f it is true that trademark rights arise from actual use of the mark, it is also true that greater rights arise from greater use.”[59] It can be surmised, then, that under the current standard of use, a single use of a mark without subsequent continuous use in the ordinary course of trade does not create trademark rights sufficient to maintain a federal registration under the Act, but a single sale will suffice to create rights so long as the initial sale is succeeded by a commercial use of the mark which is not merely sporadic or de minimis.[60] As there are no bright line rules regarding what quantum of use will be considered sufficient, or what level of use will cross the threshold to use that is continuous (as distinguished from use that is merely sporadic), the standard for registration use therefore raises practical challenges for trademark owners to knowing what degree of use is required.[61]

II. The Cases

The use inquiry undertaken by the courts is fact-sensitive and compels the courts to consider a number of case-by-case factors including the amount of use, the nature or quality of the transaction, and what use is typical within a particular industry.[62] In Clorox and Gameologist the courts were unimpressed with the alleged uses of the trademarks in question. In Clorox, the applicant had difficultly satisfying the use standard as the applicant’s evidence indicated that annual sales of its product were likely to be one sale (or less) annually. In Gameologist, the court dismissed the plaintiff’s actual evidence of sales as being minimal and did not give any weight to other evidence of marketing and promotions as use of the mark. Each of these decisions serve as examples of the recurring and frequent difficulties that some trademark owners face when attempting to prove the necessary use has been made.

A. Clorox

In Clorox, a 2013 precedential opinion of the Board, the applicant sought to register the term “Clorotec” and an accompanying design for certain electronic equipment relating to the manufacture of various cleaning solutions. The opposer brought a summary judgment application claiming that relevant use of the Clorotec mark had not been made. The Board ultimately blocked registration of the mark, siding with the opposer, and holding that the applicant had not made the relevant use in commerce of its mark at the time of filing.[63]

B. The Arguments and Evidence

A number of grounds for opposition to registration were advanced by the opposer, including that the applicant’s use of the mark was not bona fide use in commerce.[64] This argument was made on the basis of statements made by the applicant in the discovery process to the effect that the applicant had not used the mark on a product sold within the United States. Specifically, in response to interrogatories, the applicant stated (inter alia) that “[it] has not yet used the [m]ark on any product sold in the United States” and “[n]o units have been sold to clients inside the United States.”[65] In response, the applicant alleged that such statements misrepresented the substance of its responses, and the mark had been used in commerce.[66] To further its argument, the applicant pointed to evidence demonstrating the mark had been used in internet advertising offering the goods for sale, as well as evidence demonstrating that machinery parts bearing the mark (but not the actual product) had been shipped interstate from an interstate manufacturer to the applicant in Mexico via the applicant’s licensee.[67] The applicant contended that requiring an actual sale or transportation of its goods would be “inequitable and inconsistent with Congress’ intent.”[68] The alleged inequity, argued the applicant, would occur by requiring sales in low-volume, high-cost businesses: Sales of the applicant’s products only occurred once per year (or even less frequently); price points ranged from $200,000 to $2,000,000 per item; and products were approximately one ton and custom-made to the customers’ requirements.[69]

C. The Board’s Findings

The Board poured cold water on the applicant’s congressional intent argument, ruling that a sale still must be made, even in an industry that has infrequent sales patterns. It emphasized that no authority had been cited to hold otherwise.[70] In holding that the applicant’s congressional intent argument was without merit, the Board noted that the “[a]pplicant’s position is in conflict with the clear and plain statutory definition of use in commerce.”[71] Along a similar line of reasoning, the Board concluded that the applicant’s argument that it had made use of its mark by way of advertising a product bearing the mark was unavailing; ultimately, the Board held that the relevant use requires such advertising to accompany an actual sale or transport of the goods in commerce.[72] Finally, the Board specifically disavowed the applicant’s contention that shipment of parts of goods bearing the mark could constitute use, holding that an actual finished product must be shipped.[73] However, the Board noted that even if a finished product had been shipped, the parts were shipped from the manufacturer to the applicant; this was merely delivery of goods to the trademark owner in preparation for offering the goods for sale, and not a bona fide use of the mark in commerce.[74] The Board granted summary judgment against the applicant, ruling that there was no genuine dispute of material fact and that there had been no bona fide use of the mark in commerce at the time the applicant filed its use-based application.[75]

D. Gameologist

In Gameologist, a 2013 decision of the United States District Court for the Southern District of New York, the plaintiff had a trademark registration for the mark “BLING BLING 2002”[76] and it sought to establish that it had protectable rights for the bling mark in relation to, inter alia, board games.[77] The plaintiff initially sought to register the bling mark in relation to lottery tickets, but the plaintiff failed to file the requisite evidence of its use of the bling mark in connection with lottery tickets.[78] The plaintiff sued for trademark infringement under the Act for the defendant’s use of the term “bling” in connection with the marketing of lottery tickets.[79] In order to sue for infringement, one of the elements the plaintiff was required to prove was that its bling mark was a valid mark entitled to protection. Such a showing required the plaintiff to demonstrate it had made a use in commerce of the mark.[80] The defendant argued that the plaintiff could not succeed in establishing the requisite use and moved to dismiss the suit by way of a summary judgment application. The Court sided with the defendant, holding that the plaintiff’s de minimis use of its mark was not sufficient to maintain its registration.

E. The Evidence and the Arguments

Despite the plaintiff’s application for the bling mark in relation to lottery tickets, the board game is the only product that was both sold by the plaintiff and featured the bling mark.[81] In an attempt to demonstrate that relevant use of the bling mark had been made, the plaintiff put a variety of evidence forward. In particular, the plaintiff had manufactured 500 units of its board game featuring the bling mark and indicated that all 500 units were either sold or given away.[82] However, the number of board games actually sold by the plaintiff was in dispute. The plaintiff submitted documentary evidence substantiating four sales of the board game at about $30 each,[83] claiming that about half of the remaining units were sold via unrecorded cash transactions and the remainder were distributed as promotional items without charge.[84] Additionally, there was evidence that the plaintiff posted an online slot machine, free of charge that bore the mark. Lastly, the plaintiff also relied on negotiations with potential licensees of the bling mark and various advertising, marketing, and promotion using the bling mark.[85]

F. The Court’s Findings

The court curtly dismissed the plaintiff’s claims, stating that the plaintiff “take[s] ‘bling’ too far.”[86] The Court was unconvinced by the plaintiff’s arguments, holding that the evidence of use of the bling mark was minimal and not sufficiently widespread.[87] In relation to the court’s finding that the use made of the bling mark was minimal, the court pointed out that even if plaintiff could substantiate the undocumented case sales, “de minimis sales such as these are insufficient to demonstrate use in commerce under the Lanham Act.”[88] The Court also took issue with the lack of widespread use of the bling mark. The plaintiff attested to it having attended trade shows, publishing press releases and advertisements, producing product prototypes, and purchasing an email blast directed to the gaming industry informing recipients of the “bling bling” casino game.[89] However, the plaintiffs were unable to provide evidence as to how widespread its efforts were.[90] As a result, the Court held that the plaintiff had failed to raise a genuine issue of material fact that its use of the mark was anything other than “sporadic, casual or transitory.”[91] Accordingly, the plaintiff’s mark was not entitled to protection under the Act, and the defendants were entitled to summary judgment on the plaintiff’s infringement claim.[92]

III. Analysis of the Use Requirement

The following analysis of Clorox and Gameologist does not question whether the application of the law or the analytical framework applied by the courts is correct. Indeed, in this note’s view, both decisions largely comport with the law and the established principles for the use standard applied by the courts. Similarly, neither case stands out as causing a significant change in trademark law or would be expected to cause a significant future impact on how courts approach the use inquiry. The importance of Clorox and Gameologist, however, is that the decisions highlight a distinct issue of trademark law which make certain trademark owners more vulnerable than others. The purpose of this section is to analyze the use in commerce requirement and discuss why it is more difficult for certain trademark owners to prove use than others. Ultimately, it can be seen that the unequal application of the use requirement is more acute for business owners who, like the applicants in each of the decisions, offer infrequent sales of large and expensive goods, or are small businesses and start-ups whose initial sales patterns are haphazard or minimal.

A. The Open and Public Use Aspect of the Sale or Transportation Requirement is Burdensome

The Clorox decision demonstrates that, when interpreting the use requirement to prove the validity of a federal registration, the courts follow a literal interpretation of the Act, which mandates a “sale” or “transportation” of the goods bearing the mark.[93] It is this note’s contention that the stringent interpretation of the open and notorious public use aspect of the sale or transportation requirement is inequitable, as it makes it more difficult for trademark owners who operate in industries with high barriers to entry to prove use. In Clorox, the manner in which the sale or transportation requirement was interpreted required the Board to disregard evidence of bona fide use relating to both the applicant’s internet advertising, via its website, and an interstate shipment of parts of the applicant’s products bearing the mark.[94] The shipment of parts of the applicant’s products from Utah to Mexico would have posed no difficulty satisfying the jurisdictional prerequisite that the use in question have an effect on commerce with foreign nations.[95] Thus, inequity follows where the Act requires invalidation of a federal registration in circumstances where an applicant is making a bona fide use of a mark, and significantly investing in its brand, in order to obtain an initial sale.[96] If sales are typically infrequent in a given industry, a sale is going to be unquestionably harder to make in that industry. It logically follows that a trademark owners’ ability to satisfy the sale or transportation requirement of the Act is more burdensome where the standard of use dictates a sale must be made, but the trademark owner’s evidence of its open and public use of the mark in connection with obtaining a sale (which would likely be building some public association between the mark and the good) is disregarded. Consequently, the use requirement is unequal in its application as the sale or transportation requirement does not factor in that sales are more difficult to attain in certain industries. The Act’s legislative history expresses the desire of Congress to interpret use in commerce flexibly, and to accommodate use that is typical in a particular industry.[97] However, Congress’ desire for a flexible interpretation focuses on use of a mark made after an initial sale or transportation of the good bearing that mark. The need for a flexible interpretation of use equally applies to uses that may be made of a mark before an initial sale or transportation of the good has been made. Trademark owners would receive greater protection and certainty if the Act stipulated a more flexible commercial standard of use that incorporated open and public pre-sales use of a mark (that is, use occurring before an initial sale or transportation takes place) as sufficient. This is especially important where applicants, like the applicant in Clorox, operate in an industry where products are high-end, custom made goods and therefore sales are, by their inherent nature, more infrequent and difficult to obtain. As the system currently stands, injustice results to the extent that the law requires businesses to invest in a mark to secure a sale, only to have a registration invalidated at a later date merely because the trademark owner had not actually attained any sales.

B. The Continuous Use Threshold Disadvantages Small Businesses and New Market Entrants

The Gameologist decision, and the litany of cases before it litigating the use issue, indicate that, in order to maintain a valid registration, more than minimal use of a trademark is required.[98] In this note’s view, the continuous approach to use is undesirable as courts are essentially required to make a ruling regarding whether a brand is growing fast enough.[99] In Gameologist, the requirement for more than de minimis use compelled the court to disregard documented bona fide evidence of actual sales of the plaintiff’s products bearing the mark, with the court holding, “de minimis sales such as these are insufficient to demonstrate use in commerce.”[100] In simple terms, the court effectively said that the plaintiff’s use of its mark was not good enough. Thus, Gameologist highlights the difficulty trademark owners face when attempting to determine whether use of the mark crosses the threshold from minimal to sufficient, as there is no bright line test to answer this question.[101] Many start-up and small businesses have sporadic initial sales patterns for a number of justifiable reasons, including a lack of resources or expertise (if the mark owner is new to the industry) or lack of capital (which may prevent the mark owner from obtaining legal counsel). It follows, then, that the continuous use standard is prejudiced in favor of those brands that are already strong, or have sufficient capital, over those that are starting out. In this way, the continuous use standard under the Act is unequal in its application as the standard is biased in favor of the strong. Where de minimis use is in issue, the law says “might is legally right,” or at least, “legally better.” As a result, the continuous use standard deprives some new or start-up businesses from growing a burgeoning brand into a thriving core asset.[102] Leading trademark scholar Jerome Gilson has voiced similar concerns stating that start-ups should not be deprived of obtaining federal registration because of minimal use.[103] Whilst Gilson’s concerns are not identical to the opinions expressed in this note, Gilson has spoken out against the “usage by industry” approach adopted by Congress with the introduction of the TRLA. Gilson rightly notes that the legislative history does not address the fact that usage within an industry varies significantly. Indeed, there are “likely to be as many different levels of product sales and trademark uses as there are businesses.”[104] Accordingly, attempting to find an industry standard in any given industry “would pose a virtually insurmountable problem both for the courts and for businesses attempting in good faith to comply with the statutory requirements.”[105] Furthermore, Gilson notes that attempts to prove an industry standard may be prohibitive from a cost perspective and inconclusive or unreliable due to the sensitivity with which businesses often treat sales figures of products.[106]

IV. Moving Forward: Congressional Amendment to Address the Use Dilemma – an Alternative Approach to Use under Australian Trademark Law

This note advocates equal treatment for all trademark owners under the use inquiry of the Lanham Act. As in United States law, the concept of use is a bedrock principle of Australian trademark law, and it is fair to say that under both systems trademarks are born from use.[107] Whilst both systems require use to a lesser or greater extent in order to maintain federal registration, and both adopt a measure of flexibility in analyzing this type of use, a comparison of use under both systems demonstrates that the differences are more than merely theoretical or academic.[108] The focus on the use being open and public is less pronounced under Australian trademark law. Additionally, in contrast to the United States, Australia mandates a minimal use standard in evaluating whether there has been sufficient use of the trademark.[109] In Australia, minor use will suffice to maintain a registration as long as it is genuine use. Put another way, genuineness trumps volume, resulting in a focus on use that is qualitative rather than quantitative.[110] The analysis of Clorox and Gameologist suggests that uniformity under the Act has not been achieved for certain trademark owners. The benefits that adoption of a broader use requirement may have can be seen when the outcomes for the plaintiffs in Clorox and Gameologist are analyzed under use concept standards akin to the standard in Australia. Under the Australian use standard, the outcomes would have been more favorable to the respective mark owners because the use demands placed on Australian trademark owners are modest in comparison to those placed on their American counterparts. Consequently, there is a need for legislative action to amend the use requirement to better protect trademark owners who are vulnerable under the current standard. Specifically, Congress should revise the Lanham Act, broadening the use requirement to bring it more in line with the less demanding standards of Australian trademark law.

A. Broadening the Use in Commerce Standard

If a broader use requirement is to be effective, any change should indicate the types of use that would qualify as sufficient to maintain federal registration. Looking to the Australian standard, a broader use inquiry should at least include use of a trademark by way of preparatory or other steps showing an objective commitment to using the trademark that meets the jurisdictional prerequisite that the use have the requisite effect on commerce.[111] Under such standard, there would be less emphasis on the use being open and public and greater weight placed on how that use has contributed to, and built, the mark owner’s brand. In order to demonstrate an objective commitment to using the trademark, this category of use may encompass circumstances where an owner has not yet sold or transported a good bearing the mark, but has gone beyond mere consideration of whether to use a mark and has taken objective steps to commit itself to using the mark, such as shipping parts of branded products or building brand awareness by way of preparatory activities.[112] In other words, use would be satisfied under this category where a mark owner could objectively demonstrate carrying its intention to use the mark into effect and such use has the necessary effect on interstate or foreign commerce.[113] For example, if a mark owner had committed itself by taking a number of steps, such as obtaining business cards, letterhead or signs bearing the mark and taken steps towards production, evidence of such activities would constitute an objective commitment to use the mark.[114] The benefits of the suggested statutory amendment can be readily seen when applicants, like the applicant in Clorox, is considered. Under the broader use standard, the applicant in Clorox could have maintained its registration, assuming the applicant was ready to manufacture its custom-made goods.[115] The combination of the advertising of the goods via the applicant’s website and shipping parts of its products across borders would suffice to constitute use under the “objective commitment to using the trademark” category. Opponents may argue that intent-to-use applications could be filed in circumstances where the applicant is in an industry where sales are infrequent.[116] But that argument simplifies the complexity of the matter. The current United States use inquiry does not take into account that, in some industries — especially those in which the products sold have high barriers to entry for the producer of the goods — an initial sale will be harder to obtain and the requirements for registration are thereby harder to satisfy. Additionally, arguing that an intent-to-use application could have been filed is not relevant to the continuous use issue because even if an applicant is able to obtain a sale or transportation of a good, it must continue to use the mark and have more than de minimis use in order to be considered use “in the ordinary course of trade.” Any potential issues that may arise from the proposed changes to a broader use standard are negligible compared to the inequities under the current use standard that permits trademarks whose owners have invested heavily in obtaining a sale to later be invalidated because the use was not good enough. While the current use standard may arguably promote competition by reserving registration only to those trademark owners who have made the best use of a trademark by way of an actual sale or transportation, this rationale works against trademark owners who have to invest in the trademark in order to obtain a sale. A legislative change to broaden the use standard would provide equal protection to trademark owners, irrespective of the ease or difficulty the owner has in obtaining a sale. Such a change would thereby offer greater certainty and predictability to business.

B. The Continuous Use Standard Should be Replaced By a Minimal Use Standard

In order to achieve uniformity under the Act’s use requirement, the more than de minimis use threshold encompassed within the “ordinary course” of a mark owner’s trade should be replaced with a standard of minimal, but bona fide, use that trademark owners can rely on in order to defend against invalidation of a federal registration. In order for a minimal use standard to be effective, the Act should adopt a qualitative, rather than quantitative, analysis that considers evidence of use of the mark after the initial sale. Such evidence may include the mark owner’s ongoing efforts to promote, advertise and market the goods and such use should suffice to create trademark rights if the use is bona fide. Although some case law indicates that registration may be upheld in spite of modest sales programs, that position is not consistently applied in the case law.[117] A lack of consistent subsequent sales after an initial sale should not be determinative of whether requisite use has been made of a mark. The courts should be instructed by legislation to consider other evidence of use including how much the business has spent on use of the mark, how many sales have been made, and what ongoing efforts the mark owner has made to promote and market the goods. Notwithstanding, use of the mark in advertising should be simultaneous with availability of the goods in the marketplace.[118] In other words, advertising alone should not constitute use, but advertising coupled with availability of the advertised goods for sale should suffice to create use so long as the use activities meet the jurisdictional prerequisite that have the requisite effect on commerce. An intermediate standard has been advanced by Gilson, who states that a more realistic inquiry would consider the “ordinary course” of the trademark owners own trade, not the industry in which the mark owner trades in.[119] Under Gilson’s inquiry, relevant considerations are size of the trademark owners business and the volume of products shipped.[120] Gilson elaborates using the following example: “[I]f Company A typically ships 5,000 cases of cola to distributors in a three-state area when launching a new brand, that level of activity should establish a trademark use standard for the company which it can refer to in filing affidavits in the Patent and Trademark Office.[121] The advantages of a minimal use threshold are apparent when considering plaintiffs like the plaintiff in Gameologist. Under a qualitative minimal use focus, which focuses on the bona fides of the transactions regarding the mark, the plaintiff in Gameologist would have maintained its registration as its initial documented sale of the board game, in addition to its substantial efforts to promote its branded goods (e.g., by way of manufacture of 500 products even though only four had been sold, online advertising and negotiations with licensees), would suffice to create the requisite rights. Critics may suggest that a minimal use approach would stem the incentive to compete embedded in the current use standard and that greater competition is fostered under the current standard by encouraging mark owners to establish themselves as quickly as possible. But this argument must be balanced against the fact that the current use standard systematically works against certain segments of the market, such as trademark owners who are small businesses or start-ups who are simply not able to quickly establish themselves. Adopting the minimal “single sale will suffice” standard of Australian law will allow American trademark owners a period of time after registration in which to establish and grow their business, without requiring immediate success judged by sales volume and significant advertising and marketing budgets. One benefit of this type of qualitative approach is that it fosters greater inclusiveness, which would better encompass the vast cross-section of commercial enterprises within the American landscape. It also means fewer federal registrations would be invalidated. Additionally, this type of approach would provide greater certainty to all trademark owners as businesses would be able to invest in a mark with greater certainty in knowing quality of use, not quantity, is the yardstick upon which a federal registration is measured. A legislative change to a qualitative, bona fide, minimal use focus thereby fosters greater equality.


It is time for Congress to empower “weaker” trademark owners by way of added protections to the Lanham Act that achieve greater uniformity in the application of the use requirement. In doing so, Congress would finally provide protection to trademark owners whom the Act, as currently written, denies. In order to ensure the Act’s use requirement is uniform in its application, Congress should amend the Act to broaden the nature of the activities that constitute use and ensure the use inquiry is a qualitative analysis that explicitly includes bona fide but minimal use. The current use requirement is unpredictable and blurry, given that what constitutes a de minimis quantum of use is ultimately at the court’s discretion and is not readily predictable by market participants. The regularity of federal cases litigating the use issue can be explained by the lack of a bright-line rule specifying what types of activity, and what quantum of use, will satisfy the use threshold. Without any change or development in the law, one can expect that actions will continue to saturate the courts. By broadening and clarifying the use provision — including specifying that certain pre-sales activity constitutes use and loosening the quantum of use standard — Congress can keep countless lawsuits from the federal court system while strengthening the underlying spirit of the Act.

* LL.M Candidate, New York University School of Law, 2014, LL.B (Hons), Queensland University of Technology, 2008. Special thanks to the NYU JIPEL Editorial Board, particularly Senior Notes Editor Lin Weeks, for his insightful comments and diligence. Lastly, thank you to my husband, Jay McDowall, for his boundless patience and support.
[1] See, e.g., Menashe v. V. Secret Catalogue, Inc., No 05 Civ. 239 (HB), 2005 U.S. Dist. LEXIS 13324, at *18 (S.D.N.Y. July 7, 2005) (“‘Use it or lose it’ is a fundamental precept of trademark law.” (citing Capitol Records, Inc. v. Naxos of Am., Inc., 262 F. Supp. 2d 204, 211 (S.D.N.Y. 2003); Holiday Inn v. Holiday Inns, Inc., 534 F.2d 312 (C.C.P.A. 1976))). Another old adage is “no trade — no trademark.” See La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1274 (2d Cir. 1974); Lucent Info. Mgmt. v. Lucent Techs., Inc., 186 F.3d 311, 319 (3d Cir. 1999) (“It is axiomatic that if there is ‘no trade — no trademark.’ ” (quoting id. at 1274)).
[2] See Aycock Eng’g, Inc. v. Airflite, Inc., 560 F.3d 1350, 1357 (Fed. Cir. 2009) (“Despite the seeming harmony and simplicity in the application of the use requirement to trademarks . . . opportunity exists for confusion in this area of the law.”); cf. Zazu Designs v. L’Oreal S.A., 979 F.2d 499, 503 (7th Cir. 1992) (“Use is neither a glitch in the Lanham Act nor a historical relic.”).
[3] In this paper, all iterations of the phrase “use in commerce” whether in the form of a noun (a “use in commerce”), a verb (“to use in commerce”), or adjective (“used in commerce”), are intended, without distinction, as instances of that phrase. The “use in commerce” requirement is also referred to as the “use issue,” the “use requirement,” the “use standard,” or the “use inquiry” in this note.
[4] The concept of “use in commerce” is also relevant to whether a trademark has been used in the relevant sense with respect to services, as distinct from physical goods. See, e.g., Patsy’s Italian Rest., Inc. v. Banas, 658 F.3d 254, 267 (2d Cir. 2011) (“Due to the different nature of the marks, ‘use in commerce’ is defined differently for trademarks and service marks.” (citing 15 U.S.C. § 1127)). For the purpose of brevity, this note limits the discussion to “use in commerce” that is necessary to support an application for trademark registration in connection with goods.
[5] Avakoff v. Southern Pacific Co., 765 F.2d 1097, 1098 (Fed. Cir. 1985) (adopting the following two-part test for use necessary for registration: “(1) Was the application upon which the registration application was founded bona fide; and (2) if [so], was it followed by activities proving a continuous effort to use the mark.”). For more recent support of the two-part test, see Chance v Pac-Tel Teletrac Inc., 242 F.3d 1151, 1157 (9th Cir. 2001) and Dep’t of Parks & Rec. v. Bazaar Del Mundo, Inc., 448 F.3d 1118, 1125–26 (9th Cir. 2006).
[6] See, e.g., Paramount Pictures Corp. v. White, 31 U.S.P.Q.2d 1768, 1774 (T.T.A.B. 1994) (finding that where a game was distributed on a less-than-commercial scale at a de minimis volume to promote a musical group, the mark was not eligible for register).
[7] See, e.g., Le Blume Imp. Co. v. Coty, 293 F. 344, 351 (2d Cir. 1923) (holding that “[a] casual sale or a casual importation does not establish or create a market, within the rule that a trader can protect his trade-mark or trade-name in the markets in which he sells, and prevent another trader from adopting the same trade-mark or trade-name in that territory”). The holding in Le Blume resulted in occasional importations of the perfume being considered too infrequent with the result that the mark owner was not entitled to trademark protection.
[8] The Clorox Co. v. Salazar (Clorox), 108 U.S.P.Q.2d (BNA) 1083 (T.T.A.B. 2013). The Trademark Trial and Appeal Board is referred to as “the Board” throughout this note.
[9] Gameologist Group, LLC, v. Scientific Games Int’l, Inc., 838 F. Supp. 2d 141 (S.D.N.Y. 2011).
[10] The Lanham Act will be referred to as “the Act” throughout this note.
[11] See, e.g., Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 413 (1916) (“[T]he right grows out of use, not mere adoption.”). For more recent pronouncements of this statement, see Aycock Eng’g, 560 F.3d at 1358 (“[M]ere adoption (selection) of a mark accompanied by preparations to begin its use are insufficient . . . for claiming ownership of . . . the mark.” (quoting Intermed Commc’ns, Inc. v. Chaney, 197 U.S.P.Q. 501, 507–08 (T.T.A.B. 1977))); Int’l Bancorp, LLC v. Societe Des Bains De Mer Et Du Cercle Des Etrangers a Monaco, 329 F.3d 359, 364 (4th Cir. 2003) (“[T]he right to a particular mark grows out of its use, not its mere adoption.” (quoting United Drug Co. v. Theodore Rectanus, Co., 248 US 90, 97 (1918))).
[12] Lanham Act § 1, 15 U.S.C. § 1051(a) (“Application for use of trademark … the owner of a trademark used in commerce may register his trademark. . . .” (emphasis added)); see, e.g., Rescuecom Corp. v. Google, Inc., 562 F.3d 123, 133 (2d Cir. 2009) (stating that “[§ 1] sets the standards and circumstances under which the owner of a mark can qualify to register the mark and to receive the benefits and protection provided by the Act”) (emphasis omitted).
[13] Allard Enters. v. Advanced Programming Res., Inc., 146 F.3d 350, 356 (6th Cir. 1998) (“One of the bedrock principles of trademark law is that trademark . . . ownership is not acquired by federal . . . registration. Rather, ownership rights flow only from prior appropriation and actual use in the market.” (quoting Homeowners Grp., Inc. v. Home Mktg. Specialists, Inc., 931 F.2d 1100 (6th Cir. 1991)) (internal quotations marks omitted)); S Indus., Inc. v. Diamond Multimedia Sys., Inc., 991 F. Supp. 1012, 1018 (N.D. Ill. 1998) (“Trademark rights are acquired by adoption and use, not by registration.”); Blue Bell, Inc. v. Farah Mfg. Co., 508 F.2d 1260, 1265 (5th Cir. 1975) (“[C]onception of the mark, . . . [does not] establish[] trademark rights.”).
[14] See, e.g., In re Compagnie Generale Mar., 993 F.2d 841, 854 (Fed. Cir. 1993) (“[U]se in commerce . . . is essential to obtain a federal registration of a mark.”).
[15] Aycock Eng’g, 560 F.3d at 1357 (“The registration of a mark that does not meet the use requirement is void ab initio.” (citing Gay Toys, Inc. v. McDonald’s Corp., 585 F.2d 1067, 1068 (CCPA 1978))). “Void ab initio” means “[n]ull from the beginning.” Black’s 1064 (8th ed. 2004); see also Premier Pool Mgmt. Corp. v. Lusk, No. CIV S-11-2896 GEB CKD, 2012 U.S. Dist. LEXIS 63350, at *15 (E.D. Cal. May 3, 2012) (“The registration of a mark that does not meet the use requirement is void ab initio.” (quoting Quia Corp v. Mattel, Inc., No. C 10-1902 JF (HRL), 2011 U.S. Dist. LEXIS 76157, at *10 (N.D. Cal. Jul. 14, 2011))).
[16] Lanham Act § 45, 15 U.S.C. § 1127 (“Use in Commerce”); see Aycock Eng’g, 560 F.3d at 1357 (stating that “[f]or trademarks, the use in commerce requirement is met when a mark is (1) placed on the good or container, or on documents associated with the goods if the nature of the goods makes placement on the good or container impracticable, and (2) that good is then sold or transported in commerce” (internal quotation marks omitted)).
[17] Trademark Law Revision Act of 1988, Pub. L. No. 100-667, 102 Stat. 3935 (effective November 16, 1989) (codified at 15 U.S.C. § 1127 (2006)). The Trademark Law Revision Act of 1988 is referred to as “the TRLA” in this note.
[18] Id. The change to a bona fide use standard has been described as a “stricter” standard. See Allard, 146 F.3d at 357 (explaining that the purpose of the amended standard “was to eliminate token use as a basis for registration, and that the stricter standard contemplates instead commercial use of the type common to the particular industry in question.” (quoting Paramount Pictures, 31 U.S.P.Q.2d at 1774), aff’d, 108 F.3d 1392 (Fed. Cir. 1997)); Chance, 242 F.3d at 1157 (referring to the use standard implemented in 1988 as a “stricter standard”).
[19] Aycock Eng’g, 560 F.3d at 1357 (internal quotation marks omitted); see also Automedx Inc. v. Artivent Corp., 95 U.S.P.Q.2d 1976, at *5 (T.T.A.B. 2010) (explaining that token sales are “artificially made solely to reserve a right in a mark and not made as part of a usual product or service launch” (quoting McCarthy On Trademarks And Unfair Competition § 19:109 (4th ed. 2010))).
[20] See Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1199 n.17 (11th Cir. 2001) (“The reason ‘token use’ was expressly eliminated was that the [Trademark Law] Revision Act had created an ‘intent-to-use’ application system that rendered such a ‘commercial sham’ unnecessary.” (citing 134 Cong. Rec. 32,053 (Oct. 20, 1988) (Sen. DeConcini))).
[21] NetJets Inc. v. IntelliJet Group, LLC, No. 15a0138n.06, 2015 U.S. App. LEXIS 2621, at *7 (6th Cir. 2015) (“The requirement that the use in commerce be a bona fide use . . . in the ordinary course of trade . . . requires that the goods or services have been used in a way which is typical in a particular industry . . . .” (internal quotation marks omitted)); Chance, 242 F.3d at 1157 (“[B]ecause token use is not enough, mere adoption of a mark without bona fide use, in an attempt to reserve it for the future, does not create trademark rights.”) (internal quotation marks omitted) (citation omitted); see also Allard, 146 F.3d at 357.
[22] For example, analysis of use is also required when the parties are in a priority dispute. In such disputes, each party is attempting to persuade the trier of fact that it was the first to use the trademark, and is therefore the rightful owner. The standard of use, in addition to the type and quantum of evidence of use that is considered when the court is adjudicating a priority dispute, is different than the use analysis regarding registration use. See, e.g., Allard, 146 F.3d at 358 (holding, in relation to a priority dispute, that “ownership may be established even if the first uses are not extensive and do not result in deep market penetration or widespread recognition.”); Sheila’s Shine Prods., Inc. v. Sheila Shine, Inc., 486 F.2d 114, 123 (5th Cir. 1973) (holding that a low volume of door-to-door sales of goods over ten years was sufficient to establish priority, reasoning that “the mere fact that a business is small and its trade modest does not necessarily militate against its . . . acquiring goodwill and rights in a trademark.”). Additionally, use is also relevant when a trademark owner alleges infringement of its mark but the use analysis regarding alleged infringement by a defendant is entirely different. See, e.g., Rescuecom, 562 F.3d at 133 (noting that “The Act employs the term ‘use in commerce’ in two very different contexts . . . . The first . . . sets the standards . . . under which the owner of the mark can qualify to register the mark . . . [The second] appears as part of the Act’s definition of reprehensible conduct, i.e., the conduct which the Act identifies as infringing of the rights of the trademark owner . . . .”).
[23] See Avakoff, 765 F.2d at 1098, see also Chance, 242 F.3d at 1157 and Dep’t of Parks & Rec., 448 F.3d at 1125–26 (9th Cir. 2006).
[24] Lanham Act § 45, 15 U.S.C. § 1127(1); see also Kelly-Brown v. Winfrey, 717 F.3d 295, 305 (2d Cir. 2013) (stating the “use in commerce” definition and the affixation requirement under § 1127(1) and holding that “the use in commerce requirement . . . is satisfied if the mark is affixed to the goods in any manner.”) (internal quotation marks omitted).
[25] See Rescuecom, 562 F.3d at 135 (discussing and describing the new requirement as “less complicated” and “more accommodating”).
[26] Lanham Act § 45, 15 U.S.C. § 1127(1)(A). Section 45 of the Act states that a mark is deemed to be used in commerce on goods when “it is placed in any manner on the goods . . . .” See, e.g., Blue Bell, 508 F.2d at 1267 (holding that “[e]lementary tenets of trademark law require that labels or designs be affixed to the merchandise actually intended to bear the mark in commercial transactions”).
[27] Lanham Act § 45, 15 U.S.C. § 1127(1)(A).
[28] See, e.g., Gen. Healthcare Ltd. v. Qashat, 364 F.3d 332, 335 (1st Cir. 2004) (stating that “transportation” requires “open and public use before customers” and that “courts . . . require[] an element of public awareness of the use.”) (citing New England Duplicating Co. v. Mendes, 190 F.2d 415, 418 (1st Cir. 1951) (“[U]se in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind . . . is competent to establish ownership, . . . .”); Dynamet Technology, Inc. v. Dynamet Inc., 197 U.S.P.Q. (BNA) 702, 705–06 (T.T.A.B. 1977) (“[U]se must be open and notorious public use directed to the segment of the purchasing public for whom the [products] are intended.”), aff’d, 593 F.2d 1007, 201 U.S.P.Q. (BNA) 129 (1979); Chere Amie, Inc. v. Windstar Apparel, Corp., No. 01 Civ. 0040 (WHP), 2002 U.S. Dist. LEXIS 4950, at *17 (S.D.N.Y. Mar. 25, 2002) (holding that an intra-company shipment is devoid of the requisite open and public use before customers).
[29] See, e.g., Smith International, Inc. v. Olin Corp., 209 U.S.P.Q. 1033, at *10 (T.T.A.B. 1981) (holding that “use of a mark must be open and notorious so that the purchasing public for whom the goods are intended are aware of the availability of the goods and aware of use of the mark . . . .” (emphasis added) (citing Bellanca Aircraft Corporation v. Bellanca Aircraft Engineering, Inc., 190 U.S.P.Q. 158 (T.T.A.B. 1976)).
[30] Mystique, Inc. v. 138 Int’l, Inc., 375 F. App’x 997, 999 (11th Cir. 2010) (quoting Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1196 (11th Cir. 2001)).
[31] Another example of circumstances in which a sale or transportation has not satisfied the requirements of the Act is Jaffe v. Simon & Schuster, Inc., No. 86 Civ. 1577 (GLG), 1987 U.S. Dist. LEXIS 14902, at *46 (S.D.N.Y. Feb. 3, 1987) (internal nominal sales of goods to friends and relatives).
[32] Blue Bell, Inc. v. Jaymar-Ruby, Inc., 497 F.2d 433, 437 (2d Cir. 1974) (recognizing that a number of courts have accepted “a minimal amount of interstate commerce — either a sale or transportation — will suffice [to satisfy the trademark laws]”).
[33] S Indus., Inc. v. Stone Age Equip., Inc., 12 F. Supp. 2d 796, 808 (N.D. Ill. 1998) (holding that a single use of the mark on the goods was insufficient where“[t]here is no evidence that this [single use] was followed by active use that allows consumers to associate a mark with particular goods . . . .” (internal quotations marks omitted)).
[34]La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1271–72 (2d Cir. 1974) (holding that “[t]o prove bona fide usage, the proponent of the trademark must demonstrate that his use of the mark has been deliberate and continuous . . . .”); Momentum Luggage & Leisure Bags v. Jansport, Inc., No. 00 CIV. 7909 (DLC), 2001 U.S. Dist. LEXIS 10253, at *21 (S.D.N.Y. July 23, 2001).
[35] White v. Paramount Pictures Corp., 108 F.3d 1392, at *2 (Fed. Cir. 1997) (stating that “[t]he legislative history of the [] Act is instructive as to the quantum of use required for registration.”).
[36] S. Rep. No. 100-515, 100th Cong., 2d Sess. at 44 (Sept. 15, 1988); see also White, 108 F.3d at *3 (citing the Senate Report in determining the required quantum of “use in commerce” under the Act).
[37] S. Rep. No. 100-515 (Sept. 15, 1988); H. Rep. No. 100-1028, 100th Cong., 2d Sess. at 15 (Oct. 3, 1988).
[38] S. Rep. No. 100-515 at 44 (Sept. 15, 1988).
[39] Id. at 45.
[40] A search of cases in Lexis that contain the phrase “interrupted due to special circumstances” generates only two case references: FN Herstal, S.A. v. Clyde Armory, Inc., No. 3:12-CV-102 (CAR), 2015 U.S. Dist. LEXIS 4310, at *27 n.98 (M.D. Ga. Jan. 8, 2015) and Electro Source, LLC v. Brandess-Kalt-Aetna Grp., Inc., 458 F.3d 931, 940 (9th Cir. 2006).
[41] Casual Corner Assoc., Inc. v. Casual Stores of Nevada, Inc., 493 F.2d 709, 712 (9th Cir. 1974). For more recent pronouncements of this statement, see, Neurovision Med. Prods. v. NuVasive, Inc., 494 F. App’x 749, 751 (9th Cir. 2012) (quoting Casual Corner, 493 F.2d at 712); Quiksilver, Inc. v. Kymsta Corp., 466 F.3d 749, 762 (9th Cir. 2006).
[42] Planetary Motion, 261 F.3d at 1196 (“In general, uses that are de minimis may not establish trademark ownership rights.”); Allard, 146 F.3d 350 at 359 (“Trademark rights are not created by sporadic, casual, and nominal shipments of goods bearing a mark.” (quoting La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1274 (2d Cir. 1974)); Major League Baseball Properties, Inc. v. Opening Day Prods., 385 F. Supp. 2d 256, 265 (S.D.N.Y. 2004) (“[U]se of the mark . . . [must be] deliberate and continuous, not sporadic, casual or transitory.” (quoting La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1271 (2d Cir. 1974))); Larsen v. Terk Techs. Corp., 151 F.3d 140, 146 (4th Cir. 1998).
[43] Chere Amie, 2002 U.S. Dist. LEXIS 4950 at *12 (“Whether a trademark has been used in commerce is a question to be determined on a case by case basis, considering the totality of the circumstances surrounding the alleged use of the mark.”) (citing Johnny Blastoff, Inc. v. L.A. Rams Football Co., 188 F.3d 427, 433 (7th Cir. 1999)).
[44] No. 00 CIV. 7909 (DLC), 2001 U.S. Dist. LEXIS 10253 (S.D.N.Y. July 23, 2001).
[45] 293 F. 344, 351 (2d Cir. 1923).
[46] 110 U.S.P.Q. 142 (Comm’r of Patents 1956).
[47] 121 U.S.P.Q. 102 (T.T.A.B. 1959).
[48] 251 F. Supp. 362 (E.D. Va. 1965), aff’d, 401 F.2d 179 (4th Cir. 1968).
[49] 311 F. Supp. 1261, 1270 (S.D.N.Y. 1969).
[50] 495 F.2d 1265, 1272 (2d Cir. 1974).
[51] 31 U.S.P.Q.2d 1768, 1774 (T.T.A.B. 1994).
[52] 915 F. Supp. 639 (S.D.N.Y. 1996).
[53] 991 F. Supp. 1012, 1019 (N.D. Ill. 1998).
[54] 186 F.3d 311 (3d Cir. 1999).
[55] 188 F. Supp. 2d 1369, 1378 (S.D. Ga. 2002).
[56] Momentum Luggage, 2001 U.S. Dist. LEXIS 10253, at *21 (emphasis added).
[57] Custom Vehicles, Inc. v. Forest River, Inc., 476 F.3d 481, 486 (7th Cir. 2007).
[58] See Anne Gilson Ladonde, Gilson on Trademarks § 3.02[9] (“As more and more bona fide public trademark use is made and increasing sales and advertising under the mark show a degree of consumer acceptance, legal rights become stronger and stronger.”).
[59] Id.
[60] See, e.g., Chance, 242 F.3d at 1157 (holding that “where a mark has been placed on goods, a single sale or shipment may be sufficient to support an application to register the mark, providing that [the] shipment or sale . . . is accompanied . . . by activities which . . . tend to indicate a continuing effort or intent to continue such use and place the product on the market on a commercial scale within a time demonstrated to be reasonable in the particular trade.” (citing Hydro-Dynamics, Inc. v. George Putnam & Co., 811 F.2d 1470, 1472–74 (Fed. Cir. 1987))); Custom Vehicles, 476 F.3d at 485–86; Chere Amie, 2002 U.S. Dist. LEXIS 4950, at *11–12.
[61] White, 108 F.3d at *2 (“This court has yet to set any bright line rules concerning the quantum and nature of use necessary to constitute an ‘ordinary use in trade’ under the . . . Act.”).
[62] See, e.g., Electro Source, LLC v. Brandess-Kalt-Aetna Grp., 458 F.3d 931, 940 (9th Cir. 2006) (“Evaluating whether a use is in ‘the ordinary course of trade’ is often an intensely factual undertaking.”); Johnny Blastoff, Inc. v. L.A. Rams Football Co., 188 F.3d 427, 433 (7th Cir. 1999) (“The determination of whether a party has established protectable rights in a trademark is made on a case by case basis, considering the totality of the circumstances.”) (citing New West Corp. v. NYM Co. of Cal., Inc., 595 F.2d 1194, 1200 (9th Cir. 1979) cert. denied, 528 U.S. 1188 (2000).
[63] Clorox, 108 U.S.P.Q.2d at *8.
[64] Id. at 2.
[65] Id. at 2–4.
[66] Id. at 5.
[67] Id.
[68] Id. at 5–6.
[69] Clorox, 108 U.S.P.Q.2d at *5–6.
[70] Id. at 9.
[71] Id. (internal quotation marks omitted).
[72] Id.
[73] Id. at 9–10.
[74] Id. at 10.
[75] Clorox, 108 U.S.P.Q.2d at *11.
[76] Referred to in this note as the “bling mark.”
[77] Gameologist, 838 F. Supp. 2d at 149.
[78] Id. at 149, 153 n.4. As the trademark application filed by the plaintiff was an intent-to-use application, the plaintiff divided its application so a registration would issue for the bling mark in relation to board games. As such, no trademark registration was obtained for the bling mark in relation to “lottery tickets.”
[79] Id. at 147. The plaintiff also sued for a variety of related claims including false designation of origin, unfair competition and false advertising under the Lanham Act. The plaintiff alleged claims under New York common law for unfair competition, passing off, breach of contract, unjust enrichment and quantum meruit.
[80] Id. at 152–54. To succeed on a federal claim for trademark infringement the plaintiff must establish that “(1) it has a valid mark that is entitled to protection under the Lanham Act; and that (2) the defendant used the mark, (3) in commerce, (4) in connection with the sale . . . or advertising of goods or services, 15 U.S.C. § 1114(1)(a), (5), without the plaintiff’s consent.”1-800 Contacts, Inc. v., Inc., 414 F.3d 400, 406–07 (2d Cir. 2005) (internal quotation marks omitted) (citing Time, Inc. v. Petersen Publ’g Co., 173 F.3d 113, 117 (2d Cir. 1999)); see also Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 142 (2d Cir. 1997). Only element one has been discussed as the remaining elements are not relevant to the use requirement which is the focus of this paper.
[81] Gameologist, 838 F. Supp. 2d at 151.
[82] Id.
[83] Id.
[84] Id.
[85] Id. at 155.
[86] Id. at 147.
[87] Gameologist, 838 F. Supp. 2d at 155–56.
[88] Id. at 155 (emphasis added).
[89] Id.
[90] Id.
[91] Id. at 156.
[92] Id.
[93] As noted earlier in this paper, the Board stipulated “sales” must still be made, stating that the “Applicant’s position is in conflict with the clear and plain statutory definition of use in commerce.” Clorox, 108 U.S.P.Q.2d at *9 (internal quotation marks omitted); see also Scorpiniti v. Fox TV Studios, Inc., 918 F. Supp. 2d 866 (N.D. Iowa 2013) (“The language of the statute . . . makes plain that advertisement and actual use of the mark in commerce are required . . . .” (quoting Aycock Eng’g, Inc. v. Airflite, Inc., 560 F.3d 1350, 1360 (Fed. Cir. 2009))).
[94] Id. at 9–10.
[95] See Rescuecom Corp. v. Google, Inc., 562 F.3d at 133, supra note 12.
[96] But cf. Zazu Designs v. L’Oreal S.A., 979 F.2d 499, 503 (7th Cir. 1992) (stating that “[c]ourts have read ‘used’ in a way that allows firms to seek protection for a mark before investing substantial sums in promotion.”). Zazu Designs then cites to a 1968 pre-TRLA decision, Fort Howard Paper Co. v. Kimberly-Clark Corp., 390 F.2d 1015 (CCPA 1968), in support of this proposition.
[97] S. Rep. 100-515, 100th Cong., 2d Sess., p 44 (Sept. 15, 1988); see also Part I of this note which discusses the legislative history in more detail.
[98] See Part I of this note.
[99] Cf. Bell v. Streetwise Records, Ltd., 640 F. Supp. 575, 580 (D. Mass. 1986) (stating in relation to trademark use, albeit in a priority dispute, that “[I]t is not required that a product be an instant success the moment it hits the market, [but] its usage must be consistent with a present plan of commercial exploitation.” (internal quotation marks omitted) (quoting La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1273 (2d Cir. 1974))).
[100] Gameologist, 838 F. Supp. 2d at 155.
[101] See White, 108 F.3d at *2
[102] See Kathreiner’s Malzkaffee v. Pastor Kneipp Medicine Co., 82 F. 321, 326 (7th Cir. Ill. 1897) (“[I]t is . . . not necessary, . . . that a trade in an article should be fully established, in the sense that the article be widely known, . . . . Otherwise it might be impossible, with respect to a valuable and desirable article or product of manufacture, designated by a particular brand or in a particular manner, ever to establish a trade.”).
[103] Gilson Ladonde, supra note 60, at§ 3.02[8][b][ii] (discussing the commercial use standard).
[104] Id.
[105] Id.
[106] Id.
[107] In Australia, the word trademark is spelled as two words, “trade mark.” See Trade Marks Act 1995 (Cth) (Austl.). For the purposes of consistency, the author has used the American spelling throughout this note.
[108] For example, in Australia the meaning of “trade” encompassed in the phrase “use in the ordinary course of trade” has a much wider meaning than the sale or transportation requirement under the “use in commerce” definition. See, e.g. Angela Christou v Tonch Pty Ltd [2008] ATMO 24, 22 (“The term ‘trade’ . . . is undoubtedly a wide one. It encompasses a wider range of commercial transactions than the actual sale and purchase of marked goods.” (quoting Oakley Inc v Franchise China Pty Ltd [2003] FCA 105; (2003) 58 IPR 452, 459)); Moorgate Tobacco Co. Limited v Philip Morris Limited and Another, [1983-1984] 156 CLR 414, 433 (“it is not necessary that there be an actual dealing in goods bearing the trade mark before there can be a local use of the mark as a trade mark.”); Malibu Boats West Inc v Catanese [2000] FCA 1141, [27] (“While the mark must be used for the purpose of indicating a connection in the course of trade, this does not mean that any actual trade or dealing in the goods is required.”).
[109] See, e.g., Angela Christou [2008] ATMO 24, 22 (holding that use will “probably amount” to trademark use where a mark owner demonstrates that “it is committed to supplying marked goods to persons prepared to purchase them, activities preliminary to the actual commencement of selling the goods, such as the distribution of marked samples and marked brochures to agents, so that they could show them to prospective customers in soliciting business . . . .” (quoting Oakley, Inc. v Franchise China Pty Ltd (2003) 58 IPR 452, 459)).
[110] Australian courts having consistently held for decades that very minimal use of the trademark is required to prove use under Australian law. See, e.g., Re New Atlas Rubber Co. (1918) 35 RPC 269; Seven-up Co. v. O.T. Ltd (1947) 75 CLR 203, 211; Aston v. Harlee Manufacturing Co. (1960) 103 CLR 391, 400; Thunderbird Products Corp v Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592, 600.
[111] Buying Systems (Aust) Pty Ltd v Studio SrL [1995] FCA 1063; Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261, 40.
[112] In order to fit within this category of use, the approach taken by courts in Australia is that a mark owner must have gone beyond simply considering or investigating whether to use a trademark and must have carried its intention to use the mark into effect. See Woolly Bull Enterprises, [2001] FCA 261, 40 (“[T]he owner will not use its mark unless it has so acted to show that it has gone beyond investigating whether to use the mark and beyond planning to use the mark and has got to the stage where it can be seen objectively to have committed itself to using the mark, that is, to carrying its intention to use the mark into effect.”).
[113] In Woolly Bull Enterprises, the court held “[T]he owner will not use its mark unless it has so acted to show that it has gone beyond investigating whether to use the mark and beyond planning to use the mark and has got to the stage where it can be seen objectively to have committed itself to using the mark, that is, to carrying its intention to use the mark into effect.” [2001] FCA 261, 40.
[114] For an example of a case that found that conduct fell within this category, see Buying Systems, [1995] FCA 1063. In Buying Systems, the mark owner had applied for a trademark in respect of magazines. Evidence was filed showing the mark owner had obtained business cards and letterheads bearing the mark and that it had solicited third parties to advertise in the magazine. Although these activities could not constitute a sale of the goods, the activities were held to demonstrate an objective commitment to use the trademark.
[115] This is assuming the applicant in Clorox was ready to accept an order to build one of its custom-made products. The decision did not specifically discuss this issue, but there is nothing in the decision to suggest otherwise.
[116] An intent to use application is based on an applicant’s intent to use the mark at a future date. Lanham Act § 1(b), 15 U.S.C. § 1051(b).
[117] See, e.g., La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1272 (2d Cir. 1974) (“It is true, . . . that trademark rights have often been upheld in spite of modest sales programs . . . [where] the trademark usage, although limited [is] part of an ongoing program to exploit the mark commercially.” (internal citations omitted)).
[118] The approach taken by courts in Australia is that use of a trademark in advertising must be concurrent with the placing of the goods on the market. See, e.g., John Toh v Paris Croissant Co. Ltd [2010] ATMO 34, 11 (“An advertisement on its own does not amount to trade mark use but may amount to preparations for use if the [goods] are concurrently available.”).
[119] Gilson Ladonde, supra note 60, at§ 3.02[8][b][ii] (discussing the commercial use standard).
[120] Id.
[121] Id.

