Song on Wire: A Technical Analysis of ReDigi and the Pre-Owned Digital Media Marketplace

Song on Wire: A Technical Analysis of <em>ReDigi</em> and the Pre-Owned Digital Media Marketplace
By James Huguenin-Love* Download a PDF version of this article here.  

Introduction

If you have ever impulsively purchased the latest trendy song on iTunes[1] and then, 34 repetitious plays later, wondered, “Did I really need that?”, your salvation may have stealthily surfaced in the middle of the night only to be shot down by the sheriff before it could see the sunrise.  Just like the time you purchased that Macarena CD in 1995 and then sold it on eBay five years later for a dollar, a new wave of businesses have attempted to create a marketplace for the resale of previously owned digital media files.  Many such businesses rely on taking a cut from your resale of that Psy album you purchased online while providing you a place to sell it at a discounted price. This creative business prowess deserves applause, but media companies are less than thrilled.  Their quarrel is obvious: As the number of secondhand sales increases, the number of new sales decreases. In some instances, media companies make nothing from the secondhand sales.  Accordingly, some media companies have turned to copyright law to protect their content (and their revenue) by claiming that digital resales violate their exclusive rights[2] as owners of the content.  If the first big lawsuit[3] on this issue is any indication, such copyright challenges may successfully block the development of a secondhand digital market.  Nonetheless, the issue is far from decided.  Given the narrow holding in Capitol Records v. ReDigi, Inc., there remain viable options for startups that want to revolutionize the way digital media is bought and sold. Moreover, the ReDigi court’s reluctance to engage the finer technical aspects of digital media, as compared to traditional media, may leave the door open for disagreement by other courts. Section I of this note summarizes the facts of the ReDigi court, including an analysis of the court’s decision on reproduction and distribution rights and ReDigi’s attempted fair use and first sale defenses. Section II looks in depth at copyright law’s reproduction right and why ReDigi was unsuccessful arguing that its business method did not infringe it.  Section III identifies the technical, device-level view of digital files so that the copyright holder’s reproduction right is not necessarily infringed if the files are properly transferred.  Section IV quickly visits the distribution right under this view.  Section V looks at the policy considerations and implications surrounding the ReDigi court’s decision.  Section VI reflects on the future outlook for previously owned digital media markets.

I. ReDigi Case

On March 30, 2013, the Southern District of New York decided a case in which Capitol Records, a major music publishing company, sued ReDigi, a startup company that allowed its users to resell previously owned music, for copyright infringement.[4]  In contrast to the historical practice of selling physical objects like compact discs or vinyl records, ReDigi resold digital media that their users had previously purchased and downloaded from iTunes.  The outcome of the case turned on whether ReDigi’s service involved the creation of a new – and unauthorized – reproduction of a pre-owned digital file. Despite reassurances from ReDigi that the digital file was eliminated from the subscriber’s computer during upload to an individualized storage space hosted by ReDigi (a subscriber’s “Cloud Locker”),[5] and hence resulted in a “migration” rather than a reproduction of the media file, the court held that a violation of Capitol Record’s reproduction and distribution rights occurred once the file was stored in the Cloud Locker.[6]

A. Facts

Among the facts established at trial was the process by which a digital resale occurs. A ReDigi subscriber downloads ReDigi’s Media Manager software, which analyzes the subscriber’s computer to create a list of music files available for resale.[7]  Only files purchased via iTunes or from another ReDigi user are eligible for resale.[8]  This was a legal decision took to ensure the subscriber actually owned — instead of merely licensed — the music file so that the first sale doctrine[9] applied to all subsequent transfers.[10]  After the initial analysis, Media Manager continues to run on the subscriber’s computer in order to flag any attempts by the subscriber to copy or transfer the file to a remote device.  According to ReDigi CEO John Ossemacher, the Media Manager software contains a “really cool forensic engine that . . . determines where the song came from, whether you’re the lawful owner, whether it was moved from one computer to another and so on.”[11]  If a copy is detected, ReDigi asks the subscriber to delete it or face suspension of his account.[12] The subscriber can choose to upload any authorized file to his Cloud Locker.  The upload process is the crux of the lawsuit.  While ReDigi asserts that the upload is a migration of the original, purchased iTunes file, Capitol Records insists that any upload necessarily involves copying the file.[13]  Regardless of how one classifies the movement, no file is retained on the subscriber’s computer.[14]  Thereafter, the subscriber can choose to use the Cloud Locker to stream the music, sell the music, or transfer it back to his computer,[15] but access to the file is terminated once the subscriber sells the music to another subscriber.[16]  No money is transferred between the subscribers; instead, subscribers accumulate credits from ReDigi as compensation for the sale.  Subscribers may also purchase credits directly.  Those credits can then be used to buy additional music, but cannot be exchanged for money.[17]  Individual songs are priced between 59–79¢, which is split 20/20/60 between the seller (in the form of credits), the artist, and ReDigi, respectively.[18]

B. Reproduction Right

Artists and their record labels receive a copyright in the sound recording of their music.[19]  Sound recordings are works that result from fixation in a material object called a phonorecord, which include disks and tapes.[20]  The copyright owner has the exclusive right “to reproduce the copyrighted work in copies or phonorecords.”[21] The Southern District of New York recognized the unprecedented nature of the ReDigi case from the very beginning.  Unlike previous copyright infringement cases that involved duplication of digital files, the issue in this case was “whether the unauthorized transfer of a digital music file over the Internet — where only one file exists before and after the transfer — constitutes reproduction within the meaning of the Copyright Act.”[22] The court reasoned that the copyrighted sound recording constituted a reproduction of the phonorecord once fixed in the subscriber’s Cloud Locker after upload.  Thus, the ReDigi server — a collection of hard drives in Arizona that contained the same sound recording — represented the infringing, reproduced phonorecord.  The court did not care whether ReDigi characterize it as a transfer, migration, or pilgrimage because “[i]t is simply impossible that the same ‘material object’ can be transferred over the Internet.”[23]  The fact that the file was deleted on the subscriber’s computer was irrelevant.  Even deletion of the file located in the subscriber’s Cloud Locker would be no saving grace.  “Simply put, it is the creation of a new material object and not an additional material object that defines the reproduction right.”[24]

C. Distribution Right

The Copyright Act also provides the copyright owner the exclusive right “to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.”[25]  ReDigi did not contest that it was distributing the sound recordings.[26]  Instead, it relied on defenses under the fair use and first sale sections of the Act[27] to argue it was within its legal rights to distribute the previously owned music.

D. Fair Use and First Sale Defenses

The court promptly dismissed ReDigi’s fair use defense, weighing all four factors[28] in the analysis against ReDigi.[29]  The court was more deliberate in discarding the first sale defense since, at first glance, reselling used digital music seems akin to reselling used compact discs and vinyl records.  However, in contrast to physical sales, the court found it significant that the phonorecord, which was resold and redistributed by ReDigi, had already been unlawfully reproduced, as analyzed above.  Since the reproduction was not “lawfully made under this title,” as the first sale defense requires, the defense could provide no shield.[30]  Whereas the original phonorecord created in the subscriber’s computer hard drive would retain the benefit of the first sale defense,[31] under the court’s interpretation, that file had been deleted, and with it went the first sale defense.  Thus, the infringement of the distribution right in this case was directly tied to the court’s decision about whether an illegal reproduction occurred in the first place. The court found security in its decision due, in large part, to the Copyright Office’s report on the Digital Millennium Copyright Act, which explained why the first sale doctrine should not be extended to digital works.  The Copyright Office justified its reasoning for limiting the first sale doctrine by noting both the relative difficulty with which physical copies are transported as compared to digital copies, which tends to keep the resale market in check, as well as the fact that physical copies degrade over time, making them less desirable than new copies.[32]  On the other hand, “[d]igital information does not degrade, and can be reproduced perfectly on a recipient’s computer.  The ‘used’ copy is just as desirable as (in fact, is indistinguishable from) a new copy of the same work.”[33] The court’s proposition raises an interesting philosophical question: If digital copies are “indistinguishable,” and there is no other phonorecord with which to compare, how can the court know that the phonorecord stored on ReDigi’s server is a new phonorecord rather than the original?  This question and others will be explored in later sections.

II. Reproduction Right Pertaining to Previously Owned Digital Media

Once ReDigi lost its argument that uploading the digital music files to its Cloud Locker service was not an infringement of the copyright owner’s reproduction rights, its remaining arguments and defenses fell along with it.[34]  Thus, the critical aspect to the legality of digital media resale seems to be avoiding infringement of reproduction rights.

A. Argument Made by ReDigi

From the very start, ReDigi put itself behind the eight ball.  In one of its first memorandums to the court opposing Capitol Records’ motion for a preliminary injunction, ReDigi repeatedly, and unfortunately, referred to uploaded music files as “copies” of the music file on the subscriber’s computer.[35]  After Capitol Records exposed this vulnerability,[36]  ReDigi was left trying to explain how the word “copy” was used in its colloquial sense rather than as a term meant to describe reproduction in the legal sense.[37] ReDigi’s unfortunate characterization of its uploading process is understandable given the way modern technology has altered the meaning of several common words such as “chat” and “cookie.”  The court tried to allay fears that it based its holding on semantics by explaining that even if no copying takes place, “the fact that a file has moved from one material object—the user’s computer — to another — the ReDigi server — means that a reproduction has occurred.”[38]  If the court had accepted the theory that the file was moved, instead of copied, it would need an additional reason to believe that a new phonorecord had been created, as required to infringe the owner’s exclusive reproduction rights.  In that sense, one cannot help but feel that the opinion was written with a certain degree of skepticism towards ReDigi’s recasting of copying as migration that pervades much of the analysis.
1. Was ReDigi’s Argument Dismissed Too Casually?
No matter the operating system — Windows, Mac OS X, Linux, or Unix — all have distinct commands for “copying” as opposed to “moving” a file.  When “copying,” there are always at least two files in existence after command execution, but when “moving,” only one file exists both before and after command execution.[39]  Thus, modern technology parlance would suggest that ReDigi is well within its bounds to call its proprietary upload process a move or migration. ReDigi attempted to use this differentiation to analogize its proprietary technology to the defendant’s action in C. M. Paula Co. v. Logan, where the defendant transferred — one could say moved — copyrighted prints from the plaintiff’s greeting cards and notepads onto ceramic plaques.[40]  The images were chemically stripped from the paper they were printed on, temporarily supported by a resin emulsion, before being adhered to the ceramic plaques.[41]  The court held that the affixation of the image on the ceramic plaque was not a reproduction or duplication of the print because there was no copying involved.[42]  Key in its decision was the fact that the defendant legally purchased another print from the plaintiff every time the defendant wanted to make another ceramic plaque.  The court also held that the first sale doctrine protected the defendant from infringing the plaintiff’s “exclusive right to vend,” otherwise known as the right to distribute.[43]  “[T]he policy favoring a copyright monopoly for authors gives way to the policy opposing restraints of trade and to restraints on alienation.”[44] Since each transferred print was fixed in the resin emulsion before finally being fixed on a ceramic plaque, both of which meet the definition of new material objects, the ReDigi court could have argued that the defendant in C. M. Paula actually unlawfully reproduced each copyrighted print twice.  But the court, rightfully, did not.  Instead, it considered the holding in C. M. Paula to be based on “questionable merits” and distinguished ReDigi’s service from the chemical stripping that occurred in C. M. Paula.[45]  With chemical stripping, “the copyrighted print, or material object, was lifted from the greeting card and transferred in toto to the ceramic tile; no new material object was created.”[46]  In contrast, ReDigi’s service “creates a new material object when a digital music file is either uploaded to or downloaded from the Cloud Locker.”[47] The distinction presented by the court looks quite natural at first glance.  However, this distinction seems to be contrived through clever wordplay in the name of convenience.  For, when citing Nimmer on Copyright earlier, the court correctly wrote, “the reproduction right is the exclusive right to embody, and to prevent others from embodying, the copyrighted work (or sound recording) in a new material object (or phonorecord).”[48]  But when analyzing C. M. Paula a page later, the court loosely interchanges a “copyrighted work” with a “material object,” saying that one and the same were lifted from the card.[49]  However, the print was transferred separately of the material object; the card (which was the material object in which the print was fixed) actually peeled away.[50]  When the court’s equating of the copyrighted print to a material object is juxtaposed with its explanation of the reproduction right as preventing someone from embodying a copyrighted work in a material object, something is amiss.  It is difficult to believe that the print is a material object itself which is also embodied in another material object: the card, resin, or a ceramic tile. Without the card, resin, or ceramic tile, it strains logic to imagine an audience perceiving the print (i.e., work) when the material object is the tangible thing that allows the work to be perceived, reproduced, or otherwise communicated.[51] If the court is steadfast in its equating the copyrighted print to a material object, in disregard of the Copyright Act’s plain language,[52] then ReDigi should also be allowed to equate the copyrighted sound recording (i.e., work) to a material object as well.  In essence, ReDigi would be stripping the sound recording (print) from the subscriber’s hard drive (paper) and transferring it “in toto” to the Cloud Locker (ceramic tile) without reproduction just as in C. M. Paula.  No new material object could be said to have been created because, like the ceramic tile, the Cloud Locker already existed as a material object and another material object (i.e., the sound recording) would simply be placed in the Cloud Locker.  One could even consider the transitory nature of the sound recording as it passes through network equipment over the Internet analogous to the transitory state of the print in the resin emulsion. The court would probably insist that its “copyrighted print, or material object” language was being misread.  But in order to do this and still conclude, consistently with the C. M. Paula court, that no new material object was created, it would have to contend that the copyrighted print was still fixed in the paper when it was stripped from the paper.  That contention runs counter to the stripping process in C. M. Paula that was described as “involv[ing] the use of acrylic resin . . . as a transfer medium to strip the printed indicia from the original surface on which it is printed. . . .”[53]  Thus, C. M. Paula actually comports quite nicely with a favorable result for ReDigi. Despite the aforementioned analysis, the ReDigi court used C. M. Paula against ReDigi.  If the court felt persuaded to find against ReDigi for policy reasons external to the law, the best option for the court may have been just to declare that C. M. Paula was not precedent in the Southern District of New York and to distinguish its decision as an exercise of independent judgment in light of different facts and different time periods.  Indeed, the court would have been perfectly free to do this, especially since it could have noted that the court in C. M. Paula (decided in 1973) was completely unaware of how technology has made copyright infringement so easy and pervasive. For this reason, the court’s decision could also be understood as a response to the ease and increase in copyright infringement resulting from technological advances.

B. File Sharing Zeitgeist

A palpable undercurrent of paranoia regarding illegal file sharing runs throughout the ReDigi decision, despite no explicit policy argument alluding to the practice.  For example, the court explicitly relies on previous cases concerning peer-to-peer file sharing systems to provide analytical guidance.  Specifically, the court uses London-Sire Records, Inc. v. Doe 1 for the proposition that an electronic download of a music file is a reproduction of the sound recording when magnetically encoded on the downloader’s hard drive as a phonorecord.[54]  But London-Sire involved anonymous users of peer-to-peer file sharing software that were copying files from other users’ computers.  In each instance, a copy of the file simultaneously existed on the downloader’s computer, while the original was retained by the supplier.  That court stated, “[plaintiffs] note, correctly, that an electronic download does not divest the sending computer of its file . . . .”[55]  It continued, “because the data at point A[, the source,] is not necessarily destroyed by the process of reading it, the person at point A might retain ownership over the original . . . .”[56]  Thus, the facts on which the London-Sire court based its understanding of the reproduction and distribution rights differ substantially from the facts in ReDigi.  Whereas the alleged infringers in London-Sire retained a copy of the music file that was “not necessarily destroyed,” in ReDigi, the original file is necessarily moved from source to destination without retention, as designed and implemented by ReDigi’s Media Manager software.[57] However, the court ignored this fairly significant difference.  Instead, it extrapolated from London-Sire the belief that the “distinction is immaterial under the plain language of the Copyright Act.  Simply put, it is the creation of a new material object and not an additional material object that defines the reproduction right.”[58]  The only additional form of support for its opinion is a reference to the dictionary definition of “reproduction,” which means, inter alia, “to produce again” and not, as the court says, “to produce again while the original exists.”[59]  While the court makes a well-founded point, it is generally difficult to know whether an object has been reproduced unless the original (i.e., source) still exists.[60] Fortunately, we have more evidence to resolve the specific facts in this case.  The Media Manager software holds the key to whether the original was reproduced or simply moved.  Unfortunately, all of the technical code is protected as a trade secret.[61]  Nevertheless, the technical aspects of file storage and transfer will be analyzed in Section IV, which will shed light on how files are fixed on hard drives and alleviate concerns of rampant file sharing abuse. Before analyzing the technical details of file storage and transfer, it is important to recognize that the court was in a difficult situation.  ReDigi presented a novel question that had never been litigated before,[62] and there was limited legal doctrine to apply to the facts of this case.  So it is perhaps natural that the morally opprobrious shadow illegal file sharing casts would also influence the court.  It may have been tough for the court to conceptualize ReDigi’s process when, traditionally, technology has made it easier to copy files for redundancy, archival, and distribution purposes, sometimes illegally.  Not that the situation cannot be conceptualized; without the potential to resell files, ReDigi subscribers are simply migrating their files to the trashcan for deletion.  Obviously, this is absurd. In a way, the court may be thinking that it is being hoodwinked; that ReDigi, with a wink and a nod, is telling the world that it is moving the file when in reality it is copying.  With these reservations, it is difficult to intuit that ReDigi is more like eBay than it is like the original Napster.[63]  By exploring the technical side of file storage and transfer, the distinction becomes more palatable.

III. Storing Digital Files on a Hard Drive Is Fixation Capable of Being Moved Without Being Reproduced

Throughout its briefing of the case, ReDigi stressed the importance of understanding its technology to understanding its defense that it was not reproducing digital music files.  Even while dealing with the sort of generalities inherent in analyses of proprietary processes, an argument can still be made that ReDigi is not infringing the copyright owner’s reproduction right without knowing the details of the software.

A. Fixation of Sounds in Physical Structures

Before the advent of the Internet, and certainly before anyone had heard of an “MP3” file or compact disc, music was (and still is) recorded on vinyl records.  Records are made by physically pressing grooves into a vinyl disc.  As seen in Figure 1a, a record player’s needle follows grooves in a disc as the disc spins. The needle moves within the grooves in accordance with their vertical and lateral undulations.  That mechanical movement is then converted into electronic signals by electronic circuitry.  These signals are ultimately amplified and then converted back into mechanical movements by the speaker, which produces sound waves that travel to the human ear.[64] Although sound quality improved drastically with compact disc (CD) technology, the process of storing information on CDs remained very similar to that used with vinyl discs.  On CDs, audio waveforms from vocals and musical instruments are converted into binary digits through a process of sampling (or digitizing) the waveform at intervals known as the sampling period.[65]  Each sample of the audio waveform creates a series of binary digits based on the waveforms’ amplitudes.[66]  Instead of stamping grooves into vinyl, CDs are stamped with pits to differentiate between a “1” bit and a “0” bit of the digitized sequence.[67]  Figure 1b shows those pits as viewed from the topside of the stamped layer.[68]  A polycarbonate plastic encasing surrounds the CDs stamped layer for protection.[69]  As the disc spins, a laser (rather than a needle) changes its radial distance from the center of the disc to read the particular physical changes in the CD.[70]  When the laser hits a flat part of the CD, it reflects directly into a detector.[71]  When the laser hits a pit, it scatters, reducing the intensity of the beam at the detector. [72]  The difference in the detected intensity stemming from the physical changes of the CD creates the bit pattern read by the CD drive.[73]  Because there is no conversion from mechanical movement to electronic signals, the noise levels are reduced and the sound quality remains clear. Apparent from this description of vinyl records and CDs is the fact that the sound recordings are physically sculpted into such phonorecords.  Understood in this manner, the fixation that occurs in vinyl records and CDs epitomizes the prototypical fixation of phonorecords contemplated by the House of Representatives when they passed the Copyright Act.[74] This conception of fixation also helps to explain the court’s adherence to the proposition that “it is the creation of a new material object and not an additional material object that defines the reproduction right.”[75]  Because grooves and pits are physically sculpted as material objects into the recording layer of the disc, any new material object fixed with the same sound recording will necessarily be an additional material object.  That is, the material fixation of the embedded sculpture is intimately tied to the recording layer.  In this scenario, it is impossible to imagine moving the material object (i.e., the grooves or pits as a collection) without moving the recording layer of the vinyl disc or the CD as well.  However, the notion of fixation changes when vinyl discs and CDs are replaced by hard drives composed of electric and magnetic fields.
Huguenin Figure 1(a) Vinyl Record
Figure 1a : Magnified images of a vinyl record[76]
 
Huguenin Figure 1(b) Compact Disk
Figure 1b : Magnified images of a CD[77]

B. Fixation of Sounds in Transferable Material Objects

When a ReDigi subscriber uploads his iTunes music from his personal computer to ReDigi’s cloud service, he moves that music from a magnetic hard drive or solid-state drive to another magnetic hard drive or solid-state drive, both of which could be used as the actual storage mechanism of the server.  But magnetic hard drives and solid-state drives are fundamentally different than vinyl records and CDs in how information is stored.  Whereas it makes sense to describe information as fixed grooves and pits in a vinyl record or CD, that description is inapposite when describing information storage in magnetic hard drives and solid-state drives.  This is because information is stored as electrical and magnetic signals (i.e., fields), which can actually be moved from one drive to another via electromagnetic waves and electrical lines that compose the current infrastructure of the Internet.[78]  So although an electromagnetic representation of grooves and pits can be transferred over the Internet, the actual grooves and pits cannot be transferred over the Internet.[79] Figure 2a shows a schematic drawing of a magnetic hard drive, specifically a single hard drive platter that stores digital information.  Magnetic hard drives typically contain multiple, stacked platters, which are rigid, circular discs made from aluminum or glass.[80]  Platters are divided into circular tracks, which can be further subdivided into sectors.  Each sector contains a fixed number of storage layer domains, which are the physical implementations of data bits (0s or 1s).[81]  When writing data, the write head element passes over the domains and impresses magnetic fields into the domains.  During impression, the write head element creates a strong magnetic field at its tip (represented by the red arrows) to align the magnetic material in that domain in the same direction.  The magnetic field is stored in one of two directions (represented by the black arrows).[82] In order to read the data, the read head element passes over the domains.  Instead of impressing the magnetic field like the write head element, it detects the direction of the magnetic field in each domain.  If the magnetic field is constant from one domain to the next, no electrical signal is induced in the read head element, which interprets the data as a 0 bit.  If the magnetic field changes from one domain to the next, an electrical signal is induced in the read head element, which interprets the data as a 1 bit.[83] ReDigi’s servers likely contain magnetic hard drives to store the iTunes music files because of their massive storage capabilities.  Many of ReDigi’s subscribers likely have magnetic hard drives in their personal computers as well.  However, due to their rapidly decreasing prices, non-moving parts, and superior read and write speeds,[84] some ReDigi servers and ReDigi subscribers may have solid-state drives.  Despite the differences between magnetic and solid-state drives, data in each is typically stored in a binary fashion. Figure 2b shows a schematic drawing of a simplified solid-state hard drive.  The drawing shows a memory unit capable of storing 32 bits of information.  One bit of information is stored in each of the transistors, which are arranged into eight rows and four columns.  Each bit is chosen for storing information by applying appropriate voltages to its corresponding word line and bit line.[85]  The right side of Figure 2b shows an enlarged diagram of the transistor corresponding to word line six and bit line three.  The transistor is composed of a silicon base and two other silicon layers (the gates) separated by two insulating layers (blue layers).  Each transistor operates in two states: an “on” state (1 bit), and an “off” state (0 bit).  The “off” state is programmed by applying a positive voltage to the control gate to attract a negative electrical charge (in the form of numerous electrons) into the floating gate.  The transistor is erased to the “on” state when the electrical charge is removed from the floating gate by applying a negative potential to the control gate.[86]
Huguenin Figure 2(a) Magnetic Hard Drive
Figure 2a : Diagram of Digital Media Stored on a Magnetic Hard Drive
 
Huguenin Figure 2(b) Solid State Drive
Figure 2b : Digital Media Stored on a Solid State Drive
  The electrical charge stored in the floating gate directly effects whether current will flow through the silicon base layer.  In order to read the data stored in the transistor, the current is measured.  If current flow is detected, a 1 bit is read.  If current flow is not detected, a 0 bit is read.[87] Although it is tempting to define these electrical charges and magnetic fields as fixed (in the legal copyright sense) in the drive, they are perhaps better described as contained or stored at a waypoint.  This is because they are not intimately tied to the recording layer like grooves and pits, but instead are merely stored in an electronic transistor or a magnetic domain until they are transferred to a new storage unit.[88]  Furthermore, because grooves and pits are physically fixed in the recording layer, they cannot be extracted and transferred in media that carry only electrical and magnetic signals. The key point of this analysis is that when digital files are transferred from magnetic hard drives and, certainly, solid-state drives, no new material object is created because the electrical charge and magnetic fields that constitute the data are actually transferred from waypoint to waypoint.  A more insightful way to conceptualize such data storage is to view the electrical charge and magnetic fields as material objects themselves, rather than assigning that role to the magnetic storage layer or transistor.  In this schemata, every time data is transferred, the material object is transferred, which further implies that no new material object is created.  This conceptualization posits that, upon transfer, the electrical charge or magnetic field is released from the waypoint; otherwise, the data would necessarily be copied into a new material object.  And, just as the foregoing analysis indicated that electrical charge is easily stored and removed from the floating gate, magnetic fields can be stored and removed from their domains.  While it may be unlikely that the exact material object in the legal sense (electron/magnetic field) is transferred from one waypoint to another, one cannot definitively say they are not transferred because they all appear identical to human observers.[89]  This shows how digital files can be differentiated from physical grooves and pits, since it is never possible for a physical, sculpture-like material object to be transferred along a medium conducive to electromagnetic signals. Perhaps an analogy would help solidify the concept.  Consider a series of five buckets at point A, of which the first three contain water and the last two do not.  The five buckets at point A can be imagined to represent five bits in a “11100” sequence.  One way to transfer that information is to carry the five buckets, with their contents, to point B.  However, if the only way to transfer the bit sequence from point A to point B is copper tubing, carrying the buckets is no longer feasible.  Nonetheless, the information can still be transferred to point B using the copper tubing, a prearranged timing protocol to know when to expect the water (if there is any) from each bucket, and five receiving buckets available at point B.  Only the water, not the buckets, is essential to the communication because the water, not the bucket, is indicative of the bit sequence.[90]  The water (electric charges and fields) is the material object in which the information (sound recording) is fixed, while the bucket (magnetic hard drive or solid state drive) is simply a storage container. When discussing vinyl records and CDs, however, there is no water.  The shape of the bucket is the data-carrying object in this alternate universe.  Although the user at point A could send color-coded water through the copper tubing to signify whether the bucket shape is, for example, cylindrical or rectangular, if the person at point B uses that information to create cylindrical and rectangular buckets of their own, we know they must be new material objects because the buckets cannot physically pass through the copper tubing. It is this conceptual difference the court was unwilling to recognize in its ReDigi opinion.  Instead of discussing the physics of storing digital information in magnetic and solid-state drives, the court chose to make a conclusory declaration that “[i]t is simply impossible that the same ‘material object’ can be transferred over the Internet.”[91]  Axiomatically, the court stated, “[t]his understanding is, of course, confirmed by the laws of physics.”[92]  However, if courts are going to premise infringement of reproduction rights on the creation of a new material object, it is critical that they recognize what fits that category.  With today’s modern technology, the line differentiating material objects from containers storing such objects has become clearer.  Though the two are essentially indistinguishable with vinyl records and CDs, they can be conceptually separated in modern mass storage devices.