Restoring Order in European Patent Law: A Proposal for the Reintroduction of the Substantive Patent Provisions of the Unitary Patent Package into EU Law

Restoring Order in European Patent Law: A Proposal for the Reintroduction of the Substantive Patent Provisions of the Unitary Patent Package into EU Law
By Michael J. Crowley* A PDF version of this article is available for download here.  


Europe is on the verge of instituting a uniform patent regime that will change the landscape of patent litigation in twenty-five member countries. The unitary patent package will include a European patent with unitary effect (“unitary patent”) and the creation of a Unified Patent Court (“UPC”). Patentees will no longer have to litigate in each member country; a single litigation will be binding throughout all of the participating countries.[1] The unitary patent will be effective in all participating member states, and the UPC will have jurisdiction throughout the same. The UPC will apply the same laws of infringement and invalidity regardless of where infringement or litigation occurred. The outcome of litigation, whether it is a finding of infringement or invalidity, will be applicable throughout the entire jurisdiction. The new regime is the product of many compromises and is an even more remarkable achievement in light of the controversy surrounding its enactment. In particular, patent practitioners, academics, and judges debated the inclusion of Articles 6 through 9 in the regulation implementing the unitary patent (“UPR”).[2] These articles constituted the substantive patent provisions. They defined the rights that the unitary patent confers, including the laws on direct and indirect infringement, patent exhaustion, and defenses to infringement.[3] Inclusion of these provisions in the UPR would have made them a part of European Union (“EU”) law, and therefore subject to the European Court of Justice (“ECJ”). The groups opposed to the Articles’ inclusion feared that ECJ oversight would eliminate the benefits of the patent system by slowing patent litigation and increasing costs.[4] Proponents of the Articles’ inclusion focused on a legal argument based on the requirements of the Treaty on the Functioning of the European Union (“TFEU”).[5] The EU decided to remove the Articles from the UPR and put them in the international agreement that established the UPC, called the Agreement on a Unified Patent Court (“UPCA”). The Article’s move from the UPR to the UPCA removed the substantive patent provisions from EU law and from the ECJ’s jurisdiction. This note argues that the EU should not have removed the substantive patent provisions from the UPR and that their removal will have an unintended negative effect for the UPC. Part I looks at the relevant history and structure of the European patent system. Part II explores the probable consequences of removing the patent provisions. These probable consequences include: first, the UPC’s judicial isolation diminishing the quality of its jurisprudence; second, the exclusion of patent law from the rest of EU law damaging both patent and non-patent law because it removes the ability to balance the needs of different areas of law; and third, the harm to the European legal system because of the manner in which the removal of the provisions occurred. The Federal Circuit serves as a model for how an isolated specialist court can avoid these problems. Part III shows that the groups opposed to the provisions exaggerated their concerns over the inclusion of the substantive patent provisions in the UPR. The inclusion of the substantive patent provisions in EU law will provide benefits to the European patent community and EU law that outweigh any negative effects.

I. History and Structure of the Unified Patent Court and Unitary Patent

The creation of a European patent law has followed a convoluted route, and its structure reflects this process. It is necessary to understand the history of European patent law, the UPC’s fit within the EU judiciary, and the structure and function of the UPC in order to understand the effects of removing the substantive patent provisions from the UPR.

A. History of European Patent Law

The European Union has tried and failed to create a uniform European patent regime for over fifty years.[6] Beginning in 1973, Europe took the first step toward patent harmonization—the European Patent Convention (“EPC”).[7] The EPC created the European patent and the European Patent Organization (“EPO”).[8] A European patent, which the EPO issues, is not a single patent but a bundle of national patents: one patent for each of the countries that the patentee designates on his application to the EPO.[9] The EPC defined many substantive patent terms for patent prosecution, including patentability, inventive step, and novelty.[10] Though the EPC represented a significant step toward a unified European patent law, many aspects of patent law remain fragmented. A patentee has to enforce her patent in each of the member nations of the EU, and she incurs significant litigation costs for every jurisdiction where she enforces her rights.[11] In addition to EU member-states, eleven non-EU countries have also signed onto the EPC, further compounding the issues associated with geographic fragmentation.[12] The EPC is not a part of EU law, and the EPO is not an EU institution. Therefore, the EPC is outside of the ECJ’s jurisdictional reach.[13] In 1975, the European Economic Community attempted to create a Europe-wide unitary patent as well as a uniform set of rules governing the effect of the unitary patent. Ultimately, not all of the members ratified the agreement, and the attempt to create a unitary patent failed.[14] Europe took the next step in the development of European patent law, the creation of the unitary patent package, in stages during 2012 and 2013, and it will go into effect four months after thirteen countries, including Germany, France, and the UK, ratify the UPCA.[15] The patent package includes the UPC and the unitary patent. The UPC and its related agreements and legislation created a single court with jurisdiction over all contracting member states. The unitary patent is a patent that is valid and enforceable throughout all contracting member states.

B. How the UPC Fits into the EU Judiciary

The UPC is not an EU institution but an international court common to the member states that have acceded to the UPCA.[16] This means that the relationship between the UPC and the ECJ is that of a national court to a European one. It is necessary to explain the structure of the EU judiciary in order to understand the contours of this relationship. The Court of Justice of the European Union (“CJEU”) is the judicial body of the European Union. Three courts comprise the CJEU: the Civil Service Tribunal, the General Court, and the Court of Justice or European Court of Justice.[17] Of these, the ECJ is the only court that the UPC would deal with directly.[18] The ECJ is not an appellate court to the national courts, and individual parties cannot appeal decisions from the national courts to the ECJ.[19] Instead, the national courts may refer questions of interpretation of EU law to the ECJ, which then responds with its interpretation. The ECJ does not resolve factual disputes.[20] If the national court is the court of last resort for the case, then the court must refer the novel question to the ECJ.[21] The ECJ’s opinion is binding on the national court, which helps to ensure uniform application of EU law by the national courts.

C. The Structure and Function of the Unified Patent Court and the Unitary Patent

Three substantive legal documents provide the legal basis for the unitary patent package: the UPR,[22] which establishes the unitary patent, the regulation regarding the applicable translation requirement,[23] and the UPCA, which is an international agreement between the participating member states and deals with the structure, function, and make-up of the UPC as well as the substantive rights conferred by the unitary patent.[24] These documents grant the UPC exclusive jurisdiction over unitary patents.[25] Patentees have the right for the first seven years to opt out of the UPC’s jurisdiction for their European patents.[26] The UPC will have jurisdiction over non-opted out European patents.[27] The UPC’s jurisdiction over European patents is not exclusive, and a litigant can bring the case in a national court, as long as there is not a pending case in the UPC.[28] The UPC will not have jurisdiction over European patents for which holders have exercised their opt-out right, or over national patents.[29] The UPC includes the Court of Appeals and the Court of First Instance (“COFI”).[30] The Court of First Instance has a Central Division in Paris, and two additional branches of the Central Division in London and in Munich.[31] In addition to the Central Division, the Court of First Instance comprises of an as-of-yet undetermined number of local[32] and regional divisions.[33] A member state can have multiple local divisions and be a member of a regional division.[34] The local and regional divisions do not have static judges that consistently sit on a court, and the judges of a local or regional division are not necessarily from the same nation or group of nations as the division.[35] Rather, a COFI will have a panel of three judges—its composition determined by its operational history: If a COFI sees fewer than fifty patent cases over the preceding year, then the panel will include one judge who is a national of the country in which the division is located, and two judges who are nationals of a different country.[36] Litigants will be able to request that the panel include a single technically qualified judge. The president of the COFI will chose the technically qualified judge from a pool of qualified judges.[37] The parties can appeal the decision of the COFI to the Court of Appeals in Luxembourg on matters of law.[38] The Court of Appeals consists of a panel of five judges.[39] Three of the judges are legally qualified and are from differing countries. The other two judges are technically qualified judges in the relevant field.[40] All of the judges of the UPC will participate in a uniform training program to educate them on the substantive and procedural aspects of the new European patent law.[41] Many questions remain about the structure and function of the UPC. The UPC’s case law will likely answer these questions during its formative years. However, the ambiguity surrounding some of the most basic aspects of litigation, such as the average duration and frequency of bifurcation,[42] make any discussion of the UPC challenging. As the UPC progresses, it will provide more answers, and the patent community’s understanding of the UPC will increase.

II. The Benefits of Including the Substantive Patent Provisions in EU Law

The removal of the substantive European patent provisions from the UCR will create problems for the European patent community. These problems will arise from both the court’s judicial isolation, as well as the effect of placing control over substantive patent law in the hands of the individual nations. The reintroduction of the substantive patent provisions into EU law could lessen the impact of these problems for the UPC.

A. Courts Benefit from Interacting with Other Courts’ Interpretations and Choices

The quality of the UPC’s jurisprudence will suffer from the Court’s isolation from the EU judiciary. An isolated court is prone to both ossification and oscillation. The U.S. Court of Appeals for the Federal Circuit demonstrates this effect; its judicial isolation has reduced the quality of patent law in the United States.[43] The Federal Circuit provides a look at the UPC’s future and a model for potential solutions. Congress established the Federal Circuit in 1982 with the enactment of the Federal Courts Improvement Act of 1982.[44] The Federal Circuit was the culmination of years of study and legislative efforts. It solved a number of problems in the judiciary, including increasing caseloads at the regional circuit courts and the prevalence of appellate forum shopping in patent law.[45] Congress created the Federal Circuit to reduce the circuit courts’ caseloads without increasing internal circuit inconsistency or circuit splits. They also aimed to reduce forum shopping by creating more uniformity and consistency in patent law.[46] Efficiency and uniformity are also the two most prominent justifications for the UPC.[47] The Federal Circuit is an appellate court that, unlike the UPC, does not have a specialized trial court component.[48] Therefore, the Federal Circuit hears appeals from non-specialist trial courts, and is appealable to the non-specialist Supreme Court.[49] For its first fifteen years, the Federal Circuit was the de facto source for the final word on patent law. The Supreme Court took very few patent cases and the ones that it did dealt with procedural issues.[50] This has completely reversed in the last decade, and the Supreme Court has taken twenty-seven patent cases from the Federal Circuit in the last thirteen years.[51] The appeals have been on a wide range of issues, including patentable subject matter, non-obviousness, and injunctive relief.[52] Conversely, the UPC will be a national court of each of the contracting member states.[53] This means that the relationship between the UPC and the CJEU will not be the same as between the Federal Circuit and the Supreme Court. The UPC must refer questions of EU law to the ECJ,[54] and the ECJ will answer the referred questions by interpreting EU law. However, the ECJ does not apply law to the factual situation.[55] An individual’s right of direct access to the ECJ is extremely limited, and parties have no say as to when a national court refers a question of EU law to the ECJ.[56]
1. The Effect of Isolation on the Federal Circuit’s Jurisprudence
The Federal Circuit’s structure has created problems that Congress did not foresee. The features that Congress considered the Federal Circuit’s biggest assets, such as its specialized nature and ability to adjudicate patent cases separate from other courts, have dampened the quality of its patent jurisprudence. Three features demonstrate the effect that the Federal Circuit’s isolation has had on the quality of its jurisprudence: its lack of doctrinal consistency, its high rate of reversal at the Supreme Court, and its reduction of patenting standards to harmfully low levels. While a court’s jurisprudence is difficult to quantify, these three factors indicate serious issues.
i. Doctrinal Inconsistency
The Federal Circuit’s jurisprudence exhibits high levels of doctrinal inconsistency. Doctrines such as inequitable conduct have swung from one extreme to another. Originally, inequitable conduct was broader than common law fraud and was relatively easy to prove.[57] However, in a 2011 en banc decision, the Federal Circuit radically reversed this position to combat the “absolute plague” that inequitable conduct had become.[58] The history of the non-obviousness doctrine exhibits the same fluctuation.[59] Claim construction has had an even more dangerous trajectory. Claim construction doctrine has darted about without coherent direction, almost entirely dependent on panel composition.[60] The normal tool for resolving intra-circuit splits, an en banc hearing, has proven completely unsuccessful in the Federal Circuit.[61] This doctrinal oscillation comes from the Federal Circuit’s failure to self-correct and address problematic doctrines.[62] In order to correct, the Court can replace old doctrines with radically new but equally untested doctrines, as with inequitable conduct, or, if the Court cannot agree on an alternative, individual camps within the Court espouse competing doctrines that they apply in their panels, as with claim construction.[63] In contrast, the U.S. circuit court system at large has built a self-correction mechanism. If a court has made a mistake, that opinion does not have precedential effect for a different circuit, and the new court will decide the issue on new facts.[64] In general, this leads to a number of circuits adopting the ‘correct’ interpretation. Ideally, the outlier circuits change their view based on the applied decisions of the other circuit courts.[65] When the Federal Circuit makes a doctrinal shift, it affects the entire nation. If the court later determines that the decision was wrong, they can either follow stare decisis or upturn the entire system and take another blind stab.[66] They do not have the benefit of competing courts testing out doctrinal theories. The Federal Circuit’s isolation, which was supposed to create a uniform and efficient system, is thus lowering both the quality and the predictability of patent law.
ii. Reversals
For the first decade of the Federal Circuit’s existence, the Supreme Court rarely took appeals from it and even more rarely reversed it.[67] This low rate of reversal has not continued, and in the last thirteen years, the Supreme Court has taken twenty-seven appeals from the Federal Circuit, and it has completely reversed the Federal Circuit’s opinion more than 70% of those times.[68] While the change from few reversals to many reversals does not necessarily indicate a decrease in quality over the time as much as a change in Supreme Court policy, the current high rate of reversal does seem to indicate an issue of quality with the Federal Circuit’s jurisprudence. The Supreme Court’s recent reversals tie into the issue discussed above. The Federal Circuit cannot effectively and efficiently self-correct, and therefore the Supreme Court is the only option. This, then, is both a symptom of the Federal Circuit inability to work out patent law problems without the intervention of the Supreme Court, and a demonstration of how the Supreme Court can work as a partial solution to the Federal Circuit’s isolation.
iii. Patent Friendly
The Federal Circuit’s jurisprudence has been criticized for being too patent friendly.[69] Its jurisprudence has decreased the standards of patentability, resulting in patent thickets.[70] This is not true of all areas, but some doctrines have received particular scorn for lowering the bar of patentability, such as the Federal Circuit’s teaching-motivation-suggestion test. That test set the standard for combining two pieces of prior art to invalidate a patent as obvious as whether the prior art included teachings, suggestions, or motivation to combine the art. This resulted in the U.S. Patent and Trademark Office granting patents that were obvious when compared to the common knowledge of the field.[71] Many of the Federal Circuit doctrines that the Supreme Court has overruled in recent years were extremely patent friendly, and the Supreme Court has had a moderating effect on the Federal Circuit’s jurisprudence.[72] For example, the Supreme Court raised the bar of patentability and potentially reduced patent thickets by overturning the teaching-motivation-suggestion test.[73] The Federal Circuit’s narrow patent-friendly jurisprudence shows insufficient regard for the purposes of patent law and is symptomatic of the heart of the problem with specialist courts. In general, the Federal Circuit has escaped capture by either the patent bar or interested parties largely because the parties who would be the ones capturing are often on both sides of cases and therefore do not uniformly benefit from strictly pro-patentee or pro-defendant doctrines.[74] Regardless, the Federal Circuit has been undeniably pro-patent, partially because of the role that it plays within the U.S. patent system.[75] For years, the judges of the Federal Circuit viewed themselves as defenders of patents, not as adjudicators of a balanced patent system.[76] Patent rights took on moral tones, and the focus went from stimulating innovation to supporting patents for patents sake.[77] Specialized patent courts in general are at risk of following a similar pattern.[78] These factors demonstrate an issue with the quality of the Federal Circuit’s jurisprudence. The Supreme Court provides some of the benefits of a generalist peer court, such as increased dialogue, honing of legal arguments, the ability to test doctrines, and the chance to make law based on different factual situations. For example, Supreme Court Justices have made the point that a stronger patent law does not necessarily equate to a better patent law.[79] The relationship between the Supreme Court and the Federal Circuit has been contentious in the last decade, and this has resulted in a less than ideal adjudicatory environment.[80] Nonetheless, the Supreme Court’s practice of issuing guidelines, norms, and policy has served to break up unnecessarily rigid Federal Circuit rules and has served as a shot in the arm to patent jurisprudence.[81] While the Supreme Court’s involvement in patent law has served to increase uncertainty and has created some chaos, it has also alleviated some of the difficulties that an isolated court poses.
2. The Effect of Isolation on the UPC and Potential Solutions
The idea that courts suffer in isolation is not limited to the Federal Circuit. It applies to isolated specialized courts in general and therefore to the UPC. Indeed, the UPC will face challenges that are more significant than the Federal Circuit’s because the UPC has much weaker judicial relationships. The chance for either ossification or oscillation is great. The UPC will be working in a vacuum, completely removed from other legal opinions or policy arguments. Unfortunately, the structure of the EU’s judiciary and the UPC make a circuit system impossible. The COFI cannot provide the necessary simulation and challenge for the UPC to avoid this plight. The same judges will not sit on the same court consistently, eliminating the development of a distinctjurisprudence in a specific COFI court.[82] Additionally, the judges’ knowledge of European patent law will all stem from identical training programs.[83] These measures, which reduce forum shopping and increase uniformity, will also decrease the quality of the UPC’s jurisprudence by removing the COFI courts’ opportunity to become laboratories of independent legal thought. Moving the substantive provisions into EU law would allow the ECJ to provide some benefit to the UPC. The ECJ’s opinions would inject another court’s views into the UCJ’s jurisprudence. It is true that this would create a different dynamic then the relationship that exists between the Federal Circuit and the Supreme Court because the ECJ would not be issuing opinions on questions that the UCP itself has answered officially. Regardless, there would still be many of the same benefits. Additionally, the UCP, in referring questions to the ECJ, could provide its own thoughts and a suggested result to the ECJ.[84] Further, as the line between interpretation and application becomes blurred the relationship between the UCP and the ECJ will become more like the American system. If the UPC could refer questions to the ECJ, then the UCP would try the case, applying previous ECJ opinions to the particular factual situation. If there were a new question of law, the ECJ would answer it with input from the UCP. The UCP would then take the ECJ’s opinion, and apply it as it sees fit. There will be disagreements, and questions might go between the courts multiple times. It is in that process where the benefit of the system lies. More specifically, specialist courts benefit from superior generalist courts. The structure of specialist courts, and the many roles they play, can cause them to become overly narrow in their application of law; a generalist court can help to correct when the specialist court has gone astray. The Supreme Court plays this role for the Federal Circuit by acting as a balance. The Federal Circuit must play two roles that are at times in opposition.[85] It must correctly decide the cases from the district courts, on the facts as they come up. Additionally, it also must take on a quasi-managerial role in patent law and must curate patent law and create doctrines that the trial courts can apply.[86] This role has led the Federal Circuit to adopt standards that are clear and easy to apply, but which result in less than ideal outcomes.[87] While the Supreme Court seldom creates its own standards, the Court has increasingly taken appeals from the Federal Circuit in order to strike down the Federal Circuit’s standards and provide guidance and policy to point the Federal Circuit in a new direction.[88] The ECJ could provide a similar role for the UCP. The Court of Appeals of the UPC will not simply be deciding individual cases, but will be promulgating doctrines for the COFI to follow.[89] The ECJ would be able to provide high-level guidance and policy directions to the UPC, specifically to the Court of Appeals. This is ultimately a question of balance. Specialized courts tend in the direction of bright-line rules and narrow policy goals. A higher generalist court, such as the ECJ, can balance that inclination.

B. Isolating Patent Law from EU Law Will Have Negative Consequences for Patent Law and Other Areas of Law

Patent law and the rest of European law are not easily separable, and the thick dividing line between them is a false one.[90] In contrast, while the Federal Circuit has exclusive jurisdiction of patent law, the line between patent law and non-patent law disappears at the Supreme Court. This allows the Supreme Court to consider the legislative policy goals of fields of law that are in tension with one another. First, patent law suffers from narrow specialization. As we have seen in the United States, a narrow-minded pro-patent policy can ultimately stifle innovation.[91] Specialization produces “tunnel visions, with judges who are overly sympathetic to the policies furthered by the law that they administer or who are susceptible to ‘capture’ by the bar that [regularly] practices before them.”[92] The goal of patent law, increased innovation, is not without its costs. The imposition of a government monopoly is an extreme action—one that the courts must temper with an eye toward moderation.[93] The purpose of patent law is to stimulate innovation, and it cannot accomplish this without a working relation to other areas of law.[94] The various disciplines of intellectual property law work together to promote innovation, and courts must consider disciplines other than patent law areas before they can determine whether a patent policy or law will actually promote innovation.[95] Patent law is at its most effective when working in concert with all government tools to stimulate innovation.[96] For example, many companies and universities make use of both trade secret and patent law, and the relationship between the two fields dictates how companies use them.[97] Courts and legislators must be aware of such nuances in order to make decisions about patent law and policy that encourage innovation.[98] There is no judicial body that can correct the UPC’s mistakes, even if there is wide consensus that the UPC’s doctrine should change. The EU’s legislative bodies do not provide the opportunity for correction either. Changing the UPC would require the amendment of an international treaty as well as a Council Regulation.[99] This makes the need for an appellate body overseeing the UPC even more important. In addition to having a negative effect on patent law, the segregation of patent law away from other areas of law has a negative effect on those other areas. There are many examples of areas that touch on patent law, such as copyright, trademark, commercial, and contract law. One of the most high profile areas in Europe is EU competition law. Competition law and patent law are intrinsically related. European competition law works to eliminate market obstacles, including the eradication of monopolies.[100] Patent law is concerned with the grant of government-backed monopolies. These two goals are inherently at odds, and a careful balancing between the two policies is necessary.[101] In the United States this balancing is accomplished by the legislature and, most directly, by the Supreme Court.[102] In Europe, neither the legislative nor the judicial bodies can perform this role. It will be extremely difficult to make any changes to the European patent system because of European patent law’s complex statutory scheme. Additionally, considering that the European Commission, which has no say on UPC law, controls the implementation of competition policy, any synergistic collusion is unlikely.[103] There is also no court applying both patent and competition law to balance the competing interests. While the ECJ will consider patent law while evaluating competition law claims, the UPC has no jurisdiction, expertise, or inclination to consider competition law while adjudicating patent law. This is not only a general concern; patent law can negatively affect EU competition laws in ways that the EU will be unable to control. For example, the scope of a patent and the patentee’s rights will affect how the national and European courts define the market in competition law, one of the most important steps in a competition case. In a competition case, the relevant market is a combination of the product market, which are the products that are interchangeable with the product at issue and the geographic market.[104] A significant factor in the determination of the relevant market is the geographic extent of patent protection.[105] Competition authorities will often rely on the territorial scope of protection when determining the market, because the existence of the patent rights make the territory covered by the right sufficiently different from neighboring territory.[106] The introduction of the unitary patent could lead to a court defining the market as the entire area covered by the patent for a number of competition cases.[107] This significant broadening of the market definition, from national to continental, would have a serious effect on parties attempting to prove abuse of dominance.[108] Abuse of dominance becomes harder to prove the larger the market is.[109] Based on what rights the UPC assigns to the unitary patent, the definition and ease of proof for abuse of dominance can change throughout Europe. Therefore, a significant factor in determining whether an abuse of dominance has occurred will be in the hands of the UPC, an international court. Patent law will affect other areas of competition law as well, such as vexatious litigation. A national court would hear a claim of vexatious litigation, but the outcome of the case will depend on the interpretation of the patentee’s right as determined by the UPC.[110] It is absurd to put a court in charge of patent issues that have significant effect on other areas of law without empowering it to consider them. The potential for the UPC to negatively affect other areas of law is particularly insidious because its specialist nature blinds it to non-patent needs and arguments. It is necessary to have the ECJ balancing the EU’s ultimate interest and interpreting these areas of patent law for the courts.

C. Removing the Substantive Patent Provisions Undermines the EU Legal System

The removal of the substantive patent provisions from the UPR undermines the EU legal system, upsets the balance of power between the EU and the nation states, and further increases the EU’s democratic deficit. The legal authorization for the unitary patent package, including the UPR, comes from Article 118 TFEU, which states that the EU “shall establish measures for the creation of European intellectual property rights to provide uniform protection of intellectual property rights throughout the Union and for the setting up of centralised Union-wide authorisation, coordination and supervision arrangements.”[111] Through the unitary patent package, the EU does not establish European IP rights, but actually divests the power to do so to the member states. The divestment of control over the EU’s Treaty-based competences sets a dangerous precedent for other areas of law. It blurs the line between EU and national powers and gives the member states the power to amend European patent law. Member states could attempt this in other areas of law and potentially weaken gains made by the EU towards increased harmonization and control. It is true that the EU could take back the control of patent by amending the current provision which obliquely refers to the UPCA (by way of reference to national law), but this is a less than ideal situation for two reasons. First, if the EU amends the UPR, which it would have to do in order to amend substantive patent law, the amendment would wipe out the body of law created by the UPCA and UPC by cutting the UPCA out of the picture. The EU should avoid this messy and complicated situation at all costs.[112] Second, regardless of the fact that the EU could potentially amend EU patent law through amendment to UPR, the current situation allows the contracting nations to amend EU patent law with no input from the EU itself, merely by amending the UPCA. The member states can amend substantive European patent law without the EU by amending the UPCA. The removal of the substantive patent provisions also increases the democratic deficit by wrestling power from both the European and national parliaments. Advocate-General Bot’s opinion on the UPR stated that the contracting member states are under an obligation to sign the UPCA. This means that neither the European Parliament nor the national parliaments decided the substantive European patent law. The substantive treaty provisions, embodied in the UPCA, are under the control of the signers of the treaty, since the national parliaments are bound to ratify the treaty once signed. This confusing form of legislation is not in the best interests of the EU. The unitary patent package has come into existence by circumventing the European Parliament, the ECJ, and the national parliaments. While its existence is beneficial for Europe, the way that it has come into being is not. The ECJ has not decided the system’s legality yet, but Advocate-General Bot’s opinion on the case upheld the package.[113] Regardless of the ECJ’s decision, the policy behind the package is harmful because it bypasses the correct procedure and creates a precedent of vesting EU powers in the nations.

III. The Predicted Negative Consequences of the Inclusion of the Substantive Patent Provisions Were Exaggerated

The opposition to the inclusion of the substantive patent provisions in the UPR centered on three concerns: referral to the ECJ would create debilitating delays and costs, the ECJ lacked the expertise and experience to decide patent cases correctly, and ECJ review would create instability and uncertainty in European patent law.[114] Some of these concerns have merit and should be a part of the discussion on the provisions inclusion in EU law. However, the negative consequences of the inclusion of the provisions in EU law would not be as significant as implied, and the apocalyptic tone of the original discussion was misplaced.[115] Referral to the ECJ would not destroy the UPC’s achievements in efficiency and cost-savings. This section will look at the three major points of opposition to show that the concerns, while real, should not be dispositive.

A. The Ability for the UPC to Refer Questions of EU Law to the ECJ Will Not Lead to Debilitating Delays or Costs

One of the foremost purposes of the UPC was to create a patent litigation system in Europe that is efficient, cost-effective, and streamlined.[116] Any claim of inefficiency in the ECJ therefore strikes at the heart of the UPC’s purpose. There has been a recent influx of cases at the ECJ, caused by a vast widening of its jurisdiction after the Treaty of Lisbon[117] and the EU’s expansion in Central and Eastern Europe.[118] These new cases have created a backlog and the ECJ has developed a reputation for delays and slow litigation.[119] However, the most recent data from the ECJ shows that these concerns are misplaced, and that the ECJ has largely overcome the worst of its backlog. When the debate over the substantive patent provisions occurred in 2012, there was substantial worry that the ECJ’s delays would steadily worsen each year.[120] In 2012, the ECJ completed 595 cases, while there were 632 new cases.[121] This increased the case backlog to 886 cases. In 2011, the average duration of a reference for preliminary ruling was 16.4 months, up by 0.3 months from 2010.[122] The growing backlog and case duration led to proposals for judicial reform, only some of which the EU has adopted. There is truth in this fear; referral to the ECJ will inherently cause patent litigation to be, on average, longer than if the ECJ was cut out of the picture altogether. This is not necessarily dispositive, though, and it is only a sufficient reason to remove the provisions if the delays are so substantial as to render the system ineffective. There is significant reason to believe that the delays caused by reference to the ECJ would not be fatally long. The data on the ECJ after the decision to remove the substantive provisions provides an optimistic picture. In 2014, the average duration for a reference for preliminary ruling was 15 months.[123] This is the shortest average duration for preliminary rulings in the Court’s history, and a 1.3 month decrease from the 2013 average.[124] Additionally, the case backlog, which stood at 886 in 2012, has now decreased to 787, with the ECJ completing more cases than were filed in both 2013 and 2014.[125] This decrease in caseload has come at a time where the scope and complexities of the ECJ’s jurisdiction has grown rapidly.[126] Trademark law, for example, is a new area of European law that is creating a high number of cases for the CJEU.[127] The ECJ has shown the ability to handle these caseload increases and still make progress on backlog and case duration. There is hope that, as the EU institutes more of the proposed judicial reforms, the duration and backlog will become even smaller.[128] The duration of a European patent case compares favorably with the American system. The UPC’s current Draft Rules of Procedure estimates a duration of 20.5 months for a case to go through trial and appeal.[129] The average duration for the ECJ preliminary ruling is 15 months.[130] Therefore, if a case has a trial at the COFI, an appeal at the Court of Appeals, and a reference to the ECJ, the average duration would be 2 years and 6.5 months. The average time to trial for patent cases in the United States was 2 years and 3.72 months, though some districts had averages as high as 3 years and 8 months.[131] The average appeal to the Federal Circuit, which is available by right, was 11.8 months in 2013.[132] Therefore, the average patent case at the slowest district court takes approximately 4 years and 7.84 months, and the average case takes approximately 3 years and 3.52 months. Compared to the duration of American trials, the length of European trials, even those including a reference to the ECJ, is not catastrophically long. The duration of a European patent trial will ultimately depend on how effectively the UPC itself is able to litigate cases. The ability to reference questions of patent law would not create such catastrophic delays that the system would become unworkable. The estimated duration of a UPC trial plus ECJ reference would still be shorter than the American system, which is widely considered to be successful. In addition to the positive statistics, there is reason to think that the UPC would not have to refer to the ECJ as often as national courts do. A court of final resort, such as the Court of Appeals, is obligated to refer questions of EU law to the ECJ.[133] In any particular case, the national courts ultimately make the decision whether to refer, though the court can be subject to damages for failure to refer a necessary question.[134] National courts are not obligated to refer all questions of EU law though. Under the acte clair doctrine, the national court is not required to refer the question if “the correct application of Community law may be so obvious as to leave no scope for any reasonable doubt as to the manner in which the question is raised is to be resolved.”[135] The acte clair doctrine was established as a way to increase efficiency, as well as rein in the national courts by creating stringent requirements for the use of the doctrine.[136] The acte clair doctrine allows the courts to function as European courts while the ECJ retains control of EU law. The relationship between the UCP and the ECJ will likely be different from the relationship between national courts and the ECJ, and further it is reasonable to expect that the application of acte clair will be different as well. The national courts are not applying their own national law and are theoretically less familiar with the EU law they are applying. Therefore, there must be strict requirements on when they may apply the law without reference to the ECJ. Though the national courts are acting somewhat as proxies of the EU, they are not European Courts.[137] On the other hand, the UPC—though it is technically a national court of each contracting member state—is a European court, with a European reach and a European mindset. Additionally, it will apply law that it is specifically trained and designed to apply. In the case establishing acte clair, the ECJ stated that “the existence of such a possibility [of acte clair] must be assessed in the light of the specific characteristics of Community Law, the particular difficulties to which its interpretation gives rise and the risk of divergence in judicial decisions within the Community.”[138] The application of all of these factors is different for the UPC than for the national courts. The UPC will be a court trained and specialized in patent law, it will be the expert in the interpretation of European patent law, and there is no risk of divergence because the Court of Appeal’s decisions apply throughout all of the contracting member states. The reasons for limiting the application of acte clair do not apply as forcefully to the UPC, in which the need for efficient decisions is heightened. The early stages of the UPC and European patent law would likely include a significant number of referrals, but once the ECJ and UPC lay down the basic doctrines it is likely that the UPC would make fewer referrals than the average national court.[139] This will allow for efficient patent litigation and for a more independent UPC. Allowing references to the ECJ will increase the time and cost of patent litigation, but the increases will not be as large, nor will the effect be as catastrophic, as was previously predicted. The anticipated case duration is favorable when compared to the American patent litigation system, and there is no reason to think that the delays inherent in ECJ reference will be unduly deleterious to European innovation.

B. The ECJ is Competent to Render Decisions in Patent Cases Despite its Lack of Experience in European Patent Law

The groups opposed to the provisions argued that the ECJ’s opinions would lower the quality of European patent law because of their unfamiliarity with patent law. As discussed extensively above, a generalist court that does not focus solely on patent law is beneficial for the development of patent law. Additionally, the idea that the ECJ is incapable of understanding patent law is ludicrous.[140] Though the patent community often holds up patent law as an especially complex area of law,[141] it is hard to imagine that it is exponentially more difficult to understand then the areas with which the ECJ currently deals, including EU citizenship law, competition law, and immigration law. The judges on the ECJ have not, as of yet, dealt with European patent cases, as there have been none, but it is irrational to assume that it would be beyond their judicial capabilities. This is especially true since the ECJ would be dealing purely with the legal aspect of the case and not the application of the law to the technical facts of the case.[142] The ECJ frequently has had to deal with new areas of law, including subjects like asylum, policing, and justice.[143] The ECJ’s experience of dealing with the flood of trademark cases, an intellectual property regime that is also new to the ECJ’s jurisdiction, is demonstrative of its ability to adapt to and learn new areas of law that come into its jurisdiction. The ECJ’s history shows a near continual expansion of its jurisdiction. The ECJ has significant institutional experience in learning new areas of law, and there is no reason that patent law would be any different.

C. The ECJ Will Not Substantially Decrease the Predictability or Certainty of the Patent System

Predictability is one of the most important attributes of patent law because it is necessary for innovators to be sure that the patent system will protect their efforts before they invest resources and time.[144] Decisions rendered by the ECJ will apply throughout contracting member states with the same uniformity the UPC’s decisions. Therefore, the issue is not geographic uniformity, but rather the potential for the ECJ to disrupt patent law with unpredictable decisions. Though the ECJ might render some individually unpredictable decisions, its overall effect would be to stabilize the specialist court. The ECJ might create some instability in the early stages of the UPC, but no more than the UPC itself will create. The UPCA instituted a seven-year transition period, which the UPC’s administrative Committee can extend seven more years because of this inherent initial instability.[145] The institution of any new court and legal system will be unpredictable until there are a sufficiently large number of opinions, but that is no reason to remove the ECJ. The ECJ’s positive effect on the quality and stability of UPC jurisprudence would outweigh any additional uncertainty that the relationship between the ECJ and the UPC causes. Admittedly, there is some merit to a few of the arguments against the inclusion of the substantive patent provisions in the UPR. The change would make patent litigation on average slightly slower and it could potentially make the outcome of cases less certain, especially in the initial stages. There is ample evidence though, that the effects of the ECJ would ultimately be slight. Once balanced, the benefits of including the substantive patent provisions in the UPR outweigh the negative costs.


The unitary patent package is a colossal achievement for Europe—the culmination of half a century of negotiation and compromise. The creation of the UPC and the unitary patent is itself an accomplishment. The goals of uniformity and efficiency are laudable, but they should not be the only focus of the unitary patent package. The ultimate goal is to encourage innovation in Europe. When Congress created the Federal Circuit, its goals were similar: uniformity and efficiency in patent law. Lawmakers were willing to create a specialist court because they believed that the benefits would outweigh the costs. The Federal Circuit’s patent jurisprudence over the last quarter of a century shows that this bargain has not worked as intended. The Federal Circuit has created a uniform body of patent laws, but at the cost of quality, nuance, and progress. The European patent community should not make the same mistakes as the U.S. patent community twenty-five years ago. The inclusion of the substantive patent provisions in EU law would likely have some negative consequences, but they would not be as severe as predicted and they are smaller than the benefits. An amendment to the UPR to place substantive patent law back into EU law would benefit patent law, other areas of EU law, and the EU legal structure.
* J.D. Candidate, New York University School of Law, 2015; B.S., Aerospace Engineering, cum laude, University of Florida, 2012. The author would like to thank the Editorial Board of the Journal of Intellectual Property & Entertainment Law, Leah Rosenbaum, and most especially his fiancé, David Matulewicz
[1] Unitary patent – frequently asked questions, European Patent Office (Dec. 13, 2012), faq-636.
[2] Proposal for a Regulation of the European Parliament and of the Council Implementing Enhanced Cooperation in the Area of the Creation of Unitary Patent Protection, COM/2011/0215 final 2011/0093 (COD). For leading examples of the sides of this debate, see Rudolf Kraßer, Effects of an inclusion of regulations concerning the contents and limits of the patent holder’s rights to prohibit in an EU regulation for the creation of unitary European patent protection, EP Law Blog (Oct. 18, 2011),; Winfried Tilmann, The Battle About Art. 68 of the Union-Patent-Regulation, UK Parliament (Feb. 28, 2012),
[3] Agreement on a Unified Patent Court, arts. 6–8, Feb. 19, 2013, 2013 O.J. (C175) 1 [hereinafter Agreement].
[4] Kraßer, supra note 2.
[5] Article 118 of the TFEU requires that “the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall establish measures for the creation of European intellectual property rights to provide uniform protection of intellectual property rights throughout the Union and for the setting up of centralised Union-wide authorisation, coordination and supervision arrangements.” The legal argument is that the empty unitary patent found in the Regulation does not provide “uniform protection” and thus Article 118 TFEU does not authorize it. Without that authorization, the EU would be overstepping its bounds in creating the unitary patent. See Tilmann, supra note 2. Advocate General Bot opposed this argument but the ECJ has not decided the case. Opinion of Advocate General Bot, Spain v. Parliament and Council, Case C-146/13, [2014] E.C.R. I___ (delivered Nov. 18, 2014) (judgment not yet issued).
[6] See generally Kevin P. Mahne, A Unitary Patent and Unified Patent Court for the European Union: An Analysis of Europe’s Long Standing Attempt to Create a Supranational Patent System, 94 J. Pat. & Trademark Off. Soc’y 173, 175 (2012) (detailing Europe’s many attempts to harmonize European patent law).
[7] Id. at 174.
[8] Id. at 173–75.
[9] The European patent is now the European patent without unitary effect. This note will continue to refer to them as European patents, as opposed to unitary patents. Christopher J. Harnett & Amanda F. Wieker, The EU Unitary Patent and Unified Patent Court: Simplicity and Standardization, Challenge, and Opportunity, 25 No. 4 Intell. Prop. & Tech. L.J. 15 (2013).
[10] Mahne, supra note 6, at 174.
[11] Id. at 174–75.
[12] In addition to all twenty-seven European Union member-states, the EPO also includes Switzerland, Liechtenstein, Turkey, Monaco, Iceland, Norway, the Republic of Macedonia, San Marino, Albania, and Serbia. Member states of the European Patent Organisation, European Patent Office (Mar. 10, 2015),; Mahne, supra note 6, at 173–74.
[13] The European Patent Convention, European Patent Office (Nov. 01, 2014),; Gérald Sédrati-Dinet, Academics Confirm Flaws in the Unitary Patent, at 1, available at
[14] Mahne, supra note 6, at 175–76.
[15] Agreement, supra note 3, art. 89.
[16] Id. at 1.
[17] The Civil Service Tribunal is a specialized court that hears disputes involving the European Union civil service, and the General Court hears disputes against European Union institutions, such as for denial of a trademark from the Office for Harmonization in the Internal Market. Litigants can make an appeal to the ECJ on points of law. The ECJ is the highest court in the European Union tasked with interpreting European Union Law. Court of Justice Presentation, CURIA, (last visited April 10, 2015); General Court Presentation, CURIA, (last visited April 10, 2015); Civil Service Tribunal, CURIA, – competence (last visited April 10, 2015).
[18] The ECJ’s interaction with the CJEU would consist of references for preliminary rulings. The ECJ is the only court in the CJEU that can answer references from national courts. Vaughne Miller, Taking a complaint to the Court of Justice of the European Union, Standard Note SN05397, 7–8 (2010).
[19] See Lars Hornuf & Stefan Voigt, Preliminary References – Analyzing the Determinants that Made the ECJ the Powerful Court it Is, CESIFO Working paper No. 3769, 4 (2012).
[20] Ricardo Garcua Ant—n, Indirect taxation and the role of the European Court of Justice within the preliminary reference procedure, 5 Perspectives on Federalism 38, 46 (2013); Allan Rosas, The National Judge As EU Judge; Some Constitutional Observations, 67 SMU L. Rev. 717, 720 (2014).
[21] Hornuf & Voigt, supra note 19, at 4.
[22] Regulation 1257/2012, of the European Parliament and of the Council of 17 December 2012 Implementing Enhanced Cooperation in the Area of the Creation of Unitary Patent Protection, 2012 O.J. (L361) 1 (EU) [hereinafter UPR].
[23] Council Regulation 1260/2012, Implementing Enhanced Cooperation in the Area of the Creation of Unitary Patent Protection with Regard to the Applicable Translation Arrangements, 2012 O.J. (L361) 89 (EU).
[24] Christoph Cordes, The Unitary Patent and the Unified Patent Court, 49 Les Nouvelles 184, 185 (2014).
[25] Agreement, supra note 3; UPR, supra note 22, art. 9.
[26] Agreement, supra note 3, art. 83; see Paul England, In? Out? What’s it all About? Patent Opt-out and Withdrawal in the UPC, 9 J. Intell. Prop. L. & Prac. 915, 915–16 (2014).
[27] The opted-out European patents will continue to function as a European patent without unitary effect. Agreement, supra note 25, art. 83; See England, supra note 26, at 915–16.
[28] Agreement, supra note 3, art. 83; see England, supra note 26, at 915–16.
[29] It is unknown what law national courts will apply to European patents. If a litigant brings an action involving a European patent before the UPC, it will apply UPC law. If a litigant brings a European patent before a national court or opted out the patent, it is unclear what law the national courts will be apply. The argument in favor of the national court applying UPC law is that it would be absurd to be able to forum shop which law a court will apply to the patent, when the choice of law is so wide. On the other hand, applying UPC law would potentially lead to divergent interpretations that are not under the control of the UPC and thus cannot be uniform.
[30] Agreement, supra note 3, art. 6.
[31] The three parts to the Central Division have different substantive specialties. London’s specialty is pharmaceuticals, chemistry, and human necessities, Paris’ is textiles, electricity, and physics, and Munich’s is mechanical engineering. Id. at annex II.
[32] A local division is a branch of the COFI serving a particular member state. Id. art. 7.
[33] A regional division is a branch of the COFI serving multiple member states that have agreed to function as a region. Id.
[34] Id.
[35] Id. art. 8.
[36] Agreement, supra note 3, at art 8.
[37] Id.
[38] Id. art. 73.
[39] Id. art. 9.
[40] Id.
[41] Id. art. 11.
[42] A local or regional court will have the option to bifurcate cases into separate invalidity and infringement proceedings by sending the invalidity proceeding to the Central Division while it retains the infringement proceeding. It is unclear what the division will use to decide whether it should bifurcate or how often they will bifurcate. Agreement, supra note 3, art. 33; How Will the UPC Decide on Whether or Not to Hear Infringement and Validity Together?, Unified Patent Court, (last visited Mar. 30, 2015) (“It is expected that the division concerned will take these decisions taking into account all relevant circumstances of the case, including grounds of fairness to the parties.”).
[43] The Federal Circuit provides a useful comparison because of its relative length of existence and the similarity between the United States and the European Union in terms of economic, legal, and technological sophistication.
[44] Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 96 Stat. 25 (codified as amended in scattered sections of 28 U.S.C.); Dunstan H. Barnes, Technically Speaking, Does It Matter? An Empirical Study Linking the Federal Circuit Judges’ Technical Backgrounds to How They Analyze the Section 112 Enablement and Written Description Requirements, 88 Chi.-Kent L. Rev. 971, 980 (2013).
[45] Rochelle C. Dreyfuss, Percolation, Uniformity, and Coherent Adjudication: The Federal Circuit Experience, 66 SMU L. Rev. 505–06 (2013) [hereinafter Dreyfuss, Percolation]; Rochelle Cooper Dreyfuss, What the Federal Circuit Can Learn from the Supreme Court-and Vice Versa, 59 Am. U. L. Rev. 787, 795 (2010) [hereinafter Dreyfuss, Supreme Court].
[46] Dreyfuss, Supreme Court, supra note 45, at 788.
[47] Agreement, supra note 3, art. 1; Harnett & Wieker, supra note 9, at 15 (“The establishment of a specialized European patent court resembles the decision of the United States Congress in 1982 to create the Court of Appeals for the Federal Circuit (Federal Circuit)—an appellate body with exclusive jurisdiction over all US patent appeals.”).
[48] Court Jurisdiction, United States Court of Appeals for the Federal Circuit, (last visited April 10, 2015).
[49] Daniel J. Meador, Origin of the Federal Circuit: A Personal Account, 41 Am U. L. Rev. 581, 587 (1992).
[50] Dreyfuss, Percolation, supra note 45, at 509–10.
[51] Gregory Castanias, Developments in Patent Law: A View from an Appellate Perspective, in The Impact of Recent Patent Law Cases and Developments 1, 4 ( 2015).
[52] Dreyfuss, Percolation, supra note 45, at 512–13.
[53] Agreement, supra note 3, art. 1 (“The Unified Patent Court shall be a court common to the Contracting Member States and thus subject to the same obligations under EU law as any national court of the Contracting Member States.”).
[54] The Reference for a Preliminary Ruling, Europa (Feb. 20, 2013),
[55] The ECJ has arguably thinned the line between interpretation and application. The combination of the ECJ’s willingness to take extremely narrow questions, as well as the guidance it issues which instruct the national court how to apply the interpretation, has effectively turned the national court-ECJ relationship into an inferior-superior appellate relationship. Paul Craig & Gráinne de Búrca, EU Law: Text, Cases and Materials 493–94 (Oxford University Press, 5th ed. 2011).
[56] Miller, supra note 18, at 7–8 (“It must be emphasized that the individual cannot make a direct reference for a preliminary ruling; it must come from a national court or tribunal . . .”).
[57] Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1257–59 (Fed. Cir. 1997); Dreyfuss, Percolation, supra note 45, at 518–19.
[58] Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1297 (Fed. Cir. 2011) (en banc); Dreyfuss, Percolation, supra note 45, at 518–19.
[59] Dreyfuss, Percolation, supra note 45, at 512–13.
[60] At one time, there was a website run by a law professor that would predict the outcome of the case based on the panel of judges. The Federal Circuit Predictor,, (last visited Mar. 22, 2015). Additionally, the Federal Circuit reverses an estimated 34.5-40% of claim construction appeals from district courts. Paul M. Schoenhard, Reversing the Reversal Rate: Using Real Property Principles to Guide Federal Circuit Patent Jurisprudence, 17 Fordham Intell. Prop. Media & Ent. L.J. 299, 303 (2007).
[61] Claim construction en banc decisions have resulted in fractious and open-ended opinions. R. Polk Wagner & Lee Petherbridge, Did Phillips Change Anything? Empirical Analysis of The Federal Circuit’s Claim Construction Jurisprudence, The Claim Construction Project (July 14, 2007),
[62] Jeremy W. Bock, Restructuring the Federal Circuit, 3 NYU J. Intell. Prop. & Ent. L. 197, 201 (2014).
[63] Dreyfuss, Percolation, supra note 45, at 519.
[64] Cecil D. Quillen, Jr., Response Essay: Rethinking Federal Circuit Jurisdiction – A Short Comment, Geo L.J. Online 23, 24 (2012) [hereinafter Quillen, Response Essay].
[65] Of course this sometimes does not occur, leading to circuit splits and, often, a Supreme Court opinion. Wagner & Petherbridge, supra note 61.
[66] Moba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306, 1322 (Fed. Cir. 2003) (Rader, J., concurring) (“Whenever a Federal Circuit panel makes an error interpreting the patent code, every district court in the nation, and even every later Federal Circuit panel, is obliged to follow and perpetuate the error. Even the Supreme Court has difficulty identifying errors for correction because this court’s national jurisdiction requires universal application of a mistake.”); Quillen, Response Essay, supra note 64, at 24; Cecil D. Quillen, Jr., Innovation and the U.S. Patent System, 1 Va. L. & Bus. Rev. 207, 232 (2006) (“However, in our current patent system, once the Federal Circuit has decided a case, there is no opportunity for alternative views to develop free from the constraints of stare decisis. . . .”).
[67] These appeals were on technical issues. They dealt with the functioning of the Federal Circuit more than the nuances of patent law. They were not significant forays into patent law, but affirmation’s of the functioning of the Federal Circuit from above the Federal Circuit itself. Dreyfuss, Percolation, supra note 46, at 509–10.; John F. Duffy, The Festo Decision and the Return of the Supreme Court to the Bar of Patents, 2002 Sup. Ct. Rev. 273, 275–76 (2002).
[68] Castanias, supra note 51, at 4.
[69] Arti K. Rai, Competing with the “Patent Court”: A Newly Robust Ecosystem, 13 Chi.-Kent J. Intell. Prop. 386, 388 (2014) (noting that the Federal Circuit’s purpose is to create “a regime that, within the limits of the statutory language, promotes innovation. . . .”); Paul R. Gugliuzza, Saving the Federal Circuit, 13 Chi.-Kent J. Intell. Prop. 350, 373–74 (2014).
[70] Rochelle Cooper Dreyfuss, The Federal Circuit As an Institution: What Ought We to Expect?, 43 Loy. L.A. L. Rev. 827, 835–36 (2010).
[71] Dreyfuss, Percolation, supra note 45, at 512–13.
[72] Dreyfuss, Supreme Court, supra note 45, at 795; 9, 1131–133.
[73] Dreyfuss, Percolation, supra note 45, at 512–13.
[74] Rochelle Cooper Dreyfuss, The Federal Circuit: A Case Study in Specialized Courts, 64 N.Y.U. L. Rev. 1, 27–28 (1989) [hereinafter Dreyfuss, Case Study].
[75] 28.
[76] Glynn S. Lunney, Jr., Patent Law, the Federal Circuit, and the Supreme Court: A Quiet Revolution, 11 Sup. Ct. Econ. Rev. 1, 2 (2004) (“Intended, at least by some of its supporters, to rescue patents from a judiciary often suspicious, if not overtly hostile, towards patents, the Federal Circuit has taken its role as defender of the patent system seriously. Using its exclusive jurisdiction over patent appeals, and relying on the sporadic and inherently limited nature of Supreme Court review, the Federal Circuit has rewritten the nonobviousness requirement and the doctrine of equivalents, sharply limiting their reach.”).
[77] Lorna M. Vélez Gómez, Minds at Work: Employed Inventors’ Ideas for A Therapeutic Patent System, 5 U. P.R. Bus. L.J. 46, 55–56 (2014); Eric Schmitt, Business and the Law: Judicial Shift in Patent Cases, N.Y. Times, Jan. 21, 1986, at D2 (“The Kodak-Polaroid patent dispute is the most prominent example of an increasingly pro-patent sentiment in American courts[.]”).
[78] Dreyfuss, Case Study, supra note 74, at 26.
[79] Lab. Corp. of America Holdings v. Metabolite Labs. Inc., 548 U.S. 124, 126 (2006) (Breyer, J., dissenting) (per curiam).
[80] See generally The Honorable Paul R. Michel, The Supreme Court Saps Patent Certainty, 82 Geo. Wash. L. Rev. 1751 (2014) (detailing the tension between the Supreme Court and Federal Circuit).
[81] John M. Golden, The Supreme Court as “Prime Percolator”: A Prescription for Appellate Review of Questions in Patent Law, 56 UCLA L. Rev. 657, 686 (2009).
[82] The President of the COFI will assign judges for each court on a case-by-case basis. Agreement, supra note 3, art. 8.
[83] Id. art. 11.
[84] Miller, supra note 18, at 8 (“Finally, the referring court may, if it considers itself able, briefly state its view on the answer to be given to the questions referred for a preliminary ruling.”).
[85] R. Polk Wagner, The Two Federal Circuits, 43 Loy. L.A. L. Rev. 785, 789–90 (2010).
[86] Id.
[87] See Sapna Kumar, The Accidental Agency?, 65 Fla. L. Rev. 229, 231 (2013) (“The Federal Circuit engages in two agency-like functions: promulgating substantive rules and adjudicating disputes. The court has historically engaged in a form of rulemaking by issuing mandatory bright-line rules.”).
[88] Dreyfuss, Supreme Court, supra note 45, at 801 (“In certain respects, then, the Supreme Court ought to conceptualize its relationship with the Federal Circuit as more of a dialogue than the product of hierarchy—as I said earlier—as the substitute for percolation.”).
[89] The COFI is different from the trial courts in the United States in that the COFI is also a specialized patent court. This eases the burden of the Court of Appeals somewhat, because there is less need to create simple doctrines that need to be clear enough for non-specialists. Regardless, there is still a need to create workable rules, especially for a new court with judges inexperienced in the law. Additionally, the fact that the trial courts are also specialist could have a negative effect, by destroying any push back on doctrines that negatively affect non-patent areas of law.
[90] Where the line is drawn is often a difficult question. In the United States, the Federal Circuit’s jurisdiction is broader than the UPC’s will be. First, the Federal Circuit deals with patent cases, not just issues, which means it has to on occasion deal with non-patent issues in patent cases. Second, the Federal Circuit deals with invalidity and infringement issues, but it also deals with patents as property, including licensing and assignment issues. The UPC will not deal with the latter category. Mahne, supra note 6, at 187.
[91] Michael A. Heller & Rebecca S. Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical Research, 280 Science 698, 698 (1998).
[92] Dreyfuss, Percolation, supra note 45, at 506 (“To paraphrase a well-known proverb, if all the judges have is the hammer of patent law, every social problem they encounter could easily come to look like a nail.”).
[93] Dreyfuss, Supreme Court, supra note 45, at 795; Kelly Casey Mullally, Legal (Un)certainty, Legal Process, and Patent Law, 43 Loy. L.A. L. Rev. 1109, 1131–33 (2010).
[94] U.S. Const. art. VIII, §8, cl. 8; see generally Agreement, supra note 3, art. 83.
[95] Robert C. Denicola, The New Law of Ideas, 28 Harv. J.L. & Tech. 195, 220–21 (2014).
[96] Id.
[97] Patent law and trade secret are interrelated; using a trade secret can preclude patenting, and a patent destroys trade secrecy. David E. Korn, Patent and Trade Secret Protection in University-Industry Research Relationships in Biotechnology, 24 Harv. J. on Legis. 191, 191–92 (1987).
[98] Id.
[99] The process of implementing the UPC, during which four countries have no signed on to all of the agreements, and two of the countries sued the Council and Parliament claiming the unitary patent was illegally based, makes it extremely unlikely that there will be any sort of timely response.
[100] Lionel J. Frank, Antitrust and Trade Regulation in the European Union: Information Sharing in the Global Economy, 195 N.J. Law. 31, 31 (1999).
[101] Milosz Malaga, The European Patent with Unitary Effect: Incentive to Dominate?, 6 Int’l Rev. Intell. Prop. & Comp. L. 621, 631–42 (2014).
[102] U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition (2007), available at
[103] Christopher Allen, FTC v. Actavis, Inc.: Antitrust Scrutiny of Reverse Payment Settlements in Pharmaceutical Patent Litigation, 53 U. Louisville L. Rev. 115, 115 (2014) (detailing an area where there is particular tension between antitrust and patent law).
[104] Malaga, supra note 101, at 639–41.
[105] Id.
[106] Id.
[107] Id.
[108] Id.
[109] Id.
[110] Malaga, supranote 101, at 641–43.
[111] Consolidated Version of the Treaty on the Functioning of the European Union art. 118, Oct. 26, 2012, 2012 O.J. (C 326).
[112] The EU could amend the UPR to include all of the UPCA, theoretically retaining all case law built on the UPCA, but that is an unnecessarily messy solution.
[113] Opinion of Advocate General Bot, Spain v. Parliament and Council, Case C-146/13, [2014] E.C.R. I___ (delivered Nov. 18, 2014) (judgment not yet issued).
[114] Kraßer, supra note 2; Jochen Pagenberg, President’s Report 2011, European Patent Lawyers Association (Dec. 2, 2011),
[115] The European Patent Lawyers Association stated that “[i]f one wants a really unattractive, inefficient, unpredictable and probably extremely expensive patent court system, then we will get it; one must only give the ECJ a chance to receive as many referrals in patent law as possible. If one wants to see substantive patent law in Europe to be decided by judges without any solid knowledge and experience in this field, then one must involve the ECJ whenever possible.” Pagenberg, supra note 114.
[116] Harnett & Wieker, supra note 9, at 16.
[117] The ECJ’s new jurisdictions cover areas of particular sensitivity and complexity, such as issues of asylum, policing, and justice. Hugo Brady, Twelve Things Everyone Should Know About the European Court of Justice, Centre for European Reform 42 (2014).
[118] Id. at 13.
[119] See European Union Committee Workload of the Court of Justice of the European Union: Follow-Up Report, 2012-3, H.L. 163, at 20 [hereinafter Workload] (“However, ‘between 2000 and 2010 as a trend, the number of new cases has more than doubled.’ The Law Society called attention to ‘the current backlog and the very long duration of proceedings (both in terms of the ‘average’ duration and in relation to the cases that last longer, sometimes much longer, than the average).’”) (internal citation omitted).
[120] Id.
[121] Press Release, Court of Justice of the European Union, No. 23/13, Statistics Concerning Judicial Activity in 2012: Consolidation of the Results Achieved in Recent Years (Mar. 6, 2013), available at
[122] Annual Report of the Court of Justice of the European Union, CURIA (2011), (last visited April 20, 2015).
[123] Press Release, Court of Justice of the European Union, No. 27/15, Statistics Concerning Judicial Activity in 2014 (Mar. 3, 2015) [hereinafter Press Release No. 27/15], available at
[124] Id.
[125] Id.
[126] Annual Report of the Court of Justice of the European Union, CURIA (2013), (last visited April 20, 2015).
[127] Trademark cases account for 40% of the General Court’s cases, and many of those cases make it to the ECJ as appeals. See id.
[128] The CJEU has recommended various proposals to increase efficiency, including increasing the size of the Grand Chamber and amending the ECJ’s Rules of Procedures. Workload, supra note 119, at 11.
[129] Nine months for the written procedure, three months for the interim procedure, six weeks for oral procedure, four months to file the Statement of grounds of appeal, three months to file the Statement of Response. See Klaus Grabinski, An Overview of the Draft Rules of Procedure for the Unified Patent Court, 48 Les Nouvelles 154, 159–68 (2013).
[130] Press Release No. 27/15, supra note 123.
[132] Median Time to Disposition in Cases Terminated After Hearing or Submission, United States Court of Appeals for the Federal Circuit, (last visited April 20, 2015). This calculation only uses the data for appeals from district courts because appeals from other bodies, such as the International Trade Commission, are not comparable to a patent trial court such as the COFI.
[133] Hornuf & Voigt, supra note 19, at 4.
[134] Morten Broberg & Niels Fenger, Preliminary References to the European Court of Justice 269–70 (Oxford University Press 2d ed. 2014).
[135] Case C-283/81, CILFIT v. Ministero della Sanità, 1982 E.C.R. 03415, ¶ 16 (1982); see also Case C-231/96, Edis v. Ministero delle Finanze, 1998 E.C.R. I-4979, ¶ 15–16 (1998). The acte clair doctrine holds that if the ECJ has already answered the question of EU law, then the national courts also do not have to refer.
[136] Vladimir Shifrin, Article 177 References to the European Court, 27 Denv. J. Int’l L. & Pol’y 657, 667 (1999) (“The strict requirement developed in CILFIT would seem not a relaxation of the duty to refer under Article 177(3), but an attempt to deter national courts from the use of acte clair by setting forth conditions that no national court could realistically satisfy. However, examples abound of Member States’ supreme courts not making a reference under Article 177(3) on the grounds of acte clair.”) (citations omitted).
[137] Mark A. Pollack, The New EU Legal History: What’s New, What’s Missing?, 28 Am. U. Int’l L. Rev. 1257, 1270–75 (2013).
[138] CILFIT, supra note 135, at 13.
[139] House of Commons European Scrutiny Committee, The Unified Patent Court: Help or Hindrance?, 2010–12, H.C. 1799-I, ¶ 64–65 (U.K.).
[140] Critiques often make the same claim about the Supreme Court. While reasonable minds might disagree over the correct statutory interpretation or policy choice that the Supreme Court makes in patent law, it is absurd to accuse them of making their decisions because they do not understand it. Michel, supra note 80, at 1753.
[141] Jennifer F. Miller, Should Juries Hear Complex Patent Cases?, 2004 Duke L. & Tech. Rev. 4, at 1 (“Some commentators argue that a ‘complexity exception’ to the Seventh Amendment right to a jury trial should be invoked”).
[142] If the technical aspects are relevant to the legal interpretation, they can use a technical advisor as well though. Craig & de Bœrca, supra note 55, at 493–94.
[143] Brady, supra note 117, at 42.
[144] Mullally, supra note 93, at 1112.
[145] Agreement, supra note 3, art. 83; see England, supra note 26, at 917.

JIPEL Fall 2014 Edition

The NYU Journal of Intellectual Property and Entertainment Law is proud to present its Winter 2014 Edition of the Journal. While individual PDFs of articles may be found accompanying their respective posts, you may download a complete PDF of the Winter 2014 Edition containing all of the articles along with a preface from the Journal’s Editor-in-Chief, Spencer Joffrion, here.

Remixing Transformative Use: A Three-Part Proposal for Reform

Remixing Transformative Use: A Three-Part Proposal for Reform
By Liz Brown* Download a PDF version of this article here.  


Art is big business. Worldwide, the global art market was valued at approximately $64 billion in 2012.[1] Institutional investors are also turning to art as an investment vehicle.[2] The assets in art investment funds worldwide rose 69% to $1.62 billion in 2012.[3] In May 2014, the auction house Christie’s brought in record sales of $744 million in a single evening, including sales of two Andy Warhol works for $100 million, $30 million more than their pre-sale estimate.[4] At the center of this high-stakes art world are appropriation artists, such as Richard Prince, whose work is built on the works of other artists.[5] These works command the highest prices for modern art sales. In Cariou v. Prince, for example, the Prince artworks at issue were marketed to A-list celebrities like Beyoncé, Tom Brady and Anna Wintour.[6] One series of these works sold at the Gagosian gallery for more than $10 million.[7] In Cariou, the Second Circuit held that Prince’s unlicensed appropriation of Patrick Cariou’s photographs, with what many consider to be only minor modifications, was fair use rather than copyright infringement, broadening the scope of copyright law’s fair use defense.[8] The Cariou decision resolved issues that are critical to appropriation art, but the Second Circuit’s ruling in that case—final now that the Supreme Court has denied certiorari—has troubling implications for the entire art market. By broadening the definition of “transformative,” the Second Circuit’s decision in Cariou may encourage other appropriation artists to use original images in ways that have never before been considered fair use. Without the revival or reaffirmation of limitations on how one artist can use another’s work, many creative artists—and the businesses that rely on their work—are likely to suffer severe economic loss. The Supreme Court has noted that the fair use doctrine “permits and requires courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster.”[9] After Cariou, one might question who is best suited to evaluate the creativity that the law is designed to foster. In its wake, lawyers, artists, and dealers face growing uncertainty as to what kind of copying is legal. The ruling has led to a new sense of unease, has uncovered a generational shift in the perception of artistic ownership rights, and reflects a dramatic reversal of the roles of artists and judges in evaluating art. The importance of appropriation art as a cultural element will grow exponentially in the future. The ubiquity of photo sharing sites like Pinterest, Flickr, Tumblr, 4Chan, and Instagram, together with new photography databases like Photogrammar, which catalogues FSA photographs, makes it easier to access other people’s images than ever before. This is the moment for a robust discussion of how law can protect photographers and other source artists without curtailing the continued development of appropriation art. It is only the privileged few major artists who can afford the kind of complex litigation defense mounted by Prince’s elite legal team. If we do not want to limit the making of appropriation art to those privileged few, we must adopt a more sensible and predictable approach to assessing the legality of this kind of art. This article proposes such an approach. In order to preserve the balance between protecting existing works and incentivizing the creation of new ones, in light of recent jurisprudence, this proposal calls for three critical, interdependent changes to copyright law as it applies to visual art. First, courts should clarify that meritorious appropriation art is per se transformative use. Adopting a transformative use presumption for appropriation art will reduce the current confusion as to how much variation between the original work and the new work is permissible and what role market value plays in visual art copyright infringement cases, providing much-needed clarity to the rights of all visual artists. Second, courts should encourage expert testimony from art scholars in order to guide judges as to whether the works in question are meritorious appropriation art or not, an intentionally unexacting standard. Judges should resume their historic reluctance to evaluate visual art, especially in light of the non-obvious meanings of appropriation art. Instead, courts should invite experts on the merits of art to guide judicial determinations of infringement. Finally, Congress should revise the Copyright Act to narrow the scope of fair use for visual artists to reproductions, eliminating the current confusion between the protected transformative use defense and the infringing transformation of original works within the scope of the artists’ derivative rights. These three recommendations work best when taken together. Clarifying the transformative use determination for visual art would be significantly more difficult without the adoption of expert testimony on merit and the concurrent statutory narrowing of visual artists’ derivative rights. Similarly, expert testimony would not be worth the trouble and expense without the focused point of contention that both the adoption of the transformative use per se standard and the limited derivative rights would provide. Unless these three critical changes are made, visual artists’ derivative rights under current copyright law will continue to collide regularly with appropriation art in untenable ways. This article explores the consequences of the current doctrinal chaos of fair use in the visual arts, particularly in the lucrative world of appropriation art, while also providing a tripartite remedy. It contends that reforms to the judicial standards for evaluating appropriation art in infringement cases, the use of expert testimony to support those determinations, and the derivative rights of source artists are needed to clarify the scope of the transformative use defense. Part I describes the origins of transformative use as an extension of the fair use defense to copyright infringement and explains how the Second Circuit’s ruling in Cariou and other recent decisions have expanded the scope of transformative fair use. Part II explores the impact of this expansion on the production and valuation of art, placing this legal development in the context of the modern art market. Part III reviews solutions proposed by other scholars to limit the over-expansion of the transformative use doctrine, and explores the benefits and drawbacks of each, concluding that none will be sufficient standing alone or in combination with each other. Part IV describes the benefits of adopting a transformative use per se standard for meritorious appropriation art, expanding the use of art experts, and reducing the scope of derivative rights for visual artists. Part V concludes. It is time to recognize that current copyright law cannot fairly and effectively resolve the tensions between the rights of source artists like Cariou and appropriation artists like Prince. There is a fundamental mismatch between appropriation art, a form of visual art central to the modern art market, and copyright law in the visual arts. While many scholars have offered piecemeal solutions to this problem,[10] a more comprehensive set of reforms like the ones proposed here is necessary. Appropriation art requires a unique approach to copyright infringement allegations, one that balances a limitation on the scope of derivative rights with a properly informed transformative use standard that limits judicial subjectivity on matters of artistic judgment. The current trend toward expansion of the fair use defense creates an uncertain legal environment because it lacks clarity and predictability, potentially chilling an increasingly valuable art market in future years. This growing market requires an effective legal solution to remain sustainable. The three reforms presented here, while perhaps controversial, provide a sound basis for the realignment of copyright law in the visual arts to accommodate art creation in the 21st century.

I. Cariou’s Impact on Transformative Use and the Art Market

The doctrinal confusion arising out of Cariou’s interpretation of transformative use is important because it concerns the application of copyright law to appropriation art, a critically and financially important form of modern art that depends on copying for its meaning and impact. While the doctrine of transformative use first entered the judicial lexicon in a case about songs, its subsequent expansion and application in art cases underscores the need for a more selective application. In short, transformative use in the visual arts requires a different set of standards than such use in other forms of copyrightable expression. The reasons for this selective application stem both from the nature of appropriation art, an established type of art that may not be well understood by judges and the general public, and from the consequences flowing from decisions like Cariou that threaten the future of the art market.

A. The Rise and Rise of Appropriation Art

Appropriation art is art made from other artists’ work, and can involve modifying that source work in a number of different ways. As defined by the Museum of Contemporary Art in Los Angeles, California:
Appropriation is the practice of creating a new work by taking a pre-existing image from another context—art history, advertising, the media—and combining that appropriated image with new ones. Or, a well-known artwork by someone else may be represented as the appropriator’s own. Such borrowings can be regarded as the two-dimensional equivalent of the found object. But instead of, say, incorporating that “found” image into a new collage, the postmodern appropriator redraws, repaints, or re-photographs it. This provocative act of taking possession flouts the modernist reverence for originality.[11]
Another definition of appropriation art posits that it “takes a (usually) recognizable object, text or image and recontextualizes it. In the new context, the associations that the reader/viewer has with the appropriated object are subverted, and he or she is forced to reexamine his/her relationship to it. Therefore appropriated art is often political, satirical and/or ironic.”[12] Most people have seen appropriation art without recognizing it as a genre. Shepard Fairey’s Hope poster depicting President Obama is perhaps the best known example of appropriation art that has been subject to a copyright challenge.[13] As a genre, however, appropriation art is at least a century old. It evolved in part from the Cubist practice of incorporating newspapers, musical scores, and drawing scraps in their work, creating new meaning from the displacement and combination of these materials.[14] Then, in a 1912 work titled “L.H.O.O.Q.,” Marcel Duchamp painted a moustache onto a postcard reproduction of Leonardo da Vinci’s Mona Lisa. He also wrote its title, which, in French, sounds like the phrase “elle a chaud au cul,” meaning “she’s got a hot ass,” underneath.[15] Appropriation art became more prominent in the 1970s, with the emergence of the “re-photographers” including Sherrie Levine, Cindy Sherman, and Barbara Kruger.[16] These artists created works largely incorporating the work of earlier photographers, and which are critical of the works that they reproduce.[17] As Monika Jasiewicz has noted, “[Levine’s] appropriation is a form of ‘criticism’ or ‘comment’–types of use that are supposed to be privileged in fair use analysis.”[18] What was once a fringe movement is now part of the art canon. Appropriation art is not only here to stay, it is primed to multiply. Aided by technological improvements to sourcing, sharing and manipulating images, it has become a springboard for a new generation of artists and art forms. It has never been so easy for appropriation artists to source and use existing material in all forms, including film, video and multi-media. As the website for an annual appropriation-based audio-visual media fest explains, “the past decade has witnessed the emergence of a wealth of new audiovisual elements available for appropriation into new works. In addition to official state and commercial archives, resources like vernacular collections, home movie repositories and digital archives now also provide fascinating material to repurpose in ways that lend it new meaning and resonance.”[19] Appropriation art has also evolved into new forms, many of which fall under the heading of remix, or the incorporation of source material into new works generally. The rise of remix culture and scholarship provides a new dimension to appropriation art, further signifying its permanent status. The variety of forms and purposes artists employ in remixing can be inferred from the introduction to Professor Mark Amerika’s Remix Culture seminar, which:
investigates the emergence of interdisciplinary media art practices that experiment with the art of remixing, including but not limited to literary cut-ups and procedural composition, image appropriation, Internet or, sound art, glitch, collage film, installation art, live A/V performance (DJ, VJ, live coding), culture jamming / hactivism,[20] and other art forms that engage with renewable source material.[21]
While many of these terms may be unfamiliar to lawyers and judges, it is easier for them and the general public to appreciate the fact that billions of images are now available on the Internet and that the number is growing daily. Several technological developments including the ubiquity of the mobile phone camera, the rise of photo sharing sites including Flickr, Instagram, Pinterest and Tumblr, and the ability to attach pictures to most if not all general social media sites, have vastly increased the number of images available to the public. The numbers are staggering. By one estimate, 500 million photographs are shared every day, and the number is likely to rise.[22] Studies showing that Facebook posts containing photos are far more likely to generate “likes” also encourage the posting of pictures online.[23] Those developments make it much easier to use and adapt existing images than it was in 1990, when Hon. Pierre Leval wrote his influential article on transformative use, or, in 1994, when the Supreme Court first adopted the doctrine in Campbell. [24] The clash between appropriation art as a recognized artistic movement and current copyright law came to a head in Cariou. It began, however, with the development of transformative use as a kind of fair use defense to copyright infringement.

B. The Origins of Transformative Use

In most cases, the Copyright Act prevents one person from taking and using another’s protectable work without permission.[25] An accused copyright infringer can escape liability by showing that his use falls within the fair use exception, which allows for the use of copyrighted materials for certain limited purposes. The Copyright Act codifies the fair use defense in Section 107, setting out four factors for the court to consider in ruling on the defense:
(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.[26]
Although the Copyright Act defines the four factors clearly, it does not specify how each factor should be weighted. Limited by precedent, each court has some latitude in its interpretation and weighing of each factor. In an influential Harvard Law Review article, the Hon. Pierre Leval (then of the Southern District of New York) developed a theory of “transformative use,” which elaborates on the first fair use factor.[27] According to Leval, in order to be transformative, the second work must add something new, with a further purpose or different character, altering the first work with a new expression, meaning, or message.[28] A work’s commercial qualities are less significant when the work is extremely transformative and parodic.[29] The Supreme Court analyzed the fair use defense and adopted the doctrine of transformative use, citing Judge Leval’s article, in its 1994 decision in Campbell v. Acuff-Rose Music, Inc.[30] In that case, the Court was asked to decide whether 2 Live Crew’s song “Pretty Woman” infringed the copyright in Roy Orbison’s song “Oh Pretty Woman.”[31] In determining that the rap version was a parody, and therefore fair use, the Court noted that in evaluating a fair use defense, “[a]ll [of the four factors] are to be explored, and the results weighed together, in light of the purposes of copyright.”[32] In discussing the expansion of transformative use, it may be helpful to distinguish “appropriation artists,” as defined above, from “source artists.” The term “source artist” denotes the artist whose work is used by the “appropriation artist” in creating the newer work at issue. These terms are fluid, in the sense that they must be defined with reference to a particular work or series of works. The source for a work created by an appropriation artist may itself have relied on the work of another artist.[33] In that way, she would become an appropriation artist with respect to that new work. That said, some artists tend to be, and have developed reputations as, one or the other. Richard Prince, for example, is well known as an appropriation artist in the global art market, and his work played a central role in the recent expansion of the legal limits of appropriation.

C. The Expansion of Transformative Use in Cariou

On November 12, 2013, the Supreme Court denied certiorari in Cariou, letting stand a decision that has dangerous repercussions for the art business.[34] Cariou concerned the appropriation artist Richard Prince, who created a series of artworks using the photographs of another artist, Patrick Cariou, as his base materials.[35] In 2000, Cariou published a book of his photographs of Jamaican Rastafarians called Yes Rasta.[36] Cariou testified about the creative choices involved in composing his photographs, including the equipment, staging, and development techniques and processes involved.[37] Prince’s works are highly collectable and expensive. They have been the subject of major survey exhibitions at the Whitney Museum of American Art in New York, the San Francisco Museum of Modern Art, and the Serpentine Gallery in London, among other places.[38] In July 2008, a New York dealer paid $8.4 million at auction for Prince’s 2002 work Overseas Nurse.[39] Prince bought copies of Yes Rasta, and incorporated some of the photographs in works he displayed in St. Barth’s in 2007-2008.[40] Prince ultimately completed a series of twenty-nine paintings in what he called the “Canal Zone” series, twenty-eight of which incorporated Cariou’s Yes Rasta photographs.[41] The Gagosian Gallery, one of the most prominent art galleries in the United States, exhibited twenty-two of Prince’s Canal Zone paintings in November and December 2008 at one of its Manhattan galleries.[42] The gallery sold eight of the paintings for a total of $10,480,000, 60% of which went to Prince.[43] Although another New York gallery had approached Cariou about exhibiting his work, that gallery withdrew its offer when it became aware of the Canal Zone exhibit.[44] Cariou sued Prince and Gagosian for copyright infringement.[45]
1. The District Court’s Ruling
The facts of the Cariou case were largely undisputed, and the District Court ruled on cross-motions for summary judgment.[46] In evaluating the first fair use factor, the purpose and character of Prince’s use of Cariou’s photographs, the court considered three sub-factors: commerciality, bad faith, and the extent to which Prince’s art was “transformative.”[47] The three factors were not given equal weight: “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.”[48] In order to be transformative, the court noted, the new work should “comment on, relate to the historical context of, or critically refer back to the original works.”[49] In light of that requirement, the court determined that Prince’s work is transformative “only to the extent that they comment on the [Cariou] Photos.”[50] Relying largely on Prince’s own testimony that he didn’t “really have a message” when making art, the court concluded that he “did not intend to comment on any aspects of the original works.”[51] Accordingly, it found that “the transformative content of Prince’s paintings [was] minimal at best.”[52] In doing so, the court suggested a negative view of Prince’s artistry. For example, it quoted Prince’s testimony that his message in collaging guitars onto Cariou’s portraits of Rastafarian men had to do with the fact that men played guitars: “He’s playing the guitar now, it looks like he’s playing the guitar, it looks as if he’s always played the guitar, that’s what my message was.”[53] The other two components of the first fair use factor, commerciality and bad faith, also weighed against Prince. In light of the Gagosian Gallery’s extensive marketing of the Canal Zone show and the sale prices of Prince’s works, the court determined that the “Defendants’ use and exploitation of the Photos was also substantially commercial.”[54] Prince’s failure to even attempt to license from Cariou sealed the court’s conclusion of bad faith.[55] The court interpreted the second fair use factor, the nature of the copyrighted work, to be more restrictive where the work at issue is “expressive or creative,” as opposed to “factual or informational.”[56] Without further explanation, the court found that Cariou’s photographs were “highly original,” weighing against a finding of fair use.[57] The court quickly disposed of the third factor, the amount used, noting that Prince had appropriated the “central figures depicted in portraits taken by Cariou” in most of the works at issue, weighing heavily against a finding of fair use.[58] The analysis of the final factor, the effect on potential market, is perhaps the most interesting. The court rejected Prince’s efforts to minimize the potential market for Cariou’s works even though Cariou had not aggressively marketed them.[59] The potential market, the court noted, could be larger than the actual market for the original works.[60] An author is “entitled to protect his opportunity to sell his [works]”[61] and may be entitled to judgment even when he “has evidenced little if any interest in exploiting this market for derivative works.”[62] A New York gallery owner, Cristiane Celle, had offered to show Cariou’s works, but later withdrew the offer in light of the Prince exhibit.[63] Celle testified that she cancelled the Cariou show because she “did not want to seem to be capitalizing on Prince’s success and notoriety,” fed by the Gagosian show.[64] She did not want to exhibit work which had been “done already” at another gallery.[65] Celle’s cancellation supported the court’s conclusion that the defendants usurped the market for Cariou’s works.[66] The District Court may have gone a step too far by permitting the destruction of the infringing artworks. The Court ordered the defendants to hand over all copies of the infringing works for “impounding, destruction, or other disposition, as Plaintiff determines,” among other remedies.[67] In its reversal, the Second Circuit described the lower court’s order as granting “sweeping injunctive relief.”[68] It is possible that what was perceived as too severe a remedy led in part to the reaction and the reversal that followed.
2. The Second Circuit’s Reversal
On appeal, Prince retained the firm of Boies, Schiller & Flexner.[69] Although the oral argument took place on May 21, 2012, the appellate decision did not issue until April 25, 2013, nearly a year later.[70] When it did issue, the Second Circuit’s reversal sent shock waves through the art world. Throughout the decision, the court assumed that Prince’s work differed in an important way from Cariou’s without explaining its rationale. For example, in describing Prince’s use of the Yes Rasta photographs, the court noted, “Prince altered those photographs significantly by among other things painting ‘lozenges’ over their subjects’ facial features and using only portions of some of the images.”[71] In general, placing an oval cut out over part of a photo does not necessarily alter the photo significantly and the basis for the court’s characterization of it as such is unclear. The court did interpret size differences as significant, however, noting that the Yes Rasta book measures “approximately 9.5” x 12”” while Prince’s artworks are “several times that size.”[72] What troubled the Second Circuit most about the lower court’s ruling, apparently, was the implication that a secondary work must “comment on the original or its author in order to be considered transformative.”[73] In order to qualify as fair use, a secondary work could “serve[ ] some purpose other than those (criticism, comment, news reporting, teaching, scholarship and research) identified in the preamble to the [fair use] statute.”[74] The secondary work only needs to “alter the original with new expression, meaning, or message.”[75] The court went on to declare that Prince’s works passed the “new expression, meaning or message” test, noting that “Prince’s composition, presentation, scale, color palette, and media are fundamentally different and new compared to the photographs, as is the expressive nature of Prince’s work.”[76] Rejecting Cariou’s arguments that Prince’s own failure to identify any substantial message or purpose in his work were fatal to his fair use defense, the court stated that “[w]hat is critical is how the work in question appears to the reasonable observer.”[77] The court found Prince’s works so transformative that the fact that they were also commercial – another first-factor element – was, effectively, irrelevant.[78] With regard to the effect of Prince’s copying on the market for Cariou’s work, the court found that Prince’s copying did not usurp that market.[79] The bases for that conclusion were that (1) Celle did not cancel her plans to show Cariou’s work “because it had already been done at Gagosian,” (2) Cariou had “not aggressively marketed his work,” and (3) wealthier people were more interested in Prince’s work than Cariou’s.[80] The court’s emphasis on the socioeconomic status of Prince collectors was striking. Observing that “Prince’s artwork appeals to an entirely different type of collector than Cariou’s,” the court went on to note that Prince’s works sold for millions of dollars.[81] It observed further that the invitation list for the opening dinner included:
Jay-Z and Beyonce Knowles, artists Damien Hirst and Jeff Koons, professional football player Tom Brady, model Gisele Bundchen, Vanity Fair editor Graydon Carter, Vogue editor Anna Wintour, authors Jonathan Franzen and Candace Bushnell, and actors Robert DeNiro, Angelina Jolie, and Brad Pitt.[82]
After comparing the Prince and Cariou works, the court determined that twenty-five of the thirty Prince works at issue were protected by the fair use doctrine.[83] It remanded for consideration another five works to the district court, deeming them too close to call.[84] In doing so, however, the court did not articulate any basis on which the district court could make such a determination. It is not clear why the appellate court believed the district court would be better able to determine whether the five remaining works were sufficiently transformative than the appellate court.[85]

D. The Dubious Trend Toward Expanding Transformative Use

Cariou was not the only case to expand the fair use defense in 2013. Across the country, an appellate decision in the Ninth Circuit also expanded the scope of the transformative use defense in unpredictable and troubling ways. It concluded that a high-profile rock band’s unlicensed use of an artist’s original work as a concert backdrop qualified as transformative fair use. In Seltzer v. Green Day, Inc., the Ninth Circuit found that the rock band Green Day’s use of Derek Seltzer’s work in its concert backdrops was fair use.[86] Seltzer created an image called “Scream Icon,” which he sold on stickers and posters.[87] Green Day used a version of “Scream Icon” in a video that ran during its concerts during a multi-city tour in 2009.[88] Seltzer sued Green Day for copyright infringement.[89] Citing Cariou, among other precedents, and noting that “whether a work is transformative is a[n] often highly contentious topic,” the Ninth Circuit ruled in Green Day’s favor.[90] The court found that Green Day’s use of “Scream Icon” amounted to new creative expression because it juxtaposed the original image with religious imagery: “With the spray-painted cross, in the context of a song about the hypocrisy of religion, surrounded by religious iconography, Staub’s video backdrop using Scream Icon conveys ‘new information, new aesthetics, new insights and understandings’ that are plainly distinct from those of the original piece.”[91] This, the court ruled, was transformative, and therefore the first fair use factor weighed in Green Day’s favor. Green Day and Cariou are not the only indicia of transformative use’s expansion, although they are among the most newsworthy recent cases. Scholarly surveys underscore the conclusion that courts are expanding the scope of transformative use, and consequently fair use, across the country. Professor Sag examined more than 280 fair use cases from 1978 to 2011.[92] His research “reinforce[d] the dominance of transformative use over other factors” in determining case outcomes.[93] In another study, Professor Netanel looked at 79 opinions in fair use cases from 1996 through 2010.[94] He concluded that “the transformative use paradigm, as adopted in Campbell, overwhelmingly drives fair use analysis in courts today.”[95] The trend toward consideration of transformative use was significant. Netanel observed that courts’ use of the transformativeness analysis “increased measurably during the period 2006-2010, even if it was already quite high previous to that period.” [96] “[Eighty-five percent] of district court opinions and 93.75%, or all but one, of appellate opinions” analyzed whether the challenged use was transformative.[97] More importantly, Netanel’s research underscored the determinative nature of transformative use in the courts’ determinations. He noted that since 2005, “decisions that unequivocally characterize the defendant’s use as transformative almost universally find fair use.”[98] When a court found that the challenged use was transformative, there was a “sharp decline in the weight that courts say they are giving to whether a use is commercial.”[99] One interpretation of this data is that a finding of transformativeness effectively reinterprets fair use factors three and four toward inevitably favoring fair use.[100] Arguably, it also reinterprets the market analysis underlying the fourth factor. The driving concern changes from “whether the use falls within a conceivable licensing market for the copyright owner” to disregarding that potential market entirely.[101] Instead, it “effectively delimits the legally relevant market for the fourth factor. If a use is unequivocally transformative, then, by definition, it causes no market harm since the copyright holder does not have a right to exclude others from the market for transformative uses.”[102] The rise of transformative use as a guiding if not determinative factor in fair use analysis is exemplified in a pair of cases concerning another prominent artist, Jeff Koons. In the earlier case, Koons’ use of another artist’s work was held to be copyright infringement. In the later case, on similar facts, Koons’ use of another artist’s work was held to be transformative and fair use. The first case, Rogers v. Koons, concerned a Koons sculpture called String of Puppies exhibited at New York’s Sonnabend Gallery in 1988.[103] Koons based this work on a black and white photograph by Art Rogers called Puppies, which had been licensed by Museum Graphics for a notecard. Rogers sued Koons for copyright infringement in 1989. Although Koons argued that String of Puppies was fair use because it was a parody or satire, the court granted summary judgment in Rogers’ favor.[104] When Koons appealed, the court of appeals affirmed the district court’s decision.[105] The second case, Blanch v. Koons, concerned Koons’ appropriation of photographer Andrea Blanch’s work in Koons’ 2000 collage, Niagara.[106] Niagara consists of images of women’s lower legs and feet dangling above a tray of pastries.[107] One pair of feet was modeled on Blanch’s photograph, “Silk Sandals by Gucci.”[108] Blanch’s photograph showed the woman’s feet resting on a man’s lap in an airplane cabin.[109] For Niagara, Koons reproduced only the legs, feet, and shoes from Blanch’s photograph, adding a heel to one shoe, altering their orientation, and varying the coloring.[110] Blanch sued Koons for copyright infringement. The Supreme Court’s Campbell decision had issued in the years between Rogers and Blanch, and Koons now argued the defense of transformative and fair use instead of parody.[111] The district court agreed that Koons’ use of Blanch’s photograph was fair, and the court of appeals affirmed.[112] This is not to say that courts always find in favor of the appropriation artist when confronted with copyright infringement claims.[113] However, its influence on judicial decision-making in this area suggests that the precedent set by Cariou is here to stay, at least for the time being. Following the Supreme Court’s denial of certiorari, Cariou will stand as precedent in the Second Circuit, the home of one of the most influential art markets in the world. Given these rulings and the scholarly surveys of many other court rulings, we may expect circuit courts to continue to expand the scope of transformative use. The standards used in these cases are too often unclear and unpredictable. This trend makes it all the more important to impose sensible limitations on fair use in the making of 21st century art.

II. The Troubling Consequences of Expanding Transformative Use

The expansion of fair use illustrated by Cariou and its progeny raises several types of concerns: doctrinal, societal, and market-based. By blurring the line between transformative and derivative works, these decisions represent a significant shift in copyright law. The repercussions will affect the business relationships among artists, dealers, and investors, and will shift the legal boundaries of creativity.

A. The Doctrinal Impact

In the wake of Cariou, several observers have commented on the doctrinal shifts that the ruling represented.[114] Legal scholars were not the only critics of the opinion. Artists banded together to decry the Cariou ruling. When the Second Circuit remanded consideration of five works back to the district court, a coalition of professional associations and photographers filed a comprehensive amicus brief urging the court to reject the fair use defense as to those works.[115] The amici included the American Society of Media Photographers, the Picture Archive Council of America, Professional Photographers of America, the National Press Photographers Association, photographer Jeremy Sparig, the Graphic Artists Guild, American Photographic Artists, and the American Society of Journalists and Authors.[116] Perhaps the most disturbing aspect of Cariou is the lack of guidance offered as to how much difference is necessary for a reasonable observer to determine that the use is transformative. A balancing test based on unclear factors is easy to get wrong. If adapting one artist’s photographs by reprinting them in a different color and size and perhaps adding small decorative elements is fair use, then it is hard to imagine what kind of adaptive copying would not be permitted. A likely effect of this doctrinal vagueness is that whether one artist infringes the copyright of another will boil down to the aesthetic judgment of a particular judge or panel of judges. Subsequent decisions may therefore require lawyers and courts to parse the differences between copies of accused artworks, which may not be widely available, in order to make their best guess as to what is “different enough” to pass legal muster. A related danger of recent case law is the increasingly blurry line between derivative and transformative use. According to the Copyright Act,
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.”[117]
A transformative work, by contrast, is one that adds “something new, with a further purpose or different character, altering the first with new expression, meaning or message.”[118] The definition of transformative use is comparatively vague, inviting a great deal of judicial creativity in its application. The difference between derivative use and transformative use is getting harder to detect: “[i]f a court finds that defendants’ use of an author’s work is ‘transformative’ because it reaches new markets or makes the work available to a new audience, that finding could risk usurping the author’s derivative work rights. Ultimately, those rights could hinge on a ‘race to the market’ for new and sometimes unanticipated uses.”[119] Arguably, that is what happened to Cariou. In his Canal Zone exhibit, Prince established a high-end market for what could be considered derivative works based on Cariou’s photographs, usurping that market and foreclosing the possibility of a Cariou exhibit like the one Celle had planned. A further danger of the current slide toward finding that all appropriation art is per se fair use may be a violation of the United States’ obligations under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and other international treaties.[120] For example, the TRIPS agreement requires that signatories’ copyright exceptions (for foreign works) meet a three-step test.[121] That test provides:
Members shall confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder.[122]
The first of the three steps requires that any exceptions to copyright protection be limited in scope, according to the World Trade Organization’s dispute resolution panel.[123] “Normal exploitation” includes all ways in which the author would normally seek to exploit the work now or in the future.[124] In other words, an exception may not compromise a normal market for the work. The third step requires that the law protect authors from unreasonable loss of income.[125] Expanding the scope of transformative use without clearer boundaries may violate each of these three steps.

B. The Commercial Impact

In order to appreciate the impact of Cariou on the art industry, it is important to understand both the recent rise of appropriation as a means of making art and the central role of dealers and auction houses in the art market. Appropriation is a hot topic in the art world.[126] Some of the most sought after modern art is made by high-profile appropriation artists like Prince, who sold a piece at an auction for more than $3.7 million in May 2014.[127] A widely acclaimed, 24-hour long video made up of appropriated bits of film and television shows called “The Clock” has been touring major art venues around the world since its debut in 2010.[128] In recent years, appropriation art has been the focus of major exhibitions in New York, Chicago, and Los Angeles.[129] The Second Circuit’s emphasis on the socioeconomic strata and celebrity of the people who attended Prince’s opening gala correlates with an increasingly important characteristic of the art market. Dealers, collectors, museums, and auction houses all play significant roles in driving up the market prices of certain artists’ work. According to one economist, collectors describe contemporary art “in terms of innovation, investment value, and the artist being ‘hot,’ meaning a relative unknown where word-of-mouth reports make them suddenly sought-after.”[130] The valuation of any given work depends in large part on the investments that dealers, collectors, and museums make in certain emerging artists.[131] When museums exhibit an artists’ work, they add to the work’s exhibition and sale history, or provenance, thereby increasing the price that work can command in the future.[132] High-profile exhibitions like the Whitney Museum of American Art’s Biennial help create taste and add to an artists’ value.[133] So do exhibitions at certain galleries, including those of “superdealers” Larry Gagosian, who exhibited the Prince works at issue in Cariou.[134] The director of the Andy Warhol Museum observed that “[i]n many ways, having a show with [Gagosian] is synonymous with having a show at MoMA or the Tate Modern [in London].”[135] Given the increasing ubiquity of the practice, the legal scope of borrowing source material shapes both the artistic and ethical development of the profession. This is especially true for younger artists, whose attitude toward borrowing is significantly different from artists of earlier generations. As Stephen Frailey, the head of the undergraduate photography program at the School of Visual Arts in Manhattan, told the New York Times, “[t]hey feel that once an image goes into a shared digital space, it’s just there for them to change, to elaborate on, to add to, to improve, to do whatever they want with it. They don’t see this as a subversive act. They see the Internet as a collaborative community and everything on it as raw material.”[136] This sense of freedom among young artists is mirrored in the general public by the creation of apps such as Mixel, which facilitates the appropriation of images in new user-generated art.[137] The expansion of fair use will affect source artists as well. If the law permits appropriation artists like Prince to adapt materials without clear limits, it is easy to imagine that the sources such artists appropriate from may dry up for lack of commercial incentive.[138] That incentive is critical. Cariou’s investment of time and trust-building in creating his photographs was significant. He spent “some six years” with the Rastafarians he documented in Yes Rasta, “gaining their trust and taking their portraits.”[139] One could argue that that time and effort was necessary for Cariou to develop the kind of relationships with his subjects that would permit him to take the portraits in the first place. The Second Circuit’s decision undermines the importance of this kind of effort. In fact, photographers like Cariou may be more vulnerable to this expansion of fair use copying than painters, sculptors, and other visual artists. Some commentators have suggested that copyright law gives less protection to visual artists than to authors because it limits the right to copy, which isn’t as important to visual artists as it is to authors because of their different modes of profit.[140] While visual artists rely on a “single-copy business model,” selling one unique version of each work, authors, rely on a “multi-copies business model,” in which they expect to sell many copies of each original work. By focusing on the right to copy, as its name suggests, copyright law effectively discriminates against visual artists in comparison to authors.[141] This argument, however, ignores a key distinction of photography as a medium. It is easier and more common for photographers to sell copies of their work than for many other kinds of artists. Cariou primarily sold his work, for example, through a mass-produced book.[142] Appropriation artists, especially painters, primarily exhibit and sell single copies of their work, commanding higher prices in part because of their scarcity. Lastly, the expansion of fair use as illustrated by Cariou threatens the existence of the photographic licensing market. That market, which serves as a conduit between photographers and the publications or other entities that want to license their work, can be sidestepped entirely if stealing photos is fair use.[143] Indeed, the fact that there is currently an operational licensing market that Prince could have accessed makes it more difficult to justify his unlicensed use of Cariou’s photographs as fair.[144]

C. The Societal Impact

The Cariou case has important implications for the relationship between law and society as well. Prince’s business approach, like that of many appropriation artists, also raises ethical concerns. Even if courts determine that his adaptation of Cariou’s photographs was legal, was it ethical of him to use Cariou’s images without attribution? If Prince can make headlines, and millions of dollars, from taking another artists’ work, his success sends a message to younger artists that is not easily countered. It is difficult to expect art teachers to demand integrity of their students when the art world and/or the legal system discards its value.[145] The issue is especially acute for younger artists, who have come of age in an era that lauds appropriation art as much as entirely original compositions. Copyright law, like all intellectual property law, must strike a balance between the protection of original creative work and the common interest in access. If case law undermines the importance of original work, as Cariou arguably does, what is the counterweight against free-for-all use of visual works that are not yet in the public domain? Indeed, if current trends continue, the future of the “public domain” as a concept may change as well.

III. Evaluating Proposed Solutions to the Transformative Use Problem

Copyright scholars, art critics and general observers have been exchanging ideas about how to repair the damage done by Cariou since the Second Circuit’s decision issued. While many scholars have offered innovative solutions based on important insights into the nature of the problem, their proposals often suffer from a lack of practicality. However, the shortcomings of these proposals form, in part, the basis on which more workable solutions can be developed.

A. Proposed Statutory Amendments Paint With Too Broad a Brush

One potential remedy for the lack of clarity exposed by Cariou, Green Day, and similar cases might be to amend the Copyright Act to provide guidance for the proper scope and application of the transformative use defense. Congress could, for example, amend the Copyright Act to clarify the distinction between derivative use and transformative use, which is not codified in the statute.[146] Such an amendment, however, would likely do less to ease the interpretive burden on judges than the recommendations proposed in this article. No single definition of transformative use is likely to capture the fine but important distinctions inherent in the ways artists create meaning among the various types of copyrightable expression. Another scholar has proposed amending Section 101 of the Copyright Act to establish a precise list of uses that would qualify as transformative, to parallel the current statutory definition of derivative use that appears in 17 U.S.C. § 101.[147] Indeed, writers have suggested and courts have adopted a number of other more specific measures of transformative use across genres, none of them satisfactory. These include exemptions for “productive copying,”[148] copying for “socially laudable purposes,”[149] copying for “a different purpose from the original,”[150] and copying with “implied consent” which in turn would accord with the “prevailing understanding of the community” and/or “customary practice.”[151] Defining transformative use more precisely through amendment of the Copyright Act has some drawbacks. First, any illustrative list of transformative uses will, by nature, be limited in scope. A determination of fair use based on transformative use will still rely on the fact finder’s subjective analysis to some extent. The same can be said, however, for the interpretation of other kinds of fair use and, more generally, in any application of precedent. The open-ended nature of the fair use defense, and of transformative use in general, has long been recognized as a necessary condition.[152] Second, a more specific definition of transformative use may have the overall effect of narrowing the defense, thereby increasing the chances that appropriation artists will be held liable for copyright infringement. They may be discouraged, in turn, from producing work that the art market, media, and popular audiences value. Because appropriation artists’ work often commands such high prices, investors and collectors may claim that regulating appropriation art more closely will hurt the art market overall. Dealers and galleries may be more hesitant to sell and show such work if they perceive an increased risk of liability themselves. After all, Larry Gagosian, the owner and founder of the prestigious Gagosian Gallery was a named defendant in Cariou v. Prince.[153] Resistance from the intermediaries between artists and collectors may further depress the market for this lucrative type of art.