IV. Distribution Right Pertaining to Previously Owned Digital Media

Even if ReDigi did not infringe the copyright owner’s reproduction right, the company openly admitted to distributing the iTunes music files from its website.[93]  Without a proper defense, this constitutes direct infringement of the copyright owner’s distribution right under 17 U.S.C. § 106(3).  Accordingly, ReDigi asserted the first sale defense, which entitles “the owner of a particular copy or phonorecord lawfully made under this title, . . . without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”[94]  However, the court rebuffed ReDigi’s attempt to use the first sale defense because “as an unlawful reproduction, a digital music file sold on ReDigi is not ‘lawfully made under this title.’”[95]  Obviously, this conclusion is dependent upon the court’s finding that the phonorecord uploaded to the ReDigi server is a new reproduction of a phonorecord.  And because the court believes it is “impossible for the user to sell her ‘particular’ phonorecord on ReDigi, the first sale statute cannot provide a defense.”[96] But, as the previous section on reproduction rights attests, the court likely cannot—and does not even attempt to—substantiate its statement that it is impossible for a subscriber’s particular digital phonorecord to be transferred to the ReDigi server.  This is because the media used to send electromagnetic signals across the Internet do not transfer the sculpted grooves of vinyl records or pits of CDs, but rather transfer the electrical charge and magnetic fields that are the stored material of today’s digital files.  Thus, the court’s conclusion that “[t]he first sale defense does not cover [transferring digital files] any more than it covered the sale of cassette recordings of vinyl records in a bygone era” is inappropriate in this context.[97] As techniques and technology improve to more simply and efficiently transfer data, analogies to anachronistic practices become obsolete as well.  A cassette recording of a vinyl record necessarily entails two phonorecords. Regardless of whether the cassette tape or vinyl record was made first, the fact that another phonorecord was produced implies that a new phonorecord was produced.  Because the new phonorecord (i.e., the cassette recording in the court’s analogy) is unlawfully reproduced, the first sale defense is inapplicable.  In contrast, material objects that store digital phonorecords (e.g., electrons) are completely transferrable and thus no new material object need be created.[98]  Once one recognizes that a new phonorecord is not necessarily being created, the conclusion that the first sale defense is inapplicable to ReDigi is called into question.[99]

V. Policy Considerations

Despite ReDigi’s lack of success in the Southern District of New York, one piece of good news for consumers is that, in the same opinion, the court declared moving digital files around one’s computer for personal reasons, like defragmentation or transferring digital files from an old computer to a new computer, did not constitute an illegal reproduction of those files.[100]  Unlike ReDigi’s service, which “creates a new material object,” the court claims that “relocating files between directories and defragmenting” (which also creates a new material object under the court’s interpretation of a reproduction) are “almost certainly protected under other doctrines or defenses.”[101]  However, it does not state upon which legal doctrine this declaration is premised.  In fact, upon further review, it is not clear whether these personal file reorganization actions would qualify as either fair use or de minimis, the two most germane defenses.

A. Less Law, More Feel?

Fair use depends on
(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.[102]
For these illustrative file reorganization actions, the second and third factors certainly weigh against granting the actions a fair use defense because digital media is commercial in nature and the entire work is reproduced.  Factor one is less definitive.  While the actions are not for profit, they are not educational either.  Nor do they qualify under any of the specifically mentioned fair use purposes of “criticism, comment, news reporting, teaching . . . scholarship, or research . . . .”[103]  The otherwise helpful transformative use inquiry[104] fails to provide guidance here, since file equivalency is desired. Factor four is also less definitive, but the fact that a copyright holder’s revenue would increase if consumers were required to repurchase music that moved from one directory to another, or from one computer to another, suggests that the statutory text would weigh against these actions.[105]  So, even though the first and fourth factors (which tend to predict the outcome of the fair use defense more than the second and third factors)[106] don’t definitively weight against fair use, it is no stretch of the imagination to believe that such actions may not “almost certainly [be] protected under [fair use].”[107] Even more fickle in outcome is the de minimis defense.  While the court could rightfully declare that moving files between directories or while defragmenting are de minimis reproductions, it is not clear why moving files to the Cloud would not then also be de minimis.  In any case, the de minimis defense is usually limited to minimal and insignificant copying or displaying[108], neither of which applies under these actions.  The court in ReDigi may be relying more on Capitol’s concession[109] than on any legal defense asserted by ReDigi, given its perfunctory dismissal of the irrational outcomes that its holding could produce for the average computer user reorganizing files. So what is really happening here?  The answer probably has more to do with a policy of common sense than it does with the law.  We all, including judges and copyright holders themselves, organize digital media on our computers or transfer digital media to our new computers.[110]  In both actions, one file remains accessible to the user while the original instance is forgotten.  Few people would welcome the thought of an infringement lawsuit under these circumstances. The crux must be then the commercial nature of ReDigi’s transactions.  The court has to be worried that the copyright holder loses potential revenue that it could have earned if the different user had purchased the right to reproduce a new copy.  But, since moving digital media from one location to another on one’s personal computer or transferring files from an old computer to a new computer is also a reproduction, it would only seem consistent to be worried that the copyright holder is also losing potential revenue that it could have earned if the same user was required to purchase the right to reproduce a new copy when performing these personal file reorganization actions as well. Coherently differentiating ReDigi’s plight from the situations that raise no ire from the court is not an easy task.  Perhaps the policy rationale that the court manifested is that, in very close calls, err on the side of the copyright holder.

B. Global Policy Divergence

If the United States is leaning one way on the digital resale issue, the European Union appears to be leaning the other way.  In a factual scenario much like that in ReDigi, the European Union’s Court of Justice (ECJ) held that a resold user license to computer software permitted the secondary market purchaser to download (read: “reproduce”) computer software onto the purchaser’s computer.[111]  UsedSoft resold “used,” unlimited period licenses to Oracle software that UsedSoft purchased from original users.  The ECJ stated that the first sale of the computer software enabled the copyright holder to obtain appropriate remuneration for exhaustion of the distribution right to the computer software.[112]  It acknowledged that the reproduction right was not exhausted by the first sale but noted that any reproduction necessary for the use of the computer program by a lawful user is authorized.[113]  Such necessary reproduction would entail the secondary market producer to download another copy of the computer software.  Moreover, the reproduction “may not be prohibited by contract.”[114]  However, the ECJ sensibly stated that the original user must make his or her own copy unusable at the time of resale or the original user would infringe the copyright holder’s right of reproduction.[115] Although the UsedSoft decision was limited to computer software, it is not difficult to imagine its extension to digital media.  If this occurs, there will be a divergence in how the Unites States and the European Union handle reselling digital content in the secondary market.  While this could lead to different price points in the two jurisdictions, a more likely result is the proliferation of restrictive “terms of use” agreements.  Since the unlimited period of the license was critical to the ECJ’s judgment in UsedSoft, it is only a matter of time before all digital media purchases end on resell.  If purchases are defined as licenses[116] rather than outright sales, they can be terminated due to certain unfavorable actions.

C. Economic Policy

The digital world seems to be moving to a license-based purgatory in order to maintain more control over copyrighted works.  Licensed users are restricted from using the first sale doctrine as a defense to distributing the digital media and therefore every user is forced into licensing from the copyright owner.  In theory, this seems like the optimal way to generate the most revenue.  But a pre-owned digital media marketplace may actually provide a better way to free untapped revenue.  First, if consumers are able to resell their digital music and obtain some resale value, they may be willing to pay more upfront.  Second, consumers that in the past avoided purchasing digital music due to its inalienability may be willing to purchase instead of stream if it can be resold.  Lastly, digital music cannot be resold until it is originally sold and consumed.  Only when a critical mass of copies has infiltrated the market and original owners have no further use of their original copies will original sales decline because of resales.  Since sales are heavily concentrated in the first few weeks[117], if not days, of release, one wouldn’t be unreasonable in projecting that resales won’t have as large an impact on overall sales as one might initially assume. For example, Figure 3 shows Beyoncé’s self-titled album sales tracked over approximately 16 weeks from its release date.[118]  The numbers indicate that the majority of sales took place within the first three days (basically over the weekend).  Assuming that most of those original purchasers didn’t get their fix of Beyoncé over the weekend, the stragglers will continue to have to purchase original versions.  Determining what effect a secondary market would have on overall original purchasers would vary to a large degree on the connectedness and magnetism of the music.  However, regardless of its magnetism, it instantaneously becomes more seductive to would-be stragglers who are worried about buyer’s remorse because of the resale fallback opportunity.  Theoretically, then, there could be more “weekend” purchasers than under the current, no resale model.
Huguenin Figure 3 Self-Titled Album
Figure 3: US Sales of Beyoncé’s Self–Titled Album
  There are certainly attendant economic risks associated with a secondary resale market. But as they aren’t clearly irrational risks, it would be surprising if Capitol Records engaged in this sort of cost-benefit analysis before commencing litigation against ReDigi in an attempt to shut down the resale market. After all, the secondary market isn’t a file sharing market (as used in its pejorative sense).  And, as the ECJ prudently noted, reselling on the secondary market is authorized only on the condition that the original user render the original version unusable, assuring the copyright holder has seen revenue at some point from every copy in the market.[119]  Much of the paper has focused on this same notion — that the original version (as a material object) is in fact made unusable because that original version (the material object itself) is transferred to the new consumer.

VI. Future Outlook of Previously Owned Digital Media

If patent activity is any indication of the future of used digital media, this will not be the last case courts confront on the issue of reproduction and distribution of digital media.  Amazon[120] and Microsoft[121] have already received patents on technology enabling secondary markets for digital media.  Apple has applied for a patent[122] on its own method, and ReDigi has not given up on the business idea, filing a new patent application[123] on a system that completely avoids the unlawful reproduction issues addressed in its case against Capitol Records.

A. Possible Solutions

For those entities still looking to create a business around reselling used digital media, there are a few possible options available to continue that pursuit.
1. Legal Battle Option
The first option is to pursue the argument made above — that, contrary to the opinion of the Southern District of New York, ReDigi did not reproduce the digital media files on its servers.  The advantage of resolving the complex issue this way is that it puts digital media files stored on magnetic and solid-state drives on a level playing field with digital media files stored on more physically mobile forms of storage, such as CDs, vinyl, and USB flash drives.  Physical displacement of physically mobile storage devices from transferor to transferee is a well accepted means of transferring ownership without reproduction, and transferring digital media stored as electric charge and magnetic fields via electrical lines and electromagnetic waves should be a no less accepted means of transferring ownership without reproduction in the modern age of digital communication. The disadvantage of proffering this argument is simple but paramount in practice — it is unlikely to win judicial support.  While it embraces the intersection of science and law in an attempt to create a well-reasoned rule, the court, at least in the ReDigi case, seems ready to dismiss anything more than a cursory examination[124] of the scientific principles that guide how copyright law might be interpreted when applied to innovative, new technology.[125] Furthermore, the argument laid out above that ReDigi effected only an object transfer, not creation, has several vulnerabilities.  While it is true that electrons can move from point A to point B in a conductive wire, it is highly unlikely that all the electrons used to store the bits of the digital file on the ReDigi server were those used to store bits of the digital file on the subscriber’s personal computer.  This is because free electrons “hop” from ion to ion when traveling down a conductive wire.[126]  Copper atoms, for example, that compose wires impede the movement of electrons as temperatures rise due to thermal vibrations, making it more challenging for a particular electron to reach point B as its distance from point A increases.[127]  Similarly, although electromagnetic waves represent the fundamental underpinnings of wireless communication, electromagnetic waves are impeded by physical barriers and magnetic fields stray along wired communication lines and thus don’t correlate exactly with the magnetic fields used to store the bits of the digital file.[128]  These weaknesses only increase the resistance with which a court would meet any proposed scientific argument.  Nonetheless, data stored at a subatomic scale is different from data stored on a macroscopic scale, like on paper or in a CD, precisely because subatomic particles and magnetic fields can be physically transferred, indeed are the transferring agents, along internet communication channels whereas macroscopic material objects cannot.[129]  And even though an observer cannot definitively say that the same subatomic material objects originally fixing the copyrighted work were transferred to the recipient, a critic would actually fare worse because the critic would have to show how two identical particles (the original material object and accused, different, transferred material object) are actually different.[130]  The boundary between material objects and the communication channels used to transport them is blurred to the point that the court can no longer rely on archaic analogies to times past when interpreting anachronistic laws. However, even if a court were to accept the above argument, the copyright holder could still wield his distribution right to show infringement.  This is because consumers who are considered licensees, as opposed to owners, with restricted transfer and use rights are unable to invoke the first sale doctrine to distribute digital media files without repercussions.[131]  If the copyright holder or its authorized vendor (e.g., iTunes) licensed the use of digital media files via carefully constructed license agreements[132] (instead of selling them), a reselling licensee would still be a sitting duck for an infringement claim on the copyright holder’s distribution right.  Thus, any legal victory for a defendant under the reproduction right would likely be a mere consolation prize once infringement of the distribution right was adjudged.[133]
2. Technological Workaround Option
The second option is to pursue a solution outside of the legal system.  Because the legal system can be slow to reverse course, using technology to work around the obstacles set up by the legal system can actually lead to faster and less costly solutions.[134]  And, in fact, this is precisely what ReDigi did.[135]  As discussed in ReDigi’s patent application, the essence of the workaround takes the form of redirection software installed on the subscriber’s computer.  That software redirects downloaded packets (i.e., pieces) of the digital media file from the subscriber’s personal computer to the subscriber’s personal space on ReDigi’s cloud storage servers.[136]  Therefore, the subscriber’s personal computer acts as another node of the Internet in which the packets simply pass through on their way to the ReDigi cloud storage server.[137]  The downloaded digital file is stored for the first time on the ReDigi cloud storage server, not the subscriber’s personal computer.[138]  Because the file stored on the ReDigi cloud storage server is the original file downloaded from the online retailer (e.g., iTunes), there is no reproduction (and, of course, no unauthorized reproduction).  Once the subscriber decides to sell the used digital content, ReDigi can simply update the owner of the allocated space occupied by the digital file on the server.[139]  In other words, ReDigi can change the ownership permissions from transferor to transferee without actually moving the digital file around on its cloud storage server, thereby avoiding any further complications over unauthorized reproductions.  The subscriber can still access the file by streaming its contents in a manner akin to services like Amazon Cloud Player, Google Play, and iTunes Match, whose services at this point have a favorable legal track record.  This is due, in part, to similar remote television streaming services being held compliant with copyright law in the Second Circuit[140] and, in larger part, to the contractual agreements they have covering much of the music they stream. While the technological workaround avoids any further liability to ReDigi from the ReDigi case itself, the legal ramifications of the opinion will continue to haunt future defendants in similar situations.  If the court’s holding remains unchallenged, it will continue to carry precedential value, potentially expanding copyright protection beyond a reasonable interpretation of the Copyright Act.  ReDigi should not be expected to solely carry the burden of safeguarding the public’s interest against copyright expansion, but it may be necessary to compete with bigger companies that can easily bargain their way to immunity.  Nonetheless, since ReDigi does not have the bargaining power of giants like Amazon, Google, and Apple, it is also possible Capitol Records would still pursue legal action against ReDigi for infringing public performance rights until ReDigi paid for a licensing agreement.
3. Contractual Option
The first two options are really rivers that ultimately lead to the vast ocean of contractual agreements.  By agreeing to a contract, both parties remove legal action from the realm of copyright infringement into the realm of contract law.[141]  This eliminates a large degree of uncertainty and allows the parties to set their own terms for ownership of intellectual property without wondering how a court will interpret congressional action. The trend of relying on contracts instead of judges will only increase as these major players experiment with the secondary market for digital media.[142]

Conclusion

Capitol Records has two obvious concerns associated with ReDigi’s business model.  First, despite ReDigi’s most thorough efforts, users can store files externally to their local computer in order to retain a copy for themselves prior to becoming a subscriber.  Second, if users are purchasing previously owned music from other users, then they are not purchasing “new” music from providers that share profits with Capitol Records.  While the first is a legitimate legal concern, it is a separate issue from whether ReDigi is committing or inducing copyright infringement, especially since ReDigi actively eliminates copies stored on the user’s computer when the user sells the music.  The second is a legitimate business concern but, again, separate from the issue of copyright infringement. Technology will always be one step ahead of the glacially-moving legal system.  Rather than attempt to rein in technology through legal maneuvering, copyright holders should try to incorporate it into their business models.  With the uncertainty surrounding digital music transferring and copyright holders pressing the issue with almost nothing to lose, licensing agreements will continue to be sought after by both parties looking to mitigate potential loses. Because court decisions loom large when determining which party has more leverage in contractual agreements, every court decision should be analyzed and scrutinized for flawed reasoning.  These instances of flawed reasoning will be few and far between when legal reasoning is involved because judges have a vast amount of experience, and interpretation of the law is often subjective.  However, most judges outside of the Federal Circuit have little experience with scientific reasoning, which can lead to incongruent holdings and confused parties.  This is what happened in the ReDigi case. While ReDigi’s technological acumen has allowed it to sidestep this problem for now, future entrants in the digital resale market may be less fortunate.
* James received his J.D. from New York University School of Law in 2014. He received a Ph.D. in Electrical Engineering from the University of Nebraska in 2010. He also received a B.S. in Electrical Engineering and a B.S. in Computer Engineering from the University of Nebraska in 2005. He would like to thank Professor Barton Beebe and the JIPEL members who helped edit and publish this article.
[1] For those readers of the future where digital content is a relic of the past, iTunes was the leading online marketplace to buy digital media.  Users could purchase music, television shows, movies, and books in digital form at prices that were usually less than their tangible counterparts.
[2] There are six exclusive rights granted to the owner of the copyrighted work.  17 U.S.C. § 106 (2006).  The issue of reselling previously owned digital media focuses on three: the reproduction right, the distribution right, and the public performance right.
[3] Capitol Records, LLC v. ReDigi Inc., 934 F. Supp. 2d 640 (S.D.N.Y. 2013).  This case is discussed thoroughly in the next section.
[4] Id.
[5] The files stored in a subscriber’s Cloud Locker are, in reality, stored on a server in Arizona. Id. at 645.
[6] Id. at 650–51.
[7] Id. at 645.
[8] Id.
[9] More information on the first sale doctrine’s applicability to this case is provided infra Part I.D.
[10] See Def.’s Mem. of Law in Opp’n to Pl.’s Mot. for Prelim. Inj. at 19, Jan. 27, 2012, ECF No. 14 (“[U]nlike the terms of service for Amazon’s online music store, the iTunes Terms of Sale (‘iTunes TOS’) formally provide that title to music files downloaded from iTunes passes to the consumer.” (emphasis in original)).
[11] Matt Peckham, How ReDigi Lets You Resell Digital Music (and Why It’s a Big Deal), Time (June 27, 2012), http://techland.time.com/2012/06/27/how-redigi-lets-you-resell-digital-music-and-why-its-a-big-deal.
[12] Id.
[13] ReDigi, 934 F. Supp. 2d at 645–46.
[14] Id. at 646.
[15] Id.
[16] Id.
[17] Def.’s Counter Statement Pursuant to Local Rule 56.1 ¶ 18, Aug. 14, 2012, ECF No. 83.  It should be noted that the closed credit system was adopted, at least in part, at the behest of the record labels who believed it prudent to keep the money “in the music ecosphere.”  Id. ¶ 19.
[18] ReDigi, 934 F. Supp. 2d at 646.
[19] 17 U.S.C. § 102(a)(7) (1990).  Artists also receive a copyright in the underlying musical composition.  U.S. Copyright Office, Circular 56A, Copyright Registration of Musical Compositions and Sound Recordings (2012), http://www.copyright.gov/circs/circ56a.pdf.  This was not an issue in ReDigi since the artists were not plaintiffs.
[20] 17 U.S.C. § 101.
[21] 17 U.S.C. § 106(1).
[22] ReDigi, 934 F. Supp. 2d at 648.
[23] Id. at 649.
[24] Id. at 650.
[25] 17 U.S.C. § 106(3).
[26] ReDigi, 934 F. Supp. 2d at 651.
[27] 17 U.S.C. § 107 and 17 U.S.C. § 109, respectively.
[28] The factors to be considered in a fair use defense are: “(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.” 17 U.S.C. § 107.
[29] ReDigi, 934 F. Supp. 2d at 652–54.
[30] 17 U.S.C. § 109(a).
[31] Under a strict reading of section 109, the first sale doctrine would apply to the original phonorecord stored in a subscriber’s computer hard drive only if the subscriber purchased the right to fix the sound recording in a phonorecord from a store that transferred ownership to that particular phonorecord instead of simply granting a license to use that particular phonorecord.  The court never addressed this issue because it resolved the question of the application of first sale defense without regard to the phrasing of the iTunes purchasing agreement.  However, ReDigi asserted that ownership was transferred.  Def.’s Mem. of Law, supra note 10.
[32] U.S. Copyright Office, DMCA Section 104 Report 82–83 (2001), available at http://www.copyright.gov/reports/studies/dmca/sec-104-report-vol-1.pdf.
[33] Id. at 82.
[34] When the court decided that the subscriber’s act of uploading was a reproduction, the court reasoned that the “reproduced” file was not under protection of the first sale defense.  Thus, ReDigi also infringed distribution rights by selling the illegally “reproduced” file.  From here, the court found ReDigi liable for direct and secondary infringement since it actively participated in, and benefitted from, its subscribers’ infringing conduct.  ReDigi, 934 F. Supp. 2d at 656–60.
[35] Def.’s Mem. of Law, supra note 10, at 9 (“The only copying which takes place in the ReDigi service occurs when a user uploads music files to the ReDigi Cloud, thereby storing copies thereof in the user’s personal Cloud Locker . . . .”).
[36] Pl.’s Reply Mem. of Law in Further Supp. of Pl.’s Mot. for Partial Summ. J. at 1, Aug. 8, 2012, ECF No. 87 (“The only plausible reading of this statement . . . is that uploading delivers a copy of a music file to the ReDigi cloud.”).
[37] Def.’s Mem. of Law in Opp’n to Pl.’s Mot. for Partial Summ. J. at 6, Aug. 14, 2012, ECF No. 79.
[38] ReDigi, 934 F. Supp. 2d at 650.
[39] Usually, when a move command is initiated by the user, the operating system simply updates the link that points to the file’s location on the hard drive without actually moving where the bits of the file are stored.  So, if the user wanted to move the file from directory A to directory B, the operating system would internally manage the “movement” such that the link to the file appears when the user accesses directory B, but not directory A.  This does not happen when ReDigi moves the file, however, because the file is being moved from one file system, the subscriber’s computer, to a different file system, the subscriber’s Cloud Locker.  However, moving the file is probably a more appropriate description than copying the file in this case since, regardless of the actual implementation of the move command, the subscriber has no volition, intent, or knowledge of any copying.  ReDigi’s Media Manager software is proprietary, so a step-by-step analysis of the code cannot be performed. Assuming, however, that ReDigi was aware of the potential copyright issues, it is at least conceivable that it deliberately wrote the software to avoid creating copies.  See Def.’s Mem. of Law in Further Supp. of ReDigi’s Summ. J. Mot. at 6, Aug. 24, 2012, ECF No. 90 (explaining the upload process as “wholly unlike a copy and delete operation, which happens in two distinct steps”).
[40] C. M. Paula Co. v. Logan, 355 F. Supp. 189, 190 (N. D. Tex. 1973).
[41] Id.
[42] Id. at 191.
[43] Id.
[44] Id.
[45] ReDigi, 934 F. Supp. 2d at 650.
[46] Id. at 650–51.
[47] Id. at 651.
[48] Id. at 649.
[49] Id. at 650–51 (“There, the copyrighted print, or material object, was lifted from the greeting card and transferred in toto to the ceramic tile; no new material object was created.”) (emphasis added).
[50] C. M. Paula, 355 F. Supp. at 190.
[51] See 17 U.S.C. § 101 (defining the word “copy” as the material object “in which a work is fixed . . . and from which the work can be perceived, reproduced, or otherwise communicated” and the word “phonorecord” as the analogous term to “copy” where “sounds” replace “work”).
[52] See 17 U.S.C. § 101 (“‘Copies’ are material objects . . . in which a work is fixed . . . .”).  So copyrighted works are fixed or embodied in material objects, colloquially known as copies.
[53] C. M. Paula, 355 F. Supp. at 190.
[54] “[W]hen a user on a [P2P] network downloads a song from another user, he receives into his computer a digital sequence representing the sound recording. That sequence is magnetically encoded on a segment of his hard disk (or likewise written on other media). With the right hardware and software, the downloader can use the magnetic sequence to reproduce the sound recording. The electronic file (or, perhaps more accurately, the appropriate segment of the hard disk) is therefore a ‘phonorecord’ within the meaning of the statute.” ReDigi, 934 F. Supp. 2d at 649 (quoting London-Sire Records, Inc. v. Doe 1, 542 F. Supp. 2d 153, 171 (D. Mass 2008)).
[55] London-Sire, 542 F. Supp. 2d at 172.
[56] Id.
[57] See ReDigi, 934 F. Supp. 2d at 646 ( “[A]t the end of the process, the digital music file is located in the Cloud Locker and not on the user’s computer.”); see also Def.’s Statement of Undisputed Facts Pursuant to Local Rule 56.1 ¶ 12, July 20, 2012, ECF No. 56 (“Once a user requests to place a legally acquired phonorecord in the Cloud Locker, the file is migrated to the Cloud Locker so that it is no longer on the user’s local device.”).
[58] ReDigi, 934 F. Supp. 2d at 650.
[59] Id.
[60] For example, if your friend gives you a fruitcake as a gift and you find it so fantastic that you exactly replicate it as a return gift for your friend, it is difficult for your friend to know whether you have exactly reproduced the fruitcake or sheepishly re-gifted the one your friend gave you.  If you can produce the original fruitcake (or at least parts of it), you can probably salvage your relationship since your friend will know you didn’t re-gift.  If you can’t produce the original fruitcake, your friend will have to take your word for it but will not know for sure whether it is a reproduction or the original.
[61] This is not surprising given how profitable the software can be if it is ultimately deemed legal.  ReDigi CEO, John Ossenmacher, has already admitted that they are in talks with several interested companies to license their software.  “There aren’t many ways to do this without copying — we know, and they know, they’d be using our technology to do it.”  Peckham, supra note 11.
[62] ReDigi, 934 F. Supp. 2d at 648 (“The novel question presented in this action is whether a digital music file, lawfully made and purchased, may be resold by its owner through ReDigi under the first sale doctrine.”).
[63] It is certainly possible for subscribers to game the ReDigi system.  Dubious subscribers could create an external copy of their music prior to downloading Media Manager, which would not flag those copies since the software is unaware of prior events.  However, this activity would be occurring despite Media Manager, not in concert with it.  Furthermore, those subscribers would also likely realize that there are other easier methods to obtain digital files without using a scrupulous system like ReDigi.
[64] 9 Marshall Cavendish Corporation, How It Works: Science and Technology 1284 (Wendy Horobin et al. eds., 3d ed. 2003).
[65] John Y. Hsu, Computer Architecture: Software Aspects, Coding, and Hardware 3 (2001); see also Scott Mueller, Upgrading and Repairing PCs 525–26 (20th ed. 2011).
[66] Hsu, supra note 65, at 3.
[67] It is actually the detected transition from flat part to pit or pit to flat part that determines whether a “1” bit is read.  When no transition is encountered over a threshold period, a “0” bit is read.  CDs that are burned instead of stamped (e.g., by personal CD burners) differentiate between “1” bits and “0” bits by changes in the reflectivity of the recording material.  The laser in the CD burner literally heats up portions of the writeable CD’s recording layer, which creates the differentiating reflectivities necessary to create bit patterns.  Mueller, supra note 65, at 521, 532.
[68] Since the laser and detector are aimed at the underside of the CD, the plateaus are actually seen as pits from the laser’s perspective.
[69] Id. at 520.
[70] Id. at 521–22.
[71] Id.
[72] Id.
[73] Id. at 521.
[74] H.R. Rep. No. 94-1476, at 56 (1976) (defining phonorecords as “physical objects in which sounds are fixed”).
[75] ReDigi, 934 F. Supp. 2d at 650.
[76] Susumu Nishinaga, Needle Playing a Record (scanning electron microscope image), Science Photo Library, http://www.sciencephoto.com/media/215623/view.
[77] CD Scanning Electron Microscope Image, LPD Lab Services, http://www.lpdlabservices.co.uk/analytical_techniques/sem.
[78] John Rhoton, The Wireless Internet Explained 5–6, 10–11, 22 (2002).
[79] Therefore, any digital creation of a physical fixation that was transferred only with the help of the Internet, like that in vinyl discs and CDs, will necessarily involve a new fixation of the information since the original fixation could not have been transferred.
[80] Mueller, supra note 65, at 445.
[81] Id. at 438–40.
[82] Id. at 422–24.
[83] This simple encoding mechanism, where no magnetic field change equals a “0” bit and a magnetic field change equals a “1” bit, is no longer used in practice because more advanced encoding techniques are available to increase storage capacity.  Id. at 432–37.
[84] Id. at 501.
[85] The bit line selects a certain column in the cell array and the word line selects a certain row in the cell array.  All unselected cells in the series bit line are driven into a conducting mode.  Thus, if the entire bit line conducts, the selected cell is “on” (conducting state), whereas if the bit line does not conduct, the selected cell is “off” (non-conducting state).  Rino Micheloni et al., Inside NAND Flash Memories 20–24 (Rino Micheloni et al. eds., 2010).
[86] Giulio G. Marotta et al., Nonvolatile Memory Technologies with Emphasis on Flash 64 (Joe E. Brewer & Manzur Gill eds., 2008).
[87] Id.
[88] See, e.g., Christoph Friederich, Inside NAND Flash Memories 67, 77 (Rino Micheloni et al. eds., 2010) (explaining how a programming operation injects electrons into the floating gate of a transistor cell and how an erase operation removes electrons from the floating gate of a transistor cell).
[89] David J. Griffiths, Introduction to Quantum Mechanics 179 (1995) (“The fact is, all electrons are utterly identical, in a way that no two classical objects can ever be. It is not merely that we don’t happen to know which electron is which; God doesn’t know which is which, because there is no such thing as ‘this’ electron, or ‘that’ electron; all we can legitimately speak about is ‘an’ electron.”).  In fact, John Wheeler, a well-renowned American physicist, actually postulated that there is only one electron and that all electrons are simply manifestations at a particular slice in time of the world line of that singular electron.  Richard P. Feynman, Nobel Lecture: The Development of the Space-Time View of Quantum Electrodynamics (Dec. 11, 1965), in Nobel Lectures, Physics 1963-1970, at 155, 163 (1972), available at http://www.nobelprize.org/nobel_prizes/physics/laureates/1965/feynman-lecture.html (“I received a telephone call one day at the graduate college at Princeton from Professor Wheeler, in which he said, ‘Feynman, I know why all electrons have the same charge and the same mass’ ‘Why?’ ‘Because, they are all the same electron!’”).  Magnetic fields are invisible forces.  So a similar conclusion can be reached knowing that magnetic fields generated by flowing electrons are indistinguishable from those generated by materials composed of magnetic domains.  Neville G. Warren, Excel Preliminary Physics 74 (2004).
[90] One could just as easily imagine having a protocol where the person at point A pours whatever water is contained in a bucket into the copper tubing every minute.  In that case, the user at point B only needs to stand under the copper tubing and determine which minutes of the five he or she gets wet to receive the communication.
[91] ReDigi, 934 F. Supp. 2d at 649.
[92] Id.
[93] Id. at 651.
[94] 17 U.S.C. § 109.
[95] ReDigi, 934 F. Supp. 2d at 655 (quoting 17 U.S.C § 109(a)) (emphasis added).
[96] Id.
[97] Id.
[98] See infra note 129 and accompanying text.
[99] This conclusion requires that the digital music phonorecord be transferred and, by implication, not retained by the transferor.  Aaron Perzanowski and Jason Schultz advocate for a similar position but under the common law exhaustion principle on a policy basis rather than the first sale statute on physics principles.  They say that if the original owner transfers his or her ownership interest in the file and the owner did not retain any copy of the file after transfer, the file should be sanctioned by the exhaustion principle.  Without this policy change, the current law on copyright practically prevents the owner from alienating his or her digital music at all.  Aaron Perzanowski & Jason Schultz, Digital Exhaustion, 58 UCLA L. Rev. 889, 938 (2011).
[100] ReDigi, 934 F. Supp. 2d at 651 (“As Capitol has conceded, such reproduction is almost certainly protected under other doctrines or defenses, and is not relevant to the instant motion.”).
[101] Id.
[102] 17 U.S.C. § 107.
[103] Id.
[104] Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994).
[105] See Am. Geophysical Union v. Texaco Inc., 60 F.3d 913, 931 (2d Cir. 1994) (concluding that the fourth factor favored the copyright holder because photocopying academic articles in a commercial business decreased potential licensing and subscription revenue that the business would have had to pay when it wanted to access the articles if they had not been photocopied).  Contrarily, the Court might determine that the fourth factor favors time-shifting actions by viewing these activities as “caus[ing] . . . nonminimal harm to the potential market for . . . copyrighted works.” Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 456 (2012). However, this contrary position may be attributed to default bias in that there is a long-standing tradition to look past these actions instead of challenging them.
[106] Barton Beebe, An Empirical Study of U.S. Copyright Fair Use Opinions, 1978–2005, 156 U. Pa. L. Rev. 549, 584–85 (2008) (discovering that factor four and one coincided with the outcome of the fair use defense in 83.8% and 81.5%, respectively, of the 297 opinions analyzed while factor two coincided with the outcome in only 50.2% of the opinions).
[107] ReDigi, 934 F. Supp. 2d at 651.
[108] See, e.g., Newton v. Diamond, 388 F.3d 1189, 1196 (9th Cir. 2004) (holding that a three-note sequence from a jazz composition was a “simple, minimal, and insignificant” sampling, constituting de minimis use); Sandoval v. New Line Cinema Corp., 147 F.3d 215, 218 (2d Cir. 1998) (holding that copyrighted photographs shown in the movie Seven for 35.6 seconds was de minimis because the photographs were obscured, severely out of focus, and virtually unidentifiable).  But see Ringgold v. Black Entm’t Television, Inc., 126 F.3d 70, 77 (2d Cir. 1997) (holding that a copyrighted poster shown in a TV show for 26.75 seconds was not de minimis because the poster was clearly visible and recognizable with sufficient observable detail).
[109] The court noted that Capitol conceded defragmentation and file relocation were protected from copyright infringement.  See ReDigi, 934 F. Supp. 2d at 651 (“As Capitol has conceded, such reproduction is almost certainly protected under other doctrines or defenses, and is not relevant to the instant motion.”).
[110] As more files are stored remotely, i.e., stored in the “Cloud,” moving and transferring digital media will become nearly irrelevant for individual consumers but a highly relevant legal issue for remote storage companies.  Unlike individual consumers, these companies will have the bargaining power to secure these reproduction rights for themselves and for their users via contracts, avoiding uncertainties in the default copyright law rules.
[112] Id. ¶¶ 63, 89.
[113] Id. ¶ 85.
[114] Id. ¶ 76.
[115] Id. ¶ 78.
[116] See, e.g., iTunes Store – Terms and Conditions, Apple (Sept. 18, 2013), http://www.apple.com/legal/internet-services/itunes/us/terms.html (“The software products made available through the Mac App Store and App Store . . . are licensed, not sold, to you.”).
[117] See Alan T. Sorensen, Bestseller Lists and Product Variety, 55 J. Indus. Econ. 715, 724–25 (2007) (presenting data of 1,217 books off the New York Times bestseller list that indicated 73.8% hit a sales peak within their first four weeks on sale with a resulting exponential decay afterwards and noting that these sales patterns can be seen in other entertainment areas).
[118] E.g., Silvio Petroluongo, Beyonce Bound for No. 1 as Sales Soar Past 400,000, Billboard (Dec. 14, 2013, 8:28 PM), http://www.billboard.com/articles/columns/chart-beat/5839787/‌beyonce-bound-for-no-1-as-sales-soar-past-400000; Keith Caulfield, ‘Beyonce’ Sales Grow to 550k-Plus, Set for No. 1, Billboard (Dec. 15, 2013, 10:14 PM), http://www.billboard.com/‌articles/news/5839792/beyonce-sales-grow-to-550k-plus-set-for-no-1; BEYONCÉ Shatters iTunes Store Records with 828,773 Albums Sold in Just Three Days, Apple (Dec. 16, 2013), http://www.apple.com/pr/library/2013/12/16BEYONC-Shatters-iTunes-Store-Records-With-Over-828-773-Albums-Sold-in-Just-Three-Days.html; Keith Caulfield, Beyonce Spends Second Week at No. 1 on Billboard 200 Chart, Billboard (Dec. 26, 2013, 2:13 PM), http://www.billboard.com/articles/news/5847921/beyonce-spends-second-week-at-no-1-on-billboard-200-chart; Keith Caulfield, Beyonce Leads for Third Week at No. 1 on Billboard 200 Chart, Billboard (Jan. 2, 2014, 12:54 PM), http://www.billboard.com/‌articles/‌news/‌5855135/‌beyonce-leads-for-third-week-at-no-1-on-billboard-200-chart; Danielle Harling, Hip Hop Album Sales: Week Ending 3/30/2014, HipHop DX (Apr. 2, 2014, 12:55 PM), http://www.hiphopdx.com/index/news/id.28149/title.hip-hop-album-sales-week-ending-3-30-2014; Andres Tardio, Hip Hop Album Sales: Week Ending 04/06/2014, HipHop DX (Apr. 9, 2014, 10:00 AM), http://www.hiphopdx.com/index/news/id.28225/title.hip-hop-album-sales-week-ending-04-06-2014.  Although less established musicians may require a few weeks or months to create peak sales, those sales will still likely be made by original purchasers because the secondary supply will not meet consumer demand.  In cases like these, the exponential decay will not begin immediately but instead follow the fast rise.
[119] UsedSoft GmbH, ¶ 78.
[120] U.S. Patent No. 8,364,595 (filed May 5, 2009).
[121] U.S. Patent No. 7,818,811 (filed Dec. 6, 2005).
[122] U.S. Patent Appl. No. 13/531,280 (filed June 22, 2012).
[123] U.S. Patent Appl. No. 13/760,823 (filed Feb. 6, 2013).
[124] See ReDigi, 934 F. Supp. 2d at 649 (stating an ostensible maxim “confirmed by the laws of physics” that “[i]t is simply impossible [for] the same ‘material object’ [to be] transferred over the Internet”).
[125] See, e.g., 17 U.S.C. § 101 (defining a “digital transmission”); 17 U.S.C. § 117 (limiting certain exclusive rights for computer programs); Digital Millennium Copyright Act, Pub. L. No. 105–304, 112 Stat. 2860, 2873–74 (1998) (discussing limitations on liability for digital transmissions).
[126] 1 Surinder Pal Bali, Electrical Technology: Electrical Fundamentals 17–18 (2013).
[127] U. A. Bakshi & V. U. Bakshi, Basic Electrical Engineering 1-14 (2d ed. 2009).
[128] Curt White, Data Communications and Computer Networks: A Business User’s Approach 78, 83, 104 (5th ed. 2009).
[129] Bali, supra note 126, at 17–18; White, supra note 128, at 83.
[130] See supra note 89 and accompanying text.
[131] Vernor v. Autodesk, Inc., 621 F.3d 1102, 1107, 1111 (9th Cir. 2010) (noting that “[t]he first sale doctrine does not apply to a person who possesses a copy of the copyrighted work without owning it, such as a licensee” and holding that a software user is a licensee rather than an owner when the copyright owner “(1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions”).
[132] In a case similar to Autodesk, involving promotional CDs rather than computer software, the Ninth Circuit held that a boilerplate “promotional statement” affixed to the promotional CDs did not constitute a license agreement and therefore did not prevent transfer of ownership to the recipients.  UMG Recordings, Inc. v. Augusto, 628 F.3d 1175, 1180 (9th Cir. 2011).  Even though the “promotional statement” stated that the CD remained property of the record company and was only licensed to the recipient for personal use, because the promotional CDs were dispatched without prior arrangement with the recipients, the CDs were not numbered, and no attempt was made to keep track of them, the court held that no license agreement had been created.  Id. at 1180–82.
[133] In the ReDigi case, ownership of the digital file was not contested.  See ReDigi, 934 F. Supp. 2d at 645–46.
[134] Technological workarounds are frequently seen in the patent realm where the infringing party believes it easier and less costly to change software and hardware rather than pay a licensing fee.  E.g., Facetime Workarounds of VirnetX Patents Bring Complaints, Costs, MacNN (Aug. 30, 2013, 7:00 PM), http://www.macnn.com/articles/13/08/30/‌apple.allegedly.spending.24m.per.month.to.reroute.video.calls (stating that Apple was working on fixing problems to a workaround for a patent infringing FaceTime component, which had been costing Apple $2.4 million per month in royalty payments).
[135] Because the new technique was launched on June 11, 2012, after Capitol Records filed the complaint, it was not considered in the ReDigi case.  ReDigi, 934 F. Supp. 2d at 646 n.3.
[136] ’823 Patent Appl., supra note 123, ¶¶ 35-46.
[137] Id.
[138] Id.
[139] Id. ¶ 31.
[140] Cartoon Network LP v. CSC Holding, Inc., 536 F.3d 121, 139 (2d Cir. 2008) (“Because each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber, we conclude that such transmissions are not performances ‘to the public,’ . . . .”); Am. Broad. Cos., Inc. v. Aereo, Inc., 874 F. Supp. 2d 373, 378 (S.D.N.Y. 2012), aff’d sub nom. WNET, Thirteen v. Aereo, Inc., 712 F.3d 676 (2d Cir. 2013) (finding that a streaming television service did not violate the copyright holder’s public performance right because broadcasts captured by each user’s uniquely assigned antenna were not shared with or accessible to other users).  But see Fox Television Stations, Inc. v. FilmOn X LLC, 966 F. Supp. 2d 30, 47–48 (D.D.C. 2013) (reasoning that a streaming television service operating a unique mini-antenna for each user did infringe the plaintiff’s public performance right because other devices in the transmission, like the tuner, server, router, and video encoder, were aggregated among all users in a public manner); Fox Television Stations, Inc. v. BarryDriller Content Sys., PLC, 915 F. Supp. 2d 1138, 1143–44 (C.D. Cal. 2012) (disagreeing with the Second Circuit’s interpretation of 17 U.S.C. § 106(4), which grants an exclusive right “to perform the copyrighted work publicly,” and coming to the conclusion that the seemingly private streams are in fact public).
[141] London-Sire, 542 F. Supp. 2d at 174.
[142] For instance, Google Music, a free streaming music service for users that have uploaded their collection to Google servers, initially launched in May 2011 without licensing agreements.  Antony Bruno, Why Record Labels and Google Music Couldn’t Agree on the Cloud, The Hollywood Reporter (May 12, 2011, 3:30 AM), http://www.hollywoodreporter.com/news/why-record-labels-google-music-187889; Google Music Is Open for Business, Google Official Blog (Nov. 16, 2011), http://googleblog.blogspot.com/2011/11/google-music-is-open-for-business.html.  By November 2011, Google had come to terms with three major record labels, obviously concerned about possible record label backlash.  Donald Melanson, Google Partners with Universal, EMI, Sony Music, 23 Independent Labels on Google Music, Scores Exclusive Content, Engadget (Nov. 16, 2011, 5:34 PM), http://www.engadget.com/2011/11/16/google-partners-with-universal-emi-sony-music-23-independent.  Before that time, Apple had already secured agreements with the major record labels for their paid iTunes Match service, which allows users to stream music in their collection without actually uploading any files to Apple’s servers.  Aaron Gottlieb, iCloud: The Devil Is in the Details, Music Bus J. (Aug. 2011), available at http://www.thembj.org/2011/08/icloud-the-devil-is-in-the-details.  Amazon has also secured licensing agreements with the major record labels to add similar subscription-based scan and match capabilities to its Cloud Player as well.  Press Release, Updated Amazon Cloud Player Includes New Scan and Match Technology, Free Audio Quality Upgrades, and More, Amazon.com (July 31, 2012), http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-newsArticle&ID=1720456.  And, as an attempt to quell music company fears, Microsoft has even touted that its offline reselling can benefit copyright holders of pirated content because of “its ability to ‘register’ such content back into media that generates revenue in the ecosystem.” ’811 Patent, supra note 121, col. 16 ls. 21–22.