B. Compulsory Licensing for Visual Artists Is Untenable in the United States

Scholars have also proposed amending the Copyright Act to provide compulsory licensing for visual artists who incorporate copyright-protected works of others into their work.[154] Compulsory licensing already exists to some extent in music with regard to cover songs,[155] and some commentators have proposed expanding the scope of compulsory licensing to include digital sampling as well.[156] In the wake of Cariou, some commentators suggested that it might be time to revive that idea in the visual arts in order to ensure fair compensation for source artists.[157] Licensing is particularly inapt in this context because of the critical and transgressive nature of appropriation art as a movement, as described above.[158] The history of appropriation art reveals that the practice of appropriation is fundamentally aimed at challenging and departing from prior modes of representation.[159] As one scholar has put it, “[w]hile societal criticism is usually incidental to traditional parody, it is the avowed purpose of appropriationist visual art.”[160] Another difficulty inherent in a potential compulsory licensing scheme is the question of whether exhibited or published secondary works would be subject to a license fee, or whether the licensing scheme would be limited to actual sales. As noted above, appearing in an exhibit, especially at a premiere location such as the Whitney Museum or the Gagosian Gallery, can vastly increase the worth of an artist’s work.[161] A compulsory licensing scheme that addressed only the actual sale of art would address only part of the process by which art is valued, and increases in value, in the global art market. A greater challenge would be determining who might administer the licensing program. Since so many major art sales take place through galleries and auction houses, they would be the logical first choices. If galleries were compelled to direct a percentage of the sale price of an appropriation piece to a source artist(s), however, the galleries would bear the burden of identifying (or verifying, if the appropriation artist will assist in this task) the source artist(s) and the date of the source work in order to determine whether or not the work was in the public domain. If so, presumably no license fees would be due. If not, however, the gallery would then face the task of transferring payment to that person or those people. If the source artist does not know that a fee is owed to her, she has no incentive to verify the payment. That complication suggests that enforcement of the licensing scheme would be challenging as well. This would be especially difficult with regard to private sales. The difficulty of ensuring that the license fee extracted from the seller makes its way to the source artist multiplies when the seller is a private individual rather than a gallery or auction house. Increasingly, collectors and sellers are using private sales to transfer art rather than public auctions.[162] One reason is that private sales lessen the risk of failure in a prestigious market. As one New York gallery director explained, “If [a piece] doesn’t sell [privately], it’s not a public event. […] However, if your painting is on the cover of an auction catalog and it’s been marketed globally and then doesn’t sell – ouch!”[163] As more transactions are handled privately, a compulsory licensing scheme becomes harder to administer and enforce. Compulsory licensing may be easier to administer and enforce in the music business than it would be in the visual arts. Although the Supreme Court developed the transformative use defense in the context of a music case,[164] the differences between the music business and the art business help illustrate why licensing would be harder to administer in the latter. In the music industry, a few major organizations help consolidate the licensing process, including the Recording Industry Association of America (RIAA) and Broadcast Music Incorporated (BMI). In the visual arts, however, there is no comparable hegemony. Organizations such as VAGA and Artists’ Rights Society (ARS), which describes itself as the “preeminent copyright, licensing, and monitoring organization for visual artists in the United States,”[165] represent many visual artists’ interests. VAGA, for example, serves as a licensing clearinghouse for its member artists. When “any type of image user seeks to reproduce a work of art by one of our members, VAGA issues a license document, which details and limits the rights granted, contains clauses protecting the integrity of the licensed work, and ensures payment of a fee commensurate with the nature of the use.”[166] ARS, in contrast, “act[s] on behalf of [its] members to streamline the process for reviewing requests for reproduction” but does not license or sell their art on their behalf.[167] Perhaps the most intransigent difficulty in a general licensing scheme, however, has to do with the difficulty of pinpointing a single original work. As discussed above, it is difficult to pinpoint verbally what the “expression” of any artwork is, and therefore what elements can be protected by copyright, as a rule, in the same way that “expression” can be identified and quoted in written work.[168] The many problems inherent in a compulsory licensing scheme can be illustrated in part by analogy to the recent debate over the possible institution of a federal resale royalty structure.[169] A resale royalty provides that when a work of art is sold by someone other than the artist, some percentage of the sale price goes to the artist no matter how long it has been since the artist sold the work originally. Resale royalty laws are common in Europe and other parts of the world, but have been met with mixed success in the United States.[170] In 2013, however, the Copyright Office issued a report recommending that Congress consider adopting such rights.[171] In February 2014, a group of congresspersons introduced a bill which, if passed, would grant visual artists the right to collect resale royalties.[172] Critics of the bill pointed out that the logistical burden and administrative costs of such a scheme are likely to outweigh the benefits. They noted, for example, that the bill’s provisions making the collection of resale royalties transferable and retroactive would have done more harm than good.[173] Similar arguments can be made against a compulsory licensing scheme, and would likely arise if a compulsory licensing scheme were to be proposed in a more formal manner.

IV. A Three-Step Solution to Reforming Transformative Use in the Visual Arts

Resolving the current mismatch between 21st century appropriation art and copyright law requires at least three changes. First, courts should clarify that meritorious appropriation art is per se transformative use, thus reducing the current confusion as to how much variation between the original work and the new work is permissible. Second, courts should encourage expert testimony from art scholars on whether the works in question are meritorious appropriation art or not, allowing judges to resume their historic reluctance to evaluate visual art. Finally, Congress should revise the Copyright Act to narrow the scope of fair use for visual artists to reproductions, eliminating the current confusion between the protected transformative use defense and the infringing transformation of original works within the scope of the artists’ derivative rights. Taken together, these three changes will restore clarity to the question of how artists can create new works without infringing the rights of other artists. This increased clarity will allow artists to stop litigating and focus their attention on creating, a development that all parties should favor.

A. Recognize Appropriation Art as Transformative Use Per Se

As a first element of this tripartite solution, courts should accept meritorious appropriation art as transformative per se. In other words, courts should determine – preferably with the assistance of expert testimony, as described in the following section – whether the accused work is meritorious appropriation art. If so, the court should take that determination into account when evaluating the first of the fair use factors. The second, third and fourth factors should remain open to the court’s analysis, without a correlative presumption. In the past, courts have been reluctant to supplant the entire four-factor analysis with a broader presumption that appropriation art should be considered per se fair use. In Morris v. Guetta, for example, the Central District of California Appellate Court ruled that Guetta’s adjustments to photographs of Sid Vicious taken by Dennis Morris constituted copyright infringement.[174] The court rejected Guetta’s argument that appropriation art should be considered fair use per se: “[t]o permit one artist the right to use without consequence the original creative and copyrighted work of another artist simply because that artist wished to create an alternate work would eviscerate any protection by the Copyright Act.”[175] Prior to Cariou, a few scholars proposed unique fair use standards for appropriation art, but none were adopted. In 1988, for example, John Carlin suggested modifying fair use standards to better accommodate appropriation art.[176] Instead of the standard four-factor test, Carlin suggested focusing on the purpose of the copying and the nature of the work copied.[177] Carlin’s test, however, applied different standards depending on whether the copied image was recognizable to the average viewer.[178] Carlin also limited his proposed fair use determination to the appropriation of works whose creator was no longer living or actively exhibiting his work.[179] In 1993, E. Kenly Ames proposed a different approach to fair use in appropriation art cases.[180] Ames would have limited the presumption of fair use to works of visual art as defined under the Visual Artists’ Rights Act of 1990 (VARA), in part to “avoid any need to decide whether it is ‘good art,’ or even ‘art’ at all, or whether it is successful in getting its critical message across to the viewer.”[181] She further proposed a minimal standard of review for the appropriating work’s effect on the potential market for the original work, suggesting that such appropriation should be deemed fair so long as the secondary work cannot reasonably function as a market substitute for the original. [182] Both Carlin and Ames’ proposals recognized that appropriation art required different legal treatment from more traditional 19th century forms of image creation, but their standards would have been relatively difficult to implement. Carlin’s qualification that recognizable works deserved more protection introduces the unwieldy question of what an “average viewer” recognizes, and answering such a question is no easy task in a culture that is increasingly subdivided in terms of what people see and recognize. Ames’ proposal introduces the excellent notion of using the VARA standard to remove the subjective evaluation of art from the courts, but would apparently allow that determination to override the consideration of the other four fair use factors. However, a better approach would allow courts to deem appropriation art that falls under a minimal VARA standard to be transformative use, while retaining consideration of market impact and other important fair use considerations and without allowing any one of those considerations to dominate. A critical question is how much transformation of a source work is necessary to qualify as appropriation art, and therefore transformative use per se, under this proposal. This question plagued the Second Circuit in Cariou as well. In its decision, the majority determined that most of Prince’s work qualified as transformative use without specifying the standards used to reach that determination. While some of Prince’s works transformed Cariou’s photographs beyond judicial doubt, other works were too close to call. As Judge Parker noted with regard to one work, Graduation:
Prince did little more than paint blue lozenges over the subject’s eyes and mouth, and paste a picture of a guitar over the subject’s body… Where the photograph presents someone comfortably at home in nature, Graduation combines divergent elements to create a sense of discomfort. However, we cannot say for sure whether Graduation constitutes fair use or whether Prince has transformed Cariou’s work enough to render it transformative.[183]
The court remanded the question of whether Prince was entitled to the fair use defense for Graduation and four other works, but failed to provide any clear standards by which to make that determination. It is hard to see how the lower court would be any more qualified than the appellate court to make this determination, unless additional testimony was permitted on this point. Even so, it would have been difficult to introduce such testimony absent standards of proof. When a work is appropriation art, it is creative and progressive. It is “not premised on rote copying,” but is instead “about quotation, recontextualization, and criticism – the very building blocks of artistic progress.”[184] The Copyright Clause of the Constitution, after all, authorizes Congress to promote the Progress of Science and useful Arts.[185] Because genuine appropriation art represents artistic progress, it is “the sort of innovative criticism and reassessment of our environment that one might argue the Copyright Act is designed to protect.”[186] For that reason, it deserves at least per se protection as transformative use. One way to remove judges from their newly adopted and ill-suited role as art critics is to create a brighter line between what does and does not infringe a source artist’s copyright. Given the prominent role of appropriation art in the modern art canon, the time has come to recognize it explicitly in the context of copyright law. The simplest bright line to use is the term Congress has already adopted in another copyright statute designed to protect artists: VARA.[187] In adopting a relatively simple standard for basic protection, VARA relieves courts of the responsibility they are ill equipped to bear: making aesthetic judgments and determinations of artistic worth.

B. Broaden the Use of Expert Testimony by Art Scholars in Infringement Cases

Another way to restore the proper distance between judges and art evaluators is to expand the use of qualified expert testimony in visual art copyright infringement cases. Judges should not be in the business of judging art. The Second Circuit’s foray into artistic evaluation in Cariou appears to have been entirely subjective, since it did not specify any standards used to determine that twenty-five of the accused paintings were fair use and five were too close to call.[188] I propose instead that courts invite expert testimony on the issue of whether an accused work is meritorious appropriation art, mere copying without more, or something in between. Specifically, my proposal is that parties to copyright infringement cases involving appropriation art retain experts to testify as to whether the allegedly infringing work is meritorious appropriation art or not. Other scholars, most notably Monika Jasiewicz, have recently suggested inviting expert testimony on whether an artistic use is transformative so as to qualify for the fair use defense.[189] Although it is grounded in many of the same concerns, my proposal is narrower in that it calls for a parallel per se determination of transformativeness for appropriation art. Expert testimony is necessary in appropriation art cases because of its unique forms of expression, interpretation and meaning. It is harder for judges to evaluate the fair use of art than other kinds of copyrightable expression. This is especially true for appropriation art, which has its own canon and semiotics. While judges are likely to be familiar with the conventions of parody and jokes present in literary works, they are less likely to have a comparable understanding of the conventions of photography and appropriation art, because those conventions lay farther outside the popular discourse.[190] As Cariou illustrates, the current “new expression, meaning or message” test is difficult at best to implement without expert assistance. Any new depiction of a source work that varies even slightly from the original, for example, might qualify as “new expression” in that it differs from the original expression. Even if courts were to narrow the “expression” element of the current test, it is challenging to define transformative use in the visual art medium. It is significantly harder to define the “meaning or message” of a visual artwork than to define the “meaning or message” of a written work, in part because visual art is less literal by nature. There can be no single meaning of a work of art, as so much of the interpretation of a work rests with the observer.[191] Judicial opinions are also a poorer vehicle for conveying the bases of a transformative use determination in cases involving the visual arts than those involving written works. As Matthew Bunker and Clay Calvert have observed, the “perception of whether something constitutes a written parody may be more reasonably gleaned and more readily explained in a judicial opinion than the perception of whether image-based appropriation art is transformative.”[192] Indeed, judges’ willingness to engage in aesthetic judgments in the course of legal judgments is a relatively recent phenomenon. In Bleistein v. Donaldson Lithographing Co., Justice Holmes observed that
It would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of [works] … if they command the interest of any public, they have a commercial value – it would be bold to say that they have not an aesthetic and educational value, – and the taste of any public is not to be treated with contempt.[193]
Holmes’ statement underscores an important limitation on judges’ ability to interpret art in copyright cases. So, too, did Judge Wallace’s dissent in the Second Circuit’s Cariou ruling, belying his discomfort in the role of art critic. Citing a cautionary note from the Supreme Court in the Campbell case that “it would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of [a work], outside of the narrowest and most obvious limits,”[194] Judge Wallace wrote that “[i]t would be extremely uncomfortable for me to do so in my appellate capacity, let alone my limited art experience.”[195] His hesitation to engage in art criticism is well-reasoned, and should be instructive to courts in general. Nor should artists be in the business of judging their own art. Several observers have pointed out the difficulties inherent in asking artists to comment on their own intention in creating works at issue.[196] While an artist’s intent should not be viewed as dispositive, Cariou can be read to suggest that it is not even relevant. After all, in Cariou, the District Court interpreted Prince’s testimony to mean that he had no transformative intent.[197] But it is not artists’ potential inability to articulate their intent that is the problem. Indeed, any witness has the potential to be inarticulate. Dealing with that possibility is one of the trial lawyers’ responsibilities. The larger problem is that the artist’s perspective and intent is irrelevant to the commercial impact of the alleged copying, which is at the heart of the first and fourth factors of the fair use defense. [198] Scienter need not be part of a fair use determination. Whether an artist like Prince can articulate a transformative intent behind his work is not determinative of whether his work is appropriation art. As Caroline McEneaney has written, “[t]he creator often sees the work very differently from others and rarely has a true sense of the legal consequences of his own words … To rely so heavily on the testimony of the artist leaves society’s exposure to valuable cultural reference in the hands of art makers, who are not versed in the law, have very different perspectives than judges and lawyers, and may not realize the impact that their words can have.”[199] In many ways, the need for expert testimony in visual art copyright infringement cases can be compared to the need for expert testimony in patent cases, which have been standardized in claim construction hearings.[200] In such hearings, courts benefit from expert testimony from each side as to the proper construction of certain terms in the claims at issue. In patent infringement litigation, courts accept the need for expert testimony on the technical details of patented inventions because the technology is so specialized, as it must be to be patentable, that no judge can be expected to appreciate the perspective of “one of ordinary skill in the art” of the patent. This is true regardless of whether the judge sits in a court of general jurisdiction or a specialized court like the Federal Circuit. Judges are no more, or at least not much more, qualified to interpret appropriation art than they are to interpret the workings of a nonvolatile semiconductor memory device with an improved gate electrode. When courts use expert witnesses to help evaluate transformative use in the visual arts, it is critical to circumscribe their testimony. Such experts should testify only to whether the accused works meet a specific standard. This article proposes that the standard be whether the accused work is meritorious appropriation art, as described in the preceding section. There is a danger that expert testimony on transformative use will focus on the market value, if any, of the accused and original works. Indeed, the Second Circuit’s Cariou opinion included an extensive discussion of the market differences between Prince’s work and Cariou’s work.[201] This kind of testimony should be avoided. Indeed, such testimony might flow naturally from Section 107’s emphasis on the market. The first factor asks whether the accused work’s use of the original is “of a commercial nature or is for nonprofit educational purposes,” while the fourth factor focuses on “the effect of the use upon the potential market for or value of the copyrighted work.[202] Transformative use, however, is usually considered to affect the determination of the first fair use factor alone.[203] An important constraint of these proposals is that they allow the court to consider the other three factors of fair use independently. One danger of allowing marketability and market value to influence the determination of transformative use is the possibility of offering greater protection to expensive artists than to lesser known artists. While art can be big business, the price tag of a work should not influence the determination of whether it is either transformative or infringed. Given the shift in judicial attitudes evidenced in Cariou, this is a real concern. As noted above, the Second Circuit’s decision hinged in part on a finding that Cariou appealed to a different “sort of collector” than Prince. It observed that
Certain of the Canal Zone artworks have sold for two million or more dollars. The invitation list for a dinner that Gagosian hosted in conjunction with the opening of the Canal Zone show included a number of the wealthy and famous such as the musicians Jay-Z and Beyonce Knowles […] Vanity Fair editor Graydon Carter, Vogue editor Anna Wintour, […] and actors Robert DeNiro, Angelina Jolie and Brad Pitt […] Cariou on the other hand has not actively marketed his work or sold his work for significant sums, and nothing in the record suggests that anyone will not now purchase Cariou’s work, or derivative non-transformative works (whether Cariou’s own or licensed by him) as a result of the market space Prince’s work has taken up. This fair use factor therefore weighs in Prince’s favor.[204]
While the Court’s analysis is limited on its face to the fourth fair use factor, it is impossible to ignore the air of snobbery implicit in its assessment. Contrast this with the Second Circuit’s opinion in Rogers v. Koons, in which the court derided the arrogance implicit in the assumption that wealth insulates an artist from infringement allegations:
The copying was so deliberate as to suggest that defendants resolved so long as they were significant players in the art business, and the copies they produced bettered the price of the copied work by a thousand to one, their piracy of a less well-known artist’s work would escape being sullied by an accusation of plagiarism.[205]
The difference in these opinions indicates just how far the Second Circuit has slid toward accepting exactly the kind of privilege that it had derided in Rogers v. Koons. It also underscores the importance of eliminating (or at least minimizing) the effect of power and wealth on the scope of an artist’s rights. To allow market value to infect the transformativeness decision would be to perpetuate the danger that only the wealthy can afford justice. If only highly marketable artists can protect their work in court, then we as a society effectively will be determining that lesser-known artists have fewer rights. That is inapposite to copyright’s constitutional mandate “to promote the Progress of Science and useful Arts.” We should not equate artistic value with commercial value. What kind of experts should be employed? The experts testifying in transformative art cases could be art critics, art historians, or other professionals with expertise in the types of art at issue. One danger of employing gallerists and art dealers as experts instead is the possibility that their knowledge of the market and of relative value will unduly influence their opinion as to whether the accused work is meritorious appropriation art. While there need not be a bright-line exclusion of art market players from this kind of expert testimony, courts should guard against allowing market value to influence their opinions as the Second Circuit arguably did in Cariou.[206]

C. Limit Visual Artists’ Derivative Rights to Reproduction Rights

The third element of this proposal is to amend the Copyright Act to limit the scope of derivative rights for visual artists to reproductions of their work, within limits. Authors’ derivative rights in the characters they create make sense in ways that artists’ derivative rights in the particular work do not. The visual image is the creative work itself. Characters, on the other hand, exist independently of the specific words used to create them. Under the terms of this proposal, artists would retain derivative rights in reproductions of their works, including variations in size, format, materials and coloration. The reproduction of a work on a t-shirt, a poster, or a website would not qualify as transformative and, presumably, would not be fair use in most cases. Allowing for these minor differences in expression of the work is also consistent with the sensible outcomes of cases like Friedman v. Guetta.[207] In that case, Ron Friedman sued Thierry Guetta for copyright infringement based on Guetta’s use of Friedman’s photograph of the hip-hop group Run D.M.C. Guetta asserted the fair use defense, and lost. The court rejected the claim that Guetta’s adaptation of the photograph was “transformative” even though his work differed in minor ways from Friedman’s.[208] Put simply, this limitation would help bring copyright law into line with the reality of appropriation art. If courts continue to engage in subjective analyses of how much variation of an original work is transformative, the doctrinal chaos advanced by Cariou will continue to confuse artists and scholars. Only those artists wealthy enough to roll the legal dice will be able to risk an infringement decision (especially if their pockets are deep enough to afford appellate counsel). The majority of artists cannot afford to take those risks. The uncertainty caused by diffuse standards may chill the creation of new works, depriving society of the “progress of the … useful arts” that the Constitution seeks to protect.[209] It may also result in fewer source works for artists to appropriate in future years. Restoring a bright line, even one that is more conservative than that established by the current case law, will provide the certainty artists and art markets need. The scope of rights suggested here squares with case law, including Cariou, and has the benefit of being both simple and realistic. To be sure, some reproductions of copyrightable works will still be found to be fair use, for example, where the reproduction serves a different purpose from the original work.[210] And reproduction may still be found to misappropriate an image even where it is surrounded by original creative elements, as was the case in Hart v. Electronic Arts.[211] As a general principle, however, limiting the derivative rights of visual artists to reproductions with minimal variations will help restore the proper boundaries between derivative and transformative use in this sphere.


Reforming the determination of transformative use in this comprehensive manner is necessary to reign in the fragmentation of precedent that has left artists, scholars, and investors wondering what transformative use means now. The Cariou decision and other recent cases expanding the application of the fair use defense are cause for concern, not just in the multi-billion dollar global art market but for the preservation of the creative process in general. The explosion of images available on the internet feeds the development of appropriation art, demanding a legal treatment that fairly defines the rights of all players in this market. Copyright law (like all intellectual property law) seeks the right balance between rewarding the creators of new works and ensuring that those works can be used appropriately by the public, and it must adapt to evolving technology. By allowing appropriation artists apparently unfettered access to copyrighted materials, judicial decisions like Cariou threaten the incentives of more original artists to create the sources on which appropriation art depends. Left unchecked, it will continue to plague the art market, adversely affect lesser known artists, and entrust the legal boundaries of creative expression to the wide range of judicial discretion. Given the likely doctrinal, commercial and societal effects of these cases, there is a need for comprehensive reform. The proposals set forth in this article will clarify the rights of appropriation artists and source artists as well as the proper roles of judges and experts in 21st century art copyright cases. The first proposal, treating meritorious appropriation art as transformative use per se, removes the uncertain element of judicial subjectivity that currently makes it hard for artists to know a priori what their rights are when accusing someone or being accused of copyright infringement. It also allows courts to retain consideration of purpose, market impact, and other more easily determined elements of a fair use defense. The second proposal, encouraging the use of expert witnesses to determine whether the accused works meet the appropriation art test, acknowledges the limits of judges’ ability to evaluate the visual arts to the same extent that they can evaluate written works. It also dampens the likelihood that socioeconomic factors will play a large part in the court’s determination of what is and is not protectable, although the costs of litigation will always affect access to justice to some extent. The third proposal, limiting source artists’ copyright essentially to reproductions of their work, makes sense for the proper balance of rights in the visual arts context and is necessary for the first proposal to work well. This comprehensive set of reforms is necessary to restore much-needed clarity to the art world and to bring copyright jurisprudence into line with current ways of making and understanding art. As technology continues to multiply the images available for artists to work with and simultaneously fractures the viewing public into an infinite number of sub-communities, the tripartite reform proposed here is not only warranted but critical to align the interests of artists, consumers, copyright lawyers, and courts alike.
* Assistant Professor of Law, Bentley University, Waltham, Massachusetts. The author wishes to thank Sharon Patton for her assistance in preparing this article.
[1] See, e.g., Kyle Chayka, The Art Market was Worth $64 Billion in 2012, Hyperallergic (Jan. 2, 2013),; see also TEFAF Art Market Report 2013, TEFAF Maastricht, (Mar. 13, 2013),
[2] See Kathryn Tully, Are Investors Bullish on the Art Market?, Forbes (Apr. 30, 2013, 7:13 PM),
[3] Id.
[4] Ben Beaumont-Thomas, Christie’s post-war sale reaches $744m via Warhol, Bacon and Newman, The Guardian, (May 14, 2014, 7:16 PM),
[6] Cariou v. Prince, 714 F.3d 694, 709 (2d Cir. 2013) cert. denied, 134 S. Ct. 618 (2013).
[7] Id.
[8] Cariou, 714 F.3d at 710.
[9] Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994) (internal quotation marks omitted) (citing Stewart v. Abend, 495 U.S. 207, 236 (1990)).
[10] See, e.g., Matthew D. Bunker & Clay Calvert, The Jurisprudence of Transformation: Intellectual Incoherence And Doctrinal Murkiness Twenty Years After Campbell v. Acuff-Rose Music, 12 Duke L. & Tech. Rev. 92, 127 (2014) (suggesting inter alia that transformative use be limited to certain types of copyrightable expression); Deepa Varadarajan, Improvement Doctrines, 21 Geo. Mason L. Rev. 657, 682 (2014) (suggesting a “substantial improvement” limitation to the fair use defense); Monika Isia Jasiewicz, Note, “A Dangerous Undertaking”: The Problem of Intentionalism and Promise of Expert Testimony in Appropriation Art Infringement Cases, 26 Yale J.L. & Human. 143, 146 (2014) (proposing that courts invite expert testimony on whether an artistic use is “transformative” in a way that would qualify for the fair use defense).
[11] MOCA The Museum of Contemporary Art, Los Angeles, (last visited Sept. 2, 2014).
[12] Remixthebook, Appropriation, (last visited Oct. 29, 2014).
[13] Mike Masnick, AP and Shepard Fairey Settle Lawsuit over Obama Image; Fairey Agrees to Give up Fair Use Rights to AP Photos, Techdirt (Jan. 12, 2011, 11:22 AM),
[14] See Hal Foster et al., Art Since 1900: Modernism, Antimodernism, Postmodernism, Vol. 1: 1900 to 1944, at 112 (Thames & Hudson eds., 2004).
[15] See John Carlin, Culture Vultures: Artistic Appropriation and Intellectual Property Law, 13 Colum.-VLA J.L. & Arts 103, 109 (1988).
[16] For a more extensive discussion of the evolution of appropriation art, please see Jasiewicz, supra note 11, at 147-151.
[17] Id. at 150.
[18] Id. at 151.
[19] Festival of Inappropriation, About the Festival (Oct. 28, 2014),
[20] Hactivism is “a neologism that mashes up the creative use of digital tools associated with the computer hacker with the interventionist strategies of political activists. Cleverly inserting themselves into the networked space of flows, digitally inclined hactivists use whatever new media technologies they may have access to subvert the mainstream media discourse and tweak the way we construct meaning in the corporate media economy.” Remixthebook, Hactivism, (last visited Oct. 28, 2014).
[21] Remix Culture, (last visited Oct. 28, 2014); Remixthebook, The Course, (last visited Oct. 28, 2014).
[22] See, e.g., Seth Fiegerman, More than 500 Million Photos are Shared Every Day, Mashable (May 29, 2013),
[23] See, e.g., Rebecca Corliss, Photos on Facebook Generate 53% More Likes than the Average Post, Hubspot (Nov. 15, 2012, 9:00 AM), 33800/Photos-on-Facebook-Generate-53-More-Likes-Than-the-Average-Post-NEW-DATA.aspx.
[24] See Pierre N. Leval, Commentary, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105 (1990); see also Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994).
[25] See 17 U.S.C. § 107 (2012).
[26] Id.
[27] See Leval, supra note 25, at 1111.
[28] Id.
[29] Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792, 803 (9th Cir. 2003).
[30] Campbell, 510 U.S. at 579.
[31] Id. at 571.
[32] Id. at 578.
[33] The term “relied on” raises a host of issues itself, since almost all art derives in some way from previous works.
[34] Cariou v. Prince, 134 S. Ct. 618 (2013).
[35] Cariou v. Prince, 784 F. Supp. 2d 337, 343 (S.D.N.Y. 2011), rev’d in part, vacated in part, 714 F.3d 694 (2d Cir. 2013).
[36] Id.
[37] Id.
[38] Press Release, Gagosian Gallery, Richard Prince: Cowboys (Jan. 28, 2013), available at
[39] Carol Vogel, Bacon is Again a Top Draw at Auction, N.Y. Times, (Jul. 2, 2008),
[40] Cariou, 784 F. Supp. 2d at 343.
[41] Id. at 344.
[42] Id.
[43] Id. at 350.
[44] Id. at 344.
[45] Cariou, 714 F.3d at 704.
[46] Cariou, 784 F. Supp. 2d at 355.
[47] Id. at 347-51.
[48] Id. at 348 (citing Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994)).
[49] Id.
[50] Id. at 349.
[51] Id.
[52] Cariou, 784 F. Supp. 2d at 350.
[53] Id. at 349 (internal quotation marks omitted).
[54] Id. at 350-51.
[55] Id. at 351.
[56] Id. at 352 (citing Howard B. Abrams, The Law of Copyright, § 15:52 (2006)).
[57] Id.
[58] Cariou, 784 F. Supp. 2d at 352.
[59] Id. at 353.
[60] Id.
[61] Id. (citing J.D. Salinger v. Random House, Inc., 811 F.2d 90, 99 (2d Cir. 1987)).
[62] Id. (citing Castle Rock Entm’t, Inc. v. Carol Pub. Grp, Inc., 150 F.3d 132, 145-46 (1998)).
[63] Cariou, 784 F. Supp. 2d at 344.
[64] Id.
[65] Id.
[66] Id. at 353.
[67] Id. at 355.
[68] Cariou, 714 F.3d at 704.
[69] Id. at 697.
[70] Id. at 695.
[71] Id. at 699.
[72] Id. at 700.
[73] Cariou, 714 F.3d at 706.
[74] Id.
[75] Id. (internal quotation marks omitted) (citing Campbell Acuff-Rose Music, Inc, 510 U.S. 569, 579 (1994)).
[76] Id. (citing Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994)).
[77] Id. at 707.
[78] See Cariou, 714 F.3d at 708 (“Although there is no question that Prince’s artworks are commercial, we do not place much significance on that fact due to the transformative nature of the work.”).
[79] See id. at 709 (“Although certain of Prince’s artworks contain significant portions of certain of Cariou’s photographs, neither Prince nor the Canal Zone show usurped the market for those photographs.”).
[80] Id.
[81] Id.
[82] Id. Although the ruling did not so specify, it is reasonable to infer from both the elite nature of the Gagosian Gallery and the price point for Prince’s work that only the wealthiest collectors could afford to buy these pieces.
[83] Cariou, 714 F.3d at 712.
[84] Id.
[85] Prince’s response to the verdict was interesting. When the twenty-five paintings which had been held for five years pending the resolution of the case were finally returned to him after the Second Circuit’s ruling, he tweeted: “Canal Zone paintings finally back. Saw Em for the first time in 5 years. What they should of [sic] sued me for was making shitty paintings. XingEmOut.” Irina Tarsis, Photographs and Richard Prince: The Gifts That Keep on Giving, Center for Art Law, (Feb. 24, 2014),
[86] Seltzer v. Green Day, Inc., 725 F.3d 1170, 1179 (9th Cir. 2013).
[87] Id. at 1173.
[88] Id. at 1174.
[89] Id. at 1175.
[90] Id. at 1176.
[91] Id. at 1177.
[92] See Matthew Sag, Predicting Fair Use, 73 Ohio St. L.J. 47, 52 (2012).
[93] Id. at 84.
[95] Id. at 734.
[96] Id. at 736.
[97] Id.
[98] Id. at 740.
[99] Id. at 742.
[100] Kim J. Landsman, Does Cariou v. Prince Represent the Apogee or Burn-Out of Transformativeness in Fair Use Jurisprudence? A Plea for a Neo-Traditional Approach, 24 Fordham Intell. Prop. Media & Ent. L.J. 321, 354 (2014).
[101] Netanel, supra note 95, at 745.
[102] Id. at 744.
[103] Rogers v. Koons, 751 F. Supp. 474 (S.D.N.Y. 1990), aff’d, 960 F.2d 301 (2d Cir. 1992), cert. denied, 506 U.S. 934 (1992).
[104] See Rogers, 751 F. Supp. at 480.
[105] See Rogers, 960 F.2d at 306.
[106] Blanch v. Koons, 467 F.3d 244, 246-47 (2d Cir. 2006).
[107] See id. at 247.
[108] Id. at 247-248.
[109] Id. at 248.
[110] Id.
[111] Id. at 252-253.
[112] Id. at 259.
[113] See, e.g., Morris v. Guetta, No. LA CV12-00684 JAK (RZx), 2013 WL 440127, at *8 (C.D. Cal. Feb. 4, 2013) (rejecting defendant’s fair use defense to plaintiff photographer’s copyright infringement claims); Friedman v. Guetta, No. CV 10–00014 DDP (JCx), 2011 WL 3510890, at *7 (C.D. Cal. May 27, 2011) (finding infringement despite defendant’s claims that his use of plaintiff’s photograph was transformative).
[114] See, e.g., Elizabeth Winkowski, A Context-Sensitive Inquiry: The Interpretation of Meaning in Cases of Visual Appropriation Art, 12 J. Marshall Rev. Intell. Prop. L. 746, 760 (2013); Copyright Law – Fair Use – Second Circuit Holds That Appropriation Artwork Need Not Comment on the Original to Be Transformative. – Cariou v. Prince, 714 F.3d 694 (2d Cir. 2013), 127 Harv. L. Rev. 1228, 1229 (2014).
[115] Brief for The American Photographic Artists et al. as Amici Curiae Supporting Plaintiff, Cariou v. Prince, 784 F. Supp. 2d 337 (S.D.N.Y. 2011) (No. 08 CIV 11327), available at
[116] Id.
[117] 17 U.S.C. § 101 (2010).
[118] Campbell, 510 U.S. at 579.
[119] See Fair Use: Hearing Before the Subcomm. on Courts, Intellectual Property, and the Internet of the H. Comm. on the Judiciary, 113th Cong. 10 (2014) (statement of June M. Besek, Exec. Dir. of the Kernochan Center for Law, Media and the Arts and Lecturer-in-Law, Columbia Law School), available at—besek.pdf [hereinafter, Statement of June M. Besek].
[120] Id. at 12-13.
[121] Id.
[122] Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, art. 13, 1869 U.N.T.S. 299 (1994).
[123] See Panel Report, United States – Section 110(5) of the US Copyright Act, WT/DS160/R (June 15, 2000), available at
[124] See Statement of June M. Besek, supra note 120, at 12.
[125] Id.
[126] See, e.g., Kennedy, supra note 6.
[127] Richard Price, Untitled (Cowboy), Christie’s, (last visited May 27, 2014).
[128] See, e.g., Christian Marclay’s The Clock Makes Midwest Debut, Wexner Ctr. for the Arts, (last visited Sept. 2, 2014).
[129] See, e.g., Kennedy, supra note 6; Deborah Vankin, An Appropriate Time for Appropriation Art at Hammer, (Feb. 7, 2014),; A Study in Midwestern Appropriation, Hyde Park Art Center, (last visited Sept. 2, 2014).
[130] Don Thompson, The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art 12 (2008).
[131] See, e.g., Elizabeth M. Petty, Rauschenberg, Royalties and Artists’ Rights: Potential Droit de Suite Legislation in the United States, 22 Wm. & Mary Bill of Rts J. 977, 1005-1006 (2014).
[132] Id.
[133] Id.
[134] See Eric Konigsberg, The Trials of Art Superdealer Larry Gagosian, Vulture (Jan. 20, 2013, 9:10 PM),
[135] Id.
[136] See, e.g., Kennedy, supra note 6.
[137] See, e.g., Mixel, (last visited Sept. 2, 2014).
[138] This is not to suggest that all artists have a profit motive—indeed, Patrick Cariou did not commercialize his art extensively—but simply to recognize that commodifying art requires compensation.
[139] Cariou v. Prince, 784 F. Supp. 2d 337, 343 (S.D.N.Y. 2011) rev’d in part, vacated in part, 714 F.3d 694 (2d Cir. 2013).
[140] See, e.g., Guy A. Rub, The Unconvincing Case for Resale Royalties, 124 Yale L.J. F. 1 (April 25, 2014),
[141] See, e.g., U.S. Copyright Office, Resale Royalties: An Updated Analysis 2 (Dec. 2013), available at (“many visual artists [are placed] at a material disadvantage vis-à-vis other authors”); Rub, supra note 141 at 31 (“[C]opyright law has effectively discriminated against [visual artists] in many respects for centuries.”) (quoting Shira Perlmutter, Resale Royalties for Artists: An Analysis of the Register of Copyrights’ Report, 16 Colum.-VLA J. L. & Arts 395, 403 (1995)); see also Petty, supra note 132, at 986-987.
[142] Cariou v. Prince, 784 F. Supp. 2d at 343.
[143] See, e.g., Brief for The American Photographic Artists et al., supra note 116, at 18.
[144] See Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 568 n.9 (1985) (“[here] there is a fully functioning market that encourages the creation and dissemination of memoirs of public figures. In the economists’ view, permitting ‘fair use’ to displace normal copyright channels disrupts the copyright market without a commensurate public benefit”); Am. Geophysical Union v. Texaco Inc., 60 F.3d 913, 931 (2d Cir. 1994) (“it is sensible that a particular unauthorized use should be considered ‘more fair’ when there is no ready market or means to pay for the use, while such an unauthorized use should be considered ‘less fair’ when there is a ready market or means to pay for the use”).
[145] Cariou can also be viewed as an example of the imbalance of power in the legal system. While the identity of counsel is not generally considered relevant to the outcome of the case, it would be disingenuous to ignore the fact that Prince’s appellate law firm was Boies, Schiller & Flexner LLP, one of the most expensive and prestigious law firms in the country. The dramatic reversal of the Second Circuit’s opinion must have resulted from a significant legal effort by appellate counsel, some of which was described in a New York Times article on the increasing prevalence of appropriation art. See Kennedy, supra note 6.
[146] In fact, the Judiciary Committee held a hearing on the proper scope of the fair use defense on January 28, 2014. The Scope of Fair Use: Hearing Before the Subcomm. on Courts, Intellectual Prop. and the Internet of the H. Comm. on the Judiciary, 113th Cong. (2014), available at
[147] Michael A. Einhorn, Media, Technology and Copyright: Integrating Law and Economics, 33 (2004).
[148] Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 455 n.40 (1984).
[149] Id. at 478-9 (Blackmun, J., dissenting).
[150] Am. Geophysical Union v. Texaco, 802 F. Supp. 1, 14-15 (S.D.N.Y. 1994), aff’d, 60 F.3d 913 (2d Cir. 1994).
[151] Lloyd L. Weinreb, Fair’s Fair: A Comment on the Fair Use Doctrine, 103 Harv. L. Rev. 1137, 1143-4, 1160 (1990).
[152] See, e,g., Matthew Sag, G-d in the Machine: A New Structural Analysis of Copyright’s Fair Use Doctrine, 11 Mich. Telecomm. & Tech. L. Rev. 2 (2005).
[153] See Cariou v. Prince, 784 F. Supp. 2d 337, 343 (S.D.N.Y. 2011), rev’d in part, vacated in part, 714 F.3d 694 (2d Cir. 2013).
[154] See, e.g., Judith Bresler, Begged, Borrowed or Stolen: Whose Art Is It, Anyway? An Alternative Solution of Fine Art Licensing, 50 J. Copyright Soc’y of the U.S.A. 15 (2002).
[155] Section 115 of the Copyright Act provides for compulsory licensing in order to perform or record someone else’s original song. 17 U.S.C. § 115(a)(1) (2012).
[156] See, e.g., Kenneth M. Achenbach, Grey Area: How Recent Developments in Digital Music Production Have Necessitated the Reexamination of Compulsory Licensing for Sample-Based Works, 6 N.C. J. L. & Tech. 187, 190-191 (2004); Chris Johnstone, Note, Underground Appeal: A Sample of the Chronic Questions In Copyright Law Pertaining to the Transformative Use of Digital Music in a Civil Society, 77 S. Cal. L. Rev. 397, 399-402 (2004); Lucille M. Ponte, The Emperor Has No Clothes: How Digital Sampling Infringement Cases Are Exposing Weaknesses In Traditional Copyright Law and the Need for Statutory Reform, 43 Am. Bus. L.J. 515, 547 (2006) (critiquing compulsory licensing proposals).
[157] See, e.g., Tarsis, supra note 86.
[158] See, e.g., Martha Buskirk, Commodification as Censor: Copyrights and Fair Use, 60 October MIT Press 82, 102 (1992) (explaining that Rogers v. Koons “raises a number of important and troubling questions about the legal status of artistic appropriation, and it may set an important precedent with respect to the appropriation of images in works of art…. The decision is particularly troubling given the way in which strategies of appropriation have often performed a critical function”).
[159] Jasiewicz, supra note 11, at 151.
[160] E. Kenly Ames, Note, Beyond Rogers v. Koons: A Fair Use Standard for Appropriation, 93 Colum. L. Rev. 1473, 1500 (1993). But cf. Darren Hudson Hick, Appropriation and Transformation, 23 Fordham Intell. Prop. Media & Ent. L.J. 1155, 1177 (2013) (rejecting the idea that “we [can] describe the contemporary category of appropriation art on the basis that it is essentially a form of social commentary.”).
[161] See, e.g., Petty, supra note 132, at 1006-7.
[162] Katya Kazakina, Bargain Warhols, Secrecy Bring Collectors to Private Art Sales, Bloomberg (July 27, 2009, 12:01AM),
[163] Id.
[164] See Campbell, 510 U.S. at 569.
[165] History of ARS, Artists Rights Soc’y, (last visited Oct 26, 2014).
[166] General Information and Services, Vaga Rights, (last visited Oct. 26, 2014).
[167] Services Provided, Artists Rights Soc’y, (last visited Oct. 26, 2014).
[168] That said, it could be argued that determining whether an excerpt of a written work is the “heart” of the original, as fair use requires us to do when evaluating the use of quotes is a comparably difficult exercise. See, e.g., Campbell, 510 U.S. at 569.
[169] The concept of a resale royalty itself is not meant to redress the imbalance of power between a source artist and an appropriation artist. In other words, resale royalties would not compensate a source artist like Cariou when an appropriation artist like Prince uses his work.
[170] See, e.g., Petty, supra note 132, at 985 (noting that every European country other than Switzerland has a resale royalty law, as do several Latin and South American countries); see also Rub, supra note141.
[171] See, e.g., U.S. Copyright Office, supra note 142.
[172] The American Royalties Too Act of 2014, H.R. 4103, 113th Cong. (2014).
[173] See, e.g., Rub, supra note 141 at 2; Petty, supra note 132, at 1006-7.
[174] Morris v. Guetta, No. LA CV12-00684 JAK (RZx), 2013 WL 440127, at *8 (C.D. Cal. Feb. 4, 2013) (rejecting defendant’s fair use defense to plaintiff photographer’s copyright infringement claims).
[175] Id. at *13.
[176] Carlin, supra note 16, at 137-38.
[177] Id. at 139.
[178] Id.
[179] Id.
[180] See Ames, supra note 161, at 1515-1516.
[181] Id. at 1518-1519.
[182] Id. at 1523.
[183] Cariou v. Prince, 714 F.3d 694, 701-11 (2d Cir. 2013).
[184] Jasiewicz, supra note 11, at 147.
[185] U.S. Const. art 1, § 8.
[186] Jasiewicz, supra note 11, at 151.
[187] 17 U.S.C. § 106A (2006).
[188] Cariou, 714 F.3d at 708-711.
[189] See Jasiewicz, supra note 11, at 146.
[190] Bunker & Calvert, supra note 11, at 127.
[191] See, e.g., Alex Kiefer, The Intentional Model in Interpretation, 63 J. Aesthetics & Art Criticism 3, 271-281 (2005).
[192] Bunker & Calvert, supra note 11, at 127.
[193] Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 251-252 (1903).
[194] Cariou v. Prince, 714 F.3d at 714 (citing Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 582 (1994) (quoting Bleistein, 188 U.S. 239, 251 (1903))).
[195] Id.
[196] See, e.g., Caroline L. McEneaney, Transformative Use and Comment on the Original: Threats to Appropriation in Contemporary Visual Art, 78 Brook. L. Rev. 1521, 1543 (2013).
[197] Cariou v. Prince, 784 F. Supp. 2d 337, 349 (S.D.N.Y. 2011), rev’d in part, vacated in part, 714 F.3d 694 (2d Cir. 2013).
[198] See 17 U.S.C. § 107 (2006).
[199] McEneaney, supra note 197, at 1543.
[200] See Markman v. Westerview Instruments, Inc., 517 U.S. 370 (1996).
[201] Cariou v. Prince, 714 F.3d 694, 709 (2d Cir. 2013).
[202] See 17 U.S.C. § 107 (2006).
[203] See Blanch, 467 F.3d at 251; Campbell, 510 U.S. at 579; Cariou, 714 F.3d at 705-706.
[204] Cariou, 714 F.3d at 709.
[205] Rogers, 960 F.2d at 303.
[206] Cariou, 714 F.3d at 709.
[207] Friedman v. Guetta, No. CV 10-00014 DDP (JCx), 2011 WL 3510890 (C.D. Cal. May 27, 2011) at *7.
[208] Id. at *6.
[209] U.S. Const. art 1, §8.
[210] See, e.g., Perfect 10, Inc. v., Inc., 508 F.3d 1146 (9th Cir. 2007) (holding that framing and hyperlinking as part of image search engine constituted fair use of Perfect 10 images because the use was highly transformative).
[211] Hart v. Elec. Arts, Inc., 717 F.3d 141, 159-69 (3d Cir. 2013).

Application of a Mechanism of Proportional Rewards towards Global Innovation

Application of a Mechanism of Proportional Rewards towards Global Innovation
By Esteban Donoso* Download a PDF version of this article here. An application of the formula and data described in Part II.B. of the paper may be found here.  


The intent of this paper is to offer a mechanism for the application of a very simple and novel idea: the insertion of the principle of proportionality in the current international scheme of invention protection.[1] Those who have more should contribute more. This paper proposes a very simple formula to extrapolate this general principle of law (proportionality) to the international patent scheme as implemented by the Agreement on Trade-Related Aspects of Intellectual Property Rights (hereafter “TRIPS Agreement”). In relation to the global protection of inventions, John Sulston, winner of the Nobel Prize in physiology, asserted: “harmonization is obviously desirable in the long term, provided that at the same time the world becomes more egalitarian.”[2] I agree. As discussed in my previous work, this hypothetical scheme could provide more space for harmonization.[3] First, proportionality could make the system more equalitarian with one single change.[4] Then, as a second step, it could induce the proper application of the TRIPS Agreement’s regulations in each country by punishing inadequate protection, and could even weigh disparities among countries’ laws compensating those countries which reward fields that other countries exclude. This second step still needs further analysis. This paper only addresses the implementation of the first step of this new concept. This paper first provides a general overview of the current patent system. It then addresses the proposal from a quantitative prospective, presenting a very simple mathematical mechanism for the implementation of a proportional reward system. It concludes with a practical proposal, while recognizing that there could be many methods to this end. The mechanism presented tackles the first of the proposal’s objectives, which is to establish a global proportional reward system based on the economic status of the countries in question. As can be seen in the chart at the end of this paper, this proposal renders a realistic result, making it politically feasible. The next step will be to include in the equation incentives to effectuate protection.[5] This paper seeks to establish a starting point for discussion, not to provide all the answers that such a scheme will need.

I. Background of the Current Global Scheme

The subjectivity inherent to the protection of inventions is a consequence of its very nature. The object of protection and duration are subject to the discretion of human conceptions. Thus, conceptually at least, we all can dream of different patent schemes, or even the inexistence of one. Nonetheless, there is a 20-year-long international status quo that has proven difficult to change.[6] Over time, intellectual property evolution has determined that the current patent protection system is global, definitively linked to commerce, decentralized, and a one-size-fits-all system.[7] Many would like to see this structure change, by eliminating or amending one or many of these characteristics.[8] Many others would like to see one or more of these characteristics strengthened. The system of proportionality proposed in this paper is not intended to change the overall nature of the current system, but to improve it by addressing some of the issues raised by those concerned with the current systems characteristics. In that sense it has a marked status quo bias, which provides it with political pragmatism.[9] Addressing the discussion of the international patent system with a status quo bias implies that intellectual property rights are here to stay.[10] Thus, this paper does not tackle the “eternal” and unanswered causality question: does protection produce innovation, or, put it in a more general way, does the patent system “confer a net benefit or a net loss on society.”[11] There is no concluding empirical evidence available to properly answer these questions.[12] The ideas herein proposed refrain from engaging in this unsolved debate. This paper provides a solution for the status quo, which will be on its own quite an achievement. In practical political terms, to improve the status quo a global consensus should be accomplished. In order to achieve this seemingly impossible goal, the proportionality proposal gives attention to some of the concerns expressed by both sides of the controversy, by means of symmetry.[13] What if those who say that the current patent system is key for innovation are absolutely right? What if those who say that the patent system does not work at all are absolutely right?[14] The answer for both questions, from an international commercial point of view, is that we should carry the burden of our mistakes or the cost of our mastery evenly, and thus proportionally to a countries’ economic capacity. In this hypothetical system the interest in finding the right balance of protection will be higher, as the effects that a disproportionate protection potentially carries will be felt equally in all countries regardless of their state of economic development. This is the conceptual advantage of a proportional system. The query does not stop here. It could be posed in regard to the amount or level of protection as well: are 20 years of exclusivity too much or not enough? What if the lack of enough protection is, for example, what has kept us from cold fusion?[15] This is a threshold public good in the sense that, theoretically at least, with enough research and development it could be produced.[16] To this end, the International Thermonuclear Experimental Reactor, a global project financed by international cooperation, seeks to generate unlimited virtually clean energy at a marginal cost of zero.[17] This, arguably, could be humanity’s greatest achievement (this could be the case of many other technologies not even conceivable at this point in time). The present study does not examine this question, though. It takes the current contribution, the status quo of twenty years, as a starting point. It argues for proportionality among the contributors, not for the perfect amount of contribution. Such a goal could only be attempted, if ever, after this first step is accomplished.[18] This proposal’s possibility of success rests in a commercial approach. The current regulations were established and are managed within the World Trade Organization framework.[19] Stiglitz, referring to the WTO, thinks that “[t]rade negotiators have little incentive to think about the environment, health matters, or even the overall progress of science.”[20] Their mandate is to care for their own, for their national trade. It is evident why developing countries will like the proportionality proposal, which would grant shortened periods of protection in their circumscriptions. Why would countries that would have a longer period of protection under this proposal, typically inventive countries, agree with it? The answer is simple. There are potential gains from trade. As the late Garry Becker put it (with regard to pharmaceuticals): “The burden of paying for the development of the world’s new drugs, however, falls overwhelmingly on Americans: Most other nations impose controls over drug prices or undermine patents through allowing cheaper generic copies. As a result, the U.S. is by far the most important market for recouping investments in new drugs….”[21] This situation was not the intention of the rules that set the status quo (the TRIPS Agreement), but rather is the reality. Developing countries have furiously proclaimed that the TRIPS Agreement was imposed on them, causing much harm and little good.[22] Many important academics have legitimized this discontent, creating a “letter of marque” for individuals and even countries to disrespect the global regulations on intellectual property.[23] As a consequence, the coercion of the WTO in this issue has been undermined, since it is impossible (in light of the moratorium), and even politically inconvenient, for inventive countries to tackle every violation. The political feasibility of the proposal rests under the assumption that, with proportionality, patent enforcement would improve in those countries in which it is deficient. Proper enforcement would not burst spontaneously from the application of proportionality, although a psychological effect towards this result could come from it.[24] Channels to achieve a proper application of the regulations by the different countries should be part of the compromise. Furthermore, as stated in the conclusion of this paper, a weighing mechanism that takes into account proper application of the rules, could be embedded in the formula presented.

II. The Mechanism and Its Results

A. Basic Economic Considerations

From the previous segment we can draw the following broad and general conclusion: there is a disagreement regarding the utility of creating rights over inventions, yet humanity is entrenched in the current global system. To introduce proportionality in the current system is, assuming the system’s main characteristics are impossible to change, compatible with both sides of the divergence. From a global theoretical perspective, stripped from nationalisms (the analysis of the advantages for a particular country), there conceptually will be motives to introduce proportionality for those in both poles of the divergence (and those in between), if the change does not increase the size of the “mistake” (in this context the “mistake” will be defined differently by those in either pole of the divergence), and if at the same time offers any additional advantage.[25] If there is not an additional advantage, an academic will at least remain indifferent. The good news for the proposal is that proportionality does offers additional advantages. According to the proportionality proposal, innovators will receive at least the same reward as currently allotted, with a potential for increased revenue from the proper application of patent’s rules.[26] Also, the main source of economic inefficiency of the system (deadweight loss) will globally decrease, which will be advantageous to the overall global economy, particularly for innovators. Finally, access to new technologies will increase worldwide, which from a social point of view is of enormous importance. Nonetheless, not everyone will be a winner.[27] The negative effects created by the patent system will be reduced overall in a global scale, but will increase among the richest countries, proportionally to their wealth.[28] Even though the patent as an incentive system is far from receiving unanimous support, there is an agreement on its main problem: deadweight loss.[29] “Deadweight loss occurs when people are excluded from using the good even though their willingnesses to pay is higher than the marginal cost.”[30] From an economic point of view there is a net social loss because the sale is not produced. There is also an access problem. Stiglitz puts this in a necessarily crude social context with regard to medicine: “To an economist, this disparity between price and production cost is simply an economic inefficiency; to an individual with AIDS or some other life-threatening disease, it is a matter of life and death.”[31] Another comparatively less serious problem from the patent system is the reduction of consumer surplus (antitrust laws are mainly devoted to avoid it; patented products’ sales are generally exempted from this regulations, though). Some consumers do not get excluded from using the patented good by paying more for it than the marginal cost. While this raises a distributional concern, it is not a social net loss. “A dollar is a dollar, no matter whose pocket it is in.”[32] Weighing the length of the patent so that consumers with higher income on average have longer periods of protection is the proper solution for dealing with deadweight loss, without affecting the current global reward. This could be done only if the reward that innovators lose in one country through shorter periods is compensated by a longer period in another country.[33] Under this proposal, limiting the time of the patent in poor countries reduces deadweight loss in those countries, evidently, but also increases that loss in the richest countries that will have to give longer periods of protection. The first and obvious justification for this is simply to create a global patent system that includes the proportionality principal found in law in general (taxes, for instance, are a classic example, but not the only one[34]), but it may be that the world has not gotten to the stage in which such a thing is possible.[35] I will show, through an abstract model, that a year of protection in a richer country is more benevolent for the overall global economy than a year of protection in a poorer country. Economic efficiency is, thus, another powerful argument in favor of this proposal. (Equality among contributors in relation to their economic capacity, and the increased probability of a renewed agreement around it, is probably still the most powerful argument.) This is a novel proposal, so there is no previous economic analysis to rely on. Nonetheless, the model seams to accurately describe the reality, given the assumption in which it rests. This model addresses the issue abstractly, from an aggregate point of view. The “x” axis indicates quantity, in an abstract way. The “y” axis indicates the average prices paid for technology relative to income, i.e., relative to each country’s average purchasing power. In the model I am assuming the possibility of price differentiation is not presented.. Prices relative to income paid for technology in a richer country will be on average lower than in a poorer country. The elasticity represented below could be any since no specific values are given in the “x” and “y” axis, and, more importantly, the result is always the same with whichever elasticity the demand curve could have. If two countries have the same number of habitants, and one is richer than the other, all other things equal, the exclusivity in a poorer country will produce more deadweight loss than in the richer country.[36] In the case of a higher average price paid in relation with income, less quantity would be sold. At a price “y’” (for the poorer country), the quantity will be “x’.” For a lower price “y” (for the richer country), the quantity will increase at “x”. Deadweight loss for the richer country is represented by area f. Deadweight loss for the poorer country is represented by areas d, e, and f (it is always less for the richer country). Consumer’s surplus that remains is represented by area a in the case of the poorer country and areas a, b, and d in the case of the richer country. The conclusion of this model hold water for all cases in which the demand of the richer country is more inelastic than the demand of the poorer country, since the price is lower for the rich country (thus one side of the triangle that represents deadweight loss will always be shorter) and the hypotenuse (the side opposite to the right angle) will also always be shorter for the rich country (inelastic demand curve is steeper).[37] Although it is a simple and static model (it compares two countries at the same moment in time), the model determines a clear and logical tendency. If the proportionality mechanism is weighed properly, deadweight loss effect could be diminished overall in the global economy. That is why the mechanism I present in this paper uses Gross Domestic Product (GDP) per capita as a weighing instrument. Gross Domestic Product per capita, which reflects an average income of the citizens of each country, is a good indicator of willingness to pay. There are other indicators, like purchasing power parity indicators, but more data is available for GDP per capita. Moreover, for the case of essential innovations protected by patents (life saving drugs, for example), the countries with higher GDP per capita will be better equipped to provide these goods and services for their citizens that otherwise could not access them (depending in each country’s policies, of course, but more GDP per capita at the very least gives margin for such a policy). From a social perspective this is huge, plus the sale will take place, limiting even more deadweight loss. Furthermore, price discrimination and the interaction of this practice with the regime of exhaustion of rights, and the appearance of close substitutes for patented products in the market should be taken into account in order for a complete economic analysis. Up next these issues are revised in light of the proportionality proposal.
1. Close Substitutes
Both deadweight loss and reduction of consumer surplus could be more or less acute, depending on whether the patented good has a close substitute in the market.[38] “Moreover, the magnitude of the rents to inventors under a patent system is reasonably correlated with the value of an invention [] monopoly rents will be greater, as indicated, the lesser the extent to which close substitutes for the patented good exist, and the greater the degree to which consumers value it in excess of its cost. Those are precisely the factors that determine the value of an invention to society in general.”[39] The exclusivity over inventions must be established by a general rule. It is not adjustable for each specific invention (at least as the status quo is constructed). The market will determine the economic significance of the patented product or service. The proportionality mechanism determines, in a decentralized manner, how many years of exclusivity each country should offer, taking into account its GDP per capita or other similar indicator. My proposal does not want to change this characteristic (decentralized nature), nor its worldwide, commercially linked, and its one-size-fits-all nature. That is why, under the proposed scheme, cases where the patented invention’s economic transcendence is lost or reduced due to the appearance of a close substitute on the market before the end of its term in all countries, there will not be an exact proportional reward.[40] This could be an advantage for developed countries in regard to reduction of deadweight loss (the same way that price discrimination could be an advantage in regard to reduction of deadweight loss for developing countries, as we will see up next). As times passes, the probability of a close substitute or a better technology increases. Depending on the technology field, this probability can be higher (e.g. software) or lower (e.g. pharmaceuticals), but this changes from case to case (or can even change as a trend within a given technology, i.e., a breakthrough in a given field could prompt a cascade of innovation). It is impossible to know a priori. The innovator assesses the investment, the rule makes no differentiation, and the market determines the outcome.
2. Price Discrimination
A different solution offered to the deadweight loss problem is price discrimination. For the system to be overall efficient price discrimination should globally work together with proportionality as it is commented in the next paragraphs. “The deadweight loss imposed by a monopolist can be mitigated, and possible eliminated, if monopolist can discriminate prices. […] Price discrimination can go a long distance toward redressing the inefficiency of deadweight loss, but is hard to implement.”[41] If rules to enhance international price discrimination are adopted, the tendency of more deadweight loss in poorer countries in comparison with richer countries commented in previous paragraphs will be diluted. Proportionality will still be needed, though, not to correct this focus of inefficiency, but to make the system more just (an objective on its own, which could per se lead to all the positive things that are mentioned in this paper, as enabling agreements on better enforcement, opening more room for further harmonization, etc.).[42] If such a change is not possible and international price discrimination continues to be limited, proportionality is even more necessary for the overall efficiency of the system. Price discrimination consists simply in charging a different price for the same product to different consumers. This can be done in a local/national market, as well as in the international market. Its application in the local market is very complicated due to arbitrage practices (purchasing and selling the same good to take advantage of a price difference), but it certainly can be implemented for some products. This practice in the local/national markets, when applicable (which will depend on the nature of the product), contributes to increase the efficiency of the system by reducing deadweight loss (at the same time it reduces consumer surplus).[43] Moreover, if price discrimination could be done in the international markets, deadweight loss could be reduced enormously.[44] Taking on account the model presented a few paragraphs back, if the patent holder choose to apply price discrimination among different countries taking on account their different purchasing power (charging more in one country than in another), there would not be a difference in price relative to income between the two countries. If international arbitrage is prohibited (the exhaustion regime will determine this), the patent holder could take into account the reality of each country, and set a price that is nominally different but the same in consideration to the purchasing power of each country. Because the “y” axis indicates the average prices paid for technology relative to income (i.e., relative to each country’s average purchasing power), if the patent holder chooses to set prices in relation to the economic capacity of each country, the deadweight loss will be the same for both countries. The tendency of more deadweight loss (and restricted access to innovation) that I argue exist in developing countries in relationship to developed countries will cease to hold water. There are three aspects that must be taken on account in order to properly assess price discrimination in international trade. The first one comes from the essence of intellectual property rights. It is the right of the patent holder to set prices as she wishes with out facing competition (constrained only by market forces, for example, the appearance of a close substitute in the market). The other two are exogenous factors that must be taken on account by the patent holder to make its free decision: smuggling, and the scheme of exhaustion of intellectual property rights chosen by each country. The former is an issue of enforcement. The latter is the regulation choice that each country has to make.[45] The freedom that the patent holder has to set prices means that price differentiation is a possibility, but not necessarily the unequivocal practice. Patents confer its owner exclusivity in the market. In that sense the holder could set whatever price she likes without taking on account competition. If acting rationally, she will set the price that will yield the higher profit. A higher price not necessarily results in profit maximization, if by it the patent holder excludes too many consumers. Conversely, more sales due to low prices not necessarily result in profit maximization either, if the price is to low. The optimal price, with profit maximization in mind, will depend on each product and each market. A patent holder will settle with a combination of price and quantity which yields the bigger profit, taking on account its distribution capacity, the type of consumer (e.g. a firm could have a commercial strategy that comprises establishing a “high end” status for its products), the elasticity of the demand for that product, among many other factors. Moreover the patent holder faces his own product’s competition in a given market, sort to speak, if parallel imports are permitted in that country (if the country has established a international exhaustion of rights regime, as permitted by the TRIPS Agreement).[46] In this case, the application of price discrimination by the patent holder is limited.[47] Lets assume, as economist tent to do to allow analysis, that there is proper customs enforcement, no tariffs, zero transportation cost, no transactional costs, and that the patent holder decided to set an international price discrimination strategy that takes on account countries’ purchasing power. The market of the richest country among those that have chosen international exhaustion (country x) will set the price for patented products for all countries that are poorer that this one (countries y, z), regardless if they chose international exhaustion or not. Since anyone could purchase the product anywhere in the world and legitimately introduce it to that market of country x, if the price is lower in countries y or z many could take advantage of importing the good into country x. With profit maximization in mind, the patent holder would not set different prices. She would have to set an international strategy that, as a tendency, will generate more deadweight loss and less access to the products in poorer countries. The obvious solution is to set national exhaustion or regional exhaustion (like the European market) as the international global standard.[48] This has been suggested in many occasions, but such an agreement has not been possible, because negotiations are currently blocked.[49] Developing countries, which could benefit from such a change, are probably suspicious of the system. In one hand they worry that if they set national exhaustion, their markets will be undersupplied, which could be address with proper regulation. In the other hand, they repudiate the idea (almost as a dogmatic believe) of any more power advantages for the patent holder (poor countries are reluctant to trust in the market and it effect on individual decisions; that the patent holder could practice price discrimination under national or regional exhaustion does not necessarily means she will do it). Price discrimination could certainly be an advantage for the patent holder (more sales could occur and, if well applied, it could lead to profit maximization, that will entail more incentive for innovation), but also and more importantly the overall system will be more efficient. Less deadweight loss and more access could be secured for populations in developing countries. Maybe the only way to change the attitude of the developing world towards patent protection is to renew the justice of the global scheme. Proportionality could lead the way. In the case of territorial or regional exhaustion, the patent holder will have more control over the international market of her product, while in the international exhaustion case this control will be diluted. A greater control implies more economic rights for the holder of the patent, but it should also imply more responsibility toward consumers.[50] The proportionality proposal goes together with making territorial or regional exhaustion the global standard to achieve a more efficient system, but it could go even further. Until the patent expires in the very last country (the richest, in GDP per capita), the patent holder should be entitled to know who is using, producing and selling his product elsewhere (where the patent is part now of the public domain).[51] This is not an unequivocally necessary change for the proportional system to work, but it could enhance it. Lastly, currently patent holders face competition of counterfeited products. If someone infringing the patent produces in a given market a product protected by a patent, there is an unlawful dilution of the monopolistic power. It will also be unlawful if the product is smuggled into the market, even though the product could be legitimately produced elsewhere (where the product is not patented or the patent has expired). Parallel imports generate competition for the patent holder with the patent holder’s own product, thus eliminating the possibility of price discrimination. Smuggling and counterfeiting is a problem of a different nature. It is an enforcement problem, and not a regulatory problem. In strict sense, this problem is not going to be worsened or alleviated by the proportionality proposal.[52] Both a counterfeited and a smuggled product (even though produced legitimately elsewhere) will be unlawful in the jurisdiction where the patent is still enforceable. The solution in both cases is to have better custom control.

B. The Proportionality Mechanism

Some have proposed making the system less than universal as a potential solution.[53] This proposal results in a line drawing problem: which countries will be part of the reward?[54] Both politically and economically (and logically), it makes much more sense to have a proportional reward system.[55] It is a contradiction that people in Canada- as an example of a developed country with an annual income of US$51,000 per capita- abide the existence of a legal monopoly of twenty years the same way as the people of Ecuador, a country with an income of less than US$6,000 per capita (2013 data).[56] Just by stating the above, the inadequate treatment of the regulation is revealed. By applying the proportionality mechanism to this situation, other aspects for the protection of inventions may be analyzed. If reward means technological development or even if it does not, it will be correct for humankind to assume the cost proportionally to each country’s capacity. The reward to innovators is set in years of exclusivity. This proposal entails maintaining the innovators’ current reward unaffected. This could be done only if the reward that innovators lose in one country due to a shorter period is compensated by a longer period in another country. To accomplish this, the way to establish proportionality should be creative.[57] First, it is important to establish a measure of the potential revenue that the world as a whole is currently offering innovators (no measure could be uncontested). I have chosen GDP to reflect potential revenue in the mechanism.[58] Once I settled on a measure of reward (GDP), I have applied it to assess the status quo, which is 20 years of reward for every country (WTO countries that are not in the Least Developed Country list). This is the World’s GDP multiplied by the world’s reward (20 years). This is the World’s Current Reward. This amount will have to render the same result under the proposed mechanism, in order for it to be neutral in regard to the status quo. Then, I calculated the current percentage each country gives under the TRIPS’s 20 years reward with regard to the World’s Current Reward. I then used a very basic formula to establish the proportional reward that countries should give toward innovation, measured in years of exclusivity. First, for the developing countries (as categorized in accordance with this proposal), the reward will be as so: X= (GDP per capita of each country x 20) / World’s GDP per capita Next, I assigned the result to all countries that, according to the calculation, will have to give less than 20 years of exclusivity, until the result reaches as low as 7 years.[59] Thus, 7 will be the least any country will give (this is a arbitrary determination; a new minimum should be agreed in the international arena).[60] I then multiplied the GDP of these countries (all that will give less than 20 years) by the number of years of their new reward according to this formula. This, of course, renders a lower amount in comparison to what they gave applying 20 years. This number is the Developing World’s Proposed Reward. The difference is distributed among the richest countries. Thus, the Developed World’s Proposed Reward is determined by distributing the percentage in which the reward should increase in order to cover the damages produced by the application of the proposal to developing countries. These countries carry the same “burden” regardless of their economic condition, because the additional length is directly proportional to their wealth. The damages to innovators from the application of the proposal in developing countries, is the exact amount they recoup by longer periods among the developed countries. Thus, the World’s Proposed Reward is exactly the same as the World’s Current Reward. It is important to recount some basic information of the statistical work I have done in order to obtain the results presented in this paper.[61] The figures calculated use data made available from 1960 to 2013.[62] I have established which countries are members of the WTO, which are members of the European Union, and which have the LDC category, and the dates of entrance, from the WTO, EU and UN web pages.[63] The results presented in this paper range from 2004 to 2013.[64] The formula was applied to all the countries in the world (no samples used).[65] [Editor’s Note: The application of the formula and data referenced above may be found here.] Truthfully, many issues could arise regarding this mechanism, making it unwise to present it as unequivocal. This is a modest approach by which I have attempted to prove that proportionality could render a feasible result. It clearly does (see the chart and graphic at the end of this paper). A feasible result could also be achieved with the application of different indicators, as well as with different rules.[66]

C. Expected Consequences of the Proportional System and Technical Details of the Mechanism[67]

In the hypothetical system proposed, any holder of a patent shall have the same term of protection worldwide as any other holder of a patent in a subscribing country, regardless of their nationality or the field of technology of the invention. Thus, this proposal is in strict compliance with the theories of National-Treatment and Most-Favored-Nation principles of the WTO. However, “the duration of their rights will vary from country to country, according to the economic capacity of each country.”[68] Given that the determination of the term of protection a patent is granted would be in relation to a variable factor (GDP per capita), this grant may vary over time. As a result, the frequency of revisions is a matter to be determined under consensus. In the proposed scheme the term each country offers varies automatically every year.[69] Such flexibility would be a great contribution to the system. The nations of the world could undergo economic crises for various reasons. As such, any country could benefit over the course of history with this hypothetical system (coherent with an axiological perspective), given that in a crisis scenario their inhabitants would see decreases in the period of exclusivity granted to patented inventions in their territory. This kind of solidarity undoubtedly could have a positive impact on the cohesion of humanity. If a country benefits from short-term protection, it will be because it is passing through a bad economic situation. If the struggles are resolved and the country improves its economic condition, it would then be in a position to contribute more to the technological progress of humanity. “Consequently the exclusivity period that this country grants to patent holders in its territory [would] be extended.”[70] This flexibility may also bring some practical complications that must be overcome with specific regulations.[71] There may be situations in which a patent that had expired under a previous exclusivity period would be in a position to recover its availability (or vice versa), which could in turn affect third parties. For example, the ones using or preparing to use an innovation that just became part of the public domain, or those who pay for a license in advance over a patent that is no longer available. In the first case, it seems prudent that if a patent became part of the public domain, it will not recover its availability (this could create some distortions that will run against inventors). The proposal contemplates fractions of a year for the periods of protections, so distortion could be reduced. In the second case, if the fact justifying a license disappears, the contractual obligations of this license will likewise disappear. The proportional system’s implementation will certainly bring these kinds of difficulties.[72] An additional positive consequence of the proportionality system could be to achieve technological transfers to the poorest countries.[73] A real and effective transfer of technology to those who need it the most could be achieved, under the principle of proportionality in conjunction with the global principle of free movement of the goods protected by intellectual property rights and recognized by the TRIPS Agreement. With the introduction of proportionality into the current system, the transfer of technology could stop being subject to the charity of the technological owner alone. This has not solved the technology gap. With the proposed system, the period of protection in the poorest countries will be shorter, so free competition could encourage local as well as multinational enterprises to set up technological business in these countries. Moreover, in the place where an intellectual activity occurs, it is effectively transferred, thus ensuring that the disclosure meets its real goal—positive impact on the body of knowledge for mankind. Under this hypothetical scenario, the global free market could attract industries to these countries in which new inventions could be exploited freely.[74] The discontent with the system of protection of inventions has even gone to the point that Thurow has asserted that the path to development is in disrespecting intellectual property rights: “copying to catch up is the only way to catch up. Every country that has caught up has done it by copying. Third World countries know that unless they can acquire the necessary knowledge, they will never make it into the First World. They cannot afford to buy what they need–even if those who have the knowledge were willing to sell, and they are not. So they have to copy.”[75] In the light of proportionality, the discontent will not have to be resolved by cheating. In accordance with the principle of the TRIPS Agreement under which the importation of a product is considered an exploitation of the same, competitors in a given industry could be interested in establishing their presence in the poorest countries to advance efforts to produce technology released earlier under this system. Eventually they could export to the rest of the world, waiting for the gradual release of the patent worldwide. Everyone could produce freely (in that particular market) the new advancements of humankind, thus supplying that market first and then exporting from it to other countries when the patent term has expired. The proposal contained in this study could help to establish a real technological transfer system, fulfilling a basic objective of the patent system. If this proposal comes to be implemented, in order for it to work optimally, a territorial (as opposed to international) exhaustion system should be established as the global standard.


I started this paper with a statement: to completely change the system is an unrealistic dream. Although the malleable nature of intellectual property conceptually permits it, the strong status quo precludes it. Thus, I focused the analysis only in the introduction of proportionality into the current system.[76] Nonetheless, if the world could agree to apply a mechanism like the one proposed in this paper (or any other that render a proportional reward), maybe we can dream again. I believe that a major reform could be constructed around proportionality. Scholars have addressed many issues of the system of invention protection, and clever solutions have been proposed that should be taken into consideration if a proportional reward opens the way to further consensus.[77] I will indulge myself by stating only two ideas in this conclusion, of the many possible additional reforms that could be envisioned after proportionality. The first relates to a concrete alarming deficiency of the current system: orphan or neglected diseases. The second is a very brief statement of an ulterior and broader dream: a global patent.[78] The only way for new drugs to be developed for orphan or tropical diseases is for investments on these drugs to be rewarded. Only developing countries’ markets could do so. A deep study of the relevant market for these kinds of diseases should be provided to reach necessary conclusions, but these potential markets could be attractive enough if the conditions for reward are improved. Developing countries have been advised to award compulsory licenses, establish exemptions to the patentability, and be very strict with patent examinations. As the system is now conceived, this was probably the wise way to act, although it did not create an incentive for investment in needed areas.[79] This consideration could be extended to innovation other than drugs, but the need is not felt so strongly elsewhere. If the previous is acknowledged by developing countries and the system ceases to be perceived as harmful (or at least to be perceived as unequally harmful), the path to further consensus could be opened. To achieve the dream of a single global patent, only one administrative procedure and one global administrative authority to grant a patent and make it available in a global scale should be available.[80] To walk toward a single global patent, consensus over the definition of prior art, novelty, inventive step, and utility should be present worldwide. In the proposed hypothetical system, the negative effect from a legal monopoly will be felt proportionally in relation to the economic capacity of each country and its people. All the countries in the world will shoulder the burden of protection equally in proportion to the economic capacity of each country, so the weight of the burden could be collectively decided. The same will be true for the exceptions and limitations to patentability, which in the current system may be established.[81] From the economic point of view, as the system is now conceived, developing countries find a restricted scope of protection convenient. Ethical implications have been used as a strong argument to dismiss the patentability of biotechnology, for example. It has become the main bargaining tool for developing countries to maintain this exception. Ethical opposition to this kind of innovation has profound goals. On the other hand, the potential benefits that could come from research and development in biotechnology are huge. A serious debate on this issue will be possible if the economic consequences of its conceptualization were to be assumed proportionally by the different countries in application of the proposed proportional system. In a proportional system, it is in the best interest of all countries that the scheme works well. As innovation will be a truly cooperative effort, it will be important to ensure that all cooperate accordingly and to avoid the typical free-rider problem. In that spirit, the system could compensate inventors for improper applications of the regulation. Thus, penalties could be established in the form of longer periods of protection for those countries that do not protect patents in a suitable way. Moreover, such a model, could also weigh the exceptions and limitations adopted by each country under the TRIPS Agreement. A deep economic and legal analysis will be needed. This analysis should address the following issues: the determination in each country of the novelty, inventive step and industrial application concepts; exceptions on the patentability that have been used in some countries under the TRIPS provisions (ordre public, health, environment, biological material, plant varieties, discoveries, “second-use patents” and, diagnostic, therapeutic, and surgical methods);[82] exceptions and limits to the rights conferred by a patent (ipso iure limits, compulsory licenses, exhaustion of rights and parallel imports); and clinical trial and data exclusivity in pharmaceuticals.
* Professor Católica del of International Agreements of Industrial Property, Pontificia Universidad Ecuador (PUCE), Law School, Quito, Ecuador. LL.M. Candidate, class of 2015, NEW YORK UNIVERSITY (NYU) SCHOOL OF LAW, New York, NY. Magister, 2009, Universidad Andina Simón Bolívar (UASB), Quito, Ecuador. Abogado (Esq.), 2006, Pontificia Universidad Católica del Ecuador (PUCE), Quito, Ecuador. I want to thank my friend Jorge Baez for his help with this article. He is not responsible for any error that it may have.
[1] For further discussion of the principal of proportional protection of inventions see Esteban Donoso, A Global Solution for the Protection of Inventions (2014); Esteban Donoso, Justicia, Vigencia y Eficacia del Régimen Internacional de Patentes de Invención (Univ. Andina Simón Bolívar – Ecuador & Corporación Editora Nacional, Serie Magíster No. 98, 2011), available at
[2] John Sulston, International Patent Law Harmonization 3 (Mar. 1, 2006), Presented at the WIPO Open Forum on the Draft Substantive Patent Law Treaty, available at For a statistical analysis of the implication of patents on follow-on research, see generally Bhaven Sampat & Heidi L. Williams, How Do Patents Affect Follow-On Innovation? Evidence from the Human Genome (Oct. 26, 2014) (Preliminary Draft), available at
[3] See Donoso supra note 1.
[4] Proportionality may be introduced without upending the entire system, but through modification of article 33 of the TRIPS Agreement. This proposal does not seek to overrule the current global agreement. The political issue should be recognized with pragmatism, as it is further developed.
[5] Eventually, according to the TRIPS Agreement, countries will be able to activate the disputed settlement mechanisms in cases of deficient application of TRIPS’ regulation. The decision at the Bali Ministerial Conference of 2013, however, extended once again the “moratorium” on non-violation disputes regarding intellectual property. TRIPS: ‘Non-Violation’ Complaints–Background and the Current Situation, WTO, (last updated Dec.3, 2009). Proportionality could finally unlock the door of the “moratorium.” See Conclusion, infra.
[6] According to the TRIPS Agreement, a review was to take place four years after the entry into force of the WTO Agreements . Although the TRIPS Agreement was signed 20 years ago, no revisions have yet occurred. Overview: The Trips Agreement, WTO (last visited Nov. 19, 2014).
[7] “The TRIPS Agreement, which came into effect on January 1, 1995, is to date the most comprehensive multilateral agreement on intellectual property.” Overview: The Trips Agreement, supra note 6. Its worldwide, linked-to-commerce characteristics come as a consequence of the WTO. Its decentralized nature is commented in the next footnote and its one size-fits-all nature is commented in footnote 49.
[8] As per the decentralized nature of the current global system, it goes without saying there are ways to give incentives other than by patents, which have advantages and disadvantages. “Whereas wealthy benefactors and governments can indulge in basic science and curiosity-driven research, a research agenda driven by patents is hostage to the market and to consumer sovereignty. The consumers who are sovereign are those with resources.” Suzanne Scotchmer, Innovation and Incentives 2 (2006). Many could dream of a global prize system. In the case of pharmaceutical research, for example, Joseph Stiglitz has proposed a “guarantee fund” (developing countries extending a purchase guarantee) and an “innovation fund” (a global prize rewarding research for widespread, costly diseases of particular concern to developing countries). Joseph E. Stiglitz, Making Globalization Work 124 (2006). Different countries could and would still use prizes and incentives other than patents to spur innovation. This is not precluded by the current system, and of course would still happen under a proportionality scheme, which is without any doubt commendable.
[9] See William Samuelson & Richard Zeckhauser, Status Quo Bias in Decision Making, 1 J. Risk & Uncertainty 7, 45-46 (1988).
[10] “To the extent that property rights become established in the status quo, any attempt to move away will be blocked. … The status quo persists, and those who propose a change merely incur the wrath of others.” Id. at 46.
[11] Subcomm. on Patents, Trademarks, & Copyrights of the S. Comm. on the Judiciary, 85th Cong., 2d Sess, An Economic Review of the Patent System (Comm. Print 1958) (prepared by Fritz Machlup), available at (hereinafter, An Economic Review).
[12] On October 24-25, 2014, NYU Law’s Engelberg Center launched the Innovation Law & Policy Empirical Research Initiative. See Program, NYU Law Engelberg Ctr. on Innovation Law & Policy, Empirical IP Research Conference (Oct. 24-25, 2014), The event started by quoting Fritz Machlup’s An Economic Review, supra note 11, and then asking: “In 1958, economist Fritz Machlup famously concluded that ‘none of the empirical evidence at our disposal’ either confirms or confutes the belief that the patent system has promoted the progress of the technical arts and the productivity of the economy.’ Can we say more than that today about the causal relationship between patenting and innovation? What can modern econometric and experimental approaches tell us about the effects that patenting has on the amount and direction of innovation?” Id. at 2. The consensus of the participants (academics, economist, lawyers, and statisticians from around the world) was that, as in 1958, there is no irrefutable empirical evidence to reach to a conclusion. To quote Machlup, “Scholars must not lack the courage to admit freely that there are many questions to which definite answers are not possible, or not yet possible. They need not be ashamed of coming forth with a frank declaration of ignorance. And they may make a contribution to knowledge if they state the reasons why they do not know the answers, and what kind of objective information they would have to have for an approach toward the answers.” Id. at 79. This is exactly what the initiative comprises. The conference was the kick-off event of this ongoing initiative. The empirical initiative is commendable.
[13] Two poles of opinion have been generated. The current scheme rests on the assumption that exclusive rights over an invention spurs innovation. As Richard Epstein puts it, “[s]ocial progress in our technological age is intimately bound up with the creation and protection of intellectual property,” implying that technical progress is a product of the protection of intellectual property. Richard A. Epstein, Mfg. Inst., Intellectual Property for The Technological Age 7 (2006). Many others think that intellectual property appears as a consequence of the interest of those who first created new technologies and who wanted to exclude others form using it. Thus, they think that intellectual property comes as a consequence of technological progress, and not that technological progress came as a consequence of intellectual property. Some call for the “abolition of all forms of private property in ideas.” Eben Moglen, The dotCommunist Manifesto 6 (Jan. 2003), available at Many adhered to the patent paradox theory and think that the patent monopoly leads to the destruction of competition and ensures protection only for powerful companies. Many others think that without reward there is no chance of technical progress. There is no unequivocal answer. Proportionality could probably help answer this question in the future, in the sense that it could sincere the positions of the different countries (and those who, in the academic sphere, are influenced by nationalism).
[14] These rhetorical questions are posed as if one of the two extreme positions is right. Probably the correct view sits in the middle.
[15] The answers could probably come from, among many other angles, a contributor’s game perspective. It appears that public goods with lower thresholds and higher rewards are more likely to be provided. Current models apply for threshold public goods, which, due to the lack of certainty of a patentable result, most individually considered potential innovations are not. For an example of a threshold case study, see Scott Barrett, The Smallpox Eradication Game, 130 Pub. Choice 179 (2006). Regarding public good provision, see generally, Charles Cadsby & Elizabeth Maynes, Voluntary Provision of Threshold Public Goods with Continuous Contributions: Experimental Evidence, 71 J. Pub. Econ. 53 (1999); Ramzi Suleiman & Amnon Rapoport, Provision of Step-Level Public Goods with Continuous Contribution, 5 J. Behavioral Decision Making 133 (1992); Hans-Theo Normann & Holger A. Rau, Simultaneous & Sequential Contributions to Step-Level Public Goods: One vs. Two Provision Levels, J. Conflict Resolution (forthcoming, published online before print May 6, 2014), available at
[16] In that sense, cold fusion is different that most research for innovation. A priori it is impossible to know if a specific research will render a patentable result. This is another fact that those in favor of the patent system invoke. “After the fact, patents are inconvenient because they restrict the use of valuable inventions. But before the fact they are necessary to create those same inventions. No one can assume that valuable inventions will pop up magically in the public domain if their inventors received no reward for their labor and capital. Most inventions are costly to design and fabricate.” Epstein, supra note 13, at 10.
[17] “ITER was first proposed in 1985, during a tense summit in Geneva between Ronald Reagan and Mikhail Gorbachev, who agreed to collaborate ‘in obtaining this source of energy, which is essentially inexhaustible, for the benefit for all mankind.’ Since then, the cooperation has expanded to include the European Union, China, Japan, South Korea, and India…. No one knows ITER’s true cost, which may be incalculable, but estimates have been rising steadily, and a conservative figure rests at twenty billion dollars—a sum that makes ITER the most expensive scientific instrument on Earth.” Raffi Khatchadourian, A Star in a Bottle, New Yorker, Mar. 3, 2014, available at
[18] This paper does not seek to establish the equilibrium or the optimal period of extension for a patent, just for an equitable reward. Proportionality could make it easier to obtain objective economic conclusions and consensus, if the patent monopoly is shouldered proportionally by the different countries or trade regions of the world.
[19] There is a lot of criticism regarding the linkage of intellectual property and international trade regulations. “Discussions over global standards for intellectual property should be taken out of the WTO and put back into a reformed WIPO, a World Intellectual Property Organization in which the voices of academia as well as corporations, consumers as well as producers, the developing as well as the developed countries, are all heard.” Stiglitz, supra note 8, at 128.
[20] Id. at 131. “The environment is the problem of the environmental minister, access to lifesaving medicines is the problem of the health minister, and the overall pace of innovation is a problem of the education, research, and technology ministers. So while trade agreements affect all of these areas, those who worry about them are not at the table.” Id.
[21] Gary S. Becker, “Get the FDA Out of the Way, and Drug Prices Will Drop,” BusinessWeek, Sep 16, 2002, at 16, available at
[22] For a historical recount of developing countries’ perspective view, see Donoso, A Global Solution, supra note 1, at 8-44.
[23] A certain general tone of condemnation to patent holders, especially against pharmaceutical companies, has been present in the international arena since the late 1990s. “Pharmaceutical companies filed a lawsuit against the government of South Africa to contest the government’s ability to use WTO access provisions—in this case, compulsory licensing—to make HIV/AIDS drugs available there. The case was dropped in April 2001.” Stiglitz, supra note 8, at 316 n.40. From then on the trend has been the same. For instance, Stiglitz describes developing countries that do not act like Brazil, which used its bargaining power and compulsory licenses threats to get a deal from Abbott for an antiretroviral medicine, as “less astute.” Id. at 121. This letter of marque is even given to developed countries. “Myriad [Genetics] eventually developed a [cancer] screening technology, and asks $3,000 for a complete screen; it refuses to let other firms perform the screen. The province of Ontario is ignoring this, allowing its citizens to be screened for free.” Id. at 314 n.26.
[24] See Donoso, A Global Solution, supra note 1, at 117-119.
[25] For a complete review of the axiological justification of this proposal, taking in account the positions of developed and developing countries, see Donoso, A Global Solution, supra note 1. The analysis in that study was developed based upon a triple validation criterion of the examined regulation, intending to unravel the justice, validity (its applicability) and effectiveness (understood as the ability of the rule to achieve the intended result) of the global patent system. If all of these potential properties of the rule are present in a given regulation, the rule achieves an optimal impact on society. Italian philosopher and historian, Norberto Bobbio, championed this way of analyzing regulations in some of his academic production (his main works have not yet been translated to English). In a very basic explanation, he states that when facing any regulation we can establish a triple order of problems: 1) if it is fair or unfair; 2) if it is valid or invalid; 3) if it is effective or ineffective. Put differently, regulations pose three different problems: one of justice, one of validity, and one of effectiveness. Norberto Bobbio, Teoría de la Norma Juridíca at 45-55 (Jair L. Vieria ed., EDIPRO 2001) (1993), available at
[26] From stage one of the application of this hypothetical system, firms that produce new technology will be better off due to the overall decrease in deadweight loss (an intrinsic advantage of the proportionality system, that entails more sales), plus a smother “collection” of that reward since it will be increased, as a compensation for shorter periods in poorer countries, in countries in which enforcement is typically done properly (an exogenous advantage of the system). More should be done to generate a proper application of the regulation in a worldwide scale (stage two). The agreement not to use TRIPS non-violation cases in dispute or settlement cases should probably (gradually) end in the face of proportionality (Article 64.2 moratorium, see supra note 3). For example, an initiative by the World Customs Organization (WCO) and the World Intellectual Property Organization (WIPO) to permit customs authorities to resolve intellectual property issues in situ has been discussed in the past years (7th and 8th WCO Counterfeiting and Piracy (CAP) Group Meetings, Brussels, Belgium, October 23 and 24, 2012 and May 6 and 7, 2013. WIPO, Recent Activities of WIPO in the Field Of Building Respect For Intellectual Property, WIPO/ACE/9/2 (Jan. 22, 2014), at 9,
[27] A very interesting analysis comparing elasticity of public and private goods gives this paper a very applicable, almost ad-hoc, frame to argue for its feasibility. “I find that increases in price greatly diminish the proportion of people willing to pay for consumers goods, such as housing and hardback books; whereas the proportion willing to pay more in taxes to support a public good, such as environmental protection or shelter for homeless, is much less responsive to changes in price.” Donald P. Green, The Price Elasticity of Mass Preferences, 86 Am. Pol. Sci. Rev. 128, 128 (1992). “Thus, not only are economic and political decisions different in character, but the fact that these decisions take place in different environments helps to sustain the schism between the consumer and the consumer’s less price-conscious alter ego, the citizen.” Id. at 140.
[28] Countries with a higher GDP per capita will have longer periods of protection, thus increasing two problems that the patent system generates (deadweight loss and reduction of the consumer surplus).
[29] See Epstein, supra note 13, at 10. “The hard social question is whether the law should grant the exclusive right that raises the price above [the] marginal cost. The question would receive an easy affirmative answer if creating this monopoly carried no social price. But unfortunately the price paid comes in the form of dead-weight social losses.”Id.
[30] Scotchmer, supra note 8, at 36.
[31] Stiglitz, supra note 8, at 124.
[32] Epstein, supra note 13, at 10. “That … payment is not a social loss because any losses to purchasers are exactly offset by gains to the patent holder.” Id.
[33] “Because the invention goes into the public domain at the expiration of the patent, the deadweight losses are incurred only for a limited period of time.” Epstein, supra note 13, at 11.
[34] Another scholar has proposed a classification according to the economic capacity of the various countries in the patent system in terms of maintenance fees and annuities. See Lester C. Thurow, Needed: A New System of Intellectual Property Rights, 75 Harv. Bus. Rev. 94 (Sept. 1997), available at This proportionality Thurow proposes is being applied to the international filing of patents under the Patent Cooperation Treaty (PCT). Under it, for example, citizens from certain developing countries are eligible for a 90% decrease of the PCT patent application fee (a few years prior, it was a 75% decrease). See also PCT FAQs – Question 9, World Intellectual Prop. Org., (last visited Nov. 19, 2014). (showing a link between the principle of proportionality and the patent system).
[35] “If the proposed corrective is introduced in the current regime of protection for inventions, the countries with better economic situation should extend the period of protection for inventions in their territorial constituencies while the poorest countries will see the periods of protection reduced. The insertion of the proportionality principle in the current regime of protection for inventions is a useful tool to correct the system taking into account the claims of both developed and developing countries, although the populations of developed countries will suffer more years of exclusivity than what they do nowadays and certainly more years of exclusivity than populations of developing countries. [If] more reward means more development … the key is to have that reward come in a way so that it can be afforded. That being reflected, not only would a proportional justice be achieved, but also an event of global generosity without precedent in the history of mankind would be witnessed. Hobbes’s [sic] theory would be proven wrong, and cohesion of humanity would be envisioned as global. The Achilles heel of the idea presented in this book is that it maybe utopian; it would not be surprising that once again it is proven that homo homini lupus.” Donoso, Global Solution, supra note 1, at 129-30.
[36] The area under the demand curve is the consumers’ surplus that would exist at a competitive price of 0. Marginal cost is represented by line xo, assuming 0 cost for reproducing all patented inventions, which is obviously not true (there is always a cost, which is typically much lower that the monopolistic price). This assumption in the chart certainly serves the analysis (if not we should establish a proportion–or percentage—of the marginal cost in relation to the per capita income of each country, that will complicate the graphic unnecessarily).
[37] From an aggregated point of view (demand for all technologies) the case in which the demand curve of the poorer country is more inelastic will be rarer since prices have bigger impact in persons with lower income.
[38] “The initial model stipulated falsely that every patent holder enjoys both a legal and economic monopoly in the relevant market. Functionally, that statement means that buyers have no close substitute for the patented goods. But new entry of rival technologies, patented and unpatented, frequently undermines that assumption.” Epstein, supra note 13, at 11. Nonetheless, the cases of “me-too drugs,” “follow-on drugs,” or “inventing around,” for instance, have been looked as an economic efficiency problem, since investment is directed where it is not needed. However, there have been examples of real technical improvements derived from these investments. “Drug companies expend huge amounts of money coming up with drugs that are similar to existing drugs but are not covered by existing patents; even though these drugs may be no better than the existing ones, the profits can be enormous.” Stiglitz, supra note 8, at 110. “In some cases, through better marketing, follow-on drugs have sometimes done as well or better than the original drug. For instance, Zantac was a ‘me-too’ anti-ulcer drug that followed on from the pathbreaking drug Tagamet (based on research that received the Nobel Prize). While some research suggests that Zantac did not, in general, outperform Tagamet, because of better marketing it out- sold it. (Its success may also be related to its having fewer side effects.)” Id. at 313 n.18. Consumers value functionality differences even within close substitutes. Moreover, if the market is worth it and the investment is done, this could generate technological competition, creating substitutes, that could tackle the consumer surplus issue.
[39] See Alan O. Sykes, TRIPs, Pharmaceuticals, Developing Countries, and the Doha ‘Solution, 13 (John M. Olin Program in Law & Economics, Working Paper No. 140 2002), available at
[40] A close substitute for the patented product could appear and change the patent economic significance, any time before it expires in the country with a higher GDP per capita, which will give the longer period of exclusivity in the world within its circumscription.
[41] Scotchmer, supra note 8, at 36.
[42] The proportionality system presented in this paper aims to correct the fact that the scheme is currently imposing charges in an inequitable way to all contributors, thus creating resistance to the structure itself and ultimately hindering innovation. Even if price discrimination could be enabled, proportionality is needed. The overall purchasing power differences (the economic differences among countries) will still remain in the presence of price discrimination.
[43] The implementation of price discrimination is hard to instrument in local markets. “Our simplified model assumes that the patent holder charges all users an identical price, even if each has a different reservation price. But sometimes a patent holder knows enough about his customers to charge different prices to different classes of users. If the patentee knew the reservation price for each potential buyer, it could sell each buyer just the quantity it needed for a price just below that reservation price. That strategy, if it could be implemented, would eliminate all the deadweight loss (and, of course, any consumer surplus). […] Apart from any distributional concerns, the total output would equal that under pure competition. In practice, any metering device is likely to be imperfect, as when the sale of toner is used to monitor price differences for printing devices [he cites an example on this regard]. But the overall tendency is still clear”. Epstein, supra note 13, at 11.
[44] Parallel imports means foreign trade could be done outside the official network. This could be very problematic in the pharmaceutical field. Many countries subsidize pharmaceutical products or bargain special prices with drug manufacturers through their public social care provider. Nonetheless, regulated markets, like medicines, seem to be less vulnerable to circumvention. “There are already huge price differences around the world, and only limited circumvention, largely because this is a highly regulated industry [the pharmaceutical industry], with imports tightly controlled, and with most purchases paid by third parties.” Stiglitz, supra note 8, at 315.
[45] The developing countries are identified with the theory of international exhaustion, while developed countries have usually established in their legislation regional (European Union) or national exhaustion (with the exception of Japan that generally uses international exhaustion, with a caveat regarding grey market products in which contractual restrictions on importation may apply). “In Japan Tokyo High Court (in 1995) applyed the international exhaustion rule (BBS Kraftfahrzeug Technik AG v. Kabushiki Kaisha Racimex Japan and Kabushiki Kaisha JapAuto Prods). The sentence turned over the leading case Brunswick (1969, Osaka District Court). According to the Brunswick case parallel importation was unlawful if goods were already patented in Japan. Finally, in 1997, the Japanese Supreme Court didn’t use the international exhaustion principle, and decided that holder of a patent in Japan and in another country can’t oppose to importation in Japan of the same product, except demonstrating that the grey market was contractually prohibited (and there was evidence on the product). […] In the E.U. is in force the European Union exhaustion principle. Goods patented (or marked) traded for the first time in the European Union or in the European Economic Area can be freely traded inside European Union […] U.S. Government, instead, has been always adverse international exhaustion. During the negotiations of TRIPS agreement U.S. Government expressed his contrary view (with reference to patents and specially drugs). The U.S. Government opinion is founded on the need to defend the research’ possibility of enterprises that want to patent their inventions. Prof. V. Di Cataldo, Parallel importations, New perspectives, available here.
[46] The theory of exhaustion of rights is universally accepted. In regard with the scope of its application (the limit of its impact), whether territorial, regional, or international, different conceptions have been established. According to the conception chosen by each country, foreign trade acts that are allowed will be determined. If the limit of the exhaustion is territorial, any export/import of a patented product or a product produced by a patented process can be made only with the consent of the patent owner, as part of an official network. On the other hand, if applying the principle of international exhaustion, acts of foreign trade of the product of a patent may be made by anyone who has lawfully acquired a patented product. Hence, the application of the international exhaustion of rights paradigm is known with the term parallel imports.
[47] Moreover, territorial or regional exhaustion prevents competition that could arise between the patent owner and licensee, thus keeping intact the exclusive exploitation rights of the first. Otherwise licensees (or even those who legitimately purchased the product) could export the licensed product to the country of origin of the patent holder. This could mean that the patent holder has to compete freely in the market for a product on which he supposed to have exclusivity. For these reasons, it seems wise to establish a system of territorial or regional exhaustion. As all the conclusions in this publication, this recommendation is in order provided that the corrective this paper urges comes to be established. Proportionality is the answer for a global, effective, and just system.
[48] Article 6 of the TRIPS Agreement, despite its confusing wording, leaves the definition of the exhaustion system to the discretion of the different countries. In the absence of a consensus in 1994, the TRIPS Agreement gave countries freedom in regard to this determination in strict respect of the principles of National-Treatment and Most-Favoured-Nation. It is noteworthy that the exhaustion of intellectual property rights is an issue that applies to all intellectual property rights in general and not only for patents, which makes its impact even greater. The suggestions here stated are meant for the case of patents. The subject under discussion is not the right of the holder of a patent to import his product (importation is considered exploitation) or the theory of exhaustion of rights (universally accepted). What has been discussed is the limit of the application of the exhaustion paradigm.
[49] “If trading nations as a whole ban parallel imports, pharmaceutical patentholders should be willing to sell their products at a low price to nations where customers cannot afford to pay much for them as long as that price covers the marginal cost of making the drug and delivering it. They will be willing to do so because each sale yields some profit, and they need not fear that their low-priced sales in one market will be re- exported to undercut their prices elsewhere. When parallel imports are possible, by contrast, they will likely become unwilling to sell at low prices in markets where demand is weak. Poorer countries may then find themselves largely priced out of the market for particular medications.” Sykes, supra note 43, at 20.
[50] If there is an official network with the capacity to control the acts of foreign trade, the global distribution of the patented product will be done through licensing or self-representation. A product that is introduced as a result of a license or direct sale will better ensure consumer rights. It will mean there will be a local agent or representative of the patent holder, who could respond for the quality of the products.
[51] Paired with this information privilege, as a two ways road, the patent holder should inform the markets she is not attending. It is essential not to have any markets underserved by lack of interest of the patent holder. The information right or responsibility should be bestowed in all international producers alike, not only patent holders. If a given product is found at a market is not supposed to be found, corrections could then be prompted, or eventually sanctions against the producer could be established. It will be easier to control piracy and borders. This will be an important step toward a decentralized control system, which could aid governmental efforts at customs; a necessary step to enforce the varied patent periods between nations.
[52] One may argue that under the proportionality proposal there will be more cases of smuggling since there will be more products to smuggle available. It all is reduced to custom control, though. This is a key aspect of international trade, which not only pertains patents or intellectual property (efforts of a better customs system will be beneficial in many aspects, and they sure should continue).
[53] See Stiglitz, supra note 8, at 120, “One of the simplest ways for the developed countries to help developing countries is to ‘waive’ the tax, allowing them to use the intellectual property for their own citizens, so that their citizens can obtain the drug at cost. Critics might say: But then the developing countries are simply freeriding on the advanced industrial countries. To which the answer is: Yes, and they should. There is no additional cost imposed on the developed countries.” In the same line of thought, one interesting economic analysis has concluded that “under specified circumstances it is not optimal to extend patent protection to all countries of the world.” Alan V. Deardorff, Welfare Effects of Global Patent Protection, 59 Economica 35, 48 (1992). Based on his analysis, Deardorff argues that “extending this protection to other countries is very likely to be harmful to them, in spite of the fact that they will benefit from increased inventive activity…. a case can be made, in terms of world welfare, for limiting the coverage of a patent protection to less than the entire world.” Id. at 36. Ultimately, his research demonstrates that “the case for universal patent protection is not a clear one … and the concerns of some developing countries that they will be exploited by patent protection are not without foundation.” Id. This happens with the LDCs, which are exempted from the application of the TRIPS agreement provision (which does not give 20 years patents).
[54] There are currently 48 least-developed countries (LDCs) on the UN list (see, 34 of which to date have become WTO members, that do not apply the 20 year TRIPS’ provisions. “WTO recognizes as least-developed countries … those countries which have been designated as such by the United Nations…. There are no WTO definitions of “developed” or “developing” countries. Developing countries in the WTO are designated on the basis of self-selection although this is not necessarily automatically accepted in all WTO bodies.” Understanding the WTO – Least Developed Countries, WTO, (last visited Oct. 10, 2014).
[55] A recent empirical analysis on China’s patent applications at the U.S. Patent Office shows a trend that is common to those countries that have walked the path to development. Jay P. Kesan, Alan C. Marco & Richard Miller, Patenting — With Chinese Characteristics (Univ. Ill. Coll. Law, Working Paper Series July 22, 2014), available at This study shows that Japan and South Korea’s increase in technological innovation is correlated with their development status (as well as benefits to their population). China is now following their footsteps. Brazil, India and others are, in a lesser way, following that path, but in a slower manner. From this kind of empirical analysis it seems that the world should continue to reward innovation, helping others to develop. India is an interesting case. There is a lot of innovative activity, but the mass of its population is extremely poor (in some years it has a per capita income smaller than many countries in the LDC list). It will enhance their chances of development if their inventions could get proper reward from the world, while their population rewards according to their capacity to do so (for instance, one of Hinduism’s main celebrations, Diwali, praises light and knowledge). Countries must contribute according to their capacity, but they should not stop contributing to the overall global retribution. This is not only because they have the aspiration to develop, but also because it will be correct for them to legitimately benefit from technological progress by contributing according to their capacity.
[56] Data: GDP Per Capita, World Bank, (last visited Sept. 27, 2014) (data is in current U.S. dollars).
[57] In taxes to establish the measure of contribution of each citizen, there are many alternatives, (e.g., a distributive agenda, to promote investment, etc.). This paper does not seek to provide unequivocal answers. I will just try to provide a mechanism in order for this proposal to be feasible. Of course there will be many alternatives.
[58] The economic significance of each invention, as we have seen, depends on many factors. No invention will have the same reward as any other. Nonetheless, they all have a market from which they can extract their reward. A measure of the potential revenue must be established accordingly. I have used GDP per capita to establish the proportional reward, in order to take into account a variable that influences willingness to pay (as discussed in the previous segment). Many other variables could have been used, and no measure will be uncontested.
[59] This could be too little, especially for pharmaceutical products. According to the Pharmaceutical Research & Manufacturers of America (“PhRMA”), an organization representing biopharmaceutical researchers and biotechnology companies, the “the clinical trials process occurs in several phases and takes on average six to seven years.” What Are Clinical Trials?, PhRMA, (last visited Nov. 5, 2014). It is an arbitrary determination. To start to compute the patent time from the moment of the first sale could be a proper solution. This is not part of the status quo, so it is presented as a simple annotation. As suggested in the conclusion, the solution to the problem of neglected diseases (those that are of primary concern to developing countries) could be to generate enough reward and legal certainty to attract investment toward researching new treatment options.
[60] I have chosen this mark, because around it LDCs start to appear when applying the formula to the database. And not only Equatorial Guinea and Vanuato, who are graduating (see note 64, infra), but other LDCs that are doing a little bit better than some that are not in that category (of course, at the end of the list most of the LDCs are piled up with what will be, according to the formula’s result, no more than 3 or 4 years of reward, which could go down to less than one year of reward). It is, in any case, an arbitrary determination. Although there are reasons to have such a minimum from the perspective of the producers, the real reason I have chosen to establish this minimum is to tackle the tropical disease and orphan diseases problem, as is discussed at the conclusion of this paper (this is based on the contested assumption that reward spurs innovation). From the producer’s perspective, it seem prudent to establish a minimum, since administrative procedures can create long delays before a patent is granted, and because to put a product in the market can also take considerable time (especially for drugs). Something that would be desirable from the producers’ point of view is that periods begin to count from the patent grant and not from the filing (as it is now), or even from the first sale (in this eventual system, such a provision could be analyzed, weighing the economic benefits and the patent term). If the duration of the exclusive rights is computed from the administrative decision granting the protection or even with the first sale, certain problems would be avoided (the reward could be really assessed, the data exclusivity issue over clinical trials could be properly evaluated, and unjustified delays in granting a patent would be avoided). Provided the application of a scheme as the one proposed in this paper, this could be considered (it could be weighed when analyzing the optimal patent duration).
[61] See Daniel L. Rubinfeld, Reference Guide on Multiple Regression, in Reference Manual on Sci. Evid. 303, 332 (3d ed., Fed. Judicial Ctr. 2011), available at$file/SciMan3D01.pdf.
[62] Data: GDP Per Capita, supra note 56. There is no GDP data for Myanmar, Somalia (from 1991 thereon), or San Marino (none of which are WTO members), no GDP data for Nauru and the Holy See, and no GDP per capita data for Democratic Republic of Korea (which is also not a WTO member). There are some other countries which are missing data from 2007, 2008, and thereon (e.g., Andorra and Syria, which are also not WTO members). China is considered separately from Macao and Hong Kong.
[63] For a list of countries belonging to the European Union, see EU Member Countries, European Comm’n, (last visited Dec. 15, 2014).
[64] The data used for the calculations takes in account the date of entrance to the WTO of each country, and if countries are in the LDCs list (the date of entrance to this list is also considered). For European Union countries, when considered together for the calculations, the year of entrance to the union is also taken in account. This made it possible to obtain a result for different years and to make that result reliable. NOTE: The general transition periods explained next were not taken into account, since the figures and charts I present in this paper are based in the 2002-2012 time frame (not all countries used the transitional period to the fullest, so to do so would have required an arduous country-by-country analysis). For the 2002-2012 time frame, the following general transition periods have already expired (for developed and developing countries), while the exceptions for the LDCs are still in place. The implementation of the TRIPS Agreement in the different countries was not immediate in all cases, being gradual for developing countries and LDCs. These are categories included by the TRIPS Agreement, according to the developed condition of the member country based on articles 65 and 66 of the TRIPS Agreement. For all developed countries it was applied since January 1, 1996, but many applied it since 1995. Meanwhile, under the transitional provisions of the agreement, the developing countries were required to comply with the TRIPS Agreement from January 1, 2000, and even LDCs had an additional period of six years. Efforts have provided greater flexibility for LDCs with some concrete results. The decision of the Council for TRIPS of June 2002 established the extension of the transition period under article 66.1 of the TRIPS Agreement for least-developed country members until January 1, 2016, for certain obligations with respect to pharmaceutical products. Decision of the Council for TRIPS of November 2005, which established the extension of the transition period under article 66.1, by which LDC members shall not be required to apply the provisions of the agreement other than articles 3, 4, and 5 until July 1 2013. Just a few months ago came the decision of the Council for TRIPS of June 2013, which extended the transition period previously mentioned, until July 1, 2021. In both of the previously mentioned decisions, the extension period will only apply until the member cease to be an LDC. I have also chosen not to take into account those countries that joined the WTO after 1995, which have their particular transition periods, because their impact is negligible (as discussed in the following footnote).
[65] Particular transition periods and LDC list inclusions: Up next I present particular transition periods scenarios (sometimes related to the LDC status, thus already considered), which are meant as an annotation to this work. The Russian Federation, which recently joined the WTO (2012), would fully apply the provisions of TRIPs, including provisions for enforcement, without recourse to any transitional period. See Working Party Seals the Deal on Russia’s Membership Negotiations, WTO (Nov. 10, 2011), A similar situation is presented by the Ukraine, which joined in 2008. See Trade Related Intellectual Property Regime, WTO, (last visited Oct. 20, 2014) [hereinafter, “TRIPs Regime”], at 9-10. Additionally, Cambodia (2004), Nepal (2004), Lao (2013), and Yemen (2014), which recently joined the WTO (their years of entrance where annotated in parenthesis), are on the list LDCs; of course are given the exception to the application of the TRIPS described in this footnote. Another example is Cape Verde, which graduated as an LDC in 2007 and became part of the WTO in 2008. See UN Advocate Salutes Cape Verde’s Graduation, UN News Centre (Jun. 14, 2007), A special transition period was agreed upon for Cape Verde: “The representative of Cape Verde confirmed that Cape Verde would apply the Agreement on Trade­ Related Intellectual Property Rights by no later than January 1, 2013 according to the action plan in Table 12 with the understanding that for the obligations covered by Sections 5 and 7 of Part II of the TRIPS Agreement or to enforce rights provided for under these Sections, Cape Verde would apply the TRIPS Agreement in respect of these obligations no later than January 1, 2016, in light of paragraph 7 of the Doha Declaration on the TRIPS Agreement and Public Health.” TRIPs Regime, supra, at 8. Such provisions have been agreed upon for other countries as well, such as Tajikistan, Montenegro and the Maldives (which entered the WTO 1995 and graduated from the LDC list on 2011). The Maldives became the third and last country to graduate and be promoted to developing country status (January 1, 2011). Samoa was suppose to graduate on December 31, 2010, but due to the tsunami catastrophe of 2009, its graduations was deferred until January 2014 (General Assembly resolutions A/RES/59/209, A/RES/62/97 and A/RES/64/295. LDC Factsheet, Samoa, UN DESA, (last visited Oct. 20, 2014). These cases are simple not considered in the calculations, as their impact is negligible.
[66] For instance, the LDCs are not considered (the status quo excludes them). If you do include them (part of the proposal is that these countries should give a reward to tackle the orphan diseases issue, as commented in the conclusion of this paper), the difference is negligible in terms of the big picture (the total contribution from LDCs will be less than 0.4% of the total reward). The case of Equatorial Guinea is a peculiar one. Even though it is still an LDC, Equatorial Guinea now has a GDP per capita that puts it in the developed group (it is a special case). Equatorial Guinea recently discovered oil and gas reserves, and thus their per capita GDP rose enormously, to levels that situate it as a developed country. See Data: Equitorial Guinea, World Bank, (last visited Dec. 15, 2014). However, they are still on the LDC list. General Assembly resolution 68/L.20, adopted on December 4, 2013, decided that Equatorial Guinea will graduate three and a half years after the adoption of the resolution, and that Vanuatu will graduate four years after the adoption of the resolution. Vanuatu, in contrast, is an example of a country who has seen a far more gradual improvement of their economy. Vanuatu is also an interesting case, though, for other reasons. It recently joined the WTO and is scheduled for graduation. Some think it got a better treatment that some previous members. “Vanuatu was allowed two years to adopt [TRIPS], while Cambodia and Nepal were allowed three years or more.” Daniel Gay, Vanuatu’s Suspended Accession Bid: Second Thoughts?, Managing the Challenges of WTO Participation: Case Study 43, WTO (2005), at n.40, (last visited Oct. 20, 2014).
[67] For a more detailed overview, see Donoso, Global Solution, supra note 1, at 81-107.
[68] Id. at 83.
[69] Id. at 91. The availability of data probably will entail that the term of protection for a given year is determined by data of previous years. In the case of my analysis, 2012 has most of the data for every country. From then on the World Bank page does not provide complete information in its webpage.
[70] Id. at 92.
[71] “In any case, it can be said that once the term of protection that a country is required to provide is known (which may vary according to the frequency in which the reviews are determined by the rule), the status of a particular patent will be known (if the patent is enforceable or if it has become of public use in that particular country).” Id.
[72] Id.
[73] “[T]echnology transfer is an objective that the current regime has failed to achieve. Even though technology transfer is a value referred to in the statement of principles and objectives of the TRIPS Agreement, this goal is not met in a complete way by the current regime. It has even been argued [by some of the most forceful critics] that the currently conceived system perpetuates the differences or the technology gap between the developed and developing countries, ensuring access to the system only by the powerful… The tools that the agreement foresees to ensure the goal of technology transfer have proven to be ineffective. For example, article 66 of the TRIPS Agreement determines that developed members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed countries (this is a category established by the TRIPS Agreement), to enable them to create a solid and viable technology base.… As a result of this, so far the principle of technology transfer has been merely declaratory, except for certain programs conducted by some industrialized countries to support other less fortunate ones. From the perspective of developed countries—if this hypothetical system came to be implemented—the resources destined to these programs (those of article 66 of TRIPS) could be better used to increase their own poor populations’ access to new technologies, especially regarding health. Technology transfer, as it is established, is a rule that aims to capture an important goal, but because of its poor axiological content (justice), it has become a mere romantic statement.” Id. at 95-98 (internal citations omitted). “If the proposed scheme came to be implemented, in which the exclusive exploitation of new technologies will last longer in the circumscriptions of developed counties, it is probable that the governments of those countries would chose to destine resources to aloud [sic] their less privileged population to have access to new technologies, especially when it comes to medicines. Resources could be those of article 66 of TRIPS.” Id. at 98 n.70.
[74] This is true only for that market, and those where the patent has expired; the key for this system to work properly is tight international trade control of protected products. Id. at 97-99.
[75] Thurow, supra note 36.
[76] In that sense, the last few paragraphs of segment III a addressing the exhaustion of rights, as well as a couple of footnotes throughout the article, tackled issues that were set outside the scope of this paper.
[77] For instance, to address the issue of patent thickets (an issue classically addressed by patent pools), some have called for a scheme where, for the case of technologies in which patents have proliferated (and thus created the thicket), preliminary injunctions are not used to prevent infringements (only to preserve evidence). This will create a system in which infringements are compensated after the fact, but the use of the technology is not hindered. For example, a proposal by Ecuador was presented in 2013 to the Council for the TRIPS, seeking technological transfer of “eco-technologies” by establishing exceptions and limits to the protection of such inventions. Although well intentioned, the proposed solution is incorrect. Less retribution for this kind of technology means less investment in research and development (and unequal share of the mistake among countries, in the case assumption of exclusivity does not spur innovation). More green or eco-technologies could only be further encouraged if the retribution is bigger. If proportionality came to be introduced, a different retribution (longer term of protection) could even be analyzed and established for this kind of technology. Many other issues have been addressed by the literature, such as efforts at evergreening, me-too drugs and patent races (see supra note 42), and lack of recognition of ancestral knowledge of indigenous peoples (the Brazilian position on the issue, which implies a requirement of disclosure in the patent application, is probably the way to address it), among others.
[78] This could bring a dramatic reduction on filing cost and fees (even litigations cost if the international authority could ventilate some patent disputes in a administrative sphere). The benefits would be enormous. Small innovators could in a better way access a global protection. Where could the dream take us? The World Health Organization doing the work that the Food and Drug Administration does in the United States, in regard to drug commercialization approvals, for the whole world? It is advisable to stop not to get carried away by an overdose of enthusiasm.
[79] “But there is another possibility, one which in my view better accords with what we know about the importance of patents to pharmaceutical research, and with the extraordinary value to consumers of medicines that successfully treat serious conditions. Developing nations have long had little intellectual property protection for pharmaceuticals, and we have concurrently witnessed an apparent dearth of research into the diseases of particular importance to them such as malaria and drug-resistant tuberculosis. The lack of patent protection may have resulted at least in part from an acute collective action problem—developing nations reap the full benefits from lower prices when they do not create pharmaceutical patents, yet the costs in terms of diminished research incentives are largely externalized to the rest of the developing world.” Sykes, supra note 43, at 3.
[80] The Patent Cooperation Treaty (PCT) of 1970, which was amended in 2001, and the Patent Law Treaty (PLT) of 2000 are examples of significant progress on harmonizing the procedures for the filing and granting of patents, but these are far from establishing a global registration procedure and do not further determine the definition of novelty, inventive step, and utility/applicability. Also, these agreements do not have the universal acceptance that the TRIPS Agreement has. Future efforts should aim to build a stronger international system for granting patents, which, unlike the PCT and PLT, is universal and definitely linked to the TRIPS Agreement. (This is not the case of the aforementioned international instruments.) “On June 2, 2000, the Patent Law Treaty (PLT) was signed by 43 countries, with the support of the United States and the European Patent Office. The PLT does not contain substantive provisions. It rather harmonizes procedural requirements and steps: what may be required to obtain a filing date (Article 5), what may be required relating to the form and content of an application (Article 6), representation before a patent office (Article 7), various issues regarding communications (Article 8), what constitutes sufficient notification (Article 9), validity of patents if not in compliance with certain formal requirements (Article 10), relief in respect of time limits (Article 11), reinstatement of rights (Article 12), correction or addition of priority rights (Article 13). The PLT provisions should help to reduce the risk of errors by patent offices, and the time and costs of procedures for patent applicants, thereby facilitating the acquisition of patent rights internationally. The PLT also provides a clear linkage to the PCT for current and any future patent law harmonization (Article 16).” Carlos M. Correa, An Agenda for Patent Amendment and Harmonization for Developing Countries (Sept. 24, 2005) (unpublished, prepared for the Int’l Ctr. for Trade & Sustainable Development’s Bellagio Dialogue), available at
[81] This could be illustrated by a hypothetical case. Imagine a new kind of technology at the moment unknown for human kind discovered in one of the traditionally inventive countries (where typically innovation take place), which opens the door for exponential technical development that will enormously benefit humanity. Suppose that this new kind of technology has certain characteristic that does not unambiguously determine its patentability under the TRIPS’ rules (almost always the developing countries bring up issues regarding the patentability of new kinds of technologies). Without proportionality, developing countries prefer to declare that this kind of technology is not patentable (they see that the benefits are not worth what they pay for it), and benefit from the innovation anyways, since the developed world is rewarding it (typically the developed do not apply exceptions and limitations). If proportionality is present in the international scheme as this paper argues, the interest of rewarding innovation in this new field (which arguably will entail benefits for the human kind), would not be constrained, as it is now, by economic considerations. The inverse will happen if the patentability of a technology field is not bringing much benefit to humanity. It would not be as easy for the developed world to urge for its protection, since the period of protection in their circumscription will be longer. With proportionality reward, all countries know that exclusivity over this technology will “hurt” all countries equally, in relation to their wealth. If the “burden” is shared, it is more likely it will be agreed upon. The TRIPS Agreement pertaining all the fields of intellectual property (not only patents) regulates “rights enumerated explicitly, which gives it a certain rigidity, that has been criticized by some who would have preferred it to cover not only all rights included under the term intellectual property, but to those not specifically mentioned.” Donoso, Global Solution, supra note 1, at 74 n.56 (citing Baldo Kresalja, El Sistema de Patentes Después del ADPIC: Comentarios y Reflexiones Sobre Su Futura Eficacia, 4 Temas de Derecho Industrial y De La Competencia 180, Propiedad Intelectual en Iberoamérica, Buenos Aires: Ediciones Ciudad Argentina (2001); Emery Simon, GATT & NAFTA Provisions on Intellectual Property, 4 Fordham Intell. Prop., Media & Ent. L.J., 267, 276-77 (1993)). Regarding patents, for instance, proportionality could be paired with such a provision, so to strengthen the principle by which patents should be granted in any field of technology (article 27.1 of the TRIPS Agreement), and to limit exceptions and limitations. An alternative that will be coherent with the proportionality proposal is to keep the system as it is in regard to exceptions and limitations, but to weigh them embedding in the proportionality formula an indicator for the exclusions and exceptions to the patentability. This, as explained in the introduction, will be a further step towards the implementation of the proportionality proposal, which is not engaged in this paper.
[82] A distinction is made by some countries between discoveries and innovations, prohibiting the patentability of the latter.