The Interview: John Koegel & Barton Beebe

The Interview: John Koegel & Barton Beebe

The Interview:

John Koegel & Barton Beebe

  Download a PDF version of this interview here.   John Koegel is an attorney and founder of the law firm The Koegel Group LLP. Since 1982 Mr. Koegel has specialized in Art Law, exclusively representing artists, galleries and others involved with visual art in most areas of the law. Mr. Koegel attended Fordham Law School and initially joined the law firm Rogers & Wells. After a two-year appointment as counsel to a national commission appointed by President Carter, Mr. Koegel served as General Counsel and Secretary at the Museum of Modern Art. Over the years Mr. Koegel has been actively involved in the development of intellectual property rights including the drafting of the Visual Arts Rights Act of 1990 and representing Jeff Koons in the landmark fair use cases Rogers v. Koons and Blanch v. Koons. Barton Beebe is the John M. Desmarais Professor of Intellectual Property Law at NYU School of Law.   * * *   BB: My first question is how did you become involved in the practice of art lawyering? JK: I began in 1973 when I first represented an artist in a pro-bono matter. I was at a large law firm Rogers & Wells, and I thought it was really gratifying to help a marvelously creative person. Then I got involved with the City Bar Association and with writing legislation. Going to the Museum of Modern Art (MoMA) as its general counsel in 1979 was the legal turning point for me that set me down the path that I have been on. After leaving MoMA, I simply started representing only artists and galleries. BB: And what is it like representing artists now? JK: It’s terrific. It’s the thing I missed the most at MoMA because I had very little involvement with artists. Even today when I represent a lot of other arts businesses—such as Artforum Magazine and other arts related businesses like that—it’s the artists that are always the heart and soul of what I do. BB: Is it possible to say the practice has changed over the years? I realize it’s a broad question, but are there thematic changes you noticed in general and in the business of art lawyering? JK: I would say that there is more understanding that law is involved. In 1982 when I began practicing art law full time, there were no contracts with galleries and very little other documentation, regardless of the size of the transaction. Since there is more money involved now, you see more paperwork and more concern on the part of collectors. There are more lawyers involved now which brings more contentiousness to everything. Since legal fees have not evolved to become a significant or reliable profit center for large law firms, you do not see those firms pursuing this business. So there are few that do. But even for those that do, I doubt it is at the heart of any of those firms. Art law still has more PR value to law firms than substantial economic value. BB: Do the artists have good business sense when they come to you? JK: There’s an amazing range, from those who are incredibly businesslike to those who are completely un-businesslike. So there really is a wide variety. And that’s one of the things that I find so interesting, you never know where the new artist client is going to be on that spectrum. BB: Are artists more attuned nowadays to intellectual property than they used to be? JK: Yes. BB: Do they know, for instance, copyright versus trademark or do they just sort of know that they’ve got rights? JK: Attuned was the word you used, and to me attuned means aware that copyright is an issue. Because copyright infringement claims have received a certain amount of visibility, artists are aware that copyright law is a potential problem. Art schools now have courses that cover copyright and a lot of outreach from various sources trying to educate every segment of the art community through numerous forums. The word is spreading out there to artists that this is something that intellectual property laws are something that they need to take into account. BB: Do you think that art is viewed almost more like a business now than it was before? JK: People become artists not because of the business angle; they mostly do it out of a passion. While it is hard to generalize among this incredibly disparate group, I think people become artists because that’s what they want to be and they feel like they have something to say. That said, it does feel as if business is more a part of being an artist than when I started in 1982. BB: Is it fair to say that as they become more and more successful, they might become more and more attuned, and also more and more sophisticated about intellectual property issues? JK: Mmm, no. As artists get more successful, they become more of a target. Maybe they also begin to spend a little bit more time on business matters and start becoming more businesslike. If you’re not making any money and all you’re doing is making art, business concerns are quite secondary. BB: Now a very broad sort of academic kind of question, which a lot of people always wonder about. Does copyright law, in your view, incentivize anything in the art world? JK: No. Absolutely not. But I’ll make a distinction. I do think that in the text world, for authors, copyright law is an incentive and especially regarding the all-important subject of derivative uses, speaking of that horrible term in the copyright law. BB: Why are the problems you see with derivative uses? JK: Copyright capitalists seek to use the definition of a derivative work to restrict fair use because the word “transformed” happens to be in the statutory definition. This unfortunate confluence of concepts has become problematic as transformation has taken on such a significant role in determining fair use. In my view, the reach of the derivative use right should extend only to adaptive uses that the author would have likely or plausibly pursued as part of the incentive to create and distribute for the public good. BB: You mentioned earlier that copyright is more important in a medium like writing. Can you elaborate? JK: Well, it’s a point that comes up whenever someone is advocating a resale royalty for visual art. There is a real difference between the way a book and music are distributed. The author receives a royalty based on multiple copies of the work. Multiple copies are rewarded by copyright. So, fundamentally, when you have a certain product with the potential for wide distribution through multiple copies, copyright allows the author to exploit the product commercially. This is different than a single work of art that is sold for a full retail purchase price and whoopee on to the next sale of another work. BB: And is it the practice that most visual artists will retain the copyright in the work even though they sell the physical version of it? JK: Absolutely. Absolutely. Although with commissioned work, the bigger the commissioning party, the more aggressive they are about owning the copyright. But you fight back, as hard as you possibly can. BB: Have you seen a change in the way artists approach IP law or the way that art lawyers approach IP law given the internet and things now being more accessible and easier to copy? JK: When I think about the internet I think about two things. First, I think about the sensitivity and fear on the part of someone who has created a work that once it is published digitally, it’s out there and there’s no going back. I don’t think that gets anybody to hold back because artists really want their work to be seen. It’s just a matter of being more aware of how, puff, there goes your work out to the world. The other side of the thought is how important the internet is as source material, and in turn why fair use is so important. BB: Has the role of an artist changed over the years as a result of the internet and this new access to material? JK: Role is the wrong word. I don’t think the role of the artist has changed. Certainly the subject matter and the direction has changed to some extent. But the endeavor is still a devotion to visual expression. Marcel Duchamp is a good example of a significant shift in direction based on new material followed by many artists after him, he did not produce any shift or change in the role of the artist. BB: But now artists are working with a lot more subject matter, like images from popular culture, that is already propertized. JK: That’s right. And copyright was also narrower way back when. Now, everything is subject to copyright protection, which is why fair use is so important, because copyright protection is so much easier to obtain. It is automatic, it is forever, and it keeps expanding. BB: So let’s talk about the case law then. What do you think of the Cariou v. Prince[1] outcome? JK: Great. Excellent. As you know, there are some problems. I worry a little bit about taking the law too far, causing future case outcomes to cut back. For example, the 7th Circuit recently said “We’re skeptical of Cariou’s approach, because asking exclusively whether something is ‘transformative’ not only replaces the [other fair-use factors] but also could override 106(2), which protects derivative works.”[2] When you go really far out taking away the four factors and turning the determination into one analysis, that may be going a little bit too far. I’m thrilled that the pendulum has moved in favor of fair use, but I worry. BB: You accept that the pendulum has shifted then from the old days of Rogers v. Koons?[3] JK: Are you kidding? Huge. And, it’s all due to Campbell.[4] Campbell was the change. BB: Campbell was 1994 and Rogers v. Koons came before it in 1992. JK: Absolutely. Campbell however was a parody case. Coincidentally one of the confusing things about Rogers v. Koons is the parody argument that was made and the response of the Court to this argument. Since Campbell, Souter’s analysis has been modified so that there is no longer any satire/parody distinction. BB: After Campbell, it did seem that people could read Campbell as establishing this pretty clear distinction that parody is okay and satire is not, so you’ve got to fit your work into the parody box. JK: That is what I tried to do in Rogers v. Koons. Unfortunately at that time I was dealing with precedent that was not very helpful. The two Supreme Court decisions were Sony[5] and Harper Row.[6] And they were bad cases for defending Jeff’s work, even though Sony ruled in favor of fair use. I was trying to get the judge to understand Jeff’s artistic expression as something that ought to be within the safe harbor that the parody decisions provided. Transformation was not a factor or consideration in Rogers. Transformation wasn’t part of the lexicon. That did not come until later, until Campbell. Judge Leval’s article[7] was June 1990, and so we didn’t have that article to cite to Judge Haight in the district court. We cited it to the Second Circuit on appeal. But it was only a law review article, even if the author was a judge. Souter made it important in Campbell. BB: And what about in Prince? JK: Prince was incredibly fortunate on his appeal to the Second Circuit. He got hammered in the district court. Possibly reacting to the lower court’s dismissiveness, the panel decided that it did not matter that Prince wasn’t commenting. Judge Parker almost entirely relied upon transformation as the decisive determination. BB: Judge Parker found, in essence, that the fact that Prince did not provide any explanation of what he intended by his work was not dispositive.[8] Prince doesn’t have a good story to tell about what he intended his work to mean, about how he might have intended to comment on Cariou’s work, but we don’t care about that. We’re just going to look at Prince’s work to assess transformativeness. JK: Yes. One of things that has always been important to me ever since Rogers is that Judge Cardamone said that I argued that a mere change in medium was sufficient to exempt a work from being infringing. This demonstrates the hazard of trying to get a nuance across sometimes. I was simply trying to say that changing the medium was significant especially for visual expression. This change made the sculpture a very different work. I’ve gone back and forth on this. Was that a good argument or bad idea. If you make that point too big a deal, you then run the risk of going in a bad direction, as opposed to just strictly discussing the four fair use factors as they then existed. But I thought it was important for the court to realize that these were very different expressions—and remember, this was pre-Campbell. Once you take a work from two dimensions and make it three-dimensional, you really change the expression of the subject. I often think about a sculpture I once saw that was derived from a famous photograph of a girl following the 1970 Kent State tragedy with her arms spread out over a dead student’s body. The sculpture was just the girl, a three-dimensional sculpture, Duane Hanson-like, and naked. It was an exact look-alike. I said to myself, I really need to have this example of what should be fair use. The artist took heart out of the photograph, but the sculpture is a completely different expression. And it’s an amazingly powerful statement. So changing medium should be significant, but not absolute. BB: Does the Prince approach then invite aesthetic discrimination by judges? JK: I hope not. I don’t think it requires differentiation on the basis of artistic merit. I don’t think judges are in a position to do that. Necessarily, decisions are made by human beings who have tastes, prejudices and experiences. That’s not going to change. But artistic merit should not be part of the assessment. Therefore it should not matter whether a judge has some artistic sensibility or not. Experts should not matter, although having said that, I’m going to almost take back my statement because I do think that experts can instruct on some of the messages and meanings in the work. In Rogers v. Koons we had affidavits of three leading experts in the contemporary art world. Kathy Halbreich, currently the Associate Director of the Museum of Modern Art, John Caldwell then a highly regarded expert at SF MoMA, and the eminent Robert Rosenblum from NYU. These were all leading people and they were all explaining the Koons sculpture to Judge Haight and to the Second Circuit. But poof, the judges could care less about what experts had to say. A decade later in In Blanch,[9] not a single expert was offered, just Jeff saying what his work was all about. BB: So the parody analysis could allow the court to avoid making a decision on whether the art is meritorious. The artist could voice his or her opinion. So if you have Jeff Koons talking about the transformative nature of the Blanch piece, then it allows the judge not to have to step in and make an aesthetic judgment or rely on an expert’s opinion. JK: Well the judge should be able to ascertain whether there is really a new message, a new meaning, a purpose to it and hopefully without that silly business about explaining why the artist had to pick this particular source. That is one of the worst distractions that you get in these cases: the plaintiff arguing “you could have picked something else; you didn’t have to pick this one.” That said, if the artist can provide some insight, it does help the cause. Even though under Prince v. Cariou it doesn’t matter anymore, if I were advising someone, and notwithstanding Prince v. Cariou, I would say it is worthwhile to explain your work, somewhat. Especially since some of the courts criticize the artist for an ad hoc explanation. For example in Morris v. Guetta[10] a case involving a photograph of Sid Vicious, the court rejected the artist’s explanation saying “you’re just making this up now.” So even if the artist slips in some contemporaneous explanation as simple as “I thought I had to say something about Mickey Mouse because…”, it could help. I wish the artist did not have to offer any justifications but it can help. BB: We have the case in trademark law in which the artist Tom Forsythe[11] explained exactly why we had chosen to photograph the Barbie doll. It was perfect. JK: Great case, great outcome. Best part was the attorney’s fees portion,[12] which I wish would still happen more often so that there would be fewer lawsuits. BB: Do you think there should be more fee shifting in copyright and trademark litigation? JK: I think that prevailing defendants should receive an award of attorney’s fees more often as a disincentive to the litigation of meritless claims, especially those lacking any injury. BB: What if the plaintiff is a small time figure though, and is dissuaded from suing a big artist because the plaintiff’s worried about fee shifting. JK: Well that’s the American system and why we have it the way we have it. I think that the way it exists in copyright law is just right. In other words, you have to have a prior registration to get statutory damages and attorney’s fees, which I believe is just right because it means you have to do something to indicate in advance that the work you have created has value to you regarding potential alternative uses. It’s not automatic. Then if you have done that simple, inexpensive act, the system will reward you. And on the other hand, if you pursue a bogus case, you get hammered. And since it was a company like Mattel that brought the lawsuit, it was especially gratifying that it was severely punished for doing so. In Blanch we made a motion for attorney’s fees, but we abandoned it because we really didn’t think the judge was going to punish the plaintiff. But a huge award of attorney’s fees would have been perfect in Fairey v. The Associated Press.[13] BB: How? JK: AP should have lost big time in that case. They deserved to solely lose on the merits and to have had attorney’s fees assessed against them. BB: A lot of people didn’t sympathize with Fairey because he lied to the court. JK: That’s how he was forced to abandon his defense of the case, and it did strip away much of the sympathy for him. But take that mistake out of it, Fairey’s use was fair use pure and simple. And the fact that AP wasn’t even the photographer was an embarrassment to the Associated Press in my opinion. The case also had another part of fair use that I have been very, very keen on seeing develop, but has fallen by the somewhat wayside. That is the idea of copyright being thin or fat. I strongly believe in the importance of that assessment. The copyright in the Garcia photograph was as thin as it gets. BB: Low creativity? JK: Absolutely. And especially when Fairey has painted it over and put a message on it. I think that the second fair use factor in the Fairey case should have weighed strongly in favor of Fairey. On the other hand, I believe that highly creative uses should have more protection. BB: The harder the artist works, the more sweat of the brow she puts into something, the wider the scope of protection she should get? JK: Absolutely, in terms of creativity. BB: But does that work against artists who engage in very minimalist or conceptual art? JK: I don’t see why. BB: The judge looks at a blank white canvas and says, “What’s this”? JK: Well, that’s going to be a problem with judges and art generally. Judges can and will understandably look at art and like what they see or dislike what they see. I don’t think that cuts against my point about creativity. BB: Back to Cariou v. Prince. Judge Parker for the majority writes that we should use the reasonable observer standard to decide whether the defendant has transformed the plaintiff’s work. Judge Wallace in his concurrence/dissent, applying the Bleistein[14] language, objects, asking, “who are we to say twenty-five of these are transformative but five of these have to be sent back?” JK: Judge Wallace said that this factual question ought to be decided by the trier of fact in the first instance, under proper guidelines. I think he was being a purist about it. I believe that the majority was trying to get the case settled, which is why they split it the way they did. Cut the case down to five works and let them fight about those five. BB: A criticism of the Prince majority opinion is that it overemphasized the idea that the defendant must have “usurped” the market for the plaintiff’s work. In the court’s analysis of the four-factor test, the court referred to the invitation list for one of Prince’s art openings to determine the effect on the market. The court was basically saying to Cariou: “Prince is an art star. You’re little people. Who do you think you are to suggest that you are in the same market as this guy?” JK: That was bad. That was bad. I was really sorry to read that, and it taints the opinion unfortunately. That should be meaningless. While they did use this fact from the record to indicate or observe that there were two different markets, because of the references to those celebrities the important point becomes diminished. BB: To shift gears, what do you think of the four-factor fair use test? Is it working? JK: I think the factors are just fine. While [the third factor’s] “amount and substantiality” never really factors in much, it’s good to have it because there could be a total taking and that would allow the court to heavily weigh that one fact. And the thought of Congress fritzing around with § 107 is a nightmare. I also believe the determination was lopsided when the fourth factor was said to be the most important consideration. BB: The fourth factor, involving the effect of the defendant’s use on the market for the plaintiff’s work, is often criticized for being circular. To the extent that the defendant uses the plaintiff’s work in some way, doesn’t that imply that the plaintiff’s work had value to the defendant for which the plaintiff could have charged a licensing fee? JK: No, although the circularity is always there and frequently is problematic. I do not believe that the source work has economic value simply because an artist sees it as being useable to make the statement that the artist wants to make. That’s why the “you should have picked another source” argument should be meaningless. You want to give a broad latitude to artists to make new works. Another very good feature of the decision in Cariou v. Prince is its focus on the actual market, not speculative markets. What are the actual markets that are being affected? And the answer in Cariou was none, and the answer in Rodgers was none, and the answer in Blanch was none. In most art cases the answer is none because there is no licensing market for what they call an art reference. If you look at some market instruction books even those published by the likes of the ASMP,[15] the fee for an “art reference” is two hundred dollars. And these organizations are trying to beef up licensing fees. The market is not a big one. Nor should it be. BB: The Visual Artists Rights Act:[16] Does it make any difference? Does it do any good? JK: Well it is a good law. But as for making a difference, not a huge one. I am glad that it’s there. It’s a matter of respect. It so happens, that it comes into play largely in the most problematic areas: with regard to site-specific sculpture. And it so happens, that site-specific sculpture was intentionally left out of that new law exactly because it was too difficult or problematic to resolve. One particular situation was added, work incorporated into a building, but that is it. So the law does not reach or resolve the important matter of site-specific artworks. BB: What’s your view of the resale royalty right? JK: Well fortunately it doesn’t exist right now at least since a California court declared it unconstitutional. It’s on appeal so we’ll see. I’ve become opposed to it just because of the negative impact on the relationship between artists and collectors, and the fact that I do not believe it really has the justification that people posit. I think there is a fundamental difference between the way an artwork is sold and the way books or music are sold. With a single work of art, the purchaser pays a lot for it. She takes a risk. If it goes down, she loses her money. The artist doesn’t compensate the collector for that. If the artist becomes more successful, the artist generally makes more money because of that success. To enforce this really aggressive and complicated law into the marketplace doesn’t make sense. And it is not needed. It’s not an incentive to create. So it’s just another right. It is another manifestation of the property rights mantra that drives the advocates who are on the other side of fair use. Copyright not a natural right. More and more cases nowadays are talking about the purpose of copyright, “to promote the progress of science and useful arts,” and this is most welcome. Copyright rights exist primarily to benefit the public, not to prevent new work.   * * *  
[1] Cariou v. Prince, 714 F.3d 694 (2d Cir. 2013).
[2] Kienitz v. Sconnie Nation LLC, 766 F.3d 756, 758 (7th Cir. 2014).
[3] Rogers v. Koons, 960 F.2d 301 (2d Cir. 1992).
[4] Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1993).
[5] Sony Corp. of America v. Universal City Studios, 464 U.S. 417 (1984).
[6] Harper & Row v. Nation Enterprises, 471 U.S. 539 (1985).
[7] Pierre N. Leval, Towards a Fair Use Standard, 103 Harv. L. Rev. 1105 (1990).
[8] Prince, 714 F.3d at 707.
[9] Blanch v. Koons, 467 F.3d 244 (2d Cir. 2006).
[10] Morris v. Guette, No. LA CV 12-00684 JAK RZX, 2013 WL 440127 (C.D. Cal. Feb. 4, 2013).
[11] Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792 (9th Cir. 2003).
[12] Id. at 816.
[13] Fairey v. The Associated Press, No. 09-CV-01123 (AKH) (S.D.N.Y. filed Feb. 9, 2009).
[14] Bleistein v. Donaldson Lithographing Co., 188 U.S. 239 (1903).
[15] American Society of Media Photographer. Available at: http://asmp.org.
[16] Visual Artist Rights Act, 17 U.S.C. §106A.

Restructuring the Federal Circuit

Restructuring the Federal Circuit
By Jeremy W. Bock* A pdf version of this article may be downloaded here.  

Introduction

Patent-related issues are becoming ever more salient in the national economy, as reflected in the intense interest in patent policy exhibited by all three branches of government in recent years.[1] No wonder, then, that the Chief Judge of the United States Court of Appeals for the Federal Circuit—which has exclusive jurisdiction over patent appeals[2]—recently declared “We are the most important court in the United States.”[3] While not everyone may agree with that sentiment,[4] the Federal Circuit has, nevertheless, been one of the more closely-scrutinized appellate courts by virtue of its specialized jurisdiction[5] and its mandate to create national uniformity in the adjudication of patent disputes.[6] Of particular concern to interested observers of the Federal Circuit are certain persistent problems identified in the academic literature, such as: that its outcomes are strongly panel-dependent on certain issues;[7] that it has formalist tendencies;[8] that its case law leads to indeterminate results;[9] and that it enforces certain doctrines too strictly,[10] while being too lax on others.[11] Criticisms of the Federal Circuit are contained in a vast body of literature, and are also aired at numerous patent law-related conferences, often in the presence of one or more Federal Circuit judges in attendance. And yet, many of the complaints seemingly endure (e.g., the Federal Circuit’s conflicting claim construction methodologies lead to panel-dependent outcomes[12]), and change is often substantially delayed (e.g., certain problematic rules associated with willfulness determinations were overruled after twenty years[13]), if not denied (e.g., the Federal Circuit decided to reconsider the de novo standard of review for claim construction[14]—after fifteen years of complaints from not only commentators,[15] but also district judges,[16] and its own members[17]—only to reaffirm it[18]). In light of these criticisms, one question that arises is whether the Federal Circuit has difficulty reconsidering and correcting the suboptimalities in its case law in a timely manner, whether by clarifying, limiting, reconciling, or overruling precedents that have become problematic.[19] Because it is effectively the court of last resort in patent cases, given the rarity of Supreme Court review,[20] self-correction by the Federal Circuit is critical. This, coupled with the extreme improbability of timely Congressional action,[21] creates a situation where the primary responsibility “for assuring that gaps are filled, uncertainties resolved, and stupidities corrected”[22] in patent law falls squarely on the Federal Circuit. Otherwise, without periodic self-correction, Federal Circuit precedents may ossify in a suboptimal state, which, as John Golden has observed, may be the real danger posed by a centralized appellate scheme for patent cases.[23] Compared to the regional circuits, the Federal Circuit likely requires a faster, more robust mechanism for making corrections to a body of precedent, for two reasons. First, patent law must be able to keep up with advances in technology.[24] Second, as the exclusive appellate venue for patent cases, the Federal Circuit does not experience the type of corrective case law “percolation” that occurs among the regional circuits.[25] It is possible then, that suboptimal case law might endure more readily at the Federal Circuit, when, at the same time, the need to make timely adjustments to precedent may be more pressing in light of the issues raised by new technologies. While a variety of solutions have been proposed in the literature that seek to compensate for or otherwise mitigate the Federal Circuit’s shortcomings,[26] scant attention has been paid to the cognitive and situational elements that define the internal adjudicatory environment within that court. As such, this Article undertakes an exploration of the behavioral factors that may underlie the various complaints about the Federal Circuit, with a specific focus on the cognitive and situational elements that allow suboptimal precedents to be generated and maintained. In doing so, this Article draws lessons not only from the literature on judicial behavior, but also from cognitive psychology and management science—in particular, organizational behavior[27]—in evaluating the difficulty of self-correction. As described in greater detail infra,[28] this analytical path suggests that a potential solution may lie in changing the organizational structure of the Federal Circuit to mitigate the behavioral elements that may negatively affect the court’s ability to take timely actions to refine or otherwise repair suboptimal case law.[29] When the complaints about the Federal Circuit are viewed through a cognitive and situational lens, two possibilities emerge. First, with certain precedents, some judges may simply fail to recognize the need to take corrective action. As discussed in greater detail infra,[30] a Federal Circuit judge’s inability to recognize the existence of a problem could be an artifact of his or her expertise. Specifically, a phenomenon known in the cognitive psychology literature as the “curse of expertise”[31] may prevent experts (i.e., Federal Circuit judges)[32] from properly weighing criticism from others, and may also impair their ability to accurately assess the difficulties encountered by non-experts (e.g., district judges).[33] Second, with other precedents, some Federal Circuit judges may be fully aware that problems do exist for which correction is necessary, but the court, as an institution, is unable to undertake timely remedial action. This second problem, as explored infra,[34] is known in the management science literature as the “knowing-doing gap,”[35] which may arise from the situational dynamics among the Federal Circuit judges. Taken together, the curse of expertise and the knowing-doing gap may impair the Federal Circuit’s ability to address the suboptimalities in its case law in a timely manner because the former may prevent the court from realizing that a problem exists, while the latter may hinder the court from taking action on the problems that it is aware of. This Article contributes to the literature on the institutional analysis of the Federal Circuit in two ways: First, it combines lessons from the literature on judicial behavior, cognitive psychology, and management science to evaluate possible behavioral explanations for how and why the Federal Circuit generates or maintains suboptimal precedent. Second, based on this behavioral analysis, a proposal is introduced that may improve the Federal Circuit’s ability to identify and self-correct suboptimal precedents: staffing the court with district judges who serve staggered terms of limited duration. In essence, by changing the organizational structure of the Federal Circuit, it may be possible to compensate for, or at least mitigate, some of the cognitive biases and situational influences[36] within the court’s deliberative environment that may inhibit timely self-correction. This proposal focuses on a beneficial effect of regular changes in personnel that has not been fully appreciated in the literature relating to judicial term limits and rotations, which tends to concentrate on the Supreme Court[37] and issues relating to democratic accountability, the politicization of nominations, and mental decrepitude,[38] rather than the ability of an intermediate appellate tribunal to self-correct. This Article proceeds in four parts. Part I describes the Federal Circuit’s internal mechanisms for self-correction, and also summarizes several existing proposals in the literature that endeavor to remedy or compensate for the Federal Circuit’s deficiencies. Part II identifies potential cognitive and situational barriers to timely self-correction at the Federal Circuit—namely, the curse of expertise and the knowing-doing gap. Part III analyzes how the cognitive and situational barriers identified in Part II may be overcome by staffing the Federal Circuit with district judges who serve staggered terms of limited duration. Part IV addresses various objections and concerns about the proposal, and is followed by a brief conclusion.

I. The Current State

A. Internal Mechanisms for Quality Control

As an institution, the Federal Circuit has several internal “quality control” mechanisms for precedential opinions. They generally fall into two categories: before issuance and after issuance.
1. Before Issuance: Review of Precedential Opinions
Shortly after the Federal Circuit was formed, its first Chief Judge, Howard Markey,[39] and Judge Giles Rich, one of the drafters of the 1952 Patent Act,[40] touted the adoption of two procedures designed to help the newly-formed appeals court fulfill its mandate of bringing uniformity to patent law. First, every draft precedential opinion would be circulated to the entire court for several working days in order to allow the non-panel judges to weigh in and provide comments prior to issuance.[41] (Presently, the review period is ten working days.[42]) Second, the Federal Circuit’s internal administrative departments would include an office of the “Senior Technical Assistant” (STA),[43] whose staff members are charged with analyzing draft precedential opinions during the review period and circulating memos to the entire court that highlight potential conflicts with existing case law.[44] While these two mechanisms for pre-issuance correction of precedential opinions have endured throughout the Federal Circuit’s existence, the persistent complaints about the court suggest that Judges Markey and Rich might have overestimated their effectiveness. The utility of circulating draft precedential opinions to the entire court is dependent on the willingness of the non-panel judges to closely monitor them, provide substantive comments, and, if necessary, issue “hold sheets” that prevent their issuance until substantive concerns are addressed.[45] At the same time, the receptiveness of the authoring judge and the other panel members to suggestions from the rest of the court may also be a significant factor. However, persistent concerns about panel-dependent outcomes[46] and the existence of divergent lines of precedent[47] suggest that the internal circulation of draft opinions may be a weak mechanism for self-correction. As for the STA’s memos analyzing draft opinions for conflicting precedent, they are merely advisory, and, for that reason, it is possible that some Federal Circuit judges disregard them.[48] Notably, the STA’s conflicts check procedure has actually been scaled back in recent years: when the STA’s office was first established at the Federal Circuit, it reviewed every draft precedential opinion for potential conflicts prior to issuance;[49] however, on July 7, 2010, the Federal Circuit’s Internal Operating Procedures (IOPs) were changed so that the STA reviews a draft precedential opinion for conflicts only if requested.[50] The Federal Circuit’s decision to scale back the original role of the STA’s office is puzzling, if not troubling, especially when divergent lines of precedent still persist—and, in some instances, have emerged after July 7, 2010, on issues such as patentable subject matter[51]—and decisional disagreement at the court is becoming more severe.[52]
2. After Issuance: The En Banc Process
Once issued, precedential panel decisions may be overruled only by an en banc court.[53] However, the en banc process is seldom invoked: according to an empirical study by Christopher Cotropia, the Federal Circuit’s en banc rate is relatively low.[54] This is unsurprising as the en banc process is viewed by judges as a time-consuming, labor-intensive endeavor[55] whose uncertain outcomes might not be worth the cost of disturbing the collegial atmosphere that courts strive to maintain.[56] As a result, an extended period of time may elapse before the “right” case appears for which a majority of judges would agree is worth the hassle of en banc consideration. In some instances, a change in the composition of the court may be necessary in order for an issue to be ever considered en banc.[57] And when en banc review finally does occur, there is no guarantee that the outcome will necessarily improve the situation: the en banc court might simply reaffirm the status quo,[58] take the precedent in a more problematic direction,[59] or create further uncertainty by issuing a highly fractured decision with no majority opinion.[60]

B. Existing Proposals in the Literature

The literature offers a variety of proposals for remedying or compensating for the deficiencies in the Federal Circuit’s case law and its decision-making process. One popular proposal is to develop patent law expertise at the trial level[61] such as by establishing specialized trial courts[62] or by changing the venue rules so as to concentrate the filing of patent cases to certain districts.[63] This proposal has largely come to fruition in the form of the “Patent Pilot Program,”[64] which helps district judges cultivate patent law expertise through the reassignment of patent cases from judges who seek to avoid them to judges who are interested in hearing more of them.[65] However, empirical support for the expected benefits[66] of enhancing trial judge expertise is, at best, mixed.[67] Furthermore, specialization at both the trial and appellate levels could exacerbate the Federal Circuit’s “exceptionalist” approach to patent law.[68] Rather than focusing on the trial courts, some commentators have questioned the unitary appellate regime for patent cases. Craig Nard and John Duffy propose expanding the number of circuit courts that hear patent appeals, on the theory that “a polycentric, competitive appellate structure” may facilitate doctrinal development through incremental innovation and experimentation, as well as provide clearer signals to the Supreme Court to intervene.[69] Judge Diane Wood of the U.S. Court of Appeals for the Seventh Circuit has expressed support for a similar proposal.[70] As some commentators have observed, however, it is unclear whether inter-circuit percolation is likely to provide benefits adequate to offset the loss of uniformity,[71] especially in the event the other circuit courts find it expedient to defer to the expertise of the Federal Circuit by adopting its case law.[72] In addition, with the enactment of the Leahy-Smith America Invents Act,[73] Congress has reaffirmed its commitment to a unitary appellate regime in patent cases by abrogating Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.[74] and channeling all patent-related appeals to the Federal Circuit, including those appeals raising a patent issue that was introduced only through a counterclaim.[75] Others have considered whether the scope of the Federal Circuit’s jurisdiction might be a source of its dysfunction. Paul Gugliuzza, for example, proposes modifying the Federal Circuit’s jurisdiction so that it has a mix of cases that is closer to that of the regional circuits,[76] under the theory that Federal Circuit judges who are exposed to a more generalized docket would be “more policy conscious, less formalist, and, ideally, more responsive to the different innovation dynamics present in different industries.”[77] This proposal presupposes that the adjudicatory style of individual Federal Circuit judges may change if their knowledge of generalist legal principles is enhanced. As will be discussed later, a substantial part of the problem with the Federal Circuit may not only be a lack of certain knowledge, but also the lack of the will to act on that knowledge.[78] A common limitation in the aforementioned proposals is that they may not be adequate to counteract the primary pathology underlying the complaints about the Federal Circuit, which, as identified by John Golden, is the ossification of precedent[79] resulting in “suboptimal legal equilibria.”[80] Golden’s solution to the ossification problem requires the Supreme Court to assume the role of “prime percolator,” which periodically grants review to disturb those suboptimal Federal Circuit precedents that have “frozen legal doctrine either too quickly or for too long.”[81] In addition, Golden suggests that the Federal Circuit itself can further promote percolation by not writing or reading panel opinions unnecessarily broadly, and granting en banc review when precedent has reached a “suboptimal doctrinal equilibrium.”[82] There are several limitations to Golden’s proposals. First, given the overall rarity of certiorari grants,[83] and the limitations of Federal Circuit dissents as signaling devices,[84] the Supreme Court’s execution of its percolation function may not be timely and frequent enough to materially improve the performance of the Federal Circuit beyond its current state—especially where the Federal Circuit views itself as the “expert,” and, as a result, may be unreceptive to suggestions from non-experts, even those located in a superior position in the judicial hierarchy.[85] Second, it is unclear how the tendency of some Federal Circuit judges to write (or interpret) broadly may be effectively restrained. A “maximalist”-style[86] of opinion-writing that makes broad, sweeping pronouncements could be viewed by some Federal Circuit judges as wholly appropriate, if not obligatory, for a court whose primary mission is to provide uniform guidance on patent law.[87] Furthermore, by invoking judicial efficiency concerns, the Federal Circuit has, on occasion, decided issues beyond those needed to dispose of the specific case at hand, such as construing claim terms that are not necessary to the judgment.[88] Finally, as discussed previously, going en banc is a labor-intensive and unpredictable process,[89] such that case law may be stuck in a suboptimal legal equilibrium until the “right” case comes along or if the composition of the court changes.[90] At a high level, the above-mentioned proposals highlight different approaches to improving the operation of the Federal Circuit. What is missing, however, is an approach that focuses on the behavioral elements that may inhibit timely reconsideration of suboptimal precedents. To this end, the next section explores some of the behavioral elements that may influence how Federal Circuit case law is produced.

II. The Cognitive and Situational Barriers to Self-Correction

This section introduces two theories directed to the behavioral elements that may hinder self-correction at the Federal Circuit: (1) the “curse of expertise,” which may impair the ability of Federal Circuit judges to recognize potential problems in existing case law; and (2) the “knowing-doing gap,” which may contribute to the court’s failure to take corrective action despite some judges recognizing the existence of a problem.

A. The Curse of Expertise

In general, the patent law expertise of Federal Circuit judges is viewed as a positive trait.[91] Although expertise may enhance one’s ability to analyze problems involving complex subject matter—such as patent law—experts are susceptible to certain systematic errors and biases.[92] As described in the cognitive psychology literature, the “curse of expertise” is a term that captures the cognitive pitfalls to which experts are particularly susceptible,[93] such as underestimating the difficulties of non-experts[94] and resisting correction.[95] For the purpose of analyzing the curse of expertise in the context of the Federal Circuit, the “experts” are the Federal Circuit judges, and the “non-experts” are the generalist district judges. The practitioners, who are also active consumers of the Federal Circuit’s decisional output, include a wide range of individuals, from experts (e.g., specialists who have practiced patent law exclusively for decades) to non-experts (e.g., general litigators who have recently become involved in a patent case). However, the discussion of the curse of expertise in this Article will focus primarily on the expert/non-expert comparison between Federal Circuit judges and district judges because both are engaged in the same function—namely, the adjudication of patent disputes.
1. Underestimation of Difficulties of Non-Experts
According to experiments conducted by Pamela Hinds, experts may be prone to underestimating the difficulties encountered by non-experts who attempt to perform tasks within the expert’s field.[96] At the Federal Circuit, the curse of expertise is at work when it skews the Federal Circuit judges’ perceptions regarding the clarity or the soundness of the court’s precedents, such that they may fail to recognize when existing case law may warrant reconsideration. That is, the expertise of the Federal Circuit judges could potentially interfere with their ability to recognize when an error in the judgment below may be primarily attributable to vague, conflicting, or unworkable case law, as opposed to the district judge’s failure to apply otherwise sound precedent. By way of illustration, consider the following pair of claim construction canons: the claims must be read in light of the specification;[97] however, limitations may not be imported therefrom.[98] District judges have struggled with these canons, which govern the use of the specification in claim construction.[99] Although the Federal Circuit has acknowledged that a fine line separates these canons,[100] it nevertheless believes that they may be reliably applied[101]—even though a schism exists in the court’s claim construction methodology, which places different emphases on the specification vis-‡-vis the claims.[102] This schism, which has endured despite the en banc restatement of claim construction principles in Phillips,[103] has made it difficult for district courts to correctly apply these complementary canons because the “correct” methodology is panel-dependent. Either the canons need to be updated or the schism needs to be resolved, but with the exception of Judge Kimberly Moore (and possibly Chief Judge Randall Rader),[104] the Federal Circuit does not appear to view the current state of the law on claim construction methodology to be problematic enough to warrant en banc consideration.
2. Resistance to Correction
Hinds’s experiments also suggest that experts, when compared to non-experts, may be unusually resistant to correcting or changing their positions even when presented with “debiasing” information that could help increase the accuracy of their analysis.[105] This comports with the general understanding that experts are “often wrong but rarely in doubt.”[106] It is possible then, that Federal Circuit judges, by virtue of their expertise in patent law, may be prone to approaching their work with a level of overconfidence that may render them relatively unreceptive to reconsidering their analysis in the face of debiasing information.[107] One potential indication of the Federal Circuit’s resistance to debiasing may be its decision to scale back the generation of the STA’s reports of potential conflicts in draft precedential opinions.[108] Another indication may be the court’s perceived reluctance to give substantive consideration to relevant scholarship.[109] But perhaps the most profound indication that the Federal Circuit may be unreceptive to debiasing is the seemingly weak corrective influence of the Supreme Court.[110] For example, some Federal Circuit judges appear to be resisting the Supreme Court’s directive to apply the patentable subject matter requirement more rigorously.[111] Indeed, the rapid succession of patentable subject matter cases heard by the Supreme Court in recent years[112] suggests that it might be engaged in a “battle of wills” with the Federal Circuit. It is possible that some Federal Circuit judges may be reluctant to accord much weight to the guidance provided on issues within their realm of expertise by a non-expert, yet hierarchically-superior, tribunal.[113] This, along with the sparse and episodic nature of Supreme Court review, likely creates a situation where the Federal Circuit is potentially operating without any meaningful moderating influence.
3. Aggravating Factors
Research on cognitive heuristics suggests that the key factors contributing to the curse of expertise include anchoring effects[114]—i.e., the heavy reliance on initial information or impressions[115]—as well as the “availability heuristic”[116]—i.e., the tendency to rely on information that readily comes to mind.[117] This suggests that the adverse effects of the curse of expertise may be aggravated by the selection effects introduced by the appeals process: the mix of patent cases and issues that reach the Federal Circuit may not be representative of what the district judges encounter. If the Federal Circuit judges over- or under-estimate the severity of the problems associated with certain doctrines, they may consequently over- or under-correct them. This skew in perception may be the most severe for those issues that come before the Federal Circuit infrequently but arise often at the district court level (and vice versa), such as discovery issues and evidentiary rulings, for which seasonable appellate review might be available only through discretionary means.[118] Deficient or suboptimal Federal Circuit precedents affecting issues that arise frequently at the district court level, but which rarely make it to the appellate level, not only will have a major adverse impact, but also will endure because the opportunities to develop and refine those precedents will be rare. For example, it took over twenty years for the “adverse inference” and “affirmative duty” rules in Underwater Devices, Inc. v. Morrison-Knudsen Co.,[119] which presented thorny privilege and waiver issues for accused infringers, to be overruled in Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp.[120] and In re Seagate Tech., LLC,[121] respectively. * * * In weighing the relative benefits of expertise against the drawbacks discussed above, it is worth noting that the Federal Circuit, by virtue of its expertise, may be quite comfortable with making broad pronouncements on a variety of issues—which, as mentioned earlier, is something that the court should refrain from doing to avoid lock-in of suboptimal precedents.[122] At the same time, if a given pronouncement proves to be overly broad or otherwise problematic, the cognitive pitfalls associated with expertise could make it difficult for the court to realize that there is a problem. The tradeoff then, is whether an expert court that might be difficult to correct is preferable to a non-expert court that might be easier to correct. As will be discussed in later sections, there are benefits associated with staffing the Federal Circuit with non-experts that could potentially tip the balance toward the latter option.