Amicus Brief of the Electronic Frontier Foundation and the ACLU of Virginia in Radiance Foundation, Inc. v. NAACP

Amicus Brief of the Electronic Frontier Foundation and the ACLU of Virginia in <em>Radiance Foundation, Inc. v. NAACP</em>
By Eugene Volokh* and Mairead Dolan** Download a PDF version of this article here.  

Summary of Argument[1]

People often use the names of organizations, celebrities, and trademarked products, to comment on them, critique them, parody them, review their work, and more. A director might make a movie about fictional dancers who imitate Fred Astaire and Ginger Rogers, and call it “Ginger and Fred.”[2] A musical group might write a song mocking Barbie and call it “Barbie Girl.”[3] Some might condemn the NRA by saying that it stands for “Next Rifle Assault” or “National Republican Association.”[4] Others might criticize NBC by saying that it stands for “Nothing But Caucasians,”[5] or the ACLU by saying that it stands for “Anti-Christian Lawyers Union.”[6] Still others might do what Radiance did here: criticize the NAACP by saying that it stands for “National Association for the Abortion of Colored People,”[7] on the theory that the NAACP “has publicly supported Planned Parenthood numerous times,” has “fought to prevent the abortion chain from being defunded while simultaneously fighting to ensure a massive influx of funding for its beloved ally (and annual convention sponsor),” and has otherwise allied itself with Planned Parenthood.[8] Courts have recognized that such speech is constitutionally protected, even when there is a risk that some people might be briefly confused about the source of the speech. Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), and Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2002), for instance, held that using a trademark in an artistic or political work’s title does not violate the Lanham Act unless the use “has no . . . relevance to the underlying work whatsoever.” Rogers, 875 F.2d at 999; Mattel, 296 F.3d at 902. The risk of some consumer confusion, the courts concluded, cannot outweigh the speaker’s First Amendment right to freedom of expression. Likewise, Radiance’s criticism of the NAACP contained in post titles is constitutionally protected. Such uses of trademarks also do not constitute trademark dilution. Title 15 U.S.C. §1125(c)(3) expressly excludes “noncommercial use[s] of a mark” from the dilution cause of action; as Mattel noted, this exclusion protects all uses other than “commercial speech” (i.e., commercial advertising). Mattel, 296 F.3d at 905-06. That the Barbie Girl song involved in Mattel was aimed at making money did not make it a “commercial use” for dilution law purposes. Similarly, that Radiance’s Web site is aimed partly at making money—a property the site shares with nearly all newspapers, magazines, books, movies, and other fully protected materials—does not make Radiance’s political commentary “[c]om­mercial use of a mark” under §1125(c)(3). The district court therefore erred in accepting the NAACP’s trademark infringement and trademark dilution theories. Amici ask this Court to reverse and to hold that Radiance should have been granted a declaratory judgment that its posts were not infringing.


I. Radiance’s Use of the Term “NAACP” in an Article Title Was Not Infringing on a Confusion Theory

In talking about people, organizations, and products—including talking about them using speech that makes the speaker money—critics and commentators often use trademarks, sometimes in ways that mock or condemn the target. Such speech might also include statements that are facetious, but that help convey the desired message. NRA, the initials of the pro-gun-rights group, actually stand for National Rifle Association, but the mocking label “the National Republican Association” helps the critic express what he views as the organization’s true nature.[9] Such uses of a name might sometimes briefly confuse a handful of listeners. A reader unfamiliar with the organization may mistakenly believe that NRA indeed stands for “National Republican Association,” that the ACLU indeed stands for the “Anti-Christian Lawyers Union,” or that the NAACP is indeed endorsing the abortion of African Americans. But the law cannot undermine the freedom of speech simply because a few people make a mistake. Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), and Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2002), make clear that such uses of trademarks in titles are not actionable even when some viewers are likely to be confused. In Rogers, a filmmaker was sued by Ginger Rogers for his use of the film title “Ginger and Fred.” The film was not about Rogers and her film partner, Fred Astaire, but about two other dancers who imitated the duo onstage. Id. at 996-97 Rogers argued that potential viewers might well be confused by the reference, and might mistakenly believe that Rogers or Astaire had endorsed the film. Id. And indeed it is possible that some viewers might have bought tickets to the film because they believed it to be so endorsed, or at least more directly connected to Rogers’ and Astaire’s lives. Yet despite survey evidence showing likely confusion and evidence of actual confusion, Rogers, 875 F.2d at 1001, the court found that the defendant had not violated the Lanham Act. Id. at 997. The court held that, “in the context of allegedly misleading titles using a celebrity’s name,” there is no Lanham Act violation “unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some relevance, unless the title explicitly misleads as to the source or content of the work.” Id. at 999. And the court concluded that, as to Ginger and Fred, “the consumer interest in avoiding deception is too slight to warrant application of the Lanham Act.” Id. at 1000. The Rogers approach was adopted by Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2002), which dealt with a Lanham Act claim based on a musical group’s song called “Barbie Girl.” Mattel, the owner of the “Barbie” trademark, sued the record company for trademark dilution and infringement. The court disagreed, concluding that, “when a trademark owner asserts a right to control how we express ourselves,” “applying the traditional test fails to account for the full weight of the public’s interest in free expression.” Id. at 900. And the court concluded that letting trademark claims trump free speech rights was especially inappropriate when the use was a title. “A title is designed to catch the eye and to promote the value of the underlying work. Consumers expect a title to communicate a message about the book or movie, but they do not expect it to identify the publisher or producer.” Id. at 902. Therefore, the court held, “literary titles do not violate the Lanham Act ‘unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.’” Id. (quoting Rogers, 875 F.2d at 999). The court concluded that the use of “Barbie” in the title was not enough to satisfy the “explicitly misleads as to the source or the content” test; “if this were enough to satisfy this prong of the Rogers test, it would render Rogers a nullity.” Id. at 902. As in Mattel, Radiance used a trademarked term in the course of criticizing it. The trademark was used in the title of a work and was directly related to the article itself. Just as “[t]he song [Barbie Girl] does not rely on the Barbie mark to poke fun at another subject but targets Barbie herself,” Mattel, 296 F.3d at 901, so the Radiance articles did not rely on the NAACP mark to criticize another subject, but targeted the NAACP itself. As in Mattel, there is the possibility that some people might be confused by the title’s reference. But, as Mattel and Rogers show, that possibility cannot suffice to trump Radiance’s First Amendment rights, given the importance of the right to refer to, comment on, or criticize famous organizations, people, and products. E.S.S Entertainment 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095 (9th Cir 2008), likewise followed the Rogers test. In E.S.S. Entertainment, a video game set in East Los Angeles portrayed a strip club that was clearly representative of the plaintiff’s club; the club owner sued the video game creator for trademark infringement. As in Mattel and Rogers, the court concluded that artistic or political use of a trademark will not violate the Lanham Act so long as “the level of relevance [to the underlying work is] merely . . . above zero.” Id. at 1100. And though “the Game is not ‘about’ the [club] the way that Barbie Girl was about Barbie,” the court held, “given the low threshold the Game must surmount, that fact is hardly dispositive.” Id. Because the neighborhood that the game was trying to recreate was “relevant to Rockstar’s artistic goal,” Rockstar had the right to “recreate a critical mass of the businesses and buildings that constitute it” by “includ[ing] a strip club that [was] similar in look and feel” to the plaintiff’s club. Id. As with the defendants’ speech in Rogers, Mattel, and E.S.S. Entertainment, Radiance’s use of NAACP’s trademark in the title of an article was directly relevant to the article’s political goal and did not explicitly mislead as to the source or content of the article. At most it led some people to briefly misunderstand what “NAACP” stood for—but the risk of misunderstanding the title was present in Rogers and Mattel as well, and the Second and Ninth Circuits held that this risk was not enough to justify restricting defendants’ speech. Rogers, Mattel, and E.S.S. Entertainment show that the First Amendment broadly protects cultural reference, commentary, criticism, and parody, including when such speech uses another’s trademark. The district court thus erred in viewing the possibility of some consumer confusion as trumping Radiance’s free speech rights. The district court likewise erred in admitting the expert report presented by NAACP, given that, under these precedents, the report’s assertions are irrelevant. And the Second and Ninth Circuit’s analyses in Rogers, Mattel, and E.S.S. Entertainment are sound. To be sure, in any group of potential viewers or listeners, some people might not think hard about what is being said and might thus reach the wrong conclusion. But in most situations, a brief further review will clear things up. “[M]ost consumers are well aware that they cannot judge a book solely by its title any more than by its cover.” Rogers, 875 F.2d at 1000. And even if there is some risk of consumer confusion, that cannot justify interfering with the First Amendment rights of artists, social commentators, and political commentators. These precedents also show that the First Amendment protects the expressive use of others’ trademarks for cultural or historical reference, commentary, criticism, or parody. The use of “National Association for the Abortion of Colored People” as a mocking decoding of “NAACP” was indeed “parody,” “defined as ‘a simple form of entertainment conveyed by juxtaposing the irreverent representation of the trademark with the idealized image created by the mark”s owner.’” People for Ethical Treatment of Animals v. Doughney, 263 F.3d 359, 366 (4th Cir. 2001). “[E]ntertainment” need not arouse laughter or light-hearted pleasure; some political criticism can entertain precisely by being caustic. See, e.g., Rosemarie Ostler, Slinging Mud: Rude Nicknames, Scurrilous Slogans, and Insulting Slang from Two Centuries of American Politics (2011). But even if the article title was not parody but was commentary or criticism, it should be protected. “Ginger and Fred,” for instance, was a constitutionally protected reference to Rogers and Astaire but not a parody of them. And more broadly, political criticism must be at least as protected as humor and entertainment; indeed, when the Lanham Act expressly discusses “parodying,” in 15 U.S.C. §1125(c)(3)(A)(ii) (in the dilution section), it treats parodying on par with “criticizing[] or commenting upon” the mark.

II. Radiance’s Use of the Term “NAACP” in an Article Title Was Not Trademark Dilution

A. Radiance’s Speech Was a “Noncommercial Use” and Thus Expressly Exempted from Trademark Dilution Actions

Beyond its mistaken finding of confusion, the court below also mistakenly found trademark dilution by failing to apply the exceptions laid out in 15 U.S.C. §1125(c)(3). To begin with, §1125(c)(3) expressly exempts “any noncommercial use” of a trademark from Lanham Act action. As the Ninth Circuit held in Mattel, “‘[n]oncommercial use’ refers to a use that consists entirely of noncommercial, or fully constitutionally protected, speech,” 296 F.3d at 905—which is to say, speech that “does more than propose a commercial transaction,” id. at 906. As a result, the Ninth Circuit held that the Barbie Girl song, though distributed for profit, constituted a “noncommercial use” of the Barbie trademark. Likewise, this Court has stated that Congress “did not intend for trademark laws to impinge the First Amendment rights of critics and commentators”; one First Amendment protection within “[t]he dilution statute” is that Congress “incorporate[d] the concept of ‘commercial’ speech from the ‘commercial speech’ doctrine,” i.e., “speech proposing a commercial transaction,” into the “noncommercial use” exception. Lamparello v. Falwell, 420 F.3d 309, 313-14 (4th Cir. 2005) (citations omitted). The “noncommercial use” exception thus limits the dilution cause of action to commercial advertising (which does propose a commercial transaction), and excludes fully protected speech, even when that speech—like most speech in newspapers, magazines, films, songs, and similar media—is distributed with an eye towards raising money. Mattel offered a detailed explanation for why this interpretation of “noncommercial use” is correct. Reading the “noncommercial use” exception as limited to non-money-making media, the court held, “would . . . create a constitutional problem, because it would leave the FTDA [the Federal Trademark Dilution Act] with no First Amendment protection for dilutive speech other than comparative advertising and news reporting.” 296 F.3d at 904. But this First Amendment difficulty can be avoided because the FTDA’s legislative history suggests that “‘[n]oncommercial use’ refers to a use that consists entirely of noncommercial . . . speech” in the sense that “noncommercial speech” is used in First Amendment doctrine, id. at 905:
The FTDA’s section-by-section analysis presented in the House and Senate suggests that the bill’s sponsors relied on the “noncommercial use” exemption to allay First Amendment concerns. H.R. Rep. No. 104-374, at 8, reprinted in 1995 U.S.C.C.A.N. 1029, 1035 (the exemption “expressly incorporates the concept of ‘commercial’ speech from the ‘commercial speech’ doctrine, and proscribes dilution actions that seek to enjoin use of famous marks in ‘non-commercial’ uses (such as consumer product reviews)”); 141 Cong. Rec. S19306-10, S19311 (daily ed. Dec. 29, 1995) (the exemption “is consistent with existing case law[, which] recognize[s] that the use of marks in certain forms of artistic and expressive speech is protected by the First Amendment”). At the request of one of the bill’s sponsors, the section-by-section analysis was printed in the Congressional Record. Thus, we know that this interpretation of the exemption was before the Senate when the FTDA was passed, and that no senator rose to dispute it.
Id. at 905-06 (emphasis added, some citations omitted). And this analysis is entirely consistent with this Court’s reasoning in Lamparello. The articles about the NAACP that Radiance posted were not “commercial speech” aimed at “proposing a commercial transaction.” They were political advocacy aimed at communicating Radiance’s views about the NAACP. That they appeared on a site that aimed to raise money for Radiance is irrelevant for purposes of dilution law, just as Barbie Girl being a commercially distributed song—and most movies, newspapers, magazines, and books being aimed at making money—is irrelevant for purposes of dilution law.

B. Radiance’s Speech Was Not Actionable Dilution Because It Was Exempted Commentary and Criticism

Under §1125(c)(3)(A)(ii) any use of a trademark is protected against a dilution claim if it is “identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner.” Radiance used the NAACP’s trademark to criticize the practices of the organization and to comment on how abortion affects the African-American community. Such uses are therefore exempted under §1125(c)(3)(A)(ii). Indeed, exceptions for commentary and criticism, such as those laid out for copyright infringement in 17 U.S.C. §107, are a “First Amendment protection[].” See Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539 (2007) (discussing “the First Amendment protections already embodied in . . . the latitude for . . . comment traditionally afforded by fair use”). Likewise, the exception for “parodying, criticizing, or commenting” in §1125(c)(3)(A)(ii)—a close analog to the exception “for purposes such as criticism[ or] comment” in 17 U.S.C. §107—is also an important First Amendment protection. In this instance, and even independently of the “noncommercial use” exception, the §1125(c)(3)(A)(ii) exception protects Radiance’s rights to use NAACP’s mark to criticize what Radiance sees as NAACP’s improper stance on abortion.


Amici ask that this court follow Rogers, Mattel, and E.S.S Entertainment—as well as the plain meaning of §1125(c)(3)(A)(i)-(ii)—and conclude that Radiance’s uses of the NAACP marks constituted neither infringement by confusion nor infringement by dilution.

Interest of Amici Curiae

The Electronic Frontier Foundation (“EFF”) is a nonprofit public advocacy organization devoted to preserving civil liberties in the digital realm. Founded in the nascent days of the modern Internet, EFF uses the skills of lawyers, policy analysts, activists, and technologists to promote Internet freedom, primarily through impact litigation in the American legal system. EFF has no position on the controversy over abortion. EFF views the protections provided by the First Amendment as vital to the promotion of a robustly democratic society. This case is of special interest to EFF because incautiously defined intellectual property rights improperly restrict speech that should receive full First Amendment protections. It is thus important that the Lanham Act not be interpreted in a way that erodes long-standing First Amendment freedoms.[10] The American Civil Liberties Union of Virginia, Inc. is the state affiliate of the American Civil Liberties Union (“ACLU”), a nationwide, non-profit, non-partisan organization with more than 500,000 members dedicated to defending the principles of liberty and equality embodied in the Constitution and the nation’s civil rights laws. Among the top priorities of the ACLU is the defense of the freedom of speech guaranteed by the First Amendment. The ACLU generally strongly supports the NAACP, and its mission of racial justice. The ACLU also vigorously defends reproductive freedom, including a woman’s right to choose an abortion. But despite its disagreement with the speech of Radiance Foundation, the ACLU of Virginia joins this brief in support of Radiance because it believes that the right to parody prominent organizations like the NAACP (and the ACLU) is an essential element of the freedom of speech.
* Gary T. Schwartz Professor of Law, UCLA School of Law (
** Class of 2016, UCLA School of Law.
[1] To retain consistency with the filed brief citations have been verified, but not re-formatted to conform with blue book standards. Additionally, sections have been moved or deleted to better suit the journal format. For an unedited version of the brief see
[2] Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989).
[3] Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2002).
[4] Chris Williams, The NRA Stands for Next Rifle Assault, The Huffington Post, Jan. 17, 2013,; Michael J. McCoy, NRA: The National Republican Association, Times-Herald, Mar. 27, 2013.
[5] Ruben Navarrette Jr., Biggest Story Never Told Is Latinos Missing from the Media, Contra Costa Times, Aug. 24, 2011.
[6] Neo-Con* Tastic, Anti-Christian Lawyers Union, Nov. 16, 2005,; Ed Brayton, The Anti-Christian Lawyers Union, Dispatches from the Creation Wars, May 30, 2008,, (sarcastically referring to this decoding in a post that stresses that the ACLU actually protects the rights of Christians).
[7] Radiance Found., Inc. v. Nat’l Ass’n for the Advancement of Colored People, 2014 WL 2601747 (E.D. Va. June 10, 2014).
[8] Ryan Bomberger, NAACP: National Association for the Abortion of Colored People, Jan. 16, 2013,
[9] Michael J. McCoy, NRA: The National Republican Association, Times-Herald, Mar. 27, 2013.
[10] No party or party’s counsel has authored this brief in whole or in part, or contributed money that was intended to fund preparing or submitting the brief. No person has contributed money that was intended to fund preparing or submitting the brief, except that UCLA School of Law paid the expenses involved in filing this brief. All parties have consented to the filing of this brief.

Media Law and Copyright Implications of Automated Journalism

Media Law and Copyright Implications of Automated Journalism
By Lin Weeks* Download a pdf version of this article here.  


The following paragraphs appeared in a story on on May 22, 2014:
Workday is expected to book a wider loss than a year ago when it reports first-quarter earnings on Tuesday, May 27, 2014. Analysts are expecting a loss of 28 cents per share, down from a loss of 20 cents per share a year ago. The consensus estimate is down from three months ago when it was a loss of 26 cents, but is unchanged over the past month. For the fiscal year, analysts are projecting a loss of $1.15 per share. Revenue is projected to be 66% above the year-earlier total of $91.6 million at $152.4 million for the quarter. For the year, revenue is expected to come in at $735.4 million.[1]
In a critique of the write-up, one might note a lack of conclusions about the information presented. This could be intentional: Forbes may believe investors should draw their own conclusions from the simple, informational story. From a stylistic standpoint, the prose is choppy, but technically sound; it is unclear whether the writer has spoken to the “analysts” referenced in the story or just noted their opinions online or in print. A more perceptive reader might notice the striking similarity to another story published an hour later on the same day:
Aeropostale is expected to book a wider loss than a year ago when it reports first-quarter earnings on Thursday, May 22, 2014. Analysts are expecting a loss of 72 cents per share, down from a loss of 16 cents per share a year ago. The consensus estimate remains unchanged over the past month, but it has decreased from three months ago when it was a loss of 17 cents. For the fiscal year, analysts are expecting a loss of $1.75 per share. A year after being $452.3 million, analysts expect revenue to fall 9% year-over-year to $409.9 million for the quarter. For the year, revenue is projected to come in at $1.94 billion.[2]
Now what looked like curt but useful prose looks like formulaic, if not lazy, writing. Questions of self-plagiarism arise; it appears that the article is written from a template. A close examination reveals that the phrasing of the second paragraph of each piece is slightly different, and that the syntax of the second and third sentences of that paragraph is flipped in a similar fashion. At the very least, one could feel reasonably comfortable in the assumption that the two articles were either authored by the same person, or that the latter piece was written by a person free to take liberties with the first writer’s work. But neither article was written by a person at all; both are the product of a computer program. New software allows computer programs to translate data-heavy content, such as box scores, stock prices, housing starts, and weather reports, into prose that reads much like traditional news stories. In the above example, Forbes used software produced by a company called Narrative Science to automatically generate blog posts for its website. These articles are generated and derived from information about the stock market,[3] but they include statistic-driven vocabulary that refers directly to the opinions of analysts. Other ventures into automated journalism are ongoing — the Knight Lab at Northwestern University is “working at advancing news media innovation through exploration, experimentation” in the digital realm.[4] The new technology has several interesting legal implications, specifically in the realms of copyright and media law. Part I of this note further introduces the technology underlying automated journalism, and explores its development, usage, and business applications. Part II examines both the traditional mass media law and copyright-related problems created by the usage of automated journalism programs, including problems affecting input, output, and the algorithm itself. These could include bad input or programming that leads to a falsehood in an automated story and potentially exposes the publisher to liability for defamation. In another scenario, competition between media entities might lead to copyright disputes over the algorithms or output of automated journalism stories. A theme is present throughout the note: Computer-generated journalism is just one type of information that will be disseminated with increasing frequency as similar technologies are adapted to various ends. The popularity of algorithmic reporting will require courts to more fully and definitively articulate a set of first principles for free speech lest they work case-by-case or see a fractal splintering of decisions in the lower courts. One effect of the relative clarity of copyright’s theoretical underpinnings, in comparison with the more open questions surrounding the First Amendment, will be a more straightforward translation of existing jurisprudence to the new questions presented by automated journalism technology.

I. Introduction to the Technology

The weather report and a listing of stock prices and changes were once pillars of major American newspapers. The practice was rooted in tradition, but it was also deeply practical — people care about things that affect their lives. The stock market is a proxy for retirement savings; the weather may affect commutes and plans for the day. Those two sections are low-level journalism, easy to investigate and simple to report. But the newspaper is far from the only way to get such information. Consider the stock ticker and the digital thermometer. Each takes a raw data input and processes it into output that humans can quickly and intuitively understand. News consumers take for granted the accuracy of this output, despite the lack of human moderation in the form of fact checkers or editors standing by to ensure the accuracy of a temperature or stock price. Similar output occur at stoplights, when GPS systems give directions, and even through Artificial Intelligence bots capable of sustaining a facsimile of conversation through a chat program. Returning to journalism, what happens when computers are enabled to provide information on topics like the weather and financial sector? More interestingly, what happens when computers are asked to tackle topics more complex than a simple report of a temperature or price? Traditional print news reporting is a highly developed field, with many conventions that have been developed to serve readers. But what if computers could be taught to “write” reports on multi-faceted subjects much the same way humans do? This technology is being developed and, in some instances, already being used.

A. Definitions and Terminology

This note will use the term “automated journalism” to refer to the process by which computer algorithms turn data-rich input into prose that reads like a traditional write-up. “Algorithm” is a general term that refers broadly to the category of computer programs that transform input into different sets of output. Input will be at times referred to as “data” or “clean data,” terminology that allows a distinction between the numbers and information that go into a story and the spreadsheet formatting itself. “Output,” “reports,” and “stories” are used interchangeably throughout.

B. Database Journalism

In a way, automated journalism is one of the most logical outgrowths of database journalism, although the two may seem at odds. Data journalism is a subversion of the normal prose structure of news stories, which was catalyzed by the realization that some of what traditional journalists do is better stored as numbers in a spreadsheet rather than in prose form.[5] For instance, if a journalist were to track down every phone call made during a certain time period from certain state offices through public records requests, society might benefit more from the production of an organized spreadsheet identifying caller, recipient, time of day, etc. rather than a simple repurposing of that data into one story and one interpretation. Of course, data journalism still leaves room for the reporter to write his story — the point is simply that by making the clean data available for mining by others, perhaps more patterns or narratives will emerge. Automated journalism operates on a different part of the process, by attempting to use the systems inherent in data journalism to identify the most relevant story. It also thrives on the exploitation of large data-rich caches of information already available in several areas of public interest.[6] In some cases, the information needs to be organized or cleaned up. In other cases, it is already in usable form. But the upshot is that automated journalism programs are a systematic, rather than human-driven, way of turning data collections into a format most news consumers are comfortable with: a prose translation of the underlying information into words, sentences, paragraphs, and articles.

C. The Business of Automated Journalism

Narrative Science, one example of the practicing leaders in the field, was buoyed when the New York Times published an article in September 2011 introducing the technology to a large cross section of the public.[7] This led to a bout of coverage in mass-media publications with headlines such as “This Article Was Not Written By a Computer,”[8] “Can the Computers at Narrative Science Replace Paid Writers,”[9] and, perhaps most optimistically, “Can an Algorithm Write a Better News Story than a Human Reporter?”[10] Reports have indicated that the company raised $6 million and $11.5 million in two highly publicized rounds of venture capital funding.[11] To understand the value investors see in Narrative Science, and to understand the legal implications, it is instructive to break down in general terms how the program creates a story. For an individual client, such as a media outlet — although, uses for the technology have been imagined in the medical, financial, and tech industries, as well as a host of others — the company tailors an algorithm to its needs, based on the expected output. For instance, the vocabulary utilized in the output story is tweaked:[12] The outcome of a baseball game and a football game are both dependent on the number of points scored by each of two competing teams, but any human reader would blanch at a description of a 21-7 contest that stated that the Packers beat the Vikings by 14 runs. Specializations also exist for various fields; the algorithm that interprets housing starts is different from one that deals with polling numbers. But in every case, the key is data-rich input. Automated journalism software is adept at interpreting a large set of data, be that barometric pressure over time or TV ratings, running that data through an algorithm, and releasing a story about that data using traditional grammar, vocabulary, and syntax. The business implications of such technology are deep and still developing. Bloomberg, Forbes, and the Big 10 Network all have some form of automated journalism integrated into their regular news output.[13] In June of 2014, the Associated Press announced that it would soon follow suit.[14] Though it remains to be seen whether the lowered cost and increased speed of reporting such technology provides can compensate for the lack of human voice and interpretation, it is likely — inevitable, in fact — that future uses of this technology will not be confined to journalism, however broadly defined. Other such uses are outside the scope of this note, which is confined to automated journalism “reporting,” while focusing specifically on the mass media implications of such work.

II. Automated Journalism and the First Amendment

A. A Three-Dimensional Problem: Theories of Protection, Manner of Restraint, Type of Output

Does algorithmic output fall within the realm of speech protected by the First Amendment? Courts have only begun to flesh out the answer to this question in the multitude of circumstances in which it might arise. But the normative answer likely depends on one’s preferred theory of First Amendment protection as well as the type of protection being contemplated. Once an abstract framework is in place for these concepts, it becomes easier to make sense of ramifications for the various points along the potential spectrum of machine-generated output. As a category, algorithmic output may be considered more or less valuable — that is, more or less worth protecting — depending on the lens through which one views the First Amendment. The four traditional justifications for the protection of free speech[15] may lead proponents to different baseline calibrations for evaluation. Adherents to the theory of the “marketplace of ideas,” following Justice Holmes’ famous articulation that “the best test of truth is the power of the thought to get itself accepted in the competition of the market,”[16] may welcome any new voice, human or otherwise. Likewise, as long as programmers stand behind it, those that see individual self-fulfillment as the main function of speech might appreciate algorithmic output as such.[17] Proponents of the self-governance theory would probably view machine speech more skeptically, as the role of algorithmic output in achieving Justice Brandeis’ construction of the goal of the state (“to make men free to develop their faculties; and that in its government the deliberative forces should prevail over the arbitrary”)[18] certainly depends on how you define “deliberative.” And there would seem to be almost no room for algorithmic output as speech for those who envision free speech’s main social benefit as providing a forum for potentially dangerous actors to let off steam in a manner less harmful than engaging in physical action.[19] The application of media and copyright law to automated journalism raises several important First Amendment questions within this framework. In the media law realm, the Supreme Court’s recent decision in Brown v. Entertainment Merchants Association sounds in the area of content-based governmental restriction, but some of the most interesting as-yet unanswered questions arise in tort. For instance, when will false information disseminated by an algorithm be considered defamation? The First Amendment questions surrounding copyright law go the other direction. When does Congress’s goal of “promot[ing] 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”[20] supersede the free usage of those creations? The first-principles formulation of copyright law is more well settled than that of free speech — the moral rights doctrine having been basically rejected in favor of a pecuniary rights regime (excepting the limited protection of VARA)[21] — but open questions still exist as to authorship. The theoretical lines are familiar, but technology has presented a new palette with which to color. Courts and scholars have discussed the spectrum of possible algorithmic output. This discussion warrants a brief overview, as it helps contextualize the specific type of output that is this note’s focus. From a positive standpoint, it is clear that in some cases the product of an algorithm or software program triggers the same protections as a piece of political writing produced by traditional means.[22] However, it is equally clear that in other cases it does not. For example, no one argues that the “opinion” expressed by an automatic door that opens in response to motion, nor a sign on subway platforms indicating when the next train will arrive should receive special protection of any sort. Indeed, these examples are definitively outside protection. Much output produced by computer algorithms does not meet the threshold of the “ideas” and “social messages” that the Court considers sufficient for First Amendment purposes. For illustration, in a set of debating articles published in the University of Pennsylvania Law Review in 2013, Stuart Minor Benjamin and Tim Wu both concede that there are plenty of permutations of “speech” produced by a machine, computer or algorithm that neither receive nor deserve constitutional treatment, regardless of where the line is drawn for First Amendment protection.[23] In his article, Wu notes the importance of such line drawing stating, “Too little protection would disservice speakers who have evolved beyond the printed pamphlet. Too much protection would threaten to constitutionalize many areas of commerce and private concern without promoting the values of the First Amendment.”[24] The articles conceive of “machine speech” as a category, on one end of which lie videogames, on the other, automatic doors, car alarms, and the like. Wu, Benjamin and other scholars have dived eagerly into borderline cases. Arguments have been made for and against the speech value of GPS directions, search engine results, and Facebook “likes.”[25] Necessarily, such discussions revolve around multiple axes. For instance, Wu distinguishes “speech” from “communication,” investigates questions of personhood, and further explores the traditional exclusions and inclusions that the Supreme Court has defined for the category of speech — explicit exclusions including incitement, false statements of fact, obscenity, and child pornography will receive no First Amendment protection regardless of their vessel. Wu and Benjamin reach opposing conclusions about where the line should be drawn on First Amendment protection for machine speech. Benjamin would exclude “algorithmic outputs that do not reflect human decision making,”[26] whereas Wu advocates for an extended application of the functionality doctrine that he detects in First Amendment jurisprudence.[27] Regardless, it is clear that any attempt at line drawing requires an accounting for at least three dimensions of the problem. Not only must the specific character of algorithmic output in question be identified, but, equally important, courts and scholars attempting to fit new technologies into existing First Amendment schema must contemplate the type of restriction at issue and establish first principles as well.