B. The Knowing-Doing Gap

The cognitive elements discussed in the previous section are not the only considerations relevant to evaluating the ability of a group of individuals to self-correct. The situational dynamics of the organization, as a whole, may be just as salient. Organizational inaction despite recognition of the existence of a problem is known in the management science literature as the “knowing-doing gap.”[123] A canonical example is the disturbingly low rate of hand-washing by healthcare professionals who are fully aware that hand hygiene is essential for minimizing hospital-acquired infections.[124] Another common example is a corporation hiring expensive management consultants (sometimes on multiple occasions) to provide recommendations on improving operations or solving a problem, but failing to implement their recommendations.[125] The concept of the “knowing-doing gap” may be useful in the judicial decision-making context as well, as a means for evaluating how suboptimal precedents may be generated and ultimately persist. Although persistence can arise naturally out of stare decisis and by operation of the Federal Circuit’s IOPs, this Article focuses on the behavioral elements beyond those mechanisms. That is, why does the Federal Circuit have difficulty using the tools available to it to prevent the issuance of, or to timely repair, case law that has been identified as problematic not only by observers outside the court, but also by its own judges?[126] Such institutional inertia is the “knowing-doing gap.” Jeffrey Pfeffer and Robert Sutton suggest that the existence of a “knowing-doing gap” is dependent primarily on organizational considerations, rather than the personal characteristics of individual actors.[127] As such, a solution for overcoming the “knowing-doing gap” could potentially lie in modifying the institutional structure of the Federal Circuit so that it becomes less susceptible to inertia—regardless of who is serving on the court at any given time. It may be helpful, then, to evaluate the internal dynamics of the appellate decision-making environment to determine how the Federal Circuit’s structure could be modified to inhibit institutional inertia from setting in when it becomes advisable to take remedial action. In this regard, there are several situational considerations within the appellate decision-making environment that may be worth exploring. For example, a judge may decide to stand firm on an issue because he wants to act consistently with his prior positions. Another reason for standing firm is that the judge has a deep-seated conviction regarding how the case should be decided. At the same time, a judge may desire to maintain a collegial working environment (or détente). And finally, a judge may endeavor to defer laborious or otherwise costly tasks if there is no urgency. At first blush, some of these considerations might appear mutually exclusive, in particular, consistency and conviction versus collegiality. However, they may exist as complementary considerations among different judges on different issues as enabled by the third consideration—the lack of urgency.[128] As explained in greater detail below, these situational considerations may be classified as having a structural origin because they appear to be byproducts of the particular manner in which the Federal Circuit is staffed—namely, lifetime appointments.
1. Consistency and Conviction
Suboptimal precedents could emerge or be maintained when judges refuse to reconsider their prior positions. This refusal may arise from a desire to maintain consistency, a deep-seated conviction on an issue, or a combination of both. In the environment of an appellate court, the desire to maintain personal consistency[129] could contribute to the perpetuation of problematic case law, particularly when correcting it may require one or more judges to take positions inconsistent with their prior votes or opinions, which could expose them to the risk of losing face.[130] If the membership of a court has split into opposing camps, the resolve of individual judges to seek vindication and to stay consistent may be heightened. At the same time, it may take less work for a judge to default to his or her prior position, because crafting an opinion that justifies a change of position on principled grounds may be labor-intensive.[131] As such, for judges who wish to maximize the “leisure” aspect of the judicial utility function,[132] staying consistent may be an attractive option. So long as there is no urgency,[133] a judge may decide to defer the investment of the necessary mental and emotional energy required to properly reconsider a prior ruling. For other judges, the refusal to reconsider may not be driven by the need to appear consistent or to avoid extra work, but rather by a deep-seated conviction on a specific issue. In these instances, the judge is highly unlikely to yield or be convinced to deviate from his or her position, and he or she may be more than willing to undertake the additional work required to write a dissent, if necessary. It is possible that such principled persistence could be more problematic, and at the same time more severe, at the Federal Circuit than in the regional circuits. This is because some Federal Circuit judges might view the court as having an implicit policy-oriented “mission,” i.e., to protect and encourage innovation in the United States,[134] as opposed to simply deciding cases. As such, some judges may develop strong beliefs as to what the law ought to be on certain issues in order to further the court’s “mission.” In addition, as Cotropia suggests, the fact that Federal Circuit judges are repeatedly exposed to the same issues might render them prone to sharp disagreement over nuances.[135] When viewed together, the desire for consistency and/or to vote one’s conviction likely contribute to the formation of camps within the Federal Circuit, which could drive panel-dependent outcomes. (At a high level, panel-dependence could also be indicative of a more fundamental problem with the case law: The precedents associated with a given doctrine may be so indeterminate[136] that they comfortably accommodate inconsistent approaches favored by different camps of judges.) Although the desire to be consistent and to remain steadfast on an issue can, under certain circumstances, have beneficial effects in contributing to the stability of case law, they may become problematic when they impede the timely reconsideration of defective or otherwise suboptimal precedents.
2. The Need to Maintain Collegiality or Détente
Initially, the desire for consistency and conviction-voting might provide the most intuitive explanations for the Federal Circuit’s difficulty with self-correction. However, they provide only part of the story. The collective need of a group of judges to maintain collegiality or détente[137] on a daily basis,[138] and to avoid fruitless battles with colleagues who might serve with them for decades,[139] may, at times, take priority over correcting suboptimal case law, which might involve resurrecting disputes over which the judges have “agreed to disagree.” Although a certain degree of collegiality is indispensable to effective decision-making,[140] the risk of “settling” behavior nevertheless exists[141]: when a group of judges serves together long enough, its members will become intimately familiar with each others’ views to an extent that would allow them to reach a state of equilibrium where the judges fall into a predictable pattern in their voting and opinion-writing.[142] This predictability, in turn, could lead to the ossification of suboptimal precedent.[143] And because the en banc process is fraught with drama, high cost, and uncertainty,[144] individual panels are left with essentially two options for handling precedents they find troublesome: distinguish them or ignore them.[145] As a result, over time, divergent lines of precedent could emerge that may prove increasingly difficult to reconcile. The willingness of appellate judges to not only live with, but also allow the creation and maintenance of, suboptimal precedents and divergent case law[146] may be explained by certain behaviors characterized by Judge Richard Posner as “going along” voting and “live and let live” opinion-joining.[147] “Going along” voting in a panel occurs when the judges who are relatively indifferent about the outcome cast their votes with the member having the strongest views.[148] Otherwise, if one or both of the indifferent judges were to vote differently from the opinionated judge, they will need to respond to the spirited arguments of the opinionated judge in either a majority opinion or a dissent.[149] To an indifferent judge, “going along” is less costly than devoting resources to an issue he may not feel strongly about.[150] Relatedly, “live and let live” opinion-joining occurs when a judge joins an opinion that contains remarks he disagrees with, but which are perceived by the joining judge to be dictum.[151] A judge may rationally view the effort to eliminate dictum with which he disagrees as not worth the hassle and potential clashes with the authoring judge.[152] The “going-along” voting and “live and let live” opinion-joining described by Judge Posner constitute a set of behaviors that may be characterized more generally as “collegial concurrence,” which Cass Sunstein and others define as a form of deference to one’s colleagues[153] that arises out of a sense of realism,[154] where an individual judge rationally views any attempt to “correct” the other members of the panel as costly and futile. Collegial concurrence may also be at work when a draft precedential opinion setting forth a problematic rule is circulated to the entire court,[155] and the non-panel judges acquiesce in its issuance without substantive revisions.[156] The risk of perpetuating and creating problematic case law also exists if there is a split panel, particularly when the judges belong to opposing camps. In such cases, suboptimal precedents may result when panel members unduly focus on vindicating their respective positions or when lingering resentments or jealousies surface,[157] such that the collective will may not exist to undertake a labor-intensive analysis to reconcile competing considerations and craft a workable rule. Furthermore, when the dissenting judge has been “written off” by the majority, which may often happen to chronic dissenters,[158] it is possible that the majority may take more extreme positions than if it were endeavoring to convert the dissenter into a joiner. * * * It may appear counterintuitive that the concerns relating to consistency/conviction and the need for collegiality may not only co-exist within a single court, but also could jointly contribute to the generation and maintenance of suboptimal precedent. Indeed, consistency/conviction and collegiality can be influences that may be present concurrently on the same panel because they may arise for different issues for different judges. Listed below are the possible configurations for a three-judge panel (for en banc panels, additional configurations may exist):
(a) All three judges are relatively indifferent regarding the issues on appeal: Collegial concurrence will likely be the dominant influence on the manner in which the opinion is crafted. (b) One judge has strong opinions on an issue (because of consistency/conviction), and the other two judges are relatively indifferent: The indifferent judges are likely to “go along” with the opinionated judge. (c) Two judges have strong opinions that are incompatible with each other (because of consistency/conviction), and the remaining judge is indifferent: The indifferent judge will likely “go along” with one of the two opinionated judges, and the opinionated judge who is in the minority is likely to dissent. (d) All three judges have strong opinions that are incompatible with each other (because of consistency/conviction): Separate opinions are likely, and there may or may not be a majority opinion.
3. Lack of Urgency
It is not often that a critical mass of appellate judges will perceive an urgent need to correct some defective precedent and willingly “rock the boat”[159] in undertaking the laborious en banc process.[160] A sense of urgency arises infrequently because the consequences of inaction are unlikely to be concrete and immediate for a permanent appellate judge. Rather, the impact of suboptimal decisions from the Federal Circuit is most immediate on the practitioners, who may need to update their case strategies, and on the district judges, who must apply the newly-minted precedents in the first instance, under the threat of reversal. For Federal Circuit judges, the impact of problematic case law on their day-to-day work is considerably attenuated, as they can distinguish it in subsequent cases or effectively disregard it[161] largely without fear of reversal, as review by the en banc court[162] or the Supreme Court is rare.[163] Accordingly, the more immediate concerns, such as appearing consistent, saving face, conviction-voting, maintaining collegiality or détente, and avoiding fruitless battles with colleagues who may serve with them for an indefinite period of time, may take precedence over engaging in a potentially costly analysis. Overcoming the “knowing-doing gap,” then, may require changing the adjudicatory environment in a way that decreases the salience of these concerns.

III. Surmounting the Barriers to Self-Correction

To overcome both the curse of expertise and the knowing-doing gap, this Article proposes staffing the Federal Circuit with a rotating group of district judges who serve staggered terms of limited duration. A suitable term served by each district judge could be two[164] to four years, which could help guard against the development of the blind spots and inertia associated with the accumulation of expertise and prolonged tenure, respectively,[165] as well as reduce the likelihood of capture by special interests.[166] This proposal resembles a common arrangement within the federal judiciary for staffing tribunals that exercise jurisdiction over specialized subject matter. For example, the Foreign Intelligence Surveillance Court, which reviews applications for orders authorizing electronic surveillance within the United States to obtain foreign intelligence information,[167] is staffed by district judges[168] who serve non-renewable, staggered terms of up to seven years.[169] The Judicial Panel on Multidistrict Litigation (JPML), which is empowered to transfer to a single district multiple civil cases whose pretrial proceedings may benefit from consolidation and coordination,[170] is staffed by a mix of district judges and circuit judges.[171] The Bankruptcy Appellate Panels (BAPs) that exist in some circuits[172] are staffed by bankruptcy trial judges who are appointed for limited terms[173] to hear bankruptcy appeals in three-judge panels.[174] As such, the federal judiciary has a variety of existing models as well as the requisite logistical experience for successfully implementing this proposal. In a similar vein, judicial rotation has been suggested as a way of staffing a potential specialized Article III appeals court for immigration, in which district judges and circuit judges serve two-year terms.[175] Moreover, given that the Federal Circuit, in some respects, behaves not unlike an administrative agency that promulgates substantive rules,[176] it may be appropriate to change its composition regularly, just like the other government agencies involved in the development of patent policy. For example, the U.S. Patent & Trademark Office and the Department of Justice are each headed by political appointees who typically change along with the presidential administration,[177] and the Federal Trade Commission and the International Trade Commission are each led by commissioners who serve staggered terms of limited duration.[178]

A. Combating the Curse of Expertise with District Judges

As previously discussed, the curse of expertise creates a blind spot for the Federal Circuit regarding its perception of the soundness of its precedents: it may render the court prone to misjudging the difficulties encountered by non-expert district judges in applying Federal Circuit case law. In addition, it may render the “expert” Federal Circuit judges resistant to considering debiasing information that may help them recognize potential problems.[179] One way of combating the curse of expertise at the Federal Circuit may be to replace the experts, i.e., the permanent Federal Circuit judges, with non-experts, i.e., district judges. More specifically, the Federal Circuit could be staffed with district judges who have handled a sufficient number of patent cases so as to have developed a sense of which precedents might be suboptimal, and how new or modified precedents might affect the quality of adjudication. In selecting the district judges to serve on the Federal Circuit, the experience threshold may be based on a variety of metrics such as the number of claim construction orders issued or the average number of patent cases handled per year. That district judges with patent experience may be particularly suitable for the Federal Circuit is suggested by Hinds’s experimental studies demonstrating that those with an intermediate level of knowledge may outperform both experts and novices in anticipating difficulties faced by novices in completing a task.[180] An expert whose learning experience is a distant memory may not be able to recall his initial difficulty with the task as readily as someone who has learned it more recently,[181] while a novice may not have an adequate understanding of the task to make accurate predictions about the behavior of other novices.[182] Applying these lessons to patent case adjudication, it is possible that district judges who have handled multiple patent cases (i.e., the intermediate users of patent case law) may be better than either permanent Federal Circuit judges (i.e., the experts) or district judges who have little or no experience with patent cases (i.e., the novices) at identifying suboptimal precedents, particularly those that have proven difficult for district judges to apply reliably. Hinds’s experiments also suggest that those with an intermediate level of knowledge may be more receptive than experts to debiasing information that could help improve the quality of their decision-making.[183] It is likely then, that compared to the current version of the Federal Circuit that is staffed with “expert” judges, a version of the court that is staffed with non-expert, yet experienced, district judges might give greater consideration to the conflicts memos prepared by the STA,[184] the relevant academic literature,[185] the views of expert agencies such as the Federal Trade Commission,[186] analogous case law from the regional circuits, and feedback from other district judges and practitioners. In addition, experienced district judges may be less influenced by the appellate selection effects that would otherwise provide an inaccurate picture of the relative frequency and severity of certain problems at the district court level.[187] Furthermore, those with an intermediate level of knowledge, i.e., the patent-experienced district judges, may have a greater ability to craft workable precedents than either experts or novices. In another experimental study, Pamela Hinds, along with Michael Patterson and Jeffrey Pfeffer, found that experts tend to use more abstract concepts when imparting specialized, technical information to novices, while beginners tend to use more concrete statements.[188] And while novices instructed by experts demonstrated a greater ability to transfer their knowledge to different, analogous tasks,[189] the novices instructed by beginners learned to complete a specific task more effectively.[190] The results of this experimental study suggest that the pedagogically-optimal mix might be achieved by an individual whose skill level falls in between that of an expert and a beginner, and who, as a result, is more likely to provide an appropriate mix of abstract and concrete guidance. It is possible, then, that opinions authored by patent-experienced district judges—who are neither experts nor beginners—may be more amenable to reliable application at the trial level than those authored by permanent “expert” appellate judges or by district judges who have little substantive experience with patent cases. This is particularly important for patent appeals involving issues (e.g., discovery) that are frequently in contention at the district court level, but are infrequently reviewed on the merits at the appellate level, such that it is critical to get such cases “right” whenever they reach the Federal Circuit because there may be limited opportunities for correcting such precedents in the future.[191] The proposed arrangement whereby district judges craft appellate precedents—that they will later follow under the threat of reversal—could be viewed as a quality-control measure that bears a conceptual resemblance to a software development process known as “eating one’s own dog food” or “dogfooding,” where software developers use internally the products they are developing in order to improve their ability to test and debug them.[192] Examples include Google’s employees internally using AndroidTM products before making them available to the public,[193] and Microsoft internally using the WindowsÆ operating system.[194] This practice tightens and strengthens the software development feedback loop between the developers and the end users because they include the same people. Likewise, the substitution of permanent Federal Circuit judges with district judges could similarly strengthen the “feedback loop” between the appellate and trial levels by having one of the primary consumers of Federal Circuit case law (i.e., district judges) contribute directly to its creation and revision. More generally, district judges who have struggled to apply Federal Circuit precedents may have a better sense than the current group of permanent Federal Circuit judges (most of whom do not have any experience as trial judges)[195] of how existing precedents should be clarified, modified, limited or overruled so that generalist district judges, as well as litigants, may reliably apply them in a manner that improves the overall quality of patent case adjudication.

B. Combating the Knowing-Doing Gap with Rotations

Although district judges may help mitigate the problems arising from the curse of expertise, permanently elevating individual district judges to the Federal Circuit is an incomplete solution. Rather, the district judges should serve staggered terms of limited duration in order to decrease the influence of the three elements that contribute to the knowing-doing gap.[196] First, to overcome the consistency/conviction element that promotes over-commitment to prior decisions, changes in personnel may be necessary.[197] As discussed previously, a judge’s reputational investment in his prior positions, the convenience of relying on previous analyses, and/or his deep-seated convictions, may make it difficult for him to change course.[198] Rather than waiting for one or more Federal Circuit judges to perform the unusually self-disciplined act of making a public about-face on an issue and engaging in a labor-intensive analysis to limit or overrule precedents they had authored or voted for in the past,[199] the task of precedent correction should be entrusted to a new set of judges who were not involved in creating or perpetuating the precedents at issue, and, as a result, may be less hesitant to make changes when necessary.[200] To be clear, the consistency/conviction element will not be completely eliminated in a Federal Circuit staffed with rotating district judges. However, its ability to hinder self-correction may be substantially attenuated because the judges will be serving for limited terms. Second, regularly rotating the membership of the Federal Circuit may help prevent the court from reaching an unproductive equilibrium, in which judges fall into predictable patterns of voting that may allow suboptimal precedents to issue and remain uncorrected.[201] Compared to a group of permanent judges with a long history of service together, a group of temporary judges who serve staggered, limited terms might be more amenable to rethinking existing doctrines. Each rotation of temporary judges will introduce new members who may bring fresh perspectives and whose views may not be firm on certain issues. Because a temporary judge may not be fully aware of the ideological or doctrinal alignments of the other temporary judges—and the extent to which their views are set—he may perceive more opportunities (than a permanent Federal Circuit judge) for persuading his colleagues to critically re-evaluate existing case law. The regular rotation of judges may also inhibit the formation of opposing camps that give rise to panel-dependent outcomes and divergent lines of precedent. In addition, judges who serve limited terms may feel freer to “rock the boat” by invoking the labor-intensive en banc procedure because the term-limited nature of their appointments may heighten their sense of purpose—i.e., to improve the adjudication of patent disputes—while decreasing the relative importance of maintaining a predictable adjudicatory equilibrium that allows judges to serve comfortably for an indefinite period of time with the same colleagues.[202] Some, however, may point to the high level of dissent at the Federal Circuit[203] as indicative of a court with diverse views that is frequently engaged in a critical analysis of its precedents. However, the frequency of dissent and separate opinion-writing may be largely a reflection of circuit culture and norms.[204] Moreover, a high dissent rate may indicate a high degree of entrenchment[205] with established camps of judges that have settled into an equilibrium of “agreeing to disagree,” where, on a given panel, neither the majority nor the dissenter perceives a compelling need to temper its views to reach a unanimous result.[206] Perhaps because of the high concentration of patent cases on its docket, the Federal Circuit, by design, might be particularly susceptible to camps developing among its permanent judges, whose views may have become progressively nuanced and divergent as a consequence of the repeated exposure to the same issues over a prolonged period of time.[207] Rather than the rate of dissent, the en banc rate may provide a better sense of whether precedential ossification has set in.[208] The Federal Circuit’s en banc rate is relatively low,[209] which may indicate that, despite the frequency of dissents, the majority of Federal Circuit judges are choosing to avoid a costly, time-consuming endeavor whose outcome may be uncertain.[210] Ultimately then, the high rate of dissents, when coupled with the relatively low rate of taking cases en banc, may be indicative of a court where its members have settled into camps that give rise to multimodal, panel-dependent outcomes, and where the collective will to resolve conflicting precedents may be weak. Third, having district judges serve limited terms may help create a sense of urgency at the Federal Circuit for fixing suboptimal precedents. As previously discussed,[211] permanent judges may view the process of correcting precedents as a labor-intensive endeavor that may be conveniently deferred by defaulting to their prior positions,[212] engaging in forms of collegial concurrence such as “going-along voting” and “live and let live opinion-joining,”[213] and studiously avoiding the en banc process.[214] Unlike a judge with a permanent appointment at the Federal Circuit, a district judge who serves for a limited time knows that after returning to the district court level, she will be required to follow the precedents she created—under the threat of reversal. Accordingly, district judges serving temporarily at the Federal Circuit may feel a heightened need to “get it right” compared to permanent judges,[215] such that they might be more willing to undertake the effort to correct, or prevent the issuance of, suboptimal precedents. At a more general level, the rotation of judges at the Federal Circuit may create a form of de facto percolation through regular changes in personnel, which may be a faster form of percolation involving more judges than increasing the number of circuit courts that hear patent appeals (i.e., percolation through space)[216] or waiting for Supreme Court intervention (i.e., percolation through time).[217] That is, with regular changes in personnel, the process of case law development at the Federal Circuit is likely to be more responsive than it is currently. If a rule is sound, subsequent instantiations of the Federal Circuit with a new slate of district judges will likely maintain it.[218] And if a rule is unsound, subsequent instantiations may be less hesitant to reconsider it and make adjustments. Ultimately, by allowing percolation to occur through regular changes in personnel, Federal Circuit precedents can be developed by individuals from a much wider variety of backgrounds and perspectives than is currently possible, while at the same time preserving a single appellate venue for patent cases.[219]

IV. Concerns and Objections

A. Stability of Case Law

Some might object to staffing the Federal Circuit with a rotating group of district judges on the ground that it could potentially destabilize patent case law. This proposal is certainly not without costs, and the potential for doctrinal fluctuations is one of them. However, because Federal Circuit case law has limited opportunities for the type of corrective percolation that occurs among the regional circuits,[220] and, at the same time, must adapt to changes in technology,[221] the benefits associated with a more responsive system for reconsidering and updating precedent, as provided by the judicial rotation proposal, are expected to outweigh the costs associated with any temporary doctrinal fluctuations. Moreover, the current status of the Federal Circuit as “the de facto administrator of the Patent Act”[222] may tilt the cost-benefit analysis in favor of implementing some mechanism for regularly rotating its membership. Whether judicial rotations may be cost-justified for any of the regional circuits is an issue left to future research.[223] The entrenchment of suboptimal precedents may be a more serious problem for the Federal Circuit than the transient doctrinal swings that may result from the court’s attempts to further refine its case law based on fresh insights that new members may bring with each rotation. The development of sound precedent is necessarily an iterative process, and the use of term-limited, rotating judges could cause fluctuations in precedent to occur more frequently within a shorter time period. At the same time, the case law associated with a particular doctrine may be less prone to getting stuck in a suboptimal state. In contrast, with permanent judges, the process of self-correction by the court may be much slower such that suboptimal case law might have the appearance of stability or doctrinal “consistency” because it is not being actively reconsidered, as opposed to enduring on its merits. The potential for doctrinal instability under the rotation proposal could be mitigated, in part, by amending the Federal Circuit’s IOPs. For example, to avoid the potential loss of institutional or historical knowledge regarding Federal Circuit case law when a group of temporary judges rotates off the court, the IOPs could be amended so that the STA would once again provide the judges with reports analyzing every draft precedential opinion for potential conflicts prior to issuance. And, as compared to the permanent Federal Circuit judges, the rotating district judges, as non-experts, might pay closer attention to the STA’s reports.[224] If the proliferation of too many precedential opinions in the course of self-correction is a concern,[225] the IOPs could be changed so that the rate of issuance of precedential opinions decreases, while allowing more non-precedential dispositions and Rule 36 judgments to issue, so as to dampen any precedential whipsawing that might occur from the accelerated percolation resulting from the rotations. Currently, an election to issue a Rule 36 judgment requires panel unanimity, while a majority is required to issue an opinion as nonprecedential.[226] To decrease the proportion of dispositions classified as precedential, the IOPs could be amended so that an opinion may be issued as precedential only if all panel members agree on that designation.[227] Alternatively, the election to make an opinion precedential could be taken away from the panel that decided the case, and instead given to a different panel of judges. Finally, the opposite concern might also arise: whether the district judge rotation proposal could actually make doctrinal change less likely. That is, when in doubt, might the district judges be inclined to defer to an existing body of law created by “the experts”? It is possible that this inclination could exist at the very beginning of the tenure of a district judge who has rotated onto the Federal Circuit. However, this inclination may be tempered as the district judge settles into his appellate role and delves into the body of Federal Circuit case law on a regular basis. Overall, the potential for undue deference to prior case law is likely to be weak because the district judges who are selected for the rotations, while not experts, are not novices either.[228] Moreover, based on their experiences with adjudicating patent cases at the trial level, the district judges may relish the opportunity to revisit those doctrines have been troublesome for them, especially because they will have to live with the precedents they create when their rotations end.

B. Quality of Adjudication

Some may argue that the participation of district judges in Federal Circuit appeals could compromise the quality of adjudication, because their level of patent law expertise is lower than that of permanent Federal Circuit judges, and that the selection criteria applied to individuals who become district judges may be somehow less rigorous than that of Federal Circuit judges.[229] However, as suggested by Nard & Duffy’s proposal to expand the number of circuit courts to hear patent appeals to allow inter-circuit percolation,[230] and Judge Wood’s endorsement thereof,[231] patent law expertise at the appellate level may not be nearly as important as ensuring that robust mechanisms exist to facilitate reconsideration and correction of case law. The Federal Circuit’s susceptibility to expertise-induced blind spots[232] and lack of receptivity to debiasing information[233]—combined with the institutional inertia arising from lifetime appointments[234]—may well result in suboptimal case law that is likely to endure. The tradeoff then, is whether an expert court that might be difficult to correct is preferable to a non-expert court that might be easier to correct. In view of the unique requirements of patent case law—namely, uniformity and the ability to adapt to changing technologies—the latter option might be preferable. In addition, staffing a “specialized court” with a group of generalist district judges may check the tendency of that court to develop case law that unnecessarily deviates from the mainstream practice of the regional circuits.[235] Permanent Federal Circuit judges may see themselves as “boosters” of patent law,[236] such that the appropriate patentee-public balance in patent case law might be better maintained by a Federal Circuit that is staffed by temporary judges whose reputations are not solely dependent on their work at that court, and, as a result, would be less inclined to develop precedents in a direction that would enhance the court’s influence at the expense of other governmental institutions and the public.[237] Furthermore, because the generalized nature of their dockets regularly exposes district judges to issues that lie at the federal-state court interface, they may be more sensitive to the need to strike an appropriate jurisdictional balance between federal and state courts in cases involving state law claims that raise issues related to patent law.[238] Finally, whether someone is appointed to a circuit court versus a district court is less a function of qualifications and more a function of politics and chance.[239] Another concern with staffing the Federal Circuit with only district judges is that they might be reluctant to reverse a fellow district judge on appeal based on sympathy or other reasons unrelated to the merits.[240] However, this may not be a substantial risk: according to one study of appeals terminated in the federal appellate courts from 1987 to 1992, the reversal rate for appeals from district courts where the panel included a district judge sitting by designation (18.54%) was indistinguishable from that of all panels in appeals originating from the district courts (18.57%).[241] It is possible, however, that the similarity in reversal rates might be partially attributable to the designated district judges deferring to the appellate judges on their panels,[242] such that a panel comprised of only district judges might feel freer to affirm more often. To decrease the likelihood of undeserved affirmances under the judicial rotation proposal, the cases assigned to a panel should not include any appeal from the home district of any panel member. Also, if the identity of the author is masked through the issuance of a “per curiam” opinion, a district judge might feel more comfortable authoring an opinion reversing a fellow district judge. To the extent that the affirmance rate might increase by a nontrivial margin in a district-judge-only Federal Circuit, it could reflect a salutary development that counterbalances the previous expansion of the number of issues subject to de novo review.[243] In addition to the standard for reviewing claim construction,[244] the Federal Circuit recently extended de novo review to the objective prong of the willfulness standard,[245] and the objective reasonableness determination for an exceptional case under 35 U.S.C. § 285.[246] If the Federal Circuit were staffed by only district judges, the court may be less amenable to expanding the number of issues that are reviewed de novo and may even reverse this trend, which could ultimately bring greater stability—not less—in the adjudication of certain issues on appeal.[247] Another potential objection to staffing an appellate court with only district judges is that they are allegedly less comfortable than circuit judges with the type of group decision-making that takes place at the appellate level, as opposed to the solitary decision-making process at the trial level.[248] This claim appears weak in light of the frequency with which district judges sit by designation on, or are elevated to, appellate courts. As for including appellate judges from the regional circuits in the Federal Circuit rotation, it would likely make the proposal less effective, as very few regional circuit judges have any experience with patent cases (let alone an intermediate level of experience that is recommended for the rotations).[249] At the same time, regional circuit judges may be less accountable because they are unlikely to be in a position to apply the precedents they create at the Federal Circuit as binding authority when they return to their home courts. In addition, the hierarchical difference between the regional circuit judges and the district judges might adversely affect the district judges’ independence of judgment required to critically re-evaluate precedents.[250] While the analysis of the district judge rotation proposal has focused primarily on its potential impact on the Federal Circuit’s patent case law, the effect of the rotations on the non-patent portions of the Federal Circuit’s docket is expected to be approximately neutral. Much of the Federal Circuit’s non-patent docket originates from agency tribunals, the Court of Federal Claims, and the Court of International Trade.[251] The variety of cases that a generalist district judge typically handles is far greater than the Federal Circuit docket—in terms of the types of government agencies, tribunals, parties, and issues,[252]—such that it is unlikely that the rotating judges will have difficulty with, or materially affect the quality of, the adjudication of the Federal Circuit’s non-patent docket, particularly when the scope of appellate review is often restricted in such cases.[253]

C. Are There Less Radical Alternatives?

Some may question the need for regular rotations at the Federal Circuit, given that turnover does occur, albeit at a slower pace. Since 2010, six new judges have been appointed to the court: Kathleen O’Malley,[254] Jimmie Reyna,[255] Evan Wallach,[256] Richard Taranto,[257] Raymond Chen,[258] and Todd Hughes.[259] The new judges constitute half of the twelve authorized active judgeships.[260] Based on this turnover, might the culture of the Federal Circuit change so that it is more amenable to timely self-correction? In drawing an analogy to the assimilation of immigrants, Rochelle Dreyfuss suggests that it might take three generations of Federal Circuit judges to shed the defensive culture of the Markey-era and internalize the general norms of the rest of the federal judiciary.[261] But the behavioral elements[262] that impair timely self-correction will likely remain, as they are grounded not in the culture of the court, but rather in the organizational structure based on the types of individuals involved (i.e., experts) and their operating environment (i.e., working with colleagues having lifetime appointments). Others may wonder if changes to the Federal Circuit’s IOPs may be sufficient to improve the court’s ability to timely address suboptimal case law, so as to obviate the need for structural changes. For example, the impact of the consistency/conviction element on the ability of a court to reconsider precedent may be weakened by revising the IOPs so that the panel judges are excluded from participating in the en banc consideration of an opinion issued by their panel. In addition, if all opinions were issued “per curiam,” it may better focus the panel judges’ attention on reaching the right result by decreasing the influence of considerations related to the authoring judge’s need to publicly save face or seek vindication of prior positions.[263] Furthermore, the IOPs could be amended to make it more difficult to designate opinions as precedential (e.g., requiring a majority vote of non-panel judges) in order to prevent the proliferation of divergent or suboptimal precedents. To further enhance intra-circuit percolation, the IOPs could be changed so that the presiding judge on the merits panel would be assigned randomly, without regard to seniority, to ensure that the authorship of significant opinions is as varied as possible.[264] And finally, the STA’s review of all precedential opinions could be reinstated. While the current version of the Federal Circuit could, in theory, implement these suggested changes to its internal procedures, they are highly unlikely to be adopted. This is because such changes might be perceived as impairing the ability of individual judges to fully participate in the development of precedents (especially if their ability to participate on an en banc panel is restricted) and to establish a legacy (especially if they cannot be identified as the author of a specific opinion), which may be unacceptable to those permanent Federal Circuit judges who, unlike the district judges on temporary rotations, may have their judicial identities closely—and exclusively—associated with the Federal Circuit. And, just as the STA’s conflict memos were scaled back, the court may change its IOPs at any time, so any changes may not last. Finally, some may object to the proposal on the ground that a less radical option exists: have more district judges sit by designation at the Federal Circuit[265] and vice versa.[266] However, increased designation practice may not be an adequate substitute. Having district judges sit by designation more often at the Federal Circuit might increase awareness among the Federal Circuit judges that certain precedents are problematic. However, visiting judges do not participate in the Federal Circuit’s en banc process,[267] and the additional insights supplied by visiting district judges may have little effect on closing the knowing-doing gap. As discussed previously, an environment that is conducive to self-correction is not one in which an unproductive equilibrium exists with predictable voting patterns, but rather one in which the judges share a sense of urgency in undertaking the effort to reconsider and take corrective action on problematic case law.[268] The current adjudicatory environment of the Federal Circuit that is maintained by the permanent judges is unlikely to be materially changed by the district judges who sit by designation, as the latter will be both outnumbered and outranked by the former. Staffing panels with a mix of judges at different levels of the judicial hierarchy may result in district judges subconsciously deferring to the circuit judges, such that the former may dissent less often,[269] while the latter may subconsciously assert their superior position in the hierarchy.[270] Indeed, the hierarchical disparity between permanent Federal Circuit judges and visiting district judges may adversely affect the latter’s independence of judgment necessary to engage the other judges in a critical, rigorous analysis directed to reconsidering existing precedents.[271] Conversely, if Federal Circuit judges were to sit by designation in the district courts more often, it is possible that it could improve their understanding of the impact of Federal Circuit case law at the district court level. However, a Federal Circuit judge may need to spend at least a year at a district court handling a full district court docket in order to meaningfully experience the challenges district judges face in managing patent cases with the rest of their caseload. In this regard, the current practice whereby some circuit judges preside over cherry-picked district court patent cases[272] is wholly inadequate. Furthermore, it is unlikely that a critical mass of Federal Circuit judges will sit by designation at the district court level because they may have neither the interest nor the necessary skill set (e.g., greater familiarity with trial practice, enhanced project management skills, and facility with a wide range of subject matter, especially criminal procedure). But even if every Federal Circuit judge were to sit by designation at the district court level, there is no guarantee that they will use their newly-acquired knowledge to correct suboptimal precedents when they return to the Federal Circuit—the knowing-doing gap will likely exist so long as the environment of the Federal Circuit remains one where a group of experts serve terms of indefinite duration.

Conclusion

If the courts are to solve the patent crisis,[273] the precedents issued by the Federal Circuit must strike the proper balance between private and public interests. And if the precedents become obsolete, unworkable, or are otherwise suboptimal, the Federal Circuit should take prompt remedial measures. In response to concerns about the Federal Circuit’s limited ability to experiment and adapt its precedents to changing needs,[274] this Article explores the cognitive and situational considerations that may underlie the Federal Circuit’s inability to correct its precedents in a timely manner, and proposes a solution. By staffing the Federal Circuit with a rotating group of district judges, the blind spots and institutional inertia arising from the curse of expertise and the knowing-doing gap, respectively, could be mitigated. Otherwise, by maintaining the present staffing arrangement whereby a group of judges are permanently assigned to the Federal Circuit, timely self-correction may occur only if the judges behave in ways that are unusually self-aware and self-disciplined.
* Assistant Professor of Law, The University of Memphis Cecil C. Humphreys School of Law. The Author thanks Michael Burstein, Jennifer Carter-Johnson, T.J. Chiang, Rochelle Cooper Dreyfuss, John Duffy, James Gibson, Andrew Gilden, John Golden, Paul Gugliuzza, Laura Heymann, Sapna Kumar, Mark Lemley, Glynn Lunney, Michael Mattioli, Mary Beth O’Connor, Lisa Larrimore Ouellette, Sean Pager, Laura Pedraza-FariÒa, Sarah Wasserman Rajec, Greg Reilly, Pamela Samuelson, David Schwartz, Andrew Thomases, Greg Vetter, and the participants at PatCon3 at IIT Chicago-Kent College of Law, the 2013 Intellectual Property Scholars Conference at Benjamin N. Cardozo School of Law, and the 6th Annual Junior Scholars in Intellectual Property Workshop at Michigan State University College of Law for helpful discussions and feedback.
[1] For example, in 2013, the Supreme Court issued multiple patent-related decisions. See, e.g., FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013); Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013); Bowman v. Monsanto Co., 133 S. Ct. 1761 (2013); Gunn v. Minton, 133 S. Ct. 1059 (2013). In addition, members of Congress on both sides of the aisle have proposed multiple bills for tackling patent trolls. See, e.g., Joe Mullin, Wide Range of Industries Plead for Congressional Action on Patent Trolls, Ars Technica (July 17, 2013), http://arstechnica.com/tech-policy/2013/07/wide-range-of-industries-plead-for-congressional-action-on-patent-trolls/, Brendan Sasso, Congress Takes Aim at ‘Patent Trolls’, The Hill (June 2, 2013), http://thehill.com/blogs/hillicon-valley/technology/302881-congress-takes-aim-at-patent-trolls. Also, the Obama administration has offered its own proposals for improving the patent system. See, e.g., FACT SHEET: Executive Actions: Answering the President’s Call to Strengthen Our Patent System and Foster Innovation, The White House (Feb. 20, 2014), http://www.whitehouse.gov/the-press-office/2014/02/20/fact-sheet-executive-actions-answering-president-s-call-strengthen-our-p; FACT SHEET: White House Task Force on High-Tech Patent Issues, The White House (June 4, 2013), http://www.whitehouse.gov/the-press-office/2013/06/04/fact-sheet-white-house-task-force-high-tech-patent-issues.
[2] 28 U.S.C. § 1295 (2012).
[3] University of New Hampshire School of Law, Hon. Randall R. Rader Discussing the America Invents Act (May 21, 2012) available at http://www.youtube.com/watch?v=dcZ7OByqJgk at 10:02.
[4] There is a general consensus that the Supreme Court is the most important court, followed by the U.S. Court of Appeals for the District of Columbia Circuit. See, e.g., Glenn Kessler, Is the D.C. Circuit Last in ‘Almost Every Category’?, Wash. Post (June 6, 2013), available at http://www.washingtonpost.com/blogs/fact-checker/post/is-the-dc-circuit-last-in-almost-every-category/2013/06/05/a589b186-ce22-11e2-8f6b-67f40e176f03_blog.html (“The D.C. Circuit is generally regarded as the second most important judicial body in the United States, after the Supreme Court.”).
[5] 28 U.S.C. § 1295(a) (2012); see also S. Rep. No. 97-275, at 3 (1981) (“The Court of Appeals for the Federal Circuit differs from other federal courts of appeals . . . in that its jurisdiction is defined in terms of subject matter rather than geography.”).
[6] S. Rep. No. 97-275, at 4 (1981) (“The creation of the Court of Appeals for the Federal Circuit provides . . . a forum for appeals from throughout the country in areas of the law where Congress determines that there is special need for national uniformity.”).
[7] See, e.g., R. Polk Wagner & Lee Petherbridge, Is the Federal Circuit Succeeding? An Empirical Assessment of Judicial Performance, 152 U. Pa. L. Rev. 1105, 1112 (2004) [hereinafter Wagner & Petherbridge, Judicial Performance] (“Our findings . . . indicate that claim construction at the Federal Circuit is panel dependent. That is, the data reveals that the composition of the panel that hears and decides an appeal has a statistically significant effect on the claim construction analysis.”).
[8] See, e.g., John R. Thomas, Formalism at the Federal Circuit, 52 Am. U. L. Rev. 771, 775 (2003) (“[T]he Federal Circuit’s increasing orientation towards rulemaking may negatively impact innovation policy, lead to heavy burdens upon patent administration, and fail to realize the goals of certainty and predictability so often ascribed to adjudicative rule formalism.”). But see David O. Taylor, Formalism and Antiformalism in Patent Law Adjudication: Rules and Standards, Conn. L. Rev. (forthcoming 2013) (manuscript at 86-87), available at http://ssrn.com/abstract=2306703.
[9] See, e.g., S. Jay Plager, Challenges for Intellectual Property Law in the Twenty-First Century: Indeterminacy and Other Problems, 2001 U. Ill. L. Rev. 69, 72 (2001) (“On the doctrinal side of indeterminacy, the most obvious and well-known example in patent law is the doctrine of equivalents.”).
[10] See, e.g., Janice M. Mueller, The Evolving Application of the Written Description Requirement to Biotechnological Inventions, 13 Berkeley Tech. L.J. 615, 649 (1998) (“[T]he Federal Circuit has fashioned a newly heightened written description standard unique to biotechnological inventions, without meaningful explanation of policy concerns that would justify such a significant departure from earlier written description principles.”).
[11] See, e.g., Donald S. Chisum, Weeds and Seeds In the Supreme Court’s Business Method Patents Decision: New Directions for Regulating Patent Scope, 15 Lewis & Clark L. Rev. 11, 23-24 (2011) (“[T]he Federal Circuit has tended to reject indefiniteness charges, applying its extraordinarily lenient standard which allows claims to pass muster unless they are not ‘amenable to construction’ or are ‘insolubly ambiguous.’”).
[12] Empirical analyses conducted both before and after Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), reveal that a methodological schism persists. Compare Wagner & Petherbridge, Judicial Performance, supra 7 at 1111 (“The data reveals [sic] a sharp division within the court between two distinct methodological approaches (which we term ‘procedural’ and ‘holistic,’ respectively), each of which leads to distinct results.”), with R. Polk Wagner & Lee Petherbridge, Did Phillips Change Anything? Empirical Analysis of the Federal Circuit’s Claim Construction Jurisprudence, in Intellectual Property and the Common Law 135 (S. Balganesh ed., 2012) (reporting results that suggest “virtually no change in the way that the court utilized the methodological approach to claim construction, even after the en banc treatment of the issue in Phillips”).
[13] See infra notes 119121 and accompanying text.
[14] Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc).
[15] Some of the earliest commentary published shortly after Cybor was issued in 1998 was highly critical. See, e.g., Gary M. Hoffman & Herbert V. Kerner, Federal Circuit Tries to Clarify Markman—Does Cybor Accomplish It? Intell. Prop. Today 42 (June 1998) (observing that, after Cybor, “at each appeal [claim construction] is reopened like it was never decided before. This whole process could potentially extend the time to resolve a patent case by years without adding much predictability or consistency to the result”).
[16] Symposium, A Panel Discussion: Claim Construction from the Perspective of the District Judge, 54 Case W. Res. L. Rev. 671, 679 (2004) (statement of Judge Saris) (“There has to be a softening of the de novo review in claim construction. . . . [T]here needs to be more deference for two reasons: to create more predictability, and to bring the standard in line with other areas of the law that recognize the trial judge’s unique role.”).
[17] See, e.g., Amgen Inc. v. Hoechst Marion Roussel, Inc., 469 F.3d 1039, 1046 (Fed. Cir. 2006) (Moore, J., dissenting from denial of rehearing en banc) (“I believe this court should have taken this case en banc to reconsider its position on deference to district court claim construction articulated in Cybor . . . ”); Phillips v. AWH Corp., 415 F.3d 1303, 1330 (Fed. Cir. 2005) (Mayer, J., dissenting) (“Now more than ever I am convinced of the futility, indeed the absurdity, of this court’s persistence in adhering to the falsehood that claim construction is a matter of law devoid of any factual component.”).
[18] Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp., 2014 U.S. App. LEXIS 3176, at *7 (Feb. 21, 2014) (en banc) (“[W]e apply the principles of stare decisis, and confirm the Cybor standard of de novo review of claim construction, whereby the scope of the patent grant is reviewed as a matter of law.”).
[19] Cf. 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) (observing that “[t]he most robust criticisms of the [Federal] Circuit, including charges that the Circuit’s pre-KSR jurisprudence interpreted nonobviousness too weakly or that the Circuit’s jurisprudence had become too reflexively formal, seem primarily to reflect a contention that the Circuit has substantively erred and, worse, persisted in error . . . . ”).
[20] The Supreme Court grants certiorari in about 1% of cases per term. The Justices’ Caseload, Supreme Court of the United States, available at http://www.supremecourt.gov/about/justicecaseload.aspx (last visited Mar. 30, 2014) (“The [Supreme] Court’s caseload has increased steadily to a current total of more than 10,000 cases on the docket per Term. . . . Plenary review, with oral arguments by attorneys, is granted in about 100 cases per Term.”).
[21] See, e.g., Jennifer Steinhauer, Congress Nearing End of Session Where Partisan Input Impeded Output, N.Y. Times (Sept. 18, 2012), available at http://www.nytimes.com/2012/09/19/us/politics/congress-nears-end-of-least-productive-session.html (“The 112th Congress is set to enter the Congressional record books as the least productive body in a generation, passing a mere 173 public laws as of last month. That was well below the 906 enacted . . . by the body President Harry S. Truman referred to as the ‘do-nothing’ Congress . . . . ”).
[22] Paul M. Bator, What is Wrong with the Supreme Court?, 51 U. Pitt. L. Rev. 673, 680 (1990).
[23] Golden, supra 19, at 701 (“[C]entralized review [of patent law] by the Federal Circuit means that the real danger is ossification . . . ”).
[24] See Rochelle Cooper Dreyfuss, In Search of Institutional Identity: The Federal Circuit Comes of Age, 23 Berkeley Tech. L.J. 787, 827 (2008) [hereinafter Dreyfuss, Institutional Identity] (observing that the Federal Circuit has been deficient in “using its expertise to keep patent law responsive to changing technological facts and emerging national interests”).
[25] Craig Allen Nard & John F. Duffy, Rethinking Patent Law’s Uniformity Principle, 101 Nw. U. L. Rev. 1619, 1622 (2007).
[26] See infra Part I.B.
[27] Organizational behavior is “primarily concerned with the psychosocial, interpersonal, and behavioral dynamics in organizations.” Debra L. Nelson & James Campbell Quick, Understanding Organizational Behavior 4 (3d ed. 2008). “Organizational behavior is a blended discipline” that draws from psychology, sociology, engineering, anthropology, management, and medicine. Id. at 5. The federal judiciary, while not a company, is a type of organization, such that the literature pertaining to improving organizational performance might contain valuable lessons for the courts.
[28] See infra Part III.
[29] Cf. Chip Heath, Richard P. Larrick, & Joshua Klayman. Cognitive Repairs: How Organizational Practices Can Compensate for Individual Shortcomings, 20 Rev. Organizational Behavior 1, 3 (1998) (discussing how organizational practices can repair or mitigate cognitive shortcomings of individuals within an organization).
[30] See infra Part II.A.
[31] See infra 93 and accompanying text.
[32] The high concentration of patent cases on their docket allows judges on the Federal Circuit to develop expertise in patent law. For example, in 2012, patent-related matters constituted 45% of the Federal Circuit’s docket. Appeals Filed, by Category, FY 2012, U.S. Court of Appeals for the Federal Circuit, available at http://www.cafc.uscourts.gov/images/stories/the-court/statistics/Caseload_by_Category_Appeals_Filed_2012.pdf (last visited Mar. 30, 2014).
[33] Patent cases constitute a small fraction of the docket of a typical district judge. For example, in the 12-month period ending March 31, 2012, 285,260 civil cases were filed in the federal district courts, of which 4,446 or 1.6% were patent cases. Caseload Statistics 2012, Table C-2, U.S. District Courts—Civil Cases Commenced, by Basis of Jurisdiction and Nature of Suit, During the 12-Month Periods Ending March 31, 2011 and 2012, U.S. Courts, available at http://www.uscourts.gov/Viewer.aspx?doc=/uscourts/Statistics/FederalJudicialCaseloadStatistics/2012/tables/C02Mar12.pdf (last visited Mar. 30, 2014).
[34] See infra Part II.B.
[35] See infra 123 and accompanying text.
[36] See supra 29 and accompanying text.
[37] See, e.g., Steven G. Calabresi & James Lindgren, Term Limits for the Supreme Court: Life Tenure Reconsidered, 29 Harv. J.L. & Pub. Pol’y 769, 772 (2006) (proposing staggered, eighteen-year terms for Supreme Court justices); John O. McGinnis, Justice Without Justices, 16 Const. Commentary 541, 546 (1999) (suggesting term limit of two years for a Supreme Court staffed with rotating judges from inferior courts); Symposium, Term Limits For Judges?, 13 J.L. & Pol. 669, 687 (1997) (statement of Judge Laurence H. Silberman) (suggesting five-year terms for Supreme Court Justices); L.A. Powe, Jr., Old People and Good Behavior, 12 Const. Commentary 195, 196 (1995) (“Life tenure is the Framers’ greatest lasting mistake.”); Ahkil Reed Amar & Steven G. Calabresi, Term Limits for the High Court, Wash. Post (Aug. 9, 2002) (“Congress should try to nudge the justices toward a better model of judicial independence based on fixed judicial terms.”). But see Ward Farnsworth, The Regulation of Turnover on the Supreme Court, 2005 U. Ill. L. Rev. 407, 407-08 (defending life tenure at Supreme Court, while proposing age limit); David R. Stras & Ryan W. Scott, Retaining Life Tenure: The Case for the Golden Parachute, 83 Wash. U. L.Q. 1397, 1397-98 (2005) (arguing that life tenure should be retained, while proposing incentives for early retirement). A few commentators have extended the case for term limits to the circuit court level on the basis that, given the rarity of Supreme Court review, the court of last resort in most cases is the circuit court. See, e.g., Michael J. Mazza, A New Look at an Old Debate: Life Tenure and the Article III Judge, 39 Gonz. L. Rev. 131, 133 (2003); Paul D. Carrington, Restoring Vitality to State and Local Politics by Correcting the Excessive Independence of the Supreme Court, 50 Ala. L. Rev. 397, 455 & n.300 (1999).
[38] See, e.g., Calabresi & Lindgren, supra 37 , at 809 (“[L]ater retirement and less frequent vacancies . . . have three primary consequences for the current state of the judiciary: the [Supreme] Court’s resistance to democratic accountability, the increased politicization of the judicial confirmation process, and the potential for greater mental decrepitude of those remaining too long on the bench.”); Stras & Scott, supra 37 , at 1422 (noting that “the three most powerful critiques of life tenure” are directed to concerns about “democratic accountability,” “strategic retirement behavior,” and “mental or physical infirmity”).
[39] Patricia Sullivan, Howard Markey: First Chief Judge of Federal Circuit Appellate Court, Wash. Post (May 5, 2006), available at http://www.washingtonpost.com/wp-dyn/content/article/2006/05/04/AR2006050402155.html.
[40] Jon Thurber, Judge Giles Rich: Patent Law Authority, L.A. Times (June 14, 1999), available at http://articles.latimes.com/1999/jun/14/news/mn-46460.
[41] First Annual Judicial Conference of the United States Court of Appeals for the Federal Circuit, 100 F.R.D. 499, 502 (1983) (statement of Chief Judge Howard T. Markey) (“[W]hen a panel has completed work on an opinion and it is ready to issue, that opinion is circulated for seven days to all the non-panel members of the Court.”); see also Giles S. Rich, Columbia Law School Julius Silver Program in Law, Science & Technology – Inaugural Lecture, 68 J. Pat. & Trademark Off. Soc’y 604, 617 (1986) (“When the panelists are finally finished, the opinion or opinions are then circulated to the entire court for 7 days (14 in summer), every judge having a chance to criticize.”). In recent years, the number of review days has increased to ten working days. Internal Operating Procedures, U.S. Court of Appeals for the Federal Circuit #10, ¶5 (July 7, 2010), available at http://www.cafc.uscourts.gov/rules-of-practice/internal-operating-procedures.html [hereinafter IOP].
[42] IOP, supra 41, at #10, ¶5 (July 7, 2010).
[43] 28 U.S.C. § 715(c) & (d) (2012) (providing specific authorization for the position of “Senior Technical Assistant” at the Federal Circuit).
[44] First Annual Judicial Conference, 100 F.R.D. at 502 (statement of Chief Judge Howard T. Markey) (“[O]ur Senior Technical Assistant and his assistant have a major duty of reading every opinion before it goes out and comparing it with earlier decisions. If they even think there even might be a conflict, they notify the judges immediately.”); see also Rich, supra 41 at 617 (noting that the Senior Technical Advisor is tasked with “commenting on any suspected departure from precedent or suggesting additional citations” for precedential opinions that are circulated prior to issuance).
[45] At the Federal Circuit, a non-panel judge may prevent the issuance of an opinion by submitting a “hold sheet.” IOP, supra note 41, at #10, ¶5 (“A nonpanel member judge in regular active service may submit a hold sheet pending a request for an en banc poll. Absent transmittal of a hold sheet or a request for an en banc poll during the circulation period, the authoring judge sends the opinion . . . to the clerk for issuance.”).
[46] See supra 7 and accompanying text.
[47] See generally Matthew F. Weil & William C. Rooklidge, Stare Un-Decisis: The Sometimes Rough Treatment of Precedent in Federal Circuit Decision-Making, 80 J. Pat. & Trademark Off. Soc’y 791 (1998) [hereinafter Weil & Rooklidge, Stare Un-Decisis] (describing various ways in which the Federal Circuit generates conflicting precedent).
[48] See William C. Rooklidge & Matthew F. Weil, En Banc Review, Horror Pleni, and the Resolution of Patent Law Conflicts, 40 Santa Clara L. Rev. 787, 808 n.92 (2000) [hereinafter Rooklidge & Weil, En Banc Review] (“It seems likely that these conflicts [in precedent] can arise when judges ignore the efforts of the Senior Technical Assistant.”).
[49] First Annual Judicial Conference, 100 F.R.D. at 502 (statement of Chief Judge Howard T. Markey) (noting that the Senior Technical Assistant has “a major duty of reading every opinion before it goes out”).
[50] Compare IOP, supra 41, at #10 ¶5 (July 7, 2010), with Internal Operating Procedures, U.S. Court of Appeals for the Federal Circuit #10, ¶5 (Nov. 14, 2008) (copy on file with author).
[51] See, e.g., CLS Bank Int’l v. Alice Corp., 717 F.3d 1269 (Fed. Cir. 2013) (en banc); see generally Dina Roumiantseva, Note, The Eye of the Storm: Software Patents and the Abstract Idea Doctrine in CLS Bank v. Alice, 28 Berkeley Tech. L.J. 569, 571 (2013) (examining “the current split regarding software patentability in the Federal Circuit”).
[52] Jason Rantanen & Lee Petherbridge, Disuniformity (unpublished manuscript) at 13, available at http://ssrn.com/abstract=2351993 (November 10, 2013) (reporting data suggesting that “Federal Circuit panels are formally disagreeing with increasing frequency about the content of patent law”).
[53] IOP, supra 41, at #13, ¶1 (Nov. 14, 2008) (“En banc consideration is required to overrule a prior holding of this or a predecessor court expressed in an opinion having precedential status.”).
[54] Christopher A. Cotropia, Determining Uniformity Within the Federal Circuit by Measuring Dissent and En Banc Review, 43 Loy. L.A. L. Rev. 801, 816-17 (2010) (reporting that en banc opinions constituted 0.18% of Federal Circuit opinions issued during 1998 through 2009).
[55] Douglas H. Ginsburg & Donald Falk, The Court En Banc: 1981-1990, 59 Geo. Wash. L. Rev. 1008, 1020 (1991) (observing that “one case reheard en banc consumes as much of the court’s resources as five or six cases heard by a panel”).
[56] Judge Patricia Wald of the D.C. Circuit describes the dynamics that militate against en banc consideration, as follows:
Perhaps the most effective antidote against profligate en bancing is the very human desire of judges to coexist in peace. Apart from the inordinate demands on the time and resources of judges, en bancs heighten tensions on the court. No judge likes to have her opinions en banced, and although she may expect it from those with whom she frequently disagrees, she may resent it from usual allies. Some judges do indeed regard a vote in favor of en bancing their cases as tantamount to betrayal. Especially on a divided court, we are thus tempted occasionally to rationalize voting against an en banc of one of our colleagues’s opinions for purposes of collegiality (“It’s not that important, I can distinguish the opinion in the future if I have to”).
Patricia M. Wald, Changing Course: The Use of Precedent in the District of Columbia Circuit, 34 Clev. St. L. Rev. 477, 488 (1986) [hereinafter Wald, Changing Course] (emphases in original); see also Douglas H. Ginsburg & Brian M. Boynton, The Court En Banc: 1991-2002, 70 Geo. Wash. L. Rev. 259, 260 (2002) (observing that decline in D.C. Circuit’s en banc rate may be attributable in part to collegiality and judges’ “keen[ ] sense of the high costs and uncertain benefits of rehearing a case en banc”).
[57] For example, in early 2013, when the Federal Circuit had only nine active judges—such that only five votes would be needed for en banc review—the court issued an en banc order in Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp., 500 F. App’x 951 (Fed. Cir. 2013), to reconsider the rule in Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), that established the de novo standard of review of claim construction rulings.
[58] See, e.g., Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp., 2014 U.S. App. LEXIS 3176 (Feb. 21, 2014) (en banc) (reaffirming the de novo standard of review for claim construction issues); Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc). In dissent, Judge Mayer summarized the Phillips en banc opinion as follows: “[A]fter proposing no fewer than seven questions, receiving more than thirty amici curiae briefs, and whipping the bar into a frenzy of expectation, we say nothing new, but merely restate what has become the practice over the last ten years . . . . ” Id. at 1330 (Mayer, J., dissenting).
[59] See, e.g., Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012) (en banc). According to Judge Linn, the majority impermissibly “broaden[ed] the doctrine of inducement, such that no predicate act of direct infringement is required.” Id. at 1342 (Linn, J., dissenting).
[60] See, e.g., CLS Bank Int’l v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed. Cir. 2013) (en banc).
[61] See, e.g., Rochelle Cooper Dreyfuss, The Federal Circuit: A Continuing Experiment in Specialization, 54 Case W. Res. L. Rev. 769, 798-99 (2004) [hereinafter Dreyfuss, Continuing Experiment].
[62] See, e.g., Jay P. Kesan & Gwendolyn G. Ball, Judicial Experience and the Efficiency and Accuracy of Patent Adjudication: An Empirical Analysis of the Case for a Specialized Patent Trial Court, 24 Harv. J.L. & Tech. 393 (2011); Arti K. Rai, Specialized Trial Courts: Concentrating Expertise on Fact, 17 Berkeley Tech. L.J. 877 (2002); John B. Pegram, Should There Be a U.S. Trial Court with a Specialization in Patent Litigation?, 82 J. Pat. & Trademark Off. Soc’y 765 (2000).
[63] See, e.g., Jeanne C. Fromer, Patentography, 85 N.Y.U. L. Rev. 1444, 1447 (2010) (“[C]onstraining venue . . . would improve district courts’ decisionmaking and encourage the Federal Circuit to defer more appropriately to district courts’ factual findings.”).
[64] Pub. L. No. 111-349, 124 Stat. 3674 (2011) (codified at 28 U.S.C. § 137 note).
[65] District Courts Selected for Patent Pilot Program, U.S. Courts (June 7, 2011), http://www.uscourts.gov/News/NewsView/11-06-07/District_Courts_Selected_for_Patent_Pilot_Program.aspx.
[66] See, e.g., Kesan & Ball, supra 62, at 423 (“One of the principal arguments for the creation of a patent trial court is that it would resolve cases more efficiently, thereby saving time and money for both litigants and the court system.”); Kimberly A. Moore, Forum Shopping in Patent Cases: Does Geographic Choice Affect Innovation?, 79 N.C. L. Rev. 889, 932 (2001) (“[A] specialized tribunal would develop expertise in patent law and the resolution of patent cases, increasing its accuracy and efficiency at resolving these cases.”).
[67] Compare David L. Schwartz, Practice Makes Perfect? An Empirical Study of Claim Construction Reversal Rates in Patent Cases, 107 Mich. L. Rev. 223, 258-59 (2008) (reporting results from empirical study suggesting that “[t]here is no compelling evidence that trial court judges are improving with experience on claim construction”), with Kesan & Ball, supra 62, at 444 (reporting results of empirical study suggesting that “the impact on the efficiency and accuracy of patent adjudication provides a real but modest case for the development of patent-specific judicial human capital at the trial level”).
[68] Dreyfuss, Institutional Identity, supra 24, at 804 (“Two levels of specialized courts would . . . likely produce law that is substantially out of the mainstream.”); see also Paul R. Gugliuzza, The Federal Circuit as a Federal Court, 54 Wm. & Mary L. Rev. 1791, 1817-18 (2013) [hereinafter Gugliuzza, Federal Circuit] (discussing Federal Circuit exceptionalism).
[69] Nard & Duffy, supra 25, at 1651-55.
[70] Diane P. Wood, Keynote Address: Is it Time to Abolish the Federal Circuit’s Exclusive Jurisdiction in Patent Cases?, 13 Chi.-Kent J. Intell. Prop. 1 (2013), available at http://studentorgs.kentlaw.iit.edu/ckjip/?attachment_id=1076.
[71] Golden, supra 19, at 661 (observing that Nard and Duffy’s “solution threatens to sacrifice substantial benefits of unified review under the Federal Circuit while providing little assurance of adequate percolation”).
[72] Dreyfuss, Institutional Identity, supra 24, at 811 (observing that “Nard and Duffy’s solution may produce fewer splits and less dialogue than they expect” because the non-specialized courts may “sav[e] resources by simply adopting the Federal Circuit’s law based on its presumed expertise, rather than because they are persuaded the Federal Circuit’s views are accurate”).
[73] Pub. L. No. 112-029, 125 Stat. 284 (2011).
[74] 535 U.S. 826, 833-34 (2002) (holding that Federal Circuit’s jurisdiction is limited to cases where patent claim appears on the face of the plaintiff’s well-pleaded complaint, and not where patent claim exists only in counterclaim).
[75] Leahy-Smith America Invents Act, Pub. L. No. 112-029, § 19, 125 Stat. 284, 331-32 (2011) (codified at 28 U.S.C. § 1295(a)(1), as amended). See generally Joe Matal, A Guide to the Legislative History of the America Invents Act: Part II of II, 21 Fed. Cir. B.J. 539, 539-40 (2012) (footnotes omitted) (“Section 19 of the AIA, at subsections (a) through (c), enacts the so-called Holmes Group fix. These provisions . . . extend the Federal Circuit’s appellate jurisdiction to compulsory patent and plant-variety-protection counterclaims, thereby abrogating Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc. . . .”).
[76] Paul R. Gugliuzza, Rethinking Federal Circuit Jurisdiction, 100 Geo. L.J. 1437, 1498-99 (2012) [hereinafter Gugliuzza, Rethinking].
[77] Id. at 1499.
[78] See infra Part II.B.
[79] Golden, supra 19, at 701.
[80] Id. at 720; see also id. at 673 (observing that the Federal Circuit in its current operation may “be more likely to produce a suboptimal body of legal doctrine that sticks — that is unlikely to be abandoned or seriously questioned, even after its negative consequences have become clear”).
[81] Id. at 662.
[82] Id. at 717.
[83] See supra 20.
[84] See Dreyfuss, Institutional Identity, supra 24, at 810 (“[T]he judges on the Federal Circuit have become quite adept at writing dissents signaling the need for Supreme Court attention . . . . Signaling for Supreme Court review can only work a few times before collegial sentiments within the appellate court fray or the interest of the [Supreme] Court wanes.”).
[85] See infra 111113 and accompanying text.
[86] Cass R. Sunstein, One Case at a Time: Judicial Minimalism on the Supreme Court 9-10 (1999) (defining judicial “maximalism” as “a shorthand reference for those who seek to decide cases in a way that sets broad rules for the future and that also gives ambitious theoretical justifications for outcomes”).
[87] See Rooklidge & Weil, En Banc Review, supra 48, at 802-03.
[88] See, e.g., Regents of the Univ. of Cal. v. DakoCytomation Cal., Inc., 517 F.3d 1364, 1379 (Fed. Cir. 2008) (“While we need not reach [the construction of the term ‘morphologically identifiable cell nucleus’] . . . we will do so in the interest of judicial efficiency, as the issue has been fully briefed and that term will likely be at issue on remand.”); Chimie v. PPG Indus., Inc., 402 F.3d 1371, 1375 n.2 (Fed. Cir. 2005) (“We also address the proper construction of the term ‘atomized precipitated silica particulates’ . . . . [T]he construction of this second disputed term was not dispositive to the district court’s decision, but may be relevant on remand.”); Microsoft Corp. v. Multi-Tech Sys., Inc., 357 F.3d 1340, 1351 (Fed. Cir. 2004) (“[That the district court properly construed certain key limitations] leads to our affirmance . . . . However . . . we consider it to be in the interest of judicial efficiency, as well as in the interest of any future litigation concerning these patents, to review the other contested claim limitations.”).
[89] See supra Part I.A.2.
[90] See Wald, Changing Course,supra 56, at 489 (“[En bancing] is not always possible, given the posture of the case, the makeup of the court, or the limited energies of its members . . . .”); see also supra 57, and accompanying text.
[91] See, e.g., Rochelle Cooper Dreyfuss, What the Federal Circuit Can Learn from the Supreme Court—And Vice Versa, 59 Am. U. L. Rev. 787, 792 (2010); Timothy B. Dyk, Does the Supreme Court Still Matter?, 57 Am. U. L. Rev. 763, 772 (2008) (“The Supreme Court has repeatedly confirmed that the Federal Circuit has useful expertise in patent law, and that the Supreme Court benefits from having its views.”).
[92] See Peter Ayton, On the Competence and Incompetence of Experts, in Expertise and Decision Support 77, 77 (George Wright & Fergus Bolger eds., 1992).
[93] See generally Pamela J. Hinds, The Curse of Expertise: The Effects of Expertise and Debiasing Methods on Predictions of Novice Performance, 5 J. Experimental Psychol.: Applied 205 (1999) [hereinafter Hinds, Curse of Expertise].
[94] See infra Part II.A.1.
[95] See infra Part II.A.2.
[96] Hinds, Curse of Expertise, supra 93, at 205 (reporting results from experimental study suggesting that “experts may have a cognitive handicap that leads to underestimating the difficulty novices face”).
[97] Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995), aff’d, 517 U.S. 370 (1996) (“Claims must be read in view of the specification, of which they are a part.”).
[98] Liebel-Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 904 (Fed. Cir. 2004) (“[I]t is improper to read a limitation from the specification into the claims.”).
[99] See, e.g., Andrew T. Zidel, Patent Claim Construction in the Trial Courts: A Study Showing the Need for Clear Guidance from the Federal Circuit, 33 Seton Hall L. Rev. 711, 748 (2003) (“One of the leading reasons the CAFC reversed trial court claim construction decisions in 2001 was the trial court’s improper importation of limitations from the specification into the claims . . . ”).
[100] Comark Comm., Inc. v. Harris Corp., 156 F.3d 1182, 1186 (Fed. Cir. 1998) (“We recognize that there is sometimes a fine line between reading a claim in light of the specification, and reading a limitation into the claim from the specification.”).
[101] Phillips v. AWH Corp., 415 F.3d 1303, 1323 (Fed. Cir. 2005) (en banc) (“[T]he line between construing terms and importing limitations can be discerned with reasonable certainty and predictability if the court’s focus remains on understanding how a person of ordinary skill in the art would understand the claim terms.”).
[102] Greg Reilly, Improvidently Granted: Why the En Banc Federal Circuit Chose the Wrong Claim Construction Issue, 80 U. Chi. L. Rev. Dialogue, 43, 45-46 (2013).
[103] See supra 12; see also Phillips v. AWH Corp., 415 F.3d 1303, 1330 (Fed. Cir. 2005) (en banc) (Mayer, J. dissenting) (“[W]e say nothing new, but merely restate what has become the practice over the last ten years . . . . ”).
[104] See Retractable Techs., Inc. v. Becton, Dickinson & Co., 659 F.3d 1369, 1373 (Fed. Cir. 2011) (Moore, J., dissenting) (noting the existence of “a fundamental split within the court as to the meaning of Phillips and Markman as well as the proper approach to claim interpretation,” and suggesting en banc resolution of “the clear intra-circuit split on the claim construction process”). Chief Judge Rader joined Judge Moore’s dissent. Id. at 1370.
[105] See Hinds, Curse of Expertise, supra 93, at 217 (“The results reported here suggest that experts’ superior knowledge actually interferes with their ability to predict novice task performance times . . . . [The experts] were also unable to correct their estimates when they were prompted with a presentation intended to help them reduce their underestimation.”).
[106] Dale Griffin & Amos Tversky, The Weighing of Evidence and the Determinants of Confidence, 24 Cognitive Psychol. 411, 412 (1992); see also Jeffrey J. Rachlinski & Cynthia R. Farina, Cognitive Psychology and Optimal Government Design, 87 Cornell L. Rev. 549, 560 (2002) (“[E]xperts tend to be overconfident about their decisions. . . . People in general tend to overestimate their own abilities in areas about which they believe themselves to have some greater-than-average knowledge.”).
[107] See Hinds, Curse of Expertise, supra 93, at 212.
[108] See supra 48 52 and accompanying text.
[109] See, e.g., Nard & Duffy, supra 25 at 1647-49; Dreyfuss, Institutional Identity, supra 24, at 821 (noting the Federal Circuit’s “low regard for scholarship and its unwillingness to use scholarship as an alternative sounding board”); see also Craig Allen Nard, Toward a Cautious Approach to Obeisance: The Role of Scholarship in Federal Circuit Patent Law Jurisprudence, 39 Hous. L. Rev. 667, 668 (2002) (suggesting that the Federal Circuit “should be more receptive to empirical and social science scholarship when deciding patent cases”).
[110] The Author thanks Laura Pedraza-Fariña for this insight.
[111] See, e.g., CLS Bank Int’l v. Alice Corp. Pty. Ltd., 685 F.3d 1341, 1356-57 (Fed. Cir. 2012) (Prost, J., dissenting) (“The majority resists the Supreme Court’s unanimous directive to apply the patentable subject matter test with more vigor.”), vacated en banc, 484 F. App’x 559 (Fed. Cir. 2012), cert. granted, 134 S. Ct. 734 (Dec. 6, 2013) (No. 13-298).
[112] See, e.g., CLS Bank Int’l v. Alice Corp. Pty. Ltd., 685 F.3d 1341 (Fed. Cir. 2012), cert. granted sub. nom. Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 734 (Dec. 6, 2013) (No. 13-298); Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013) (reversing Federal Circuit, in part); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012) (reversing Federal Circuit); Bilski v. Kappos, 130 S. Ct. 3218 (2010) (affirming Federal Circuit judgment on other grounds and stressing that “nothing in today’s opinion should be read as endorsing interpretations of [35 U.S.C.] § 101 that the Court of Appeals for the Federal Circuit has used in the past”).
[113] See Dan Levine, Insight: Rocker Judge Juggles Tech Policy, Supreme Court and the Stones, Reuters (Dec. 11, 2013), available at http://www.reuters.com/article/2013/12/11/us-usa-judge-rader-insight-idUSBRE9BA06D20131211 (“Given [Chief Judge Randall] Rader’s competitiveness and depth of patent knowledge, his friend [Judge Dee] Benson said the Supreme Court’s increased interest in the field is particularly challenging . . . . ‘I don’t think that [Chief Judge Rader is] going to be easily convinced that the Supreme Court is right.’”).
[114] See Hinds, Curse of Expertise, supra 93, at 206.
[115] Daniel Kahneman, Thinking, Fast and Slow 119-20 (2011).