B. Media Law

1. Adjudicated Issues in Media Law: Implications of Brown for Automated Journalism
In Brown v. Entertainment Merchants Association, the Supreme Court spoke volumes about the First Amendment value of algorithmic speech by its omission of any acknowledgement of the category.[28] In that case, the constitutionality of California Assembly Bill 1179, which prohibited the sale of some violent video games to minors, was in question.[29] Specifically, the Bill banned the sale of those games for which a “reasonable person, considering the game as a whole, would find appeals to a deviant and morbid interest of minors.”[30] The statute was therefore a content-based restriction; one question addressed by the court was whether the videogame medium was truly speech. The Court’s opinion, written by Justice Scalia, dispenses with this query immediately: “California correctly acknowledges that video games qualify for First Amendment protection.”[31] The idea that the output might be distinguishable from the code that created the game is not touched upon. Rather, Scalia is blunt in stating the Court’s view that “[l]ike the protected books, plays, and movies that preceded them, video games communicate ideas — and even social messages — through many familiar literary devices … that suffices to confer First Amendment Protection.”[32] In fact, Scalia writes, “whatever the challenges of applying the Constitution to ever-advancing technology, ‘the basic principals of freedom of speech and the press, like the First Amendment’s command, do not vary,’ when a new and different medium for communication appears.”[33] Because the Court holds that the conveyance of “ideas” and “social messages” is sufficient for First Amendment protection, it appears that the relatively narrow question of whether stories created by automated journalism programs will be treated as speech can be answered in the affirmative.[34] Though Scalia moves on from the speech categorization question without much discussion (as the point was uncontroverted by the parties in dispute), the Court’s justification for the holding is worth parsing further — what happens if an algorithmic output lacks the requisite “ideas” or “social messages?” Rather than grounding its argument in any of the traditional theories of protection, the Court avoids explicitly endorsing any framework in favor of oblique references (intended or not) to the marketplace of ideas[35] and safety valve theories.[36] The Court also touches on a justification from history in stating, “[f]or better or worse, our society has long regarded many depictions of killing and maiming as suitable features of popular entertainment, including entertainment that is widely available to minors.”[37] The overarching result of Brown is clarity as to the speech value of machine output of the highest cognitive level — specifically, output expressing ideas and social messages along the lines of what humans express. This clearly includes automated journalism. Accordingly stories produced using automated journalism technology will trigger strict scrutiny for content-based regulation and intermediate scrutiny for content-neutral regulation. However, the court’s reluctance to explicitly endorse one or several rationales for accepting video games as speech leaves open the issue of the speech value of more borderline cases: Do videogames that do not express an idea warrant categorization as speech? What about an automated journalistic output with incorrect input — seven paragraphs of gibberish about the market’s expectations for the National League MVP’s third quarter earnings? In declining to address the foundation from which it categorized video games as speech beyond repeated reference to the jurisprudential tradition of recognizing new technologies as they arise, the Court missed a valuable chance to pick the low hanging fruit of the machine speech conversation. As discussed below, issues concerning authorship and personhood are much thornier and harder to reach.
2. Open Questions in Media Law: Defamation
Given the several sources of human control inherent in a piece of automated journalism — e.g. the input may be recorded falsely by an overworked newsroom employee, the algorithm may contain flaws that lead to inconsistent output — there is real potential for automated pieces to occasionally contain inaccuracies or falsehoods. This means that the potential exists for disgruntled subjects to commence legal action against outlets that use automated journalism technologies. However, in a defamation suit, the analysis might be different than it would be for a piece authored by a human. For instance, imagine that a Forbes employee accidentally entered data from 2009 into the algorithm that created the story about Aeropostale quoted above. The story is a prediction, and would still register as such, but it would be premised on false information. A prima facie defamation claim requires that the defendant publish a false, defamatory statement of fact concerning the plaintiff, with some level of fault with respect to the falsity of the statement.[38] The implications of some parts of this definition are independent of the machine status of the author. However, some aspects of such a claim, especially the level of fault, raise interesting implications for the best practices of a media organization attempting to regularly publish stories produced by an algorithm. The truth or falsity of the statement is one aspect of defamation that will not have to be re-examined in light of a machine author. This is because courts have tended to make tests of the meaning of the words in question dependent on the understanding of outside parties, rather than on the intent of the writer. Some courts ask, “How would a reasonable actor interpret the allegedly defamatory statement?”[39] Others afford the statement a meaning that would be given by a reasonable person of ordinary intelligence.[40] In either case, the court adopts an external, reader-centric viewpoint; the intent or status of the writer will not be in question at this point. United States courts generally require that a statement’s topic contain a degree of moral opprobrium in order to be defamatory.[41] This, too, is a requirement that hinges on the perception of readers, not on the intent or actions of the defendant. Still, one can imagine a situation in which the relevant moral opinion of a “substantial and respectable minority,”[42] of the community is influenced differently by a statement written by a human versus that of an algorithm. But until courts decide on an appropriate application of scienter, it will be difficult to predict the way this standard will swing.
a. How Should Actual Malice or Negligence Be Determined in Defamation Cases Arising from Animated Journalism Articles?
The level of fault required in a successful defamation suit depends on the type of plaintiff claiming to have been defamed. For public figures and public officials, “actual malice” is required for defamation to be found.[43] (For non-public figures, mere negligence is the standard; see the discussion below.) Actual malice is defined as false information published “with knowledge that the information was false,” or with “reckless disregard for whether it was false or not.” This is a standard based on the state of mind of the publishing party — unlike the standards for moral opprobrium and falsity, the actual malice standard asks the court to take into consideration the mindset of the speaker and not simply the perception of subjects or recipient parties. This has not traditionally been a problem, nor would it be for a mass media enterprise in possession of an automated journalism program today. The court would simply be able to impute the level of fault of a publishing entity, through its various copy editors and fact checkers, in much the same way it does in other organizational contexts. But that set up is certainly the easy case in today’s media landscape, as the Internet has decreased the cost of publishing to almost nothing. This has enabled individuals or small enterprises without traditional editing systems to reach larger audiences than ever before. For an illustration of the problem of assigning a mental state for works produced via automated journalism, recall the crossed input example above, with some tweaks to avoid complications posed by group or organizational defamation. Imagine a computer programmer with a passing interest in politics. On his personal computer, he registers a domain name for a website onto which he begins to post blog entries. After a while, his workload picks up, and he begins staying later at the office. So as not to abandon his side project, he licenses or creates an algorithm that combines keywords from certain news stories with results from a reputable public opinion poll to create articles juxtaposing candidates’ latest public statement with their polling numbers on that topic. After seeing that it has worked correctly the first few days, he lets this program run without supervision. But soon, due to a programming error that confuses the two inputs in a small number of cases, the headline appears about a popular but beleaguered candidate: “Smith tells voters he’s accepted campaign bribes, 75% believe ‘I love this country.’” Would that publisher’s failure to exercise oversight over the automated statement generated by his algorithm rise to the level of actual malice? What if, instead of a public figure, the defamed subject’s name and information were pulled randomly from the blogger’s Facebook friends? The private figure analysis is even more fraught with difficulty. Clearly, the algorithm itself cannot be said to have acted with actual malice or even negligence in any situation. One interesting effect of automated journalism is that it removes any possible culpability from the “writer” of the story and places it squarely upon the publisher, whether a media conglomerate or an individual blogger. Precedent indicates courts’ hesitance to assign this level of responsibility to a non-writing party. Taking public figures first, the mere failure of a fact checker to catch an error does not rise to the level of actual malice.[44] In fact, courts have held that even a publisher’s possession of facts that contradict false information contained in a story does not automatically amount to actual malice, either (though, it would violate the negligence requirement for defamation cases in which the plaintiffs are non-public figures or public officials).[45] However, there are instances in which editorial oversights are egregious enough to rise to the level of actual malice, particularly in cases where there is evidence of some suspicion that further investigation may be needed to verify information contained in a story.[46] For instance, the Supreme Court has held that “inherently improbable” information, such that “only a reckless man would put … in circulation,” may lead to a finding of actual malice when a publisher does not follow up with fact checking.[47] In Harte-Hanks Communications, Inc. v. Connaughton, the Court further clarified that “evidence of an intent to avoid the truth” is also sufficient to satisfy the actual malice standard.[48] For private individuals, however, the only constitutional requirement placed on state defamation statutes is that the plaintiff be required to show negligence.[49] While some state statutes, such as New York’s, heighten the standard by “requir[ing] private figure[s] to show that the media defendant acted in a grossly irresponsible manner regarding its statements about a legitimate public concern,” others, like Pennsylvania, require only that a private figure show “mere negligence.”[50] So, while a news outlet’s failure to catch a mistaken defamatory statement about a public figure might not lead to a successful defamation claim in some jurisdictions,[51] a simple user input error could lead to culpability in others. Though state-by-state analysis is not conducive to generalized discussion, the negligence requirement, at least, seems to translate fairly well from traditional journalism — the requirement is that an editor or fact checker act as a reasonably prudent person would under a corresponding set of circumstances.[52] It will also be important for courts to determine whether automated journalism programs act as newsgatherers, or whether their function is more akin to that of a page designer. In other words, is the main function to report a previously unknown story or to take a story that the media entity already owns and simply place it on the page? Criticisms of either view are conceivable — an algorithm, by definition, relies on input that the news outlet must have in its possession. On the other hand, such a program may perform a reporting function in its ability to draw conclusions from a quantity or type of data that would be impractical for human reporters. Will courts continue to apply the current standards, which afford leeway for poor fact checking by publishers, to defamation cases where the “writer” of an allegedly defamatory story is a computer rather than a human being? If courts are sympathetic to viewing algorithms as newsgatherers, perhaps one way to determine how they will treat such cases is to see how they have dealt with unknown or unreliable writers or sources. In St. Amant v. Thompson, the Supreme Court stated, “Professions of good faith will be unlikely to prove persuasive, for example, where a story is fabricated by the defendant, is the product of his imagination, or is based wholly on an unverified anonymous telephone call.”[53] Based on this skepticism of “unverified” sources, lower courts have been loath to accept arguments of good faith reliance upon anonymous sources without further verification prior to publication.[54] The analogy is imperfect, but one might extrapolate from these examples that courts will ask publishers of automated journalism — which, in a way, involve unnamed sources — to meet a higher level of verification than they would ask for traditional human-written pieces. But if courts view automated journalism programs as simple republishers, the fact checking question would fall to the original data gatherers instead.
b. How Will Section 230 Be Applied to the New Technology?
Section 230 of the Communications Decency Act (“CDA”) limits the liability of online service providers for defamation claims. Congress passed the section as an explicit response by Congress to the ruling in Stratton Oakmont v. Prodigy, which held that Prodigy could be liable for statements made on its online bulletin board, even if Prodigy had no knowledge of the information being posted.[55] In part, the section reads, “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”[56] Interestingly, within § 230, Congress signaled its preference for a marketplace of ideas theory of the First Amendment as well as its distaste for the safety valve theory. As the section states, “It is the policy of the United States … to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation … [and] to ensure vigorous enforcement of Federal criminal laws to deter and punish trafficking in obscenity, stalking, and harassment by means of computer.”[57] Section 230 has had several implications for algorithm-generated content since its passage in 1996. For instance, in Parker v. Google, Inc., Google’s status as an interactive computer service immunized it from libel claims stemming from the search engine’s caching and displaying of defamatory content originally created by USENET users.[58] Courts have also found immunity for website operators whose sites contain defamatory material in posts that they did not author.[59] To envision a more controversial application § 230, imagine an Internet provider who provides users with an algorithm with which they can input their own data. By statutory definition, a provider “means a provider of software … or enabling tools that … (A) filter, screen, allow, or disallow content; (B) pick, choose, analyze, or digest content.” The applicability of § 230 to automated journalism will depend on how courts view the technology. If courts are apt to view the algorithm simply as a proxy for a traditional editor, it is unlikely that § 230 will provide shelter from defamation claims. Further, the Ninth Circuit has held that “the CDA does not grant immunity for inducing third parties to express illegal preferences” through the use of form questionnaires.[60] Only if courts give great deference to Congress’ preference for the marketplace of information rationale as to third-party content hosted on the Internet could such an algorithm be viewed as a simple “tool” used by the “information content providers,” to allow algorithm writers to escape culpability for any potential defamation.

C. Copyright

The oft-cited line from Feist Publications, Inc. v. Rural Telephone Service Co., Inc. is the starting point for most discussions of whether certain content is too formulaic or obvious to receive copyright protection: “The sine qua non of copyright is originality.”[61] In that case, the Supreme Court found that entries in a phonebook were not protected because the facts therein (phone numbers, names, etc.) were not protected, and the organizational scheme employed (alphabetization by last name) was not original enough to meet the Court’s standard. Justice O’Connor, writing for the Court, uncoupled the concepts of ideas within a work and the work’s expression of those ideas, stating: “A factual compilation is eligible for copyright if it features an original selection or arrangement of facts, but the copyright is limited to the particular selection or arrangement. In no event may copyright extend to the facts themselves.”[62] At the highest level of abstraction, automated journalism stories consist of an algorithm, of input (known in the industry as clean data), and of prose output. However, the new technology poses a number of questions related to the organization and usage of clean data input. As for output, major questions on assignation of authorship loom as the popularity of automated journalism technology grows.
1. Adjudicated Issues in Copyright: Protection for Algorithms
One relatively uncontroversial aspect of the new automated journalism technology is the protection of the algorithm itself. Professor Arthur Miller, in his article on copyright protection for computer programs, explains that just as other forms of expression have been codified into the Copyright Act, computer programs are the most recent candidate for the same reasons that Congress has historically extended intellectual property protection.[63] Miller notes that, historically, many new technologies have brought about “fear and concern” that the traditional doctrines and boundaries of protection would not cover them adequately, writing “[t]hese apprehensions were voiced about photography, motion pictures, sound recordings, radio, television, photocopying, and various modes of telecommunication … As their labors progressed, most members of CONTU[64] became convinced that computer programs were the latest manifestation of this recurrent phenomenon.”[65] In support of the 1980 Computer Software Copyright Act, Miller notes, “[c]omputer programs, like other literary works, are expressive. The imagination, originality, and creativity involved in writing a program is comparable to that involved in more time-honored literary works.”[66] The 1980 Computer Software Copyright Act, now codified as 17 U.S.C. § 117, states in part that the lease, sale, and transfer of rights in a computer program or of its exact copies may be made only with the authorization of the copyright owner. [67] As for the definition of computer program, § 101 of the Copyright Act reads in relevant part, “A ‘computer program’ is a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.”[68] There can be little doubt that the algorithm used to produce an automated journalism story falls under this rubric. According to Miller, the fact that automated journalism algorithms are designed to mimic the human process of writing and are thus a form of artificial intelligence, does not change the paradigm.[69] In fact, the very thing that makes artificial intelligence different from standard computer programs “is more comfortably dealt with under traditional copyright principles than the issues raised by [1993’s] comparatively mundane commercial software.”[70] As Miller would have it, “these issues were nothing more than the same old wine, and they fit nicely into the old doctrinal bottles.”[71]
2. Open Questions in Copyright: Forms, Fair Use, and Authorship
a. What Protection Should Be Given to the Spreadsheet Used to Create Automated Journalism Stories?
Facts cannot be copyrighted.[72] However, an interesting question arises when the role of facts for automated journalism is considered in context. In order to create news stories, many automated journalism programs require data sets to be organized in a specific fashion, generally through the use of a spreadsheet program.[73] These set-ups, which are used to organize “clean data,” allow systematic sorting and usage of raw input into the eventual prose story. The organization of a typical spreadsheet may be particular to an algorithm, and may in fact be necessary to its function. As such, publishers may wish to protect the organization of their input, the input itself, or both. The law is somewhat in conflict on whether such organizational systems can be copyrighted. In general, this has meant that creative compilations, using systems of organization less obvious than simple alphabetization, have been copyrightable.[74] However, some recent decisions in the Courts of Appeals have called into question the precise boundaries for protection on “blank forms.” Since Lotus Development Corp. v. Paperback Software International, there has been a tension in the lower courts between decisions that have granted protection to spreadsheet programs[75] with those that have denied it to the data-entry inroads used in professions like medicine and dentistry. Decisions denying copyright protection to such systems generally cite to the 1880 Supreme Court case Baker v. Seldon,[76] and to the Copyright Act, which states that no “idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated or embodied in such work,” may receive protection.[77] The circuits are split on how to treat so-called “blank forms.” According to the Code of Federal Regulations, “[b]lank forms, such as time cards, graph paper, account books, diaries, bank checks, scorecards, address books, report forms, order forms and the like, which are designed for recording information and do not themselves convey information,” are not subject to copyright.[78] But, considering the issues of construction inherent in that regulation,[79] the circuits have split on borderline cases.[80] The Ninth Circuit, in Bibbero Sys., Inc. v. Colwell Sys., Inc. articulated a bright-line rule for blank forms, stating that just because a form contains “possible categories of information” that does not make it any less blank: “[a]ll forms seek only certain information, and, by their selection, convey that the information sought is important. This cannot be what the Copyright Office intended by the statement ‘convey information’ in 37 C.F.R. 202.1(c).”[81]The bright-line rule for the Ninth Circuit is thus defined by what it calls the “text with forms” exception:[82] Text integrated with blank forms comprises copyrightable work; blank forms, even those with unique organizations or carefully chosen categories, do not. Other circuits, however, have declined to follow Bibbero in applying a bright-line rule.[83] In Whelan Assos., Inc. v. Jaslow Dental Laboratory, Inc., the Third Circuit noted that like “the majority of courts,” it would find copyrightability for blank forms “if they are sufficiently innovative that their arrangement of information is itself innovative.”[84] Particularly useful for the purposes of this note is the Second Circuit’s decision on this topic, in which it considered whether a “baseball pitching form,” could be copyrighted.[85] According to the District Court’s statement of facts, “[t]he form listed various statistics in a tabular format with a legend at the bottom to explain the categories.” The creator of the form, George Kregos, included nine categories, among which were the names of the starting pitchers, the game time, which team was favored to win, as well as each pitcher’s statistics for the current season and his success against the present opponent.[86] Some newspapers then published Kregos’s form in that precise format — a step less than one might imagine a company like Narrative Science taking.[87] The Second Circuit held that a decider of fact would not likely find Kregos’ form to lack the creativity Feist requires, and that such a conclusion “certainly could not be reached as a matter of law.”[88] Thus, the nearly identical form that the Associated Press had been circulating could be subject to an infringement claim by Kregos. More generally, the court noted, “all forms need not be denied protection simply because many of them fail to display sufficient creativity.”[89] This is surely welcome news for the media entity that wishes to protect its unique method of data organization for the clean data it feeds into an automated journalism program. Further good news for such entities, and in further contravention of the Ninth Circuit’s bright-line rule, is the treatment computer spreadsheet programs have received. These programs have generally received copyright protection, resolving some of the tension at the margin of what is and is not considered a “blank form.” The leading cases on this area both involve Lotus Development Corporation, which twice sued to protect the “menu command structure” of its program, Lotus 1-2-3, a main competitor in the market for spreadsheet applications in the late 1980s and early 1990s. In Lotus Development Corp. v. Paperback Software Intern., the Massachusetts District Court found copyright protection for the command elements and menus of Lotus 1-2-3,[90] which comprise the parts of any spreadsheet program that can be considered creative and therefore protectable. As noted above, it is a matter of some dispute whether the spreadsheet itself should receive copyright protection, but it is relatively clear that, in combination, a spreadsheet with attendant data is indeed copyrightable. One ancillary question to this discussion is whether a second news organization could use this spreadsheet and data combination for its own end by applying the doctrine of fair use. In other words, does the transformation that the clean data and spreadsheet undergoes on its way to becoming an English-language news story rise to the level needed for the fair use limitation to apply to the original author’s exclusive copyright? The four factors weighed in a decision as to whether a certain use of copyrighted work falls under fair use are: (1) the purpose and character of the use; (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 the copyrighted work.[91] Also of note is the list of “purposes” identified in the Copyright Act’s section on fair use, which includes “criticism, comment, news reporting, teaching … scholarship, or research.” An analogy can be drawn between the unauthorized use of an unpublished data-spreadsheet set and the facts of the case in Harper & Row Publishers, Inc. v. Nation Enterprises.[92] That case, in which The Nation magazine had scooped Time magazine by publishing extensive quotes from an soon-to-be published excerpt of President Gerald Ford’s memoirs for which Time had paid $25,000 for the right to publish, was decided for the plaintiffs on the grounds that “The Nation effectively arrogated to itself the right of first publication, an important marketable subsidiary right.”[93] Fair use doctrine, Justice O’Connor wrote for the court, “has always precluded a use that ‘supersedes the use of the original.’” On this view of the role organized data plays in the automated journalism process (that is, as a “marketable subsidiary right”), courts would be unlikely to be sympathetic to a fair use argument. However, it is possible that courts would see the usage as a technological interchange — the data and its organization could be analogized to a videogame cartridge; the algorithm to a system that can interpret the data therein to form a cognizable image on a television screen. The analogy here would implicate the Ninth Circuit’s decision in Sony Computer Entertainment, Inc. v. Connectix Corp.[94] In that case, Connectix corporation had created a “Virtual Game Station,” which was intended to perform a very similar function as a Sony PlayStation, but, rather than hooking up to a television, the Virtual Game Station was designed to allow users to play PlayStation games on their computers.[95] Sony sued for a violation of the copyright it held in the PlayStation’s firmware,[96] which was known as BIOS. The Ninth Circuit found that Connectix’s reverse engineering and copying of BIOS for usage in its Virtual Game Station was “modestly” transformative, found fair use, and encouraged Sony to avail itself of the patent system. In sum, if courts view the cumulative input of automated journalism as similar to exclusive, unpublished news material, they will probably be unsympathetic to fair use arguments. However, if the material is seen more as a pathway or reverse engineering of a component piece necessary to the functioning of a system, fair use arguments are more likely to succeed.
b. Who Will Courts Favor in an Authorship Dispute?
A final open question in copyright implicated by automated journalism is the treatment of the output of such programs. The major question presented is one of authorship. Namely, who is the author of the work generated by a computer for the purposes of the initial allocation of copyright? There are three obvious potential answers to this question, not necessarily exclusive, each of which has been explored to a varying degree in scholarship surrounding this issue. First, the authorship for computer-generated works could be assigned to the programmer or firm who created the algorithm by which the work was generated. Second, it could be assigned to the data entry clerk or data provider, much like the authorship of a photograph attaches to the person standing behind the sight and depressing the shutter.[97] Or, third, the rights could be assigned to the computer program itself, by finding that the algorithm, in its creative endeavor, has attained the legal personhood necessary to be assigned copyright. To illustrate how an argument for assigning exclusive rights to a computer program would proceed, Annemarie Bridy’s recent article published in the Stanford Technology Law Review is instructive.[98] Essentially, the argument goes that legal personhood is often uncoupled from being human — business corporations and government agencies have legal personality in some instances, for example; on the flip side of the coin, slaves “were not legal persons at all under antebellum law.”[99] Therefore, given the stunning advances made in computer-generated works, the law should be prepared to recognize the true talent (balancing the “creativity of the coder with the creativity of the code”) by awarding some form of copyright to the algorithm itself.[100] An argument for such a drastic change in the copyright system reflects an opinion that “few on either side of the ‘copyfights’ would argue that the system is not broken, and many believe it is irretrievably so.”[101] So far, US courts have not agreed. One day automated journalism programs that “write” news stories may be accompanied by automated data collectors, automated newsroom meetings that decide which stories to pursue, automated data input systems, automated editors, and automated publishing suites. But until such a system is in place, the human input necessary for automated journalism to be produced will probably control the copyright. This being the case, the assignation of authorship between the former two categories articulated above — the programmer or the data entrant — will become a very important copyright question as automated journalism gains popularity and wider usage. In the famous case involving a photograph of Oscar Wilde, the Supreme Court found that the photograph in question was copyrightable and that such copyright vested initially in the person taking the picture (as opposed to the manufacturer of the camera or the subject of the photograph).[102] But the Court’s opinion anticipated arguments that there was no creativity inherent in new technologies like photography, which held the composer at more of a remove from the process than previous methods like painting. In predicting how courts will resolve the divide between programmers and those that input data, it is useful to return to the theoretical underpinnings of copyright law. Traditionally, American copyright law and jurisprudence “seeks to vindicate the economic, rather than the personal, rights of authors.”[103] Where a strict moral conception of copyright might assert that all Polaroid photographs owe dependency to Edwin H. Land,[104] or that the creator of an algorithm has a claim in everything that algorithm output, our current pecuniary conception values the promulgation of technologies into more and newer works. If faced with the decision, therefore, courts will probably prefer the rights of parties who enter data over the claims of algorithm writers in deference to copyright law’s abstract framework.


In both media law and copyright, the advent of new technology such as automated journalism raises important questions about attribution, mental state, fair use, and more. Some of the questions are easily answered, while others are unlikely to be definitively addressed by the courts for years. However, in identifying these new questions, while courts have been clear in defining a set of first principles and embracing a consistent theoretical structure for copyright law, they have been much less so in the media law realm. This observation does not necessarily lead to a simple conclusion — one’s penchant for judicial principles spanning time, taste, and technology probably inform the perceived wisdom of articulating such principles. But as computer technologies rapidly proliferate and concepts like automated journalism arise, courts large and small will have to choose between ruling on correspondent questions case-by-case or picking a conceptual structure to follow.
* J.D. Candidate, New York University School of Law, 2015; B.A. Economics, University of Wisconsin-Madison, 2012. Special thanks to Professor David McCraw, Assistant General Counsel, New York Times, and Leah Rosenbaum, NYU JIPEL Senior Notes Editor 2013–2014, for their thoughtful editing and feedback.
[1] Narrative Science, Loss Expected to Widen for Workday, Forbes (May 22, 2014, 9:00 AM),
[2] Narrative Science, Loss Expected to Widen for Aeropostale, Forbes (May 22, 2014, 10:00 AM),
[3] Narrative Science, About, Forbes, (July 10, 2014).
[4] About Us, Knight Lab, (last visited July 10, 2014).
[5] See, e.g., Nate Silver, What the Fox Knows, FiveThirtyEight (Mar. 17, 2014, 5:38 AM), (“Data journalists, meanwhile, can organize information by running descriptive statistics on it, by placing it into a relational database or by building a data visualization from it.”).
[6] See, e.g., Michael Sallah, Debbie Cenziper & Steven Rich, Left With Nothing, Washington Post (Sept. 8, 2013), 8/left-with-nothing/ (investigation into property tax liens placed on homeowners in the District of Columbia).
[7] Steve Lohr, In Case You Wondered, a Real Human Wrote This Column, New York Times (Sept. 10, 2011),
[8] Rachel Arndt, This Article Was Not Written By a Computer, Fast Company (Nov. 8, 2011, 5:37 PM),
[9] Joe Fassler, Can the Computers at Narrative Science Replace Paid Writers?, The Atlantic (Apr. 12, 2012, 8:03 AM), /04/can-the-computers-at-narrative-science-replace-paid-writers/255631.
[10] Steven Levy, Can an Algorithm Write a Better News Story Than a Human Reporter?, Wired (Apr. 24, 2012, 4:46 PM),
[11] John Pletz, Narrative Science Gets $11.5 Million to Write Next Chapter, Crain’s Chicago Business (Sept. 10, 2013), 11/130919987/narrative-science-gets-11-5-million-to-write-next-chapter.
[12] Lohr, supra note 7 (“The data also determines vocabulary selection. A lopsided score may well be termed a ‘rout’ rather than a ‘win.’”).
[13] Lohr, supra note 7.
[14] Paul Colford, A Leap Forward in Quarterly Earnings Stories, Associated Press (June 30, 2014),
[15] Namely, “the need to protect the truth-seeking function of the marketplace of ideas; the facilitation of democratic self-actualization; the pragmatic value of providing a social safety valve; and the safeguarding of individual liberty or autonomy.” Steven G. Gey, The First Amendment and the Dissemination of Socially Worthless Untruths, 36 Fla. St. U. L. Rev. 1, 6 (2008); see also Thomas I. Emerson, Toward A General Theory of the First Amendment, 72 Yale L.J. 877, 902 (1963).
[16] Abrams v. United States, 250 U.S. 616, 630 (1919) (Holmes, J., dissenting).
[17] Or maybe not — as Emerson construes the self-fulfillment theory,
Man is distinguished from other animals principally by the qualities of his mind. He has powers to reason and to feel in ways that are unique in degree if not in kind. He has the capacity to think in abstract terms, to use language, to communicate his thoughts and emotions, to build a culture. He has powers of imagination, insight and feeling. It is through development of these powers that man finds his meaning and his place in the world.
Thomas I. Emerson, Toward A General Theory of the First Amendment, 72 Yale L.J. 877, 879 (1963).
[18] Whitney v. California, 274 U.S. 357, 375 (1927) (Brandeis, J., concurring), overruled by Brandenburg v. Ohio, 395 U.S. 444 (1969).
[19] This may be a function of journalism, rather than of automated journalism, however. See John J. Watkins Charles, Gertz and the Common Law of Defamation: Of Fault, Nonmedia Defendants, and Conditional Privileges, 15 Tex. Tech L. Rev. 823, 850 (1984) (“[A]s Professor Nimmer has noted, the self-fulfillment and safety valve aspects of the first amendment have little relevance to the press.”).
[20] U.S. Const. art. I, § 8, cl. 8.
[21] Visual Artists Rights Act, 17 U.S.C. § 106A, 1990; See Carter v. Helmsley-Spear, Inc., 861 F. Supp. 303, 313 (S.D.N.Y. 1994) (“In passing VARA, Congress for the first time provided for protection of artists’ “moral rights” under the Copyright Act.”).
[22] Brown v. Entm’t Merchants Ass’n, — U.S. —, 131 S. Ct. 2729, 2733 (2011) (stating that video-games deserve First Amendment protection).
[23] See Tim Wu, Machine Speech, 161 U. Pa. L. Rev. 1495, 1496 (2013); Stuart Minor Benjamin, Algorithms and Speech, 161 U. Pa. L. Rev. 1445, 1450 (2013).
[24] Wu, supra note 23, at 1498.
[25] See Bland v. Roberts, 730 F.3d 368, 380 (4th Cir. 2013).
[26] Benjamin, supra note 23, at 1450.
[27] Wu, supra note 24, at 1479.
[28] Brown, — U.S. at —, 131 S. Ct. at 2733.
[29] Id. at 2732.
[30] Id.
[31] Id. at 2733.
[32] Id.
[33] Id. (citing Burstyn, Inc. v. Wilson, 343 U.S. 495, 503 (1952)).
[34] To elaborate, it is hard to imagine a court acknowledging that “ideas” and “social messages” are inherent in videogames yet lacking in a news story.
[35] The marketplace of ideas is the theory that “government has no power to decree [esthetic and moral judgments about art and literature], even with the mandate or approval of a majority.” Brown, — U.S, at —, 131 S. Ct, at 2733 (quoting United States v. Playboy Entm’t Group, 529 U.S. 803, 818 (2000)).
[36] The safety valve theory states that “the obscenity exception to the First Amendment does not cover whatever a legislature finds shocking, but only depictions of “sexual conduct.” Brown, — U.S, at —, 131 S. Ct. at 2734.
[37] Id. at 2745.
[38] Restatement (Second) of Torts § 558 (1977).
[39] See, e.g., Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 515 (1991) (“[W]e can think of no method by which courts or juries would draw the line between cleaning up and other changes, except by reference to the meaning a statement conveys to a reasonable reader.”).
[40] See, e.g., Romaine v. Kallinger, 537 A.2d 284, 288 (N.J. 1988) (“In making this determination [on whether the statement at issue is reasonably susceptible of a defamatory meaning], the court must evaluate the language in question according to the fair and natural meaning which will be given it by reasonable persons of ordinary intelligence.” (internal quotation marks omitted)).
[41] For instance, false information about a party’s address would probably not be defamation, but falsely descriptions of a party abusing his child probably would be. See, e.g., Moss v. Camp Pemigewassett, Inc., 312 F.3d 503, 507 (1st Cir. 2002) (defining a defamatory statement as one that “tends to lower the plaintiff in the esteem of any substantial and respectable group of people” and finding that false accusations of “inappropriate contact” with young campers meet the definition) (citation omitted).
[42] See Jews For Jesus, Inc. v. Rapp, 997 So. 2d 1098, 1100 (Fla. 2008) (quoting Restatement (Second) of Torts § 559 (1972)).
[43] See, e.g., New York Times Co. v. Sullivan, 376 U.S. 254, 279–80 (1964); Curtis Pub. Co. v. Butts, 388 U.S. 130, 133–34 (1967).
[44] Sullivan, 376 U.S at 277–78 (finding that “negligence in failing to discover the misstatements … is constitutionally insufficient to show the recklessness that is required for a finding of actual malice).
[45] Great Lakes Capital Partners Ltd. v. Plain Dealer Publ’g Co., 8th Dist. Cuyahoga No. CV-599853, 2008-Ohio-6495, ¶ 45.
[46] 1 Rodney A. Smolla, Law of Defamation § 3:49 (2d ed.).
[47] St. Amant v. Thompson, 390 U.S. 727, 732 (1968).
[48] Harte-Hanks Commc’ns, Inc. v. Connaughton, 491 U.S. 657, 693 (1989).
[49] Gertz v. Robert Welch, Inc., 418 U.S. 323, 347 (1974) (holding that “states may define for themselves the appropriate standard of liability” as long as they do not “impose liability without fault” for defamatory injuries to private individuals).
[50] Franklin Prescriptions, Inc. v. The New York Times Co., 267 F. Supp. 2d 425, 432 (E.D. Pa. 2003).
[51] See, e.g., Chapadeau v. Utica Observer-Dispatch, Inc., 341 N.E.2d 569, 571 (N.Y. 1975) (stating that failure of newspaper to catch an error does not raise a question as to “grossly irresponsible conduct” so as to preclude summary judgment in its favor).
[52] See, e.g., Straw v. Chase Revel, Inc., 813 F.2d 356, 359 (11th Cir. 1987) (“The jury was entitled to find that Mr. Smith’s failure to verify the assertions contained in it amounted to a failure to exercise that degree of care exercised under the same or similar circumstances by ordinarily prudent persons…”).
[53] St. Amant, 390 U.S. 732.
[54] See, e.g., Holter v. WLCY T.V., Inc., 366 So. 2d 445, 453 (Fla. Dist. Ct. App. 1978) (“[W]here an anonymous tipster conveys the information, one would be hard put not to have serious doubts about the authenticity of the tip.”).
[55] Stratton Oakmont, Inc. v. Prodigy Servs. Co., 1995 WL 323710, at *3 (N.Y. Sup. Ct. May 24, 1995).
[56] 47 U.S.C.A. § 230.
[57] Id.
[58] Parker v. Google, Inc., 422 F. Supp. 2d 492, 500–01 (E.D. Pa. 2006) aff’d, 242 F. App’x 833 (3d Cir. 2007).
[59] Best W. Int’l, Inc. v. Furber, CV-06-1537-PHX-DGC, 2008 WL 4182827, at *9 (D. Ariz. Sept. 5, 2008).
[60] Fair Hous. Council of San Fernando Valley v. Roommates.Com, LLC, 521 F.3d 1157, 1165 (9th Cir. 2008) (“Roommate’s own acts – posting the questionnaire and requiring answers to it – are entirely its doing and thus, section 230 of the CDA does not apply to them.”).
[61] Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 345, (1991).
[62] Id. at 350–51.
[63] Arthur R. Miller, Copyright Protection for Computer Programs, Databases, and Computer-Generated Works: Is Anything New Since CONTU?, 106 Harv. L. Rev. 977, 982–83 (1993) (articulating three reasons computer programs should be extended the same rights as other forms of expression).
[64] See, e.g., id. at 979 (CONTU is the National Commission on New Technological Uses, established by Congress in 1974).
[65] Id. at 982.
[66] Id. at 983.
[67] See 17 U.S.C.A. § 117(b).
[68] 17 U.S.C. § 101.
[69] See Miller, supra note 63, at 1036.
[70] Id.
[71] Id. at 979.
[72] Feist, 499 U.S. at 350–51.
[73] See Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 550 (1985); accord, S. Rep. No. 94–473, at 65 (1975) [hereinafter Senate Report].
[74] See, e.g., Miller, supra note 63, at 1039 n.278 (citing instances in which non-alphabetized databases were/may be copyrightable and explaining growing Congressional debate over the issue).
[75] See Lotus Dev. Corp. v. Paperback Software Int’l, 740 F. Supp. 37, 54 (D. Mass. 1990) (holding that some computer programs with literal and nonliteral aspects that are distinguishable from universal aspects of the article may be copyrightable).
[76] Baker v. Selden, 101 U.S. 99 (1879) (holding that the text of a book describing a special method is copyrightable, but the method itself is not). Cf. Utopia Provider Sys., Inc. v. Pro-Med Clinical Sys., L.L.C., 596 F.3d 1313, 1320 (11th Cir. 2010) (citing Baker v. Seldon, 101 U.S. 99 (1879); 17 U.S.C. § 102).
[77] 17 U.S.C. § 102(b).
[78] 37 C.F.R. § 202.1(c).
[79] Clearly, the list is not meant to be an exclusive rendering of things considered “blank forms.” But, as there is no general definition given, courts have taken it upon themselves to shade in the rest of the picture.
[80] See Utopia Provider Sys., 596 F.3d at 1320 n.17 (discussing various cases which support the tension in the courts and the split over whether spreadsheets are copyrightable).
[81] Bibbero Sys., Inc. v. Colwell Sys., Inc., 893 F.2d 1104, 1107 (9th Cir. 1990).
[82] Id. at 1106–07 (“Although blank forms are generally not copyrightable, there is a well-established exception where text is integrated with blank forms”).
[83] See Utopia Provider Sys., 596 F.3d at 1320 n.17 (summarizing many of the decisions weighing in on this issue).
[84] Whelan Associates, Inc. v. Jaslow Dental Lab., Inc., 797 F.2d 1222, 1243 (3d Cir. 1986).
[85] Kregos v. Associated Press, 937 F.2d 700, 702 (2d Cir. 1991).
[86] Kregos v. Associated Press, 731 F. Supp. 113, 114 (S.D.N.Y. 1990), aff’d in part, rev’d in part, 937 F.2d 700 (2d Cir. 1991) (“The first major category lists each pitcher’s statistics for the current season. Under this heading are the sub-categories of wins, losses, and earned run average. The second general category represents the pitcher’s performance during his career against the scheduled opponent. Plaintiff further tailors this category to only include the pitcher’s statistics against this opponent at the particular site where the upcoming game is to be played. This category is then divided into wins, losses, innings pitched, and earned run average. Finally, the last of the main categories lists various statistics for the pitcher’s last three starts. Included within this category are wins, losses, innings pitched, earned run average, and men on base average (‘MBA’)”).
[87] An automated journalism program could take a similar spreadsheet to Kregos’s form to allow for an algorithm to produce previews upcoming baseball games in much the same fashion, but probably would not publish the underlying spreadsheet.
[88] Kregos, supra note 85, at 705.
[89] Kregos, supra note 85, at 709.
[90] Lotus Dev. Corp. v. Paperback Software Int’l, 740 F. Supp. 37, 70 (D. Mass. 1990).
[91] 17 U.S.C.A. § 107.
[92] Harper & Row Publishers, Inc., 471 U.S. 539.
[93] Id. at 549.
[94] Sony Computer Entm’t, Inc. v. Connectix Corp., 203 F.3d 596, 598 (9th Cir. 2000).
[95] Id.
[96] Firmware is software that is embedded in a particular product to allow that product to permanently function as the manufacturer intended.
[97] C.f. Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53 (1884).
[98] Annemarie Bridy, Coding Creativity: Copyright and the Artificially Intelligent Author, 2012 Stan. Tech. L. Rev. 5 (2012).
[99] Id. at 69, n.157.
[100] Bridy would like to do so by recognizing AI-authored works as works for hire (from computers).
[101] Compare Annemarie Bridy, supra note 96, at 4 n.189, with Miller, supra note 63.
[102] Burrow-Giles Lithographic Co., 111 U.S. 53.
[103] Gilliam v. Am. Broad. Companies, Inc., 538 F.2d 14, 24 (2d Cir. 1976).
[104] Eric Pace, Edwin H. Land Is Dead at 81; Inventor of Polaroid Camera, New York Times (Mar. 2, 1991),

Association for Molecular Pathology v. Myriad Genetics, Inc. and Its Impact on the Patentability of “Designer” Genes

<em>Association for Molecular Pathology v. Myriad Genetics, Inc.</em> and Its Impact on the Patentability of  “Designer” Genes
By Amanda H. Russo* Download a PDF version of this article here.  


Would you like blue eyes with that? In the near future, prospective parents might be able to select their children’s genetic features from a drop-down menu.[1] With a heightened societal focus on perfection, it is not absurd to think parents would want to create the ideal child, nor to think it would be impossible. Advances in the biotechnology industry have increased scientists’ understanding of the human genome and enhanced their ability to genetically modify eggs, sperm, and human embryos. These developments have the potential to make “designer” babies a very stark reality. The Supreme Court’s decision in Association for Molecular Pathology v. Myriad Genetics, Inc.[2] could be interpreted as paving the way for patenting genetically altered genome or gamete cells. Every gene in the human body is encoded as deoxyribonucleic acid (“DNA”), and Myriad Genetics confronted the issue of whether a naturally occurring segment of DNA was eligible for patent.[3] The Court held that, while isolated, naturally occurring DNA was outside the realm of patent, complimentary DNA (“cDNA”), or a synthesized DNA copy, was patent-eligible.[4] However, the Court specifically concluded its opinion by noting that the “scientific alteration of the genetic code presents a different inquiry, and we express no opinion about the application of [patent eligibility] to such endeavors.”[5] If biotech scientists have the ability to manipulate the genes of an embryo or gamete cell for non-therapeutic purposes, it could be argued that these genetically modified cells are in fact patentable “inventions,” given that the material was not, in that particular sequence, naturally occurring. The country has already seen movement in this area. In September 2013, the United States Patent and Trademark Office awarded a patent to 23andMe for its gamete donor selection techniques, including genetic and computer technologies.[6] These technologies allow prospective parents to select a gamete donor who would increase the likelihood that a child would be born with or without certain hereditary characteristics. With the technology, parents can choose from a variety of traits which go beyond medical conditions, enabling them to specify certain physical and psychological characteristics. It is true that the company was not attempting to patent actual sperm or egg cells, but merely facilitate a “preview” of unborn children. Most of the current technologies that closely resemble actual genetic selection focus on testing the embryo or fetus to screen for several undesirable physiological genetic characteristics. For example, pre-implantation genetic diagnosis (“PGD”) has grown to be a common service at fertility clinics, allowing couples undergoing in vitro fertilization to test multiple embryos for genetic disorders before deciding which one to implant.[7] Recognizing this trend, Congress passed section 33 of the America Invents Act (“AIA”)[8] in 2011, resulting in, among other things, a prohibition on patents for inventions “directed to or encompassing a human organisms.”[9] Unfortunately, the AIA never expressly defines any of the terms in this provision, so it is not entirely clear what specific subject matter would fall under the prohibition. Moreover, in Myriad Genetics, the Supreme Court found that an identical provision was inapplicable in a discussion on real and synthetic human genes, noting that the “Act does not even mention genes, much less isolated DNA.”[10] While one can consequently interpret Myriad in a way that limits the scope of the Act, it leaves open the question of the patentability of modified human gametes and embryos and the altered or synthetic gene sequencing which could potentially be encompassed within those gametes and embryos. Patentability of inventions is governed by 35 U.S.C. § 101, which has several requirements. First, it must be of patentable subject matter — “process, machine, manufacture, or composition of matter . . . or improvement thereof.”[11] Second, it must be “new” or “novel.”[12] And, third, it must be “useful.”[13] While no express clause excludes inventions that contravene morality from patent-eligibility, courts historically imposed a “socially beneficial” standard under the third prong of utility; in effect, this standard served as a morality condition rendering inventions with a use deemed “injurious to the well-being, good policy, or good morals of society”[14] ineligible for patent protection. Now, though, the PTO and federal courts rarely enforce this morality standard.[15] In fact, in the context of genetic material, the PTO expressly rejected the morality-based argument that “patents should not issue for [human] genes [simply] because the sequence of the human genome is at the core of what it means to be human.”[16] In Myriad Genetics, the Supreme Court did not even consider morality-based arguments.[17] But despite the move away from a requirement of socially beneficial utility, courts have generally been reluctant to step on the toes of legislatures when they have specifically excluded a subject matter from the realm of patentability for ethical or moral concerns.[18] With the diminished strength of the morality safeguard and huge advance in the biotech industry, Myriad Genetics could arguably be read in support of patents on manipulated or synthetic genes or genome sequences for use in human embryos and gametes. This Note will argue that Myriad Genetics should not be interpreted in such a way. Instead, Myriad Genetics should be read narrowly, limiting patent-eligibility of cDNA to only its uses in medical research and testing and gene therapy. Part I will explore the history of genetically altered human genes and feasibility of manipulating human embryos within the biotech industry. Part II will analyze the Myriad Genetics decision and its current impact on the patent-eligibility of biotech “inventions.” Part III will examine court precedent within the area of gene patenting and will argue for narrow application of Myriad Genetics to genetically altered human gametes and embryos, specifically in light of Section 33(a) of the AIA.

I. The History of Assisted Reproductive Technologies

A. Understanding Genetics & the Future of Biotechnology

1. Basic Genetic Concepts
“We’re on the cusp of having much more information, and the appearance of having much greater discretion, in choosing the traits of our children,” said Thomas H. Murray, Senior Research Scholar and President Emeritus at The Hastings Center, a nonpartisan bioethics research institution.[19] Murray asked, “What use will they make of it, and should there be limits?”[20] Before one can understand the implications of patenting genetically altered or synthetic gametes or embryos, it is useful to understand basic genetic concepts. The cells contained within an early embryo are of two types: germ cells and somatic cells.[21] The germ cells contain hereditary information and become the gametes (i.e. eggs and sperm) of a developing organism, which transmit such information.[22] Every other cell in the body is a somatic cell.[23] All of these cells contain genes, but only those in the germ cells are passed on to offspring.[24] Chromosomes are contained in the nucleus of all cells.[25] Each chromosome is made up of DNA molecules that are held together by chemically-joined nucleotides, creating a system of cross-bars[26] that support the DNA’s double-helix structure.[27] The sequencing of these nucleotides within the DNA molecule creates the human genome[28], and determines the information available for building and maintaining an organism, serving a similar function to letters that are strung together to create words and sentences.[29] These sequences of nucleotides enable the creation of amino acids, which form the proteins in the body.[30] The nucleotides that code for amino acids are called “exons,” and those that do not are called “introns.”[31] For purposes of this article, it is also important to note that scientists can extract and isolate DNA molecules from cells in order to study specific sequences.[32] In addition, they can create composite DNA (“cDNA”) from these molecules, which are exon-only strands of nucleotides.[33]
2. Current Reproductive Biotechnologies
A number of current reproductive technologies seem to be bringing the reality of designer children closer and closer. The successes and failures of these technologies undoubtedly provide biologists with a deeper understanding of human genetic makeup and the human body’s interaction and response to scientifically manipulated genes. What follows is an introduction to some current biotechnologies that are undoubtedly accelerating scientists’ ability to genetically enhance the children of tomorrow.
a. In Vitro Fertilization and Pre-Implantation Genetic Diagnosis
The increasing availability of in vitro fertilization unquestionably increases the potential for the specific selection of genetic characteristics to be passed on to offspring. In vitro fertilization (“IVF”) is a method of producing an embryo ex utero — outside of the uterus — and the subsequent implantation of that embryo inside a woman’s uterus.[34] At the beginning of this process, sperm and ovum are cultured and researchers calculate the optimal time for fertilization.[35] After an embryo is successfully created, the embryo is transferred into the uterus of the mother in hopes of implantation. Prior to this transfer, clinicians typically wait two to five days[36], during which time they evaluate the shape and appearance of the embryo.[37] Another currently available technology, which complements IVF, is known as pre-implantation genetic diagnosis (“PGD”).[38] This method allows scientists to test an embryo prior to implantation, in order to determine whether it carries a particular genetic disease[39], similar to a process known as gene therapy[40]. The embryos that are determined to be disease-free are those that are then implanted in the mother.[41] According to the Wall Street Journal, some United States clinics have even been using PGD to allow customers to choose the gender of their child.[42] The same method could be used with relative ease to select particular physical traits of unborn children like eye or hair color.[43] Other characteristics like intelligence or athleticism would be harder to select for using PGD, given that they are made up of several genetic factors, but seemingly not impossible[44] Advocates claim that the use of PGD to screen embryos has the potential to eliminate complete lines of hereditary diseases, even those that have run in families for generations.[45] While proponents reject the idea that PGD will lead to the possibility of designer children[46], the ability to select for or against certain genetic conditions raises the question of why that same procedure could not also be used to select for physical or psychological characteristics.
b. Cloning
The ability of scientists to genetically clone animals and humans is another technique that significantly adds to the possibility for designer babies. Cloning is a term that refers to a number of techniques that enable the production of genetically identical organisms, and comes in three types, gene cloning, reproductive cloning, and therapeutic cloning — all of which remain controversial.[47] Gene cloning involves the isolation and copying of genes from within an organism’s cells, while therapeutic and reproductive cloning entails the creation of a cloned embryo, containing genes identical to the original organism, albeit for different purposes[48]. Scientists can now use such processes to successfully clone a variety of genes and organisms, including mammal embryos.[49] In one method of cloning, scientists can take and isolate a single gene and then create a complimentary sequence of DNA, or cDNA.[50] The cDNA can then be used for study or use in a pharmaceutical setting, or, alternatively, the cloned genes could be inserted into other organisms.[51] In utilizing each of these techniques, the existing genetic code of the clone cell or organism is effectively altered to contain a genetic sequence that was not naturally occurring. Thus, such methods could theoretically be used in the genetic enhancement of human embryos. Several examples serve to demonstrate the success of advances in cloning technologies in recent years. For instance, through the use of cDNA, genes from foreign organisms can be inserted into the cells of other organisms, regardless of whether it is of the same or different species.[52] In fact, it has become quite common for biologists to genetically engineer non-human organisms, including mammals, by inserting and removing genes from their genomes to create an entirely novel organism.[53] Moreover, even as far back as a decade ago, scientists had cloned hybrid human-animal embryos through the fusion of human cells with enucleated eggs from rabbits and enucleated oocytes from cows, resulting in nonhuman organisms.[54] Most significantly, South Korean researchers claimed to be the first to verify the successful cloning of human embryos in 2004.[55] They claimed to have produced 30 cloned human embryos and continued to cultivate them to the blastocyst stage.[56] The experiment allegedly resulted in the growth of the embryos to an age in which researchers could derive a pluripotent[57] embryonic human stem cell line.[58] However, in January of 2006, Science Magazine retracted the study papers produced by the South Korean researchers, after an independent investigating committee found misconduct and data fabrication.[59] Nonetheless, these obvious scientific progress in the ability to genetically alter human embryos through cloning techniques make genetic enhancement of humans all the more likely.
c. Somatic and Germ-line Gene Modification
In addition to the abovementioned, biotechnological advances have made it possible to modify the chromosomes of both human and animal cells through the insertion of new DNA segments into the existing chromosome.[60] Such techniques are referred to as somatic or germ-line genetic modifications. If changes are performed on specialized or differentiated body tissue — cells like liver, muscle, or blood cells — it is referred to as somatic cell gene modification, which affects only the individual whose DNA is modified.[61] On the other hand, if the insertion is performed on eggs or sperm cells prior to fertilization or in an embryo in its early stages where its cells are undifferentiated, it is called germ-line genetic modification.[62] With germ-line modification, the effects of the altered genes go beyond the individual organism on which the insertion was originally performed.[63] Given that DNA is incorporated into the embryo’s germ cells, those genes will be passed on to future generations.[64] Scientists have performed genetic modification of both somatic and germ-line cells in animals in order to examine the resulting impact of this alteration. Somatic gene modifications have in fact been performed on humans dating back to 1990, which have targeted cells in attempts to correct an existing disease or condition in that individual.[65] But experiments with genetic modification on laboratory animals like mice indicate that germ-line modification might be technically easier than somatic.[66] This might be because early embryonic cells are more accepting of foreign DNA and more readily synthesize corresponding proteins than most somatic cells.[67] In one experiment successfully utilizing the germ-line technique, researchers inserted into fertilized mouse eggs a gene that promoted the synthesis of growth hormone.[68] As a result, the developing mice produced unusually high levels of the growth hormone and, ultimately, grew to two times their normal size.[69] Given the results of animal studies and the increasing access and availability of IVF, “there appear to be no technical obstacles to initiating germ-line modification experiments in humans”[70] in order to achieve genetic enhancements. There are a number of well-established, existing methods for germ-line gene modification that have been used in animal studies for several years.[71] Three such methods include (1) the introduction of a gene by direct pronuclear microinjection of DNA segments (“PMI”), the most frequently used method, (2) the use of a virus to carry the gene of interest to infect a target cell by delivering that gene, and (3), in recent years, a process where sperm is used as a vector to deliver the genes.[72] The first method, PMI, has actually been used to inject entire artificial chromosomes.[73] So, theoretically at least, the existing germ-line modification techniques could be used for genetic enhancement purposes in humans.[74] However, the current methods for germ-line genetic modification have not yet been established “sufficiently reliable or safe to countenance their immediate use with humans”[75] and are not without issue. Both the viral and non-viral mechanisms for genetic modification pose issues with precise placement and expression of the modified genes.[76] The insertion of foreign genes into imprecise locations within a chromosome, either via direct injection or virus, may have unpredictable consequences. This is demonstrated by one experiment in which the offspring of a mouse injected with an extra copy of a gene were 40 times more likely to develop cancer than the control group of mice.[77] In another experiment, insertion of a gene substantially interfered with naturally occurring genes in mouse embryos, which resulted in mice with several physical deformities.[78] These results indicate that the techniques currently used for germ-line modifications can lead to developmental disruptions in the modified embryo itself.[79] Unsuccessful attempts at germ-line genetic modification in animals indicate that such a technique on humans “can profoundly perturb ordinary biological function and introduce new, harmful genetic variants into the gene pool[.]”[80] The aforementioned problems are primarily associated with gene addition[81]. But various techniques to introduce genetically modified DNA into gametes are continuously developing. For example, researchers are now able to insert a gene into a particular location on a chromosome, while simultaneously removing the unwanted gene — i.e. gene replacement.[82] While the Council for Responsible Genetics suggested that such a technique would increase accuracy of genetic modification, it also noted that this would not entirely eliminate the risk of the procedure.[83] One of these risks includes the lack of ability on the part of biologists to fully understand or predict the potential interactions of genes with one another within the environment of a specific individual.[84] Certain genetic combinations could prove harmful to the individual and, subsequently, to future offspring.[85] The risks associated with such harmful combinations would apply equally to germ-line genetic modification in the contexts of alleviating disorders and enhancing certain characteristics.[86] In 2009, Japanese researchers successfully performed germ-line genetic modification in mammals when they produced the first genetically modified primates with the ability to pass the modified gene down to their offspring.[87] Researchers modified a virus to carry a gene known as green fluorescent protein (“GFP”) found in jellyfish.[88] This virus was used to infect and transfer this gene to the cells of several marmosets.[89] The jellyfish gene, which causes the cells to glow green when exposed to ultraviolet light, was present in four out of five offspring resulting from the implantation of marmoset embryos in female marmosets.[90] Researchers could identify the success of this genetic modification due to the fact that the marmosets actually glowed green when exposed to ultraviolet light.[91] Then, the researchers took gamete cells from two of the marmosets that carried the gene and, from them, were ultimately able to produce four offspring — three of which contained the jellyfish gene and glowed under ultraviolet light.[92] The success of this germ-line genetic modification of primates suggests the high likelihood that the same technique would be similarly effective on humans. Ultimately, biologists and medical researchers may be able to draw on the scientific successes of somatic genetic modification in humans and the somatic and germ-line modification in animal cells to achieve successful germ-line modification in humans.[93] This would allow for genetic enhancement of humans, in addition to gene therapy — a distinction highly relevant to the following discussion. Gene therapy primarily focuses on curing or reducing human diseases and conditions, while genetic enhancement focuses instead on enhancing human characteristics.[94] Given the potential development and use of biotechnologies like human germ-line genetic modification (“HGGM”), it is necessary to address the legal implications posed by such technologies to the United States patent system.