[116] Hinds, Curse of Expertise, supra 93, at 218 (“The primary difference between those with more and those with less expertise was the accuracy with which they recalled their own novice performance of the task. . . . Evidence from these data suggest that the availability bias is the key contributor to experts’ relative inaccuracy in estimating novice performance times.”).
[117] Amos Tversky & Daniel Kahneman, Availability: A Heuristic for Judging Frequency and Probability, 5 Cognitive Psychol. 207, 207-08 (1973).
[118] For example, a petition for a writ of mandamus. See In re Calmar, Inc., 854 F.2d 461, 464 (Fed. Cir. 1988) (“Mandamus may be employed in exceptional circumstances to correct a clear abuse of discretion or usurpation of judicial power by a trial court.”).
[119] 717 F.2d 1380 (Fed. Cir. 1983).
[120] 383 F.3d 1337 (Fed. Cir. 2004) (en banc).
[121] 497 F.3d 1360 (Fed. Cir. 2007) (en banc).
[122] See supra 82 and accompanying text.
[123] See generally Jeffrey Pfeffer & Robert I. Sutton, The Knowing-Doing Gap: How Smart Companies Turn Knowledge into Action 4 (2000) (“[W]e embarked on a quest to explore one of the great mysteries in organizational management: why knowledge of what needs to be done frequently fails to result in action or behavior consistent with that knowledge. We came to call this the knowing-doing problem . . .” (emphasis in original)).
[124] See, e.g., Keith L. Cummings, Deverick J. Anderson & Keith S. Kaye, Hand Hygiene Noncompliance and the Cost of Hospital-Acquired Methicillin-Resistant Staphylococcus aureus Infection, 31 Infection Control & Hosp. Epidemiology 357, 357 (2010) (footnotes omitted) (“Noncompliance with hand hygiene recommendations is widely recognized as the most important modifiable cause of hospital-acquired infections. . . . Unfortunately, rates of compliance with hand hygiene recommendations are unacceptably low in most hospitals. Results from most studies suggest that overall hand hygiene compliance rates are below 50%.”).
[125] Pfeffer & Sutton, supra 123, at 2-3.
[126] A dissent from a denial of rehearing en banc is one of the clearest ways that a Federal Circuit judge can signal the need to reconsider precedent.
[127] See Pfeffer & Sutton, supra 123, at 6 (“Some organizations are consistently able to turn knowledge into action . . . . Other organizations . . . fail to translate their knowledge . . . into action . . . . These differences across firms come more from their management systems and practices than from differences in the quality of their people.”).
[128] See infra Part II.B.3.
[129] Cf. Craig S. Lerner & Nelson Lund, Judicial Duty and the Supreme Court’s Cult of Celebrity, 78 Geo. Wash. L. Rev. 1255, 1271-72 (2010) (“[T]he [Supreme Court] Justices have become noticeably concerned with remaining personally consistent over time. . . . [I]t is striking how frequently one sees members of the Court adhering to their own personal ‘precedents’ rather than deferring to the Court’s actual precedents.” (emphasis in original)).
[130] See Robert B. Cialdini, Influence: The Psychology of Persuasion 60 (2007) (“Inconsistency is commonly thought to be an undesirable personality trait. The person whose beliefs, words, and deeds don’t match may be seen as indecisive, confused, two-faced, or even mentally ill. On the other side, a high degree of consistency is normally associated with personal and intellectual strength.”); cf. Frederick Schauer, Incentives, Reputation, and the Inglorious Determinants of Judicial Behavior, 68 U. Cin. L. Rev. 615, 629 (2000) (footnote omitted) (“It is widely recognized that reputation or esteem provides a powerful money-independent incentive for many people.”).
[131] See Cialdini, supra 130, at 61 (“[Consistency] allows us a convenient, relatively effortless, and efficient method for dealing with complex daily environments that make severe demands on our mental energies and capacities.”).
[132] See Richard A. Posner, What Do Judges and Justices Maximize? (The Same Thing Everybody Else Does), 3 Sup. Ct. Econ. Rev. 1, 2 (1993) [hereinafter Posner, Judges Maximize] (observing that “judicial utility is a function mainly of income, leisure, and judicial voting”).
[133] See infra Part II.B.3.
[134] See Levine, supra 113 (“[Chief Judge] Rader said he thinks his biggest strength is drawing his colleagues into a broader vision for the court as a protector of innovation in the United States . . .”); Pauline Newman, The Federal Circuit in Perspective, 54 Am. U. L. Rev. 821, 826-27 (2005) (“I marvel at the rapidity with which industrial and entrepreneurial activity responded to the restoration of basic stability to patent law. This history demonstrates that the appropriate application of patent law can indeed be a force for industrial and scientific advance . . . .”).
[135] Cotropia, supra 54, at 820.
[136] See Paul R. Michel, The Court of Appeals for the Federal Circuit Must Evolve to Meet the Challenges Ahead, 48 Am. U. L. Rev. 1177, 1191 (1999) (“[T]he complaint regarding panel dependency may be symptomatic of broader ills, such as, ‘indeterminacy’ or ‘unpredictability.’”).
[137] See Richard A. Posner, How Judges Think 143 (2008) (“[B]ecause appellate judges sit in panels rather than by themselves, there is a premium on cooperative behavior. The downside is the risk of factions and (though I believe this is quite rare in the federal judiciary) of logrolling (vote trading).”).
[138] See Ruth Bader Ginsburg, Remarks on Writing Separately, 65 Wash. L. Rev. 133, 150 (1990) (“Judges on appellate tribunals . . . live daily with the competing claims or demands of collegiality and individuality. It is up to each judge to keep those claims in fair balance.”).
[139] Judge Patricia M. Wald of the D.C. Circuit characterizes life on a federal appellate court thusly:
Real friendships are rare on the court. Heartfelt differences of philosophy and ideology militate against them. Powerful egos often impede them, even among philosophical allies. Judges are like monks without the unifying bonds of a common faith. They are consigned to one another’s company for life. They cannot speak about their work outside the walls of the monastery. Lingering resentments and hostilities must be kept under wraps—and a bottle of Mylanta at hand—to preserve the image of a court that is impartial and neutral enough to decide other people’s disputes.
Patricia M. Wald, Some Real-Life Observations About Judging, 26 Ind. L. Rev. 173, 179 (1992).
[140] See generally Harry T. Edwards, The Effects of Collegiality on Judicial Decision Making, 151 U. Pa. L. Rev. 1639 (2003).
[141] See Erwin Chemerinsky & Larry Kramer, Defining the Role of the Federal Courts, 1990 BYU L. Rev. 67, 72 (1990) (“The danger when judges have strong collegial relationships is that they may be reluctant to challenge colleagues and so decide cases or join opinions to preserve those relationships.”). But see Edwards, supra 140, at 1646 (“In my view, it is collegiality that allows judges to disagree freely and to use their disagreements to improve and refine the opinions of the court.”).
[142] Cf. Pauline T. Kim, Deliberation and Strategy on the United States Courts of Appeals: An Empirical Exploration of Panel Effects, 157 U. Pa. L. Rev. 1319, 1369 (2009) (“Because of the routine, ongoing interactions among judges within a circuit, the views of their immediate colleagues will be far more salient for panel members when they deliberate than the preferences of the Supreme Court.”).
[143] An example of ossified precedent is the de novo standard of review for claim construction established in Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), which, despite intense criticism, has endured. Another example is the nonobviousness case law prior to KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007). See Nard & Duffy, supra 25, at 1661 (observing that, prior to the Supreme Court’s KSR decision, the Federal Circuit had used “boilerplate citations to the [teaching-suggestion-motivation] test, rarely if ever providing new policy justifications for the rule or considering new alternatives or adjustments to the test,” and concluding that the “doctrinal stagnation shows the weakness of the common-law process at the Federal Circuit, for the suggestion test remained unrefined and unchallenged for decades”).
[144] See supra Part I.A.2.
[145] See generally Weil & Rooklidge, Stare Un-Decisis, supra 47.
[146] See, e.g., Dreyfuss, Continuing Experiment, supra 61, at 776 (observing that “an examination of the way the court handles open questions lends support to the concern that the court is not making fruitful attempts to achieve consensus”); see also Weil & Rooklidge, Stare Un-Decisis, supra 47, at 806 (footnote omitted) (“Even as the [Federal Circuit] continues its institutional efforts to keep litigants from attempting to tailor their legal arguments to appeal to particular judges’ perceived biases and predilections, it simultaneously allows fissures to open and widen in the edifice of its jurisprudence.”).
[147] Posner, Judges Maximize, supra 132, at 20-21.
[148] Id. at 20.
[149] Id. Judge Douglas Ginsburg of the D.C. Circuit characterizes dissents as costly endeavors:
Even one dissident judge can impose upon me the cost, in time and aggravation, of having to respond to a dissenting opinion — and the further risk that I will lose my majority in the panel (or upon rehearing en banc). . . . [O]n the court the concurrence of a colleague is the coin of the realm.
Douglas H. Ginsburg & Donald Falk, The Court En Banc: 1981-1990, 59 Geo. Wash. L. Rev. 1008, 1017 (1991).
[150] Posner, Judges Maximize, supra 132, at 20.
[151] Id. at 20-21.
[152] Id.
[153] Cass R. Sunstein, David Schkade, Lisa M. Ellman & Andres Sawicki, Are Judges Political?: An Empirical Analysis of the Federal Judiciary 64 (2006).
[154] Id. at 65 (“A collegial concurrence might well result from a simple calculus: The majority view may be right, and in any case, a dissenting opinion will not do any good even if the majority is wrong.”).
[155] See supra Part I.A.1.
[156] See supra 45 and accompanying text.
[157] According to Judge Richard Posner,
[Judges] rarely level with the public—and not always with themselves—concerning the seamier side of the judicial process. This is the side that includes the unprincipled compromises and petty jealousies and rivalries that accompany collegial decision making . . .
Richard A. Posner, The Problems of Jurisprudence 190 (1990).
[158] Diane P. Wood, When to Hold, When to Fold, and When to Reshuffle: The Art of Decisionmaking on a Multi-Member Court, 100 Calif. L. Rev. 1445, 1463 (2012) (observing that “if the dissenter becomes branded as a frequent complainer about one or more issues . . . the dissenter will have lost credibility and may be disregarded altogether”).
[159] See William M. Richman & William L. Reynolds, Elitism, Expediency, and the New Certiorari: Requiem for the Learned Hand Tradition, 81 Cornell L. Rev. 273, 324 (1996) (“Judges who know, like, and depend on each other might be less likely to risk their relationship by disagreeing on matters of importance to one or the other. . . . A ‘don’t-rock-the-boat’ mentality might pervade the courts.”).
[160] See supra Part I.A.2.
[161] See Weil & Rooklidge, Stare Un-Decisis, supra 47.
[162] See supra 54 and accompanying text.
[163] See supra 20 and accompanying text.
[164] By way of comparison to suggested term limits for Supreme Court justices, John McGinnis has proposed two years as an appropriate term for a Supreme Court staffed with rotating judges from inferior courts. McGinnis, supra 37, at 546. As another example, Stephen Legomsky has proposed staffing a specialized immigration court of appeals with judges who serve two-year terms. Stephen H. Legomsky, Restructuring Immigration Adjudication, 59 Duke L.J. 1635, 1694-95 (2010).
[165] See supra Part II.
[166] See Legomsky, supra 164, at 1695 (arguing that the term of judges serving on a proposed specialized immigration court of appeals should be two years because it “minimizes both the profit in lobbying and the opportunity for capture”).
[167] Foreign Intelligence Surveillance Act § 103, 50 U.S.C. § 1803 (2006 & Supp. V 2012). See generally Foreign Intelligence Surveillance Court, Fed. Judicial Ctr., http://www.fjc.gov/history/home.nsf/page/courts_special_fisc.html (last visited Mar. 30, 2014).
[168] 50 U.S.C. § 1803(a)(1).
[169] Id. at § 1803(d).
[170] 28 U.S.C. § 1407 (2006); Judicial Panel on Multidistrict Litigation, Fed. Judicial Ctr., http://www.fjc.gov/history/home.nsf/page/courts_special_jpml.html (last visited Mar. 30, 2014).
[171] Judicial Panel on Multidistrict Litigation, supra 170.
[172] 28 U.S.C. §158(b)(1). Currently, only the First, Sixth, Eighth, Ninth, and Tenth Circuits have BAPs. Bankruptcy Appellate Panels, U.S. Courts, http://www.uscourts.gov/FederalCourts/UnderstandingtheFederalCourts/CourtofAppeals/BankruptcyAppellatePanels.aspx (last visited Mar. 30, 2014).
[173] For example, in the Ninth Circuit, BAP judges are appointed to seven-year terms, while in the Tenth Circuit, they are appointed to five-year terms. Appeals before the Bankruptcy Appellate Panel of the Ninth Circuit 3 (Sep. 2013), http://www.ca9.uscourts.gov/datastore/bap/2013/02/04/LitigantsManual2013.pdf; see List of Current Judges, U.S. Bankruptcy Appellate Panel for the Tenth Circuit, http://www.bap10. .e., district judgesseg informationn guidance to district jduges. es to apply reliably. uscourts.gov/judges.php.
[174] Bankruptcy Appellate Panels, supra 172.
[175] Legomsky, supra 164, at 1686-87.
[176] See, e.g., 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.”); Ryan Vacca, Acting Like an Administrative Agency: The Federal Circuit En Banc, 76 Mo. L. Rev. 733, 733 (2011) (“When Congress created the Federal Circuit in 1982, it intended to create a court of appeals. Little did it know that it also was creating a quasi-administrative agency that would engage in substantive rulemaking and set policy in a manner substantially similar to administrative agencies.”).
[177] See 35 U.S.C. § 3(a) (“[The] Director of the United States Patent and Trademark Office . . . shall be appointed by the President, by and with the advice and consent of the Senate.”); 28 U.S.C. § 503 (“The President shall appoint, by and with the advice and consent of the Senate, an Attorney General of the United States. The Attorney General is the head of the Department of Justice.”).
[178] See 15 U.S.C. § 41 (specifying that the FTC has five commissioners who serve staggered seven-year terms); 19 U.S.C. § 1330(a)-(b) (specifying that the ITC is composed of six commissioners who serve staggered nine-year terms).
[179] See supra Part II.A.
[180] See Hinds, Curse of Expertise, supra 93, at 212 (reporting results demonstrating that those with intermediate levels of knowledge outperformed both experts and novices in predicting time required for novices to perform task).
[181] Id. at 206.
[182] Id. at 212 (“Novices . . . have little understanding of the task they are being asked to predict and are unlikely to understand the subtasks involved.”).
[183] Id. (“In both debiasing conditions combined, intermediate users improved their predictions by 20%, whereas experts gave predictions that were 2% worse in the debiased than in the unaided trials. . . . [E]xperts were more resistant to debiasing, in general, than intermediate users.”).
[184] See supra Part I.A.1.
[185] See supra 109 and accompanying text.
[186] The FTC actively studies the patent system and its impact on competition. See e.g., Fed. Trade Comm’n, The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition (2011), available at http://www.ftc.gov/os/2011/03/110307patentreport.pdf; Fed. Trade Comm’n, To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy (2003), available at http://www.ftc.gov/os/2003/10/innovationrpt.pdf.
[187] See supra Part II.A.3.
[188] Pamela J. Hinds, Michael Patterson & Jeffrey Pfeffer, Bothered by Abstraction: The Effect of Expertise on Knowledge Transfer and Subsequent Novice Performance, 86 J. Applied Psychol. 1232, 1232 (2001) [hereinafter Hinds et al., Bothered by Abstraction].
[189] Id. at 1240 (“In Hypothesis 4, we argued that the benefits of beginner instruction would not necessarily be obtained when novices were asked to perform a different task of the same type. . . . Although not statistically significant, expert-instructed novices as compared with beginner-instructed novices took less time to perform the nontarget task . . . .”).
[190] Id. (“[W]e found that novices instructed by experts made more errors (M = 1.64 vs. 0.58) and required more time to complete the project (M = 368 vs. 237 s) than novices instructed by beginners . . . . ”).
[191] See supra Part II.A.3.
[192] See Heath et al., supra 29, at 16-17.
[193] E.g., Mario Queiroz, An Android Dogfood Diet for the Holidays, Google Mobile Blog (Dec. 12, 2009, 8:58 AM), http://googlemobile.blogspot.com/2009/12/android-dogfood-diet-for-holidays.html.
[194] E.g., Terrence O’Brien, Microsoft Details Its Own Windows 8 Rollout, Lessons Learned From ‘Dogfooding’, Engadget (Sept. 28, 2012, 4:11 PM), http://www.engadget.com/2012/09/28/microsoft-details-its-own-windows-8-rollout.
[195] Of the eighteen active and senior judges who are serving on the Federal Circuit as of February 1, 2014, only four have served as judges on a subordinate tribunal prior to their appointment, with only one former district judge among them: Judge Rader (U.S. Court of Federal Claims), Judge Mayer (U.S. Court of Federal Claims), Judge O’Malley (U.S. District Court for the Northern District of Ohio), and Judge Wallach (U.S. Court of International Trade). Judges, U.S. Court of Appeals for the Federal Circuit, http://www.cafc.uscourts.gov/judges.
[196] See supra Part II.B.
[197] Cf. Barry M. Staw & Jerry Ross, Knowing When to Pull the Plug, Harv. Bus. Rev. 68, 72 (March-April 1987) (“One way to reduce the commitment to a losing course of action is to replace those associated with the original policy or project. If overcommitment stems from psychological and social forces facing the originators of the action, then their removal eliminates some of the sources of commitment.”).
[198] See supra Part II.B.1.
[199] Cf. Michael J. Gerhardt, The Limited Path Dependency of Precedent, 7 U. Pa. J. Const. L. 903, 952 (2005) (“It has been extremely rare for [Supreme Court] Justices to join in overruling a prior decision that they wrote or joined. In only four cases has a Court with no change in membership overruled itself.”).
[200] Cf. id. at 953 (“It may . . . be easier to persuade [Supreme Court] Justices that the Court erred in opinions in which they did not participate. Indeed, it is possible new Justices might be more inclined to reconsider precedent.”).
[201] See supra Part II.B.
[202] See supra 137142 and accompanying text.
[203] E.g., Cotropia, supra 54, at 803 (reporting that the Federal Circuit’s dissent rate is the second highest among six circuits studied).
[204] See Virginia A. Hettinger, Stefanie A. Lindquist & Wendy L. Martinek, Judging on a Collegial Court: Influences on Federal Appellate Decision Making 67 (2006) (“In circuits with the highest level of separate opinion writing, an individual judge is nearly two and a half times as likely to publish a concurrence or dissent as compared to the baseline.”); see also Rochelle Cooper Dreyfuss, The Federal Circuit as an Institution: What Ought We Expect?, 43 Loy. L.A. L. Rev. 827, 832 (2010) [hereinafter Dreyfuss, What Ought We Expect?] (“Each circuit has its own traditions and heritage. . . . [T]he dissent and en banc rates in any circuit can be as much a function of a tribunal’s culture and the composition of its docket as it is a demonstration of a unique level of diversity in the viewpoints of its judges.”).
[205] See Dreyfuss, What Ought We Expect?, supra 204, at 835 (“[Cotropia’s] findings are equally (if not more) consistent with the view that each judge locks into a position from which he or she refuses to deviate.”).
[206] Cf. id. at 833 (“To the extent that the judges are not, in fact, reaching consensus on open issues, the apparent improvements in patent litigation may be something of an illusion. . . . [T]he law could still be highly dependent on the panel hearing the case.”).
[207] Cotropia, supra 54, at 820.
[208] Id. at 821-22 (“[T]he rate of en banc reviews may be the best metric for determining how willing a court of appeals is to innovate new legal rules, percolate these concepts, and then eventually adopt them in future decisions.”).
[209] Id. at 803-04 (reporting that “the Federal Circuit’s percentage of en banc review is relatively low but statistically indistinguishable from those of three other circuits studied”).
[210] See supra Part I.A.2.
[211] See supra Part II.B.
[212] See supra 131132 and accompanying text.
[213] See supra 147154 and accompanying text.
[214] See supra Part I.A.2.
[215] Mazza, supra 37, at 134 (“[F]ederal judges who serve only periodically at the appellate level may be more inclined to craft their opinions with greater care for their implications, knowing that they will have to live under them at the district level . . .”).
[216] Nard & Duffy, supra 25; see also Golden, supra 19, at 662 (characterizing Nard & Duffy’s proposal as percolation through “greater appellate space” (emphasis in original)).
[217] Golden, supra 19, at 662 (arguing that Supreme Court should periodically review substantive patent law to “combat undesirable ossification of legal doctrine” and describing “how the Supreme Court and the Federal Circuit can work to ensure better and more complete percolation of patent law issues over time” (emphasis in original)).
[218] Cf. Richard A. Posner, The Federal Courts: Crisis and Reform 163 (1985) (noting that “a difficult question is more likely to be answered correctly if it is allowed to engage the attention of different sets of judges deciding factually different cases than if it is answered finally by the first panel to consider it”).
[219] Cf. Dreyfuss, Institutional Identity, supra 24, at 811 (describing need for “new voices” to develop case law while expressing reservations about Nard & Duffy’s proposal to increase number of appellate venues for patent cases).
[220] See supra 25 and accompanying text.
[221] See supra 24 and accompanying text.
[222] Kumar, supra 176, at 233.
[223] One commentator, Michael Mazza, has suggested that all federal appeals court judges should have term-limited appointments, after which they would continue their service at the district court level. Mazza, supra 37, at 133. However, Mazza did not provide a cost-benefit analysis of his proposal for each circuit.
[224] See supra 184.
[225] The Federal Circuit may already be producing too many precedential opinions. See Haldane Robert Mayer, Foreword: Reflections on the Twentieth Anniversary of the Court of Appeals for the Federal Circuit, 52 Am. U. L. Rev. 761, 767 (2003) (“The Federal Circuit is a prolific producer of precedential opinions. . . . On average, therefore, we write more than 200 precedential opinions a year. That is a number I believe we should work to reduce. Too many opinions in well-trod areas of the law contribute to uncertainty and instability.”).
[226] IOP, supra 41, at #10.
[227] For an empirical study on the effect of publication rules on the rate of opinion publication, see Deborah Jones Merritt & James J. Brudney, Stalking Secret Law: What Predicts Publication in the United States Courts of Appeals, 54 Vand. L. Rev. 71 (2001). A limitation of Merritt & Brudney’s study, which analyzes only the regional circuits, is that it was conducted prior to the addition of Federal Rule of Appellate Procedure 32.1, effective December 1, 2006, which prohibits restrictions on the citation of nonprecedential opinions issued on or after January 1, 2007.
[228] See supra Part III.A.
[229] See Dreyfuss, Continuing Experiment, supra 61, at 796 (“If it is true that the judges of the Federal Circuit have greater facility with the technical materials involved in patent disputes, then the outcome of the cases on which a judge from another circuit participated might be compromised, or viewed as compromised . . . . Differences in the selection criteria and experience of district court judges may also contribute to a sense that lower quality justice was being dispensed.”).
[230] See supra 69 and accompanying text.
[231] See supra 70 and accompanying text.
[232] See supra Part II.A.1.
[233] See supra Part II.A.2.
[234] See supra Part II.B.
[235] See Gugliuzza, Federal Circuit, supra 68, at 1817-18 (describing Federal Circuit exceptionalism).
[236] Specifically referring to the Federal Circuit, Judge Richard Posner has observed that “[a] specialized court tends to see itself as a booster of its speciality.” Declan McCullagh, Left Gets Nod from Right on Copyright Law, CNET (Nov. 20, 2002), http://news.cnet.com/2100-1023-966595.html; see also John R. Allison & Mark A. Lemley, How Federal Circuit Judges Vote in Patent Validity Cases, 27 Fla. St. U. L. Rev. 745, 765 n.44 (2000) (noting that “one perceived goal of the Federal Circuit was to strengthen patent rights”).
[237] See William M. Landes & Richard A. Posner, An Empirical Analysis of the Patent Court, 71 U. Chi. L. Rev. 111, 111-12 (2004) (“It was predictable that a specialized patent court would be more inclined than a court of generalists to take sides on the fundamental question whether to favor or disfavor patents . . .”); Gugliuzza, Federal Circuit, supra 68 at 1853 (discussing how a specialized court may attempt to enhance its prestige as an institution); cf. Term Limits For Judges?, supra 37 at 687 (statement of Judge Laurence H. Silberman) (suggesting 5-year term limits for Supreme Court Justices on the theory that they “would think of themselves more as judges and less as platonic guardians”); McGinnis, supra 37, at 545 (“Requiring the Supreme Court’s work to be done by [a rotating group of] ordinary judges would make it more likely that they would only do the Court’s proper work.”). But see Nard & Duffy, supra 25, at 1628 & n.40 (observing that whether the Federal Circuit acts to aggrandize the importance of its jurisdiction “remains a matter of significant dispute”).
[238] Federal Circuit Judge Kathleen O’Malley, who is the sole former district judge on the Federal Circuit, has been critical of the court’s attempts to expand its jurisdiction over state law claims. See, e.g., Byrne v. Wood, Herron & Evans, LLP, 676 F.3d 1024, 1027 (Fed. Cir. 2012) (O’Malley, J., dissenting from denial of rehearing en banc) (“It is time we stop exercising jurisdiction over state law malpractice claims. I dissent from the court’s refusal to consider this matter en banc . . . . ”). Judge O’Malley’s position was subsequently vindicated by the Supreme Court. See Gunn v. Minton, 133 S. Ct. 1059, 1065 (2013) (“Although [state legal malpractice claims based on underlying patent matters] may necessarily raise disputed questions of patent law, those cases are by their nature unlikely to have the sort of significance for the federal system necessary to establish jurisdiction.”).
[239] Posner, Judges Maximize, supra 132, at 3-4 (“Politics, personal friendships, ideology, and pure serendipity play too large a role in the appointment of federal judges to warrant treating the judiciary as a collection of genius-saints miraculously immune to the tug of self-interest.”); see also McGinnis, supra 37, at 545 (“The variation in legal ability that now exists within the federal judiciary is relatively small . . . . What distinguishes the [Supreme Court] Justices as a group from other federal judges is not so much their talent as the luck and the political skills that got them onto the high court . . . . ”).
[240] See, e.g., Stephen L. Wasby, “Extra” Judges in a Federal Appellate Court: The Ninth Circuit, 15 L. & Soc’y Rev. 369, 379 (1980) (“District judges may simply be disinclined to reverse other district judges, with whose problems they sympathize and with whom they may have strong personal ties. Or they may be over-sensitive to reversals because of their own experience.”).
[241] Richard B. Saphire & Michael E. Solimine, Diluting Justice on Appeal?: An Examination of the Use of District Court Judges Sitting by Designation on the United States Courts of Appeals, 28 U. Mich. J.L. Reform 351, 368, 369 tbl.3 (1995).
[242] Id. at 378.
[243] Some Federal Circuit judges have expressed concerns about the expansion of the number of issues subject to de novo review. See, e.g., Highmark, Inc. v. Allcare Health Mgmt. Sys., 701 F.3d 1351, 1362 (Fed. Cir. 2012) (Moore, J., dissenting from denial of rehearing en banc) (“We need to avoid the temptation to label everything legal and usurp the province of the fact finder with our manufactured de novo review.”); Highmark, Inc. v. Allcare Health Mgmt. Sys., 687 F.3d 1300, 1320 (Fed. Cir. 2012) (Mayer, J., dissenting) (“The fact that we have been vested with exclusive appellate jurisdiction in patent cases does not, however, grant us license to invade the fact-finding province of the trial courts.”).
[244] Cybor Corp. v. FAS Techs. Inc., 138 F.3d 1448, 1451 (1998) (en banc) (“[C]laim construction, as a purely legal issue, is subject to de novo review on appeal.”).
[245] Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., 682 F.3d 1003, 1005 (Fed. Cir. 2012) (“The court . . . holds that the threshold objective prong of the willfulness standard enunciated in Seagate is a question of law based on underlying mixed questions of law and fact and is subject to de novo review.”).
[246] Highmark, Inc. v. Allcare Health Mgmt. Sys., 687 F.3d 1300, 1309 (Fed. Cir. 2012) (“We review the court’s determination of objective reasonableness without deference since it is a question of law.”).
[247] See Highmark, Inc. v. Allcare Health Mgmt. Sys., 701 F.3d 1351, 1362 (Fed. Cir. 2012) (Moore, J., dissenting from denial of rehearing en banc) (“When we convert factual issues, or mixed questions of law and fact, into legal ones for our de novo review, we undermine the uniformity and predictability goals this court was designed to advance.”).
[248] See Saphire & Solimine, supra 241, at 377 & n.106.
[249] See supra Part III.A. Notably, the idea of creating a national patent appellate court staffed by circuit judges on temporary assignment was proposed as early as 1900 by the ABA. John F. Duffy, The Festo Decision and the Return of the Supreme Court to the Bar of Patents, 2002 Sup. Ct. Rev. 273, 292.
[250] See infra 269271 and accompanying text.
[251] See Appeals Filed in Major Origins, U.S. Court of Appeals for the Federal Circuit, http://www.cafc.uscourts.gov/images/stories/Statistics/hist%20caseld%20by%20origin%2010-year.pdf (last visited Mar. 30, 2014).
[252] See U.S. District Courts—Civil Cases Commenced, by Basis of Jurisdiction and Nature of Suit, During the 12-Month Periods Ending March 31, 2012 and 2013, U.S. Courts, http://www.uscourts.gov/uscourts/Statistics/FederalJudicialCaseloadStatistics/2013/tables/C02Mar13.pdf (last visited Mar. 30, 2014).
[253] See, e.g., Leyga v. Shinseki, 2013 U.S. App. LEXIS 22498, at *3-4 (Fed. Cir. Nov. 6, 2013) (“[The Federal Circuit’s] review of Veterans Court decisions is strictly limited by statute . . . . [W]e may not review findings of fact or application of law to the facts, except to the extent that an appeal presents a constitutional issue. 38 U.S.C. § 7292(d)(2).”); Addison v. HHS, 945 F.2d 1184, 1186 (Fed. Cir. 1991) (“We must affirm the Board’s decision unless it is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law, obtained without procedures required by rule, law, or regulation, or unsupported by substantial evidence. 5 U.S.C. § 7703(c) (1988) . . .”).
[254] Kathleen M. O’Malley, Circuit Judge, U.S. Court of Appeals for the Federal Circuit, http://www.cafc.uscourts.gov/judges/kathleen-m-omalley-circuit-judge.html (last visited Mar. 21, 2014).
[255] Jimmie V. Reyna, Circuit Judge, U.S. Court of Appeals for the Federal Circuit, http://www.cafc.uscourts.gov/judges/jimmie-v-reyna-circuit-judge.html (last visited Mar. 21, 2014).
[256] Evan J. Wallach, Circuit Judge, U.S. Court of Appeals for the Federal Circuit, http://www.cafc.uscourts.gov/judges/evan-j-wallach-circuit-judge.html (last visited Mar. 21, 2014).
[257] Richard G. Taranto, Circuit Judge, U.S. Court of Appeals for the Federal Circuit, http://www.cafc.uscourts.gov/judges/richard-g-taranto-circuit-judge.html (last visited Mar. 21, 2014).
[258] Raymond T. Chen, Circuit Judge, U.S. Court of Appeals for the Federal Circuit, http://www.cafc.uscourts.gov/judges/raymond-t-chen-circuit-judge.html (last visited Mar. 21, 2014).
[259] Todd M. Hughes, Circuit Judge, U.S. Court of Appeals for the Federal Circuit, http://www.cafc.uscourts.gov/judges/todd-m-hughes-circuit-judge.html (last visited Mar. 21, 2014).
[260] 28 U.S.C. § 44(a).
[261] Dreyfuss, Institutional Identity, supra 24, at 823.
[262] See supra Part II.
[263] Cf. Lerner & Lund, supra 129, at 1259-60 (“Congress [should] require that all Supreme Court opinions, including concurrences and dissents, be issued anonymously. This should lead to fewer self-indulgent separate opinions, more judicious majority opinions, and more reason for future Justices to treat the resulting precedents respectfully.”). In contrast to the Supreme Court, Lerner & Lund believe that preserving the practice of signed opinions may be useful at the circuit court level, on the ground that signed opinions encourage diligence in working on otherwise low-stakes, mundane cases. Id. at 1280-81. The Federal Circuit, however, is unique among the circuit courts in exercising exclusive appellate jurisdiction over certain subject areas, and in having its precedents apply nationwide. In addition, patent cases are often deemed high-profile, “bet the company” matters. As such, like the Supreme Court justices, the judges who serve on the Federal Circuit may not need the additional incentive of signing one’s name to an opinion in order to refrain from shirking.
[264] Currently, the Federal Circuit uses seniority in choosing the presiding judge for a panel. IOP, supra 41, at #1, ¶2. Because the presiding judge (or the most senior active judge in the majority if the presiding judge dissents) has the power to assign opinion authorship, id. at #8, ¶2, the active judges on the court with the highest levels of seniority may exert a disproportionate influence on the shape and direction of Federal Circuit case law. Cf. Amar & Calabresi, supra 37 (observing that “the [Supreme] [C]ourt’s seniority system gives more experienced justices increased power to speak for the court”).
[265] See, e.g., Gugliuzza, Rethinking, supra 76, at 1474 (“By inviting a wider variety of district judges to sit by designation, the Federal Circuit could cause its law to evolve in a way more cognizant of the role of federal law in the nation and the commercial economy.”).
[266] See, e.g., Dreyfuss, Continuing Experiment, supra 61, at 796 (“Having judges on the Federal Circuit sit on trial courts might also be beneficial, as it would help the court assess the impact of its practices (such as its refusal to hear interlocutory appeals from claim constructions) on the trial process, and on litigants and jurors.”).
[267] IOP, supra 41, at #14, ¶2(f) (May 24, 2012) (“[T]he court en banc shall consist of all circuit judges in regular active service who are not recused or disqualified and any senior circuit judge of the court who participated in the decision of the panel and elects to sit . . .”).
[268] See supra Part III.B.
[269] For example, a district judge, Walter H. Rice, sitting by designation at the Sixth Circuit prefaced his dissent with a statement that he was “not unmindful of the temerity required of a district judge in dissenting from the opinion of an appellate panel on which he sits by designation.” Anderson v. Evans, 660 F.2d 153, 161 (6th Cir. 1981) (Rice, J., dissenting). See also Hettinger et al., supra 204, at 67 (“A district court judge sitting by designation is less than half as likely as a circuit court judge to write a dissenting opinion.”); Paul M. Collins, Jr. & Wendy L. Martinek, The Small Group Context: Designated District Court Judges in the U.S. Courts of Appeals, 8 J. Empirical Legal Stud. 177, 177 (2011) (reporting results from empirical study suggesting that “designated district court judges . . . are more susceptible to the influence of their peers than are regular members of the courts of appeals in a nontrivial number of cases”); James J. Brudney & Corey Ditslear, Designated Diffidence: District Court Judges on the Courts of Appeals, 35 L. & Soc’y Rev. 565, 597 (2001) (concluding from empirical study that “[a]s panel participants, district judges were markedly less assertive than their appellate colleagues”).
[270] Cf. Thomas G. Walker, Behavioral Tendencies in the Three-Judge District Court, 17 Am. J. Pol. Sci. 407, 409, 413 (1973) (analyzing results from empirical study of three-judge district courts staffed by one circuit judge and two district judges, and concluding that “[t]he appeals court judge appears to be the most influential member” and “is the most frequent opinion writer and receives the most support for his opinions”).
[271] Cf. Saphire & Solimine, supra 241, at 376-77.
[272] Cf. Gugliuzza, Rethinking, supra 76, at 1470 (“Federal Circuit judges do sometimes sit by designation in district courts, but these visits seem to focus on gaining exposure to patent litigation at the trial level rather than gaining a broader understanding of federal law.”).
[273] See generally Dan L. Burk & Mark A. Lemley, The Patent Crisis and How The Courts Can Solve It (2009).
[274] See Nard & Duffy, supra 25, at 1647 (noting “growing skepticism about the [Federal Circuit’s] ability to experiment successfully, to adapt its jurisprudence to changing scientific norms, and to develop a common law that accurately reflects the patent system’s varied role in fostering technological innovation”).