II. The Supreme Courts Decision in Association for Molecular Pathology v. Myriad Genetics, Inc.

A. Procedural Posture of Myriad Genetics

After several years of research, Myriad Genetics, Inc. (“Myriad”), a molecular diagnostic testing and assessment company, obtained a number of patents based on the discovery of two human genes, mutations of which correlate with an increased risk of breast and ovarian cancer.[95] Specifically, the Patent and Trademark Office specifically granted patents for the isolated BRCA1 and BRCA2 genes.[96] The patents essentially gave Myriad the exclusive right to isolate these genes from an individual’s genome and also to synthetically create BRCA cDNA.[97] Given that isolation is necessary to conduct genetic testing, the patents effectively gave Myriad exclusive control of BRCA testing.[98] The patents, however, did not stop others like the University of Pennsylvania’s Genetic Diagnostic Laboratory (“GDL”) from providing genetic testing services to women.[99] In fact, Dr. Harry Ostrer, former researcher at New York University School of Medicine, frequently sent DNA samples to GDL to be tested.[100] When Myriad learned that others were offering these services, it began to assert its rights over the isolated genes, claiming all genetic testing infringed upon its patents.[101] Myriad filed suit against various entities providing the BRCA testing and the litigation and threats thereof prevented several other medical practitioners and entities from providing BRCA testing.[102] Consequently, Myriad Genetics was left as the sole entity that could provide or license the service.[103] Several years later, Dr. Ostrer, along with health care professionals, advocacy groups, and patients filed suit against Myriad Genetics seeking invalidation of their patents under § 101 in the United States District Court for the Southern District of New York.[104] The plaintiffs asserted that Myriad’s claims cover patent-ineligible subject matter.[105] They alleged that the patenting of the BRCA genes impeded research on breast cancer, and restricts the “ease of access to genomic discoveries” and the dissemination of knowledge to patients.[106] Approximately ten months after plaintiffs had filed their complaint, the District Court granted summary judgment in their favor, invalidating all of Myriad’s claims to the isolated BRCA genes and testing methods.[107] Policy considerations, namely, what plaintiffs alleged to be the diminished availability of the testing for breast cancer, played into the court’s consideration of the motion for summary judgment, but, ultimately, it decided that the issues were too complicated to address at that stage.[108] On appeal to the Federal Circuit, the court affirmed the judgment of the lower court invalidating Myriad’s method patents for comparison and analysis of DNA sequences, given that they covered abstract steps and were, thus, a subject matter ineligible for patent.[109] The court went on to reverse the district court’s invalidation of the isolated DNA molecules on the grounds that the “the molecules as claimed do not exist in nature.”[110] As a result, the patents on the isolated BRCA1 and BRCA2 genes were upheld.[111] The Federal Circuit judges in this case each wrote separate opinions, in which each judge addressed their own perspective and concerns. Judge Alan D. Lourie wrote the opinion for the court, finding that the composition claims were in fact patentable and noting that the “isolated DNAs, not just cDNAs, have a markedly different chemical structure compared to native DNAs.”[112] In her concurrence, Judge Kimberly A. Moore discussed the moral implications that the patents raised.[113] However, she declined to address the moral and ethical issues, noting that the job of the court is to interpret the words of the legislature, an inquiry, she suggests, which “[has no] moral, ethical, or theological components.”[114] In a separate opinion, Judge William C. Bryson concurred and dissented in part from the court’s decision.[115] He disagreed with the court’s holding that the isolated genes were a patent-eligible subject matter.[116] Judge Bryson explained that, given the established product of nature exception, the isolated genes were merely naturally occurring material and ineligible for patent.[117] He also suggested that a decision to the contrary “would likely have broad consequences, such as preempting methods for whole-genome sequencing . . . .”[118] In 2012, the case was granted certiorari by the Supreme Court. However, the Court vacated the judgment and remanded to the Federal Circuit in light of the Court’s holding in Mayo Collaborative Services v. Prometheus Labs.[119] In Mayo, the Court was confronted with patent claims for methods of determining effective dosages of autoimmune disease medications in treating patients.[120] Ultimately, the court invalidated the patent. In its opinion, the Court significantly relied on the public policy rationale that innovations restricting the ability to research and develop natural laws should not be eligible for patent.[121] The Court seemed to be expanding the “naturally occurring” exception through its application of the law of nature doctrine to a non-natural process. Justice Breyer discussed the Court’s refusal to “uphold[] patents that claim processes that too broadly preempt the use of a natural law.”[122] Allowing these patents would “disproportionately t[ie] up the use of the underlying natural laws, inhibiting their use in the making of further discoveries.”[123] On remand, the Federal Circuit again upheld patents. The same three-judge panel reached the same legal conclusions, again allowing the isolated DNA patents given their nonexistence in nature.[124] Judge Lourie, again, delivered the opinion of the court. While indicating the concern that these patents “raise substantial moral and ethical issues related to awarding a property right to isolated portions of human DNA,” Judge Moore indicated that these are issues that are more properly within the realm of Congress.[125] In a dissenting opinion, Judge Bryson reiterated his belief that the isolated DNA genes were not a patentable subject matter and allowing such patents would “likely have broad consequences.”[126]

B. The Supreme Court’s Decision

The Supreme Court once again granted certiorari in order to determine the validity of Myriad’s patents on the isolated BRCA genes and cDNA. The primary issue before the Court was whether naturally occurring, but isolated DNA sequences were eligible for a patent under 35 U.S.C. § 101.[127] The Court also addressed the issue of whether synthetically created DNA, or cDNA was patent eligible.[128] Ultimately, the Court affirmed and reversed in part the Federal Circuit’s opinion, holding that “a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated, but that cDNA is patent eligible because it is not naturally occurring.”[129] Given that Myriad neither created or altered the genetic structure of DNA nucleotides, the Court did not decide whether creation or alteration would lead to unpatentability.[130] Instead, it was first confronted with the question of whether the discovery of the precise location and the isolation of the DNA genes renders them patentable.[131] In reaching its conclusion, the Court relied on Diamond v. Chakrabarty, in which a patent for a modified bacterium was in dispute.[132] In that case, scientists had added four plasmids to the bacterium allowing it to break down crude oil.[133] The Court explained that, prior to this patent claim, this was not a naturally occurring composition of matter, but rather a “product of human ingenuity having a distinctive name, character [and] use.”[134] In Myriad Genetics, the Court noted that the bacterium at issue in Chakrabarty had “markedly different characteristics from any found in nature,” given its distinct chemical composition and its newfound ability to break down oil.[135] This was in stark contrast to Myriad’s mere isolation of genes from its surrounding material.[136] Justice Thomas went on to discuss Funk Brothers Seed Co. v. Kalo Inoculant Co.[137], where the Court considered a patent for a resultant mixture of naturally occurring bacteria.[138] The mixture of bacteria was created as a way of improving the nitrogen intake of leguminous plants and was ultimately a more effective inoculant[139], given that other inoculants often mutually inhibited each other.[140] The Court nonetheless held that the mixture was not proper subject matter under § 101, finding that there had been no alteration to the bacteria.[141] In Myriad Genetics, there was no alteration to the chemical composition of the genetic material, nor was there any change in the material as a result of isolation.[142] The Court stated that it was not enough that Myriad’s isolation of DNA entailed the severance of the covalent bonds — holding the nucleotides of the DNA molecule in place — and effectively created a non-naturally occurring molecule.[143] The claims themselves simply focused on the genetic information contained in the isolated genetic sequence. The Court then moved on to a discussion of cDNA, recognizing that the synthetic DNA did not pose the same legal challenges as the isolated DNA segments.[144] The cDNA that Myriad claimed was a sequence resulting in only the inclusion of exons, as opposed to naturally occurring sequences which include both exons and introns. While acknowledging that nature dictated the structure of the nucleotide sequence, the Court found that resulting cDNA was an “unquestionabl[e] creat[ion] of something new,” since it was “distinct from the DNA from which it was derived.”[145] Myriad Genetics, in conjunction with Chakrabarty, could be read to suggest that the act of creating or altering of naturally occurring material are significant in determining patentability.[146] However, it seems that the Court is only willing to uphold a patent when claims deal with the creation or alteration of the essential nature of the original material, effectively crewating a “markedly different” material.

III. The Application of Myriad Genetics to Genetically Modified or Synthetic Gametes and Embryos

As has been discussed, in the last three decades, biotechnology has been advancing at such a rate to make human genetic enhancement an actual reality.[147] For years, scientists have had the ability to screen developing human embryos for chromosomal abnormalities and genetic disorders.[148] It is not in the unforeseen future that parents will be able to hand-select the genes that their children will encompass. Developments in assisted reproduction technologies have led to the creation of new markets for things like gametes and embryos.[149] These new markets raise significant questions in patent law, regarding ownership and rights surrounding human genes, embryos, gametes, and the like.[150] The Supreme Court made clear the unavailability of patents on isolated human genes in Myriad Genetics, but a question remains as to patentability of the creation of synthetic DNA or the alteration of naturally occurring DNA in the context of genetic enhancement of human gametes and embryos. This section will address how this subject matter should be addressed in light of the Court’s holding in Myriad Genetics.

A. The Emergence of Human Genes as a Topic in Patent Law

Over the past several decades, the growing industry of biotechnology has left us with many questions about what can and cannot be afforded patent protection. While 35 U.S.C. § 101 defines patentable subject matter as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof,” one of the provisions of the America Invents Act, passed by Congress in 2011, specifically prohibits the issuance of patents for inventions “direct to or encompassing human organisms.”[151] This provision consequently puts a spotlight on many reproductive biotechnologies, including genetic modification techniques. Until Myriad Genetics, courts had not addressed the issue of whether genetic material was a patent-eligible subject matter under § 101. Despite this fact, the first patents on human genes were issued by the PTO in the early 1980s.[152] By the time of the Supreme Court’s decision, there were an estimated 2,645 issued patents claiming “isolated DNA.”[153] By 2005, the PTO had issued close to 40,000 DNA-related patents that, in total, covered about twenty percent of the genes in the human genome.[154] In the past, patents have been issued on modified human tissue, cell lines, and even DNA molecules of human origin.[155] It was not until recently, however, that patents for genetically modified gametes or embryos appeared to be on the horizon. In 2013, a personal-genomics company called 23andMe was issued a patent on a system of reproductive technology[156] for a process in which fertility clinic patients could identify certain characteristics that they would like their child to have.[157] Based on donors’ and patients’ genetic profiles, the program then runs an inheritance calculation, which can identify the preferred donors for the recipient. The patient can select for a child with a low risk of certain genetic conditions, or even request that the child have a high probability of a certain eye color.[158] Significantly, the issuance of this patent indicates a move in patent law towards the protection of genetic enhancement techniques and processes. According to Jacob Sherkow, formerly a biotechnology patent expert at Stanford University’s law school and now an Associate Professor of Law at New York Law School, said that 23andMe’s patent “is a shot across the bow — a signal to the world that this is what the future is going to look like.”[159]

B. Judicial Precedent on the Patentability of Living Organisms

Existing case law in this area does not seem to produce a coherent rule of law with respect to patent eligibility of living organisms. It first began when the Supreme Court in Diamond v. Chakrabarty upheld a patent on a living bacterium organism.[160] In Chakrabarty, the Court determined that the scientific alteration of a bacterium sufficiently transformed it into a new chemical composition with new capabilities of breaking down crude oil.[161] Since Chakrabarty was decided, patents have been issued on several human-made organisms, including multicellular organisms[162] and genetically altered mammals.[163] Nonetheless, the Supreme Court has continued to reiterate the limitations on the subject matter that is eligible for patent. Prior to Myriad Genetics, the Court in Mayo had previously concluded that “simply appending conventional steps, specified at a high level of generality, to laws of nature, natural phenomena, and abstract ideas cannot make those laws, phenomena, and ideas patentable.”[164] In Myriad Genetics, the Court explained that it has “long held that [§ 101 of the Patent Act] contains an important “implicit exception” that “[l]aws of nature, natural phenomena, and abstract ideas are not patentable.”[165] But in discussing this “rule against the patents on naturally occurring things,” it noted that a balancing test limits the extent of this prohibition; that is, “a delicate balance between creating ‘incentives that lead to creation, invention, and discovery’ and ‘imped[ing] the flow of information that might permit, indeed spur, invention.’”[166] This was the standard governing the court’s decision on the whether what Myriad had claimed was a proper subject matter for patent.[167] To be clear, there are two separate holdings in Myriad Genetics. First, the Court held that an isolated, naturally occurring DNA segment is a product of nature and, as such, not eligible for patent.[168] Second, the Court fond that cDNA, or the lab created DNA, is eligible for patent, given that “it is not naturally occurring.”[169] When looking closely at the holding in Myriad Genetics, the Court specifically identifying an exception to certain uses of natural phenomenon.[170] Consequently, “only an innovative or inventive use of a natural phenomenon” may be patentable.[171] The Court’s opinion implicitly suggests that the alteration or creation of the information in the human genes or other material would a significant factor in determining whether the subject matter is “naturally occurring.”[172] Given that Myriad neither altered or created the BRCA genes, and that its primary contribution was discovering the location and identifying the sequencing of the genes within particular chromosomes, the court found it patent-ineligible.[173] Simply “separating that gene from its surrounding genetic material is not an act of invention.”[174] Depending on the future technology involved in creating desirable genetic sequences with hand selected characteristics, there could be one of two legal possibilities for an application for patent protection. Should the biotechnology industry produce a technique for isolating particular genetic human traits, perhaps taken from embryonic stem cells, then it would seem to necessarily follow that the these isolated genes would nonetheless be naturally occurring and constitute a non-patentable subject matter. However, a new question arises should these isolated genes be used to create a synthetic genetic sequence that alters or replaces an existing sequence and is not naturally occurring.

C. The Demise of the “Beneficial Utility” Requirement and the Introduction of the America Invents Act

For patent eligibility, the innovation or invention must be (i) novel, (ii) nonobvious, (iii) useful.[175] Under the utility requirement, “beneficial utility” used to play a significant role.[176] Dating back to 1817, Justice Story recognized this doctrine in Lowell v. Lewis, where he stated the view that “the law requires . . . the invention should not be frivolous or injurious to the well-being, good policy, or sound morals of society.”[177] While previously a consideration under the utility prong, the Court by the mid-1990’s no longer seemed interested in assessing the morality of inventions in patent law.[178] Since Lowell, federal courts have relaxed, if not dismissed, this additional requirement of beneficial utility. For example, the Federal Circuit in Juicy Whip, Inc., v. Orange Bang, Inc., evaluated a case in which a patented product was misleading to customers as to the source of the product it was producing.[179] Nonetheless, the court stated that a doctrine invalidating patents serving immoral or illegal purposes “has not been applied broadly in recent years.”[180] It also suggested that the legislature is free to prohibit patents on such deceptive devices but has not yet done so.[181] The Supreme Court conveyed a similar idea in Chakrabarty, when it noted that the Court was “without competence to entertain [arguments regarding the balancing of risks and benefits of inventions] . . . the contentions [before the Court] should be addressed to the political branches of Government . . . .”[182] Despite the current broad interpretation of the bounds of patentable subject matter rejecting a beneficial utility doctrine, morality cannot be entirely dismissed from a discussion of patents on human gametes and embryos. As implied by the first Federal Circuit opinion in Myriad Genetics, one of the primary functions of the judiciary is to interpret federal statutory law and regulations governing the realm of patent.[183] The Federal Circuit went on to suggest the inappropriateness of courts to intervene in policy decisions that are more adequately addressed by the legislature.[184] This indicates a key distinction between Myriad Genetics and any future case involving the patent – eligibility of human gametes or embryos. The distinction is one based on Congress’s express recognition of the ethical and moral concerns regarding patent claims “directed to or encompassing human organisms” through the adoption of a federal statute excluding such subject matter from the realm of patentability.[185] The fact that Congress has spoken with regard to the patentability of this sort of subject matter should portend courts’ adherence to this preference.[186]
1. The America Invents Act’s Prohibition on Patents for Inventions “Directed to or Encompassing Human Organisms.”
While the issuance of patents can potentially serve the significant purpose of encouraging innovation and the research and development of beneficial advances in the industry of biotechnology, patents on human gametes and embryos clearly raise a number of ethical concerns, which are expressly recognized by federal statute.[187] Prior to Myriad Genetics, Congress directly addressed the issue of patenting human organisms through the America Invents Act. Section 33(a) of the Act states, in relevant part, that “[n]otwithstanding any other provision of law, no patent may issue on a claim directed to or encompassing a human organism.”[188] It is significant that Myriad Genetics was not a case in which the court was confronted with the §33(a) of the America Invents Act discussed supra. To this extent, the holding should be properly narrowed to synthetic DNA which does not implicate this federal statute — e.g. medical uses and gene therapy, and not those materials that are so intimately related to human organisms and their creation and development. The statue itself makes no distinction between naturally occurring or synthetic materials in its prohibition on patents “directed to or encompassing human organisms.”[189] Significantly, § 33(a) may serve to limit the extent of the impact that Myriad Genetics will have on the analysis on the patentability of modified gametes and embryos. The Court will be confronted with a case necessarily involving statutory construction, something that was not involved in Myriad Genetics. When this issue arises, undoubtedly much of the debate will surround the precise meaning of the phrases “directed to” and “human organism.”[190] Unfortunately, the Act itself does nothing to precisely define either of these phrases, and its legislative history seems “riddled with internal contradictions, ad hoc exceptions, and, generally, a lack of any coherent guiding principle.”[191] It is important to note that the phrase “human organism” seems to have been intended to have the same meaning as it did under the Weldon Amendment — off of which § 33 was modeled.[192] The Weldon Amendment was originally put forward by U.S. Representative Dave Weldon and passed as a part of the Consolidated Appropriations Act of 2004, which barred appropriated federal funds from their use in issuing patents “directed to or encompassing a human organism”[193] The legislative history of this amendment offers some guidance to the meaning of this prohibition in both the Appropriations Act and § 33:
[T]he U.S. Patent Office has already issued patents on genes, stems cells, animals with human genes, and a host of non-biologic products used by humans, but it has not issued patents on claims directed to human organisms, including human embryos and fetuses. My amendment would not affect the former, but would simply affirm the latter.[194]
The history of the Weldon Amendment helps delineate Congress’s intended meaning of the statute. The congressional record further reveals that “the amendment applies to patents on claims directed to or encompassing a human organism at any stage of development, including a human embryo . . . regardless of whether the organism was produced by technological methods (including, but not limited to, in vitro fertilization, somatic cell nuclear transfer, or parthenogenesis).”[195] It, admittedly, goes on to note that the amendment should not preclude “methods for creating, modifying, or treating human organisms, including . . . through in vitro fertilization, methods of somatic cell nuclear transfer, medical or genetic therapies, methods for enhancing fertility, and methods for implanting embryos.”[196] Nevertheless, given the text of the act and what legislative history is clear, it seems obvious that human embryos would not constitute a patentable subject matter under 35 U.C.S. § 101. Pursuant to the America Invents Act, no patents shall issue to inventions “directed to or encompassing a human organism.”[197] Genetically engineered or altered human embryos are the epitome of what the America Invents Act sought to keep beyond the realm of patent. While no definition is provided for this phrase, a human embryo, including those genetically altered or synthetically created, contains all of the elements necessary for human life to form and develop and would undoubtedly “encompass a human organism.” It is less obvious, given the lack of clear guidance in interpreting this phrase, that gametes would fall into this category. But, within the Manual of Patenting Examining Procedures, the PTO has indicated that a rejection will be made on the basis of non-statutory subject matter “[i]f the broadest reasonable interpretation of the claimed invention as a whole encompasses a human organism[.]”[198] Given that gametes contain at least half of the genetic material that goes into the formation of a human embryo, it seems consistent that genetically altered or synthetic gametes, like embryos would “encompass[] a human organism” — thus, considered a non-patentable subject matter. At the very least, genetically altered gametes would be “directed to” a human organism. These cells are the building blocks of human life. Sperm and egg combine together to form an embryo, which has the potential to develop into a living, functioning human being. Consequently, even if they are genetically modified through germ-line modification or another technique, they do not lose their inherent capability of producing human life. Moreover, to the extent that scientists may create synthetic genetic material in order to alter gamete cells,[199] the gamete itself would still be ineligible for patent, and, arguably, so to would the synthetic genetic material itself. Researchers and scientists may attempt to skirt this prohibition by receiving a patent on the process of modifying human gametes or embryos given the Weldon amendment’s “methods” exception.[200] However, a patent application of this sort would nevertheless include claims directed to a human organism for the reasons described above. Furthermore, the excepted methods that are enumerated only encompass assisted reproductive technologies, somatic cell nuclear transfers, and genetic therapies.[201] While the legislative history does not provide an exhaustive list of exceptions, methods for genetic enhancement — distinct from genetic therapy — are not included and do not appear to have been contemplated.[202] The techniques and processes involved in altering gametes or embryos to achieve desired characteristics would be directly aimed at creating genetically enhanced human organisms; methods that are not explicitly protected in the legislative history. Admittedly, it is questionable whether legislative history will or should bear any weight in statutory construction. However, under the above formulations it would suggest that gametes and embryos would both be considered within the realm of human organisms, since it arguably encompasses organisms at any stage of development. Moreover, the methods for genetic enhancement techniques are distinct from medical or genetic therapy processes involving the creation of embryos, and is not expressly excluded from the realm of patentability. It is significant to reiterate the distinction between genetic modification characterized as gene therapy and genetic enhancement. [203] What has been termed gene therapy is primarily focused on curing or reducing human diseases and conditions, where as genetic enhancement focuses in stead on enhancing human characteristics.[204] In analyzing the legislative history of the Weldon Amendment, it does not expressly exclude genetic enhancement from patent law’s prohibition on claims “directed to or encompassing human organisms” but does address genetic therapy.[205] Accordingly, to properly adhere to legislative intentions, federal courts should view the impact of Myriad Genetics as limited in determining whether human gametes or embryos are patentable, either synthetic or natural. That is, when the patents at issue implicate § 33(a), Myriad Genetics should apply only in the limited context of the patentability of medical processes or genetic therapies,[206] and not in contexts of genetic enhancement. For example, patents on synthetic DNA similar to that in Myriad Genetics, but used in germ-line genetic modifications or reproductive cloning might implicate the federal statute. As gametes have the ability to pass along hereditary genetic information from one organism to its offspring[207], any synthetic gene or DNA that is inserted into a gamete is essential to the ultimate function of that gamete or embryo. In other words, without the incorporated synthetic DNA, a modified gamete would not be able to ensure perpetuation of its genetic information. In this way, it would seem a claim for such synthetic genes or DNA sequences, like those that could be utilized in germ-line genetic modification, might well be an invention “directed to or encompassing a human organism,” and, accordingly, prohibited by statute.[208] It is important to note that Myriad Genetics was considering a sort of gene therapy, where the location and isolation of the BRCA genes enabled testing for and treatment of certain health conditions within the human body; the Court was not considering genetic enhancement. But, in upholding the patents on Myriad’s claims for cDNA, the Court’s holding only specifically applied to cDNA, which did not encompass a human organism. These are synthetic materials that are entirely created and inserted by the scientists.[209] The synthetic DNA involved in Myriad Genetics was designed to to diagnose and target conditions within a human organism, but, admittedly, does not itself encompass one. However, gametes and embryos for all of the aforementioned reasons are fundamentally distinct from the type of material that Myriad was creating and should be treated as such in subsequent federal court cases involving such genetic material.


In sum, the advances of biotechnology and reproductive technologies invite the question of the patentability of human gametes and embryos. The challenges this question poses to patent law seems even more imminent given the Supreme Court’s holding in Myriad Genetics. However, pursuant to the MPEP and the America Invents Act, no innovation or invention “directed to or encompassing a human organism”[210] will be considered for a U.S. patent, and the holding in Myriad Genetics does nothing to disturb this prohibition. While the phrase directed to is never precisely defined or used in any other section of the Act, the plain meaning of the phrases and legislative history may help to inform the analysis in federal courts. Ultimately, the Supreme Court’s holding upholding patents on cDNA should be limited in its reach and should not apply in circumstances that are in direct contradiction to federal law — namely, section 33’s express prohibition on patents “directed to or encompassing human organisms.”[211]
* J.D. Candidate, New York University School of Law, 2015; B.A. and B.S., cum laude, University of Florida, 2012. The author wishes to express her sincerest appreciation to the editorial board and members of the NYU Journal of Intellectual Property & Entertainment Law for their dedication and hard work throughout the editorial process.
[1] See, e.g., Dov Fox, 23andme’s Designer Baby Patent, Huffington Post (Oct. 4, 2013),
[2] Ass’n for Molecular Pathology v. Myriad Genetics, Inc., — U.S. —, 133 S. Ct. 2107, 2118–19 (2013) [hereinafter Myriad Genetics].
[3] Id. at 2111.
[4] Id.
[5] Id. at 2119–20.
[6] Fox, supra note 1; Terry Baynes, Genetic-Testing Patent Raises Concerns About ‘Designer Babies’, Council For Responsible Genetics (Oct. 9, 2013),
[7] Id.
[8] Leahy-Smith America Invents Act, Pub. L. No. 112–29, 125 Stat. 284 (2011) (codified as amended in scattered sections of Title 35 of the U.S. Code).
[9] Id. § 33(a), 125 Stat. at 340.
[10] Myriad Genetics, 133 S. Ct. at 2118–19. Prior to the America Invents Act, Congress had banned the patenting of human embryos and organisms through annual budget appropriation acts since 2004. The Court was addressing the language found in Consolidated Appropriations Act of 2004, which is nearly identical to that in the America Invents Act. See Consolidated Appropriations Act of 2004, Pub. L. No. 108–199, § 634, 118 Stat. 101 (codified as amended in scattered sections of Title 35 of the U.S. Code) (“None of the funds appropriated or otherwise made available under this Act may be used to issue patents on claims directed to or encompassing a human organism.”)
[11] 35 U.S.C. § 101 (2012).
[12] Id.
[13] Id.
[14] Lowell v. Lewis, 15 F. Cas. 1018, 1019 (C.C.D. Mass. 1817) (No. 8568).
[15] Laura A. Keay, Morality’s Move Within U.S. Patent Law: From Moral Utility to Subject Matter, 40 AIPLA Q.J. 409, 429 (2012).
[16] Dep’t of Comm., U.S. Pat. & Trademark Office, Utility Examination Guidelines, 66 Fed. Reg. 1092, 1093–94 (Jan. 5, 2001), available at og/2001/week05/patutil.htm.
[17] Fox, supra note 1.
[18] See, e.g., Diamond v. Chakrabarty, 447 U.S. 303, 317 (1980) (“[B]alancing of competing values and interests, which in our democratic system is the business of elected representatives … should be addressed to the political branches of the Government, the Congress and the Executive, and not to the courts.”); Juicy Whip, Inc., v. Orange Bang, Inc., 185 F.3d 1364,1366-68 (Fed. Cir. 1999) (upholding patent on deceptive product, but noting that it would defer to Congress if it were to make the patenting of such devices illegal).
[19] Tia Ghose, Children to Order: The Ethics of “Designer Babies”, Live Science (Mar. 13, 2014, 2:00 PM),
[20] Id.
[21] See Council for Responsible Genetics, Position Paper on Human Germline Manipulation (updated Fall 2000), Viewpage.aspx?pageid=101 [hereinafter Position Paper].
[22] Susannah Baruch et al., Genetics & Pub. Pol’y Ctr, Human Germline Genetic Modification: Issues and Options for Policymakers 11 (2005), available at pdf.
[23] Id.
[24] Position Paper, supra note 21.
[25] National Institutes of Health, What is a Chromosome?, Genetics Home Reference (Nov. 24, 2013),
[26] Myriad Genetics, 133 S. Ct. at 2111.
[27] National Institutes of Health, What is DNA?, Genetics Home Reference (Nov. 24, 2013),
[28] The human genome consists of a complete collection of DNA. For more information, see Human Genome Project, Human Genome: Introduction, (2014), [hereinafter NIH, What is DNA?].
[29] Id.
[30] National Institutes of Health, Intron Definition, Genetics Home Reference (Nov. 24, 2013), [hereinafter NIH, Intron Definition]; National Institutes of Health, Exon Definition, Genetics Home Reference (Nov. 24, 2013), [hereinafter NIH, Exon Definition].
[31] NIH, Intron Definition, supra note 30; NIH, Exon Definition, supra note 30.
[32] Myriad Genetics, 133 S. Ct. at 2112.
[33] For more information on cDNA, see Human Genome Project, cDNA (Complementary DNA), (2014), (last visited Dec. 1, 2014).
[34] President’s Council on Bioethics, Reproduction and Responsibility: The Regulation of New Biotechnologies 26, 30 (Mar. 2004), available at [hereinafter Reproduction and Responsibility].
[35] Id. at 26.
[36] Some clinicians wait until five days after fertilization (also known as the blastocyst stage) in order to maximize the probability of implantation. Id. at 30.
[37] Id.
[38] Gautam Naik, ‘Designer Babies:’ Patented Process Could Lead to Selection of Genes for Specific Traits, Wall Street J. (Oct. 3, 2013),
[39] Id.
[40] Gene therapy is a process discussed infra that is primarily focused on curing or reducing human diseases and conditions. See Kathi E. Hanna, Genetic Enhancement, National Human Genome Research Institute (last reviewed April 2006),
[41] Naik, supra note 38.
[42] Id.
[43] Id.
[44] Id.
[45] Designer Babies: Controversy Over Embryo Selection, Telegraph (Jan. 9, 2009, 9:59 AM),
[46] Id.
[47] Natonal Institutes of Health, Cloning, National Human Genome Research Institute (last reviewed April 28, 2014), (hereinafter NIH, Cloning).
[48] Id.
[49] Neil A. Campbell & Jane B. Reece, Biology 375 (6th ed. 2002). See, e.g., I. Wilmut et al., Viable Offspring Derived from Fetal and Adult Mammalian Cells, 385 Nature 810 (1997) (discussing the cloning of genes in sheep); Reproduction and Responsibility, supra note 34, at 126 (discussing the successful cloning of human embryos for embryonic stem cell lines).
[50] Campbell & Reece, supra note 49, at 380–81.
[51] Id. at 377. cDNA is distinct from isolated DNA segments, in that the introns, as discussed above, are completely removed from the cDNA sequence and are not naturally occurring. Id. at 380–81.
[52] Id. at 376.
[53] James D. Watson et al., Molecular Biology of the Gene 262 (5th ed. 2004).
[54] Reproduction and Responsibility, supra note 34, at 125 (citations omitted).
[55] Woo S. Hwang et al., Evidence of a Pluripotent Human Embryonic Stem Cell Line Derived from a Cloned Human Blastocyst, Sciencexpress (Feb. 12, 2004), available at
[56] Reproduction and Responsibility, supra note 34, at 126.
[57] “Pluripotent” stem cells are those cells that have the ability to develop into nearly all cells in the body, and, so, when isolated from the embryo, these cells have the potential to produce almost all human cells. See Ian Murnaghan, Pluripotent Stem Cells, Explore Stem Cells (updated June 18, 2014),
[58] Reproduction and Responsibility, supra note 34, at 126 (citing Woo S. Hwang et al., Evidence of a Pluripotent Human Embryonic Stem Cell Line Derived from a Cloned Human Blastocyst, Sciencexpress (Feb. 12, 2004), available at /newsandlibrary/files/HuESSCNT.pdf).
[59] Donald Kennedy, Editorial Retraction, Science Mag. (Jan. 20, 2006),
[60] Position Paper, supra note 21.
[61] See Francis Fukuyama, Our Posthuman Future: Consequences of the Biotechnology Revolution 76 (2002).
[62] Id. at 77.
[63] Position Paper, supra note 21.
[64] Baruch, supra note 22, at 11–20.
[65] Position Paper, supra note 21.
[66] Id.
[67] Id.
[68] Id.
[69] Id.
[70] Id.
[71] Id.
[72] Id.
[73] For a more comprehensive reading of these processes, see Kevin R. Smith, Sarah Chan, & John Harris, Human Germline Genetic Modification: Scientific and Bioethical Perspectives, 43 Archives of Medical Research 491, 493–96 (2012), available at
[74] Id.
[75] Id.
[76] Baruch, supra note 22, at 14–15.
[77] Aya Leder et al., Consequences of Widespread Deregulation of the c-myc Gene in Transgenic Mice: Multiple Neoplasms & Normal Development, 45 Cell 485 (1986).
[78] A.J. Griffith et al.,. Optic, Olfactory, and Vestibular Dysmorphogenesis in the Homozygous Mouse Insertional Mutant Tg9257, 19 J. Craniofac. Genet. Dev. Biol. 157–63 (1999).
[79] Position Paper, supra note 21.
[80] Id.
[81] To be clear, gene addition is the insertion of an extra copy of a malfunctioning or nonfunctioning gene. See Gene Addition, Biochemistry, /classes/bioc461/Biochem499/RaymondCostantini/Pages/GeneAddition.htm (last visited Dec. 1, 2014).
[82] Position Paper, supra note 21.
[83] Id.
[84] Id.
[85] Id.
[86] Id.
[87] Rob Stein, Test Monkeys’ Offspring Pick Up Genetic Modification, Wash. Post, May 28, 2009, at A1 (detailing the first successful germ-line modification of a primate and hypothesizing that “[t]he approach could tempt some to use the technique to try to engineer desirable traits in people”).
[88] Id.
[89] Id.
[90] Id.
[91] Id.
[92] Id.
[93] Baruch, supra note 22, at 13.
[94] Hanna, supra note 40.
[95] Ass’n for Molecular Pathology v. USPTO, 653 F.3d 1329, 1339 (Fed. Cir. 2011); Myriad Genetics, 133 S. Ct. at 2111. It is significant to note that there are several citations to this case in its various procedural postures.
[96] See Ass’n for Molecular Pathology, 653 F.3d at 1339.
[97] Myriad Genetics, 133 S. Ct. at 2113–14.
[98] Id. at 2113.
[99] Id. at 2114.
[100] Id.
[101] Id.
[102] Ass’n for Molecular Pathology, 653 F.3d at 1340.
[103] Myriad Genetics, 133 S. Ct. at 2114.
[104] Id.
[105] Complaint at 3, Ass’n for Molecular Pathology v. USPTO, 669 F. Supp. 2d 365 (S.D.N.Y. 2009) (No. 09 Civ. 4515).
[106] Id. at 2 –4.
[107] Ass’n for Molecular Pathology v. USPTO, 702 F. Supp. 2d 181, 238 (S.D.N.Y. 2010).
[108] Id. at 211.
[109] Ass’n for Molecular Pathology, 653 F.3d at 1334.
[110] Id. at 1334.
[111] Id. at 1365 (“[T]he mere fact that the larger chromosomal polymer includes the same sequence of nucleotides as the smaller isolated DNA is not enough to make it per se a law of nature and remove it from the scope of patentable subject matter.”).
[112] Id. at 1353.
[113] Id. at 1371–73 (Moore, J., concurring in part).
[114] Id. at 1373 (discussing the notion Chakrabarty that these types of policy considerations are within the province of the legislature).
[115] Id. (Fed. Cir. 2011) (Bryson, J., concurring in part and dissenting in part).
[116] Id.
[117] Id. at 1377–78 (citing Diamond v. Chakrabarty, 447 U.S. 303 (1980)).
[118] Id. at 1373 (Bryson, J., concurring in part and dissenting in part).
[119] Ass’n for Molecular Pathology v. Myriad Genetics, 132 S. Ct. 1794 (2012).
[120] Mayo Collaborative Servs. v. Prometheus Labs., 132 S. Ct. 1289 (2012). Prometheus was the exclusive licensee of a patent that’s claims were directed to a method of determining dosages of drug to give to patients with particular autoimmune diseases. Effectiveness of dosages inherently varies with each patient given their unique metabolization rates. Having identified a threshold dosage for effectiveness, which was part of the claimed method, the plaintiffs argued that they could more efficiently determine whether to increase or decrease the dosage of the drug for individual patients. Id.
[121] Id.
[122] Id. at 1294 (citing O’Reilly v. Morse, 56 U.S. (15 How.) 62, 112–20 (1854)); see also Gottschalk v. Benson, 409 U.S. 63, 71–72 (1972).
[123] Mayo, 132 S. Ct. at 1294.
[124] Ass’n for Molecular Pathology v. USPTO, 689 F.3d 1303, 1337 (Fed. Cir. 2012).
[125] Id. at 1346 (Moore, J., concurring in part).
[126] Id. at 1348 (Bryson, J., concurring in part and dissenting in part).
[127] Id.
[128] Id. Note that the cDNA created by Myriad “contain[ed] the same protein-coding information found in a segment of natural DNA but omit[ted] portions within the DNA segment that do not code for proteins.” Id.
[129] Id.
[130] Id. at 2116, 2120 (“Scientific alteration of the genetic code presents a different inquiry, and we express no opinion about the application of § 101 to such endeavors.”).
[131] Id. at 2116.
[132] Chakrabarty, 447 U.S. at 305.
[133] Id.
[134] Id. at 309–10 (internal quotation marks omitted).
[135] Myriad Genetics, 133 S. Ct. at 2217 (citing and quoting Chakrabarty, 447 U.S. at 310).
[136] Id. at 2117.
[137] Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948).
[138] Id.
[139] Inoculants are soil additives that serve to promote plant health when included in the surrounding soil or on the roots of the plant itself. See generally id.
[140] Id. at 129–30.
[141] Id. at 132 (“There is no way in which we could call [the bacteria mixture a product of invention] unless we borrowed invention from the discovery of the natural principle itself.”).
[142] Myriad Genetics, 133 S. Ct. at 2118.
[143] Id. To be clear, the genes are only non-naturally occurring in the sense that this particular genetic sequence is not found isolated in nature.
[144] Id. at 2119
[145] Id.
[146] See, e.g., Myriad Genetics, 133 S. Ct. at 2117 (contrasting the patent claims at issue in Myriad to those in Chakrabarty and finding that, unlike in Chakrabarty, “Myriad did not create anything” (emphasis added)); Chakrabarty, 447 U.S. at 310 (upholding patent on modified bacteria given the resulting bacterium’s “markedly different” properties and abilities).
[147] Position Paper, supra note 21. Genetic engineering procedures are conducted on animals, and these procedures have resulted in mice growing to twice their size and cows producing milk enhanced with pharmaceuticals. This testing may ultimately result in athletically gifted children, the physically attractive, or a math genius. See id.
[148] See generally Reproduction and Responsibility, supra note 34, 89–104.
[149] Id. at 147.
[150] Id.
[151] Leahy-Smith America Invents Act, § 33(a).
[152] See Eric J. Rogers, Can You Patent Genes? Yes and No, 93 J. Pat. & Trademark Off. Soc’y 19, 28 (2011).
[153] Ass’n for Molecular Pathology, 689 F.3d at 1333.
[154] Rogers, supra note 152, at 19.
[155] Reproduction and Responsibility, supra note 34.
[156] Naik, supra note 38.
[157] Id.
[158] Id.
[159] Id.
[160] Chakrabarty, 447 U.S. 303; see also Keay, supra note 15, at 421–30.
[161] Chakrabarty, 447 U.S. at 309–10.
[162] See In re Allen, No. 87-1393, 1988 WL 23321 (Fed. Cir. Mar. 14, 1988) (upholding a patent on a new type of oyster).
[163] See U.S. Patent No. 4,736,866 (filed June 22, 1984) (issued Apr. 12, 1988).
[164] Mayo, 132 S. Ct. at 1300.
[165] Myriad Genetics, 133 S. Ct. at 2116 (citing Mayo Collaborative Servs. v. Prometheus Labs., — U.S. —, 132 S. Ct. 1289, 1293 (2012)). In stating the rule against patents on naturally occurring things, the Court in Mayo noted “[s]uch discoveries are ‘manifestations of . . . nature, free to all men and reserved exclusively to none.’” Mayo, 132 S. Ct. at 1293 (quoting Chakrabarty, 447 U.S. at 309).
[166] Myriad Genetics, 133 S. Ct. at 2116 (quoting Mayo, 132 S. Ct. at 1305).
[167] Id.
[168] Id. at 2111.
[169] Id.
[170] Myriad Genetics, 133 S. Ct. at 2119 (“Had Myriad created an innovative method of manipulating genes while searching for the BRCA1 and BRCA2 genes, it could possibly have sought a method patent.”).
[171] Ariosa Diagnostics, Inc. v. Sequenom, Inc., No. C 11-06391 SI, 2013 WL 5863022, at *9 (N.D. Cal. Oct. 30, 2013) (quoting Myriad Genetics, 133 S. Ct. at 2119).
[172] Id. at 2115–16.
[173] Id. at 2116.
[174] Id. at 2117.
[175] 35 U.S.C. § 101.
[176] See generally Robert P. Merges & John F. Duffy, Patent Law and Policy: Cases and Materials 216–28 (3d ed. 2002) (describing the history behind the doctrine of beneficial utility of the doctrine).
[177] Lowell, 15 F. Cas. at 1019.
[178] Keay, supra note 15, at 429.
[179] Juicy Whip, 185 F.3d at 1366–67.
[180] Id.
[181] Id. at 1368.
[182] Chakrabarty, 447 U.S. at 317.
[183] Ass’n for Molecular Pathology, 653 F.3d at 1353.
[184] Id. (“[T]he Supreme Court has ‘more than once cautioned that courts should not read into the patent laws limitations and conditions which the legislature has not expressed’” (quoting Bilski v. Kappos, 561 U.S. 593, 602 (2010)).
[185] Leahy-Smith America Invents Act, § 33(a).
[186] See Chakrabarty, 447 U.S. at 317 (“[T]he balancing of competing values and interests, which in our democratic system is the business of elected representatives . . . should be addressed to the political branches of the Government, the Congress and the Executive, and not to the courts.”); Juicy Whip, 185 F.3d at 1366–68 (upholding patent on deceptive product, but noting that it would defer to Congress if it were to make the patenting of such devices illegal).
[187] Leahy-Smith America Invents Act, § 33(a).
[188] Id.
[189] Id.
[190] See Dennis Crouch, Patents Directed to Human Organisms, Patentlyo (Sept. 9, 2011), (“The phrase ‘directed to’ is not defined in the Patent Act or the USPTO Implementation Rules found at 37 C.F.R. § 1, et seq. However, the phrase [is] often used by patent attorneys to describe the coverage of a particular claim and the statutory category. Even amongst patent attorneys, the usage is not uniform.”).
[191] Yaniv Heled, On Patenting Human Organisms or How the Abortion Wars Feed into the Ownership Fallacy, 36 Cardozo L. Rev. 241, 243–44 (2014).
[192] Id. at 261, n.86 (“The sponsors of Section 33 viewed the Section as mere codification of the Weldon Amendment and, as such, as a direct extension of the Weldon Amendment’s jurisprudence, including the meaning of the term ‘human organism.’”); see 157 Cong. Rec. E1177, E1177-78 (“Chairman Lamar Smith [included] in the manager’s amendment to . . . the America Invents Act, a provision that will codify an existing pro-life policy rider included in the CJS Appropriations bill since FY2004. This amendment, commonly known as the Weldon amendment, ensures the U.S. Patent and Trade Office, USPTO, does not issue patents that are directed to or encompassing a human organism . . . . I also submit into the Record items from previous debate on the Weldon amendment that will add further clarification to the intent of this important provision.”).
[193] Consolidated Appropriations Act of 2004, Pub. L. No. 108-199, § 634, 118 Stat. 3 (2004).
[194] 157 Cong. Rec. E1177-04 (testimony of Representative Dave Weldon previously presented in connection with the Consolidated Appropriations Act of 2004, Pub. L. 108-199, § 634, 118 Stat. 3, 101 (2004), and later resubmitted with regard to the America Invents Act; see 149 Cong. Rec. E2417-01).
[195] 157 Cong. Rec. E1177-04, E1180 (daily ed. June 23, 2011) (emphasis added) (statement of Rep. Dave Weldon).
[196] 157 Cong. Rec. E1182, E1183 (daily ed. June 23, 2011) (emphasis added) (statement of Rep. Lamar Smith).
[197] Leahy-Smith America Invents Act § 33(a); see also MPEP § 2105 (8th ed. Rev. 8, July 2010).
[198] MPEP § 2105 (8th ed. Rev. 8, July 2010).
[199] It does not seem scientifically impossible to synthetically create the desirable DNA characteristics and use those to modify existing human gametes and genes. See Myriad Genetics, 133 S. Ct. at 2112–13 (discussing the discussed the possibility of creating synthetic DNA through well-known scientific processes).
[200] 157 Cong. Rec. E1182, E1183 (daily ed. June 23, 2011).
[201] Id. (excepting methods including “in vitro fertilization, methods of somatic cell nuclear transfer, medical or genetic therapies, methods for enhancing fertility, and methods for implanting embryos”).
[202] Id.
[203] See Hanna, supra note 40.
[204] Id.
[205] 157 Cong. Rec. E1182, E1183 (daily ed. June 23, 2011) (emphasis added).
[206] Id.
[207] Baruch, supra note 22, at 11.
[208] Leahy-Smith America Invents Act § 33(a).
[209] The Supreme Court discussed the possibility of creating synthetic DNA through well-known scientific processes. “It is also possible to create DNA synthetically through processes similarly well known in the field of genetics. One such method begins with an mRNA molecule and uses the natural bonding properties of nucleotides to create a new, synthetic DNA molecule. The result is the inverse of the mRNA’s inverse image of the original DNA, with one important distinction: Because the natural creation of mRNA involves splicing that removes introns, the synthetic DNA created from mRNA also contains only the exon sequences. This synthetic DNA created in the laboratory from mRNA is known as complementary DNA (cDNA).” Myriad Genetics, 133 S. Ct. at 2112.
[210] Leahy-Smith America Invents Act, § 33(a).
[211] Id.