3-D Printing Your Way down the Garden Path: 3-D Printers, the Copyrightization of Patents, and a Method for Manufacturers to Avoid the Entertainment Industry’s Fate

3-D Printing Your Way down the Garden Path: 3-D Printers, the Copyrightization of Patents, and a Method for Manufacturers to Avoid the Entertainment Industry’s Fate
Joseph C. Storch* A pdf version of this article may be downloaded here.   “3-D printing…has the potential to revolutionize the way we make almost everything.”
–President Barack Obama, 2013 State of the Union (Feb. 12, 2013).

Introduction

In the next few years, three-dimensional printers, long a whisper of futurists and fantasy of technology columnists,[1] will begin showing up in homes all over the country. Over the course of time, they may become as ubiquitous as paper printers. The constructive possibilities for such printers are endless: fixing broken toys and home goods, modeling out rooms and additions, designing personalized jewelry for loved ones, and possibilities beyond this author’s imagination.[2] But concomitant with such advances for individuals is a risk for manufacturers: once individuals can “print” physical goods at home, perhaps with designs they acquire online, will they still purchase physical goods in stores? As the technology improves, and 3-D printers become capable of printing multiple types of media (plastic and metal, for instance), in multiple colors and with spaces and design elements built in, then such at-home manufacturing will inevitably compete with mass manufactured goods. While such possibilities may seem far off, it is wise to consider the policy and economic implications long before desktop 3-D printing becomes ubiquitous, so that manufacturing industries and policy makers can plan for the significant economic disruptiveness (although not necessarily destructiveness) of such a shift in technologies. It is this author’s hope that advanced planning and consideration of this issue will allow industry, consumers and policy makers to avoid the inevitable gnashing of teeth and making of accusations that seems to accompany major technological advances with disruptive potential.

A. A Brief History of Reacting to Technological Change

Such reactions to disruptive technology are not as new as modern intellectual property discourse seems to believe. In the late 1700’s, as America was developing as a nascent post-revolution country, across the “pond,” socks and other woolen garments were made in a labor-intensive method by individual cottage workers.[3] The socks were of low quality, itchy, and expensive; the methods of crafting them wildly inefficient. The development of the stocking frame loom by, among others, Richard Arkwright, promised to change all that.[4] With much less effort, socks could be weaved to be uniform, less itchy, and much less expensive. With funding from Jedediah Strutt, Arkwright built a water frame on the River Derwent that could produce socks and other garments in a more efficient and cost-effective manner than local cottage workers.[5] Fearing (correctly) that such progress would cause him to lose his craft, the story is told that Ned Ludd, a weaver from Anstey, England, led a mob that destroyed several stocking frame looms.[6] In the years that followed, similar “luddites” would attempt to damage machines and thus slow down technological progress. Suffice it to say luddites do not succeed. In Ludd’s time and since, initial attempts to squash technological change were slowly overcome by the sheer efficient forces of creative destruction.[7] Industries in the business of developing intellectual property, subject to the protections of copyright law, have devoted significant time and treasure to stopping or slowing the advance of technologies that make it easier to lawfully and (perhaps more often) unlawfully share copyrighted material.[8] They often found themselves complaining bitterly about a new technology and its harm to artists and creators, the industry, and society.[9] Ultimately, technology moves on and, in a line oft stated by attorneys, you can’t put the proverbial toothpaste back in the tube. Efforts to stem the advancement of technologies disruptive to intellectual property ownership have historically served only to delay the inevitable and create bad blood between producers and consumers. There is another path. As we approach a time where the ability to copy and reproduce many physical goods will be subject to the same technological change that has impacted production of pure intellectual property, producers, consumers and policy makers can consider the past examples cited above and the economic factors discussed in this article to determine whether there is a smarter path forward. Thoughtful planning and honest pricing can allow new technologies to develop while preserving the health of businesses that produce tangible goods. This article will discuss the history and purpose of copyright and patent law, tracing the history of technology used to copy creative works and the decision by copyright owners to transition from pursuit of commercial disseminators of copyrighted material to one where they filed lawsuits against consumers who shared protected intellectual property. It will then analyze this decision’s impact on the attitudes of consumers once the fine for violations was internalized as a price, how these litigation and legislative strategies failed to prevent intellectual property sharing, and economic rules of monopolies versus companies that must compete on price and quality. It concludes by drawing lessons from these histories to chart a course forward for producers of tangible goods to avoid future devastating divisiveness between producers and their consumers in the era of ubiquitous 3-D printing.

I. Copyright and Patent Law Exist to Advance Society, Not to Protect Artists

While many believe,[10] and content creators argue vehemently,[11] that copyright and patent protections were created to protect artists and inventors and allow them to fully exploit their work for fame and fortune, a plain reading of the Constitution leads to a different conclusion. Article I, Section 8 of the Constitution empowers Congress to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”[12] Courts have traditionally interpreted this clause to mean that the Framers intended primarily to advance knowledge for the public interest, not simply protect artists and inventors.[13] The Supreme Court wrote that “[t]he copyright law, like the patent statutes, makes reward to the owner a secondary consideration”[14] since “[t]he primary objective of copyright is not to reward the labors of authors.”[15] In granting to authors and creators a legal monopoly to copy and reproduce their works, the Supreme Court wrote that, “[t]he monopoly privileges that Congress may authorize are neither unlimited nor primarily designed to provide a special private benefit. Rather, the limited grant is a means by which an important public purpose may be achieved.”[16] That being said, copyright and patent law do involve a balance between the public good and the rights of authors and creators, allowing time to recoup some type of profit, so as to induce this creation.[17] Patents provide a protection to allow for profit making on an invention, since “the costs of duplicating a major new product are only about one-half of the original innovator’s research and development cost, and timely duplication of a major, patented new product is reported to be impossible in only a few industries.”[18] Ultimately, the Framers intended for the law to promote creation for the public good, not for a creator’s unlimited right to earn profit.

II. Three Types of Monopolies Protect From Copying

Producers of tangible and intellectual goods enjoy three types of monopoly. The first is a technological monopoly. If, practically speaking, the cost of producing a good at home is higher than purchasing that same good at a store, few rational people will choose to pay extra money and run afoul of legal and moral penalties to manufacture the good at home.[19] The second is a legal monopoly created by intellectual property law. Awarding certain limited rights to authors and inventors legally excludes others from also creating the same works (with limited exceptions). The final leg of the triad is the moral monopoly. When consumers believe they are inappropriately borrowing or even outright stealing physical or intellectual property, they will often feel a moral-based guilt in doing so.[20] Whether internally or externally based,[21] rooted in religion or created via societal ideals, the idea that one should not steal can be an important factor in preserving a monopoly for creators of tangible and intellectual goods.

III. Intellectual Property’s Lost Technological Monopoly Exposes a Weak Legal Monopoly

For most of this nation’s history, creators of mass market intellectual property maintained a technological monopoly that allowed them to be essentially the sole creator and manufacturer of media upon which one could read, watch, or listen to books, music, films and other creative works. For most Americans, it was far cheaper to purchase a creative work at almost any offered price than it would be to create it at home. That is to say, it was cheaper to purchase the Beatles’ “White Album”[22] from a record store than to obtain a press and forge the record for yourself.[23] In fact, the technological monopoly on music provided by the label owning the master off of which all clear copies could be made was so strong that Congress did not even add copyright protection to sound recordings until three years after said album debuted.[24] It was cheaper to purchase “1984”[25] at a bookstore than to buy a printing press and make yourself a copy.[26] There was commercial-level copyright infringement of books and records,[27] but rarely among consumers.[28] So long as creators and publishers of creative works maintained a technological monopoly, it was easy to maintain the legal and moral monopolies as well. Since one could not practicably manufacture their own version of “For Whom the Bell Tolls”[29] even if they wanted to, it was easy for consumers to say they respected intellectual property law and would not take what they did not own. That is to say, practically speaking one couldn’t violate the legal and moral monopolies even if he or she wanted to, and so there was no need to even imagine the implications of doing so. The technological monopoly was sufficient and virtually all encompassing.

A. A History of Sharing Copyrighted Content:

Though some trace the “beginning of the end” of the technological monopoly on copyrighted content to the deployment of Napster in 1999, the end actually began much earlier, with the advent of audio and video tape and the technology to dub audio and video at home.[30] For the first time, users at home could capture songs from the radio and video from television, and could copy works they owned or obtained and sell or give away those copies. Yet this technology did not tumble the walls of intellectual property law, at least in part because copies usually had poor (and increasingly diminishing) quality,[31] it was time and work-intensive (copying required physical effort and was not instantaneous), required purchase of blank media, and there was no economic reward to be reaped by selling or giving away such tapes (mix tapes for teenage lovers notwithstanding). Such copies were scattered, of poor quality such that they were not a true replacement good and, while cheaper, were not so cheap as to truly disturb profits. While cracks in the walls of copyright law appeared, most users purchased creative works the “old-fashioned way,” in bookstores and record shops. Intellectual property owners historically used litigation and legislation passed by Congress to go after commercial and large scale reproducers of material protected by copyright law,[32] while rarely bringing suit or seeking redress against consumers or end users of illegally copied materials.[33]

B. Napster Shepherds in an Era of Digital Frictionless Sharing

In 1999, Sean Fanning, a student at Northeastern University in Boston, released Napster onto the web.[34] While Napster was not the first forum used to share music through the MP3 format,[35] it quickly became the most popular to date.[36] For the first time in history, the technological monopoly on creation of perfect digital copies[37] of protected work fell; it was not just cheaper, but essentially free, to quickly create a precise duplicate of a creative work, and to share that work with friends or strangers in the next room, a nearby residence hall, or a continent away. While initially much of the illegal sharing of copyrighted content took place at colleges and universities with high-speed Internet connections, in short order, as more homes traded in their dial-up connections for high-speed Internet, the practice became more widespread in society.[38] Further, while the initial impact of file sharing was on music files, movie and television producers felt the sting of digital piracy as more homes signed up for DSL or cable broadband and the transfer time for large files significantly decreased.[39] Around the same time, the technological monopoly fell for textbook makers. From time immemorial, college and university students have purchased required and optional textbooks to accompany their courses. During this period, the price of textbooks was increasing significantly,[40] alongside other rising college costs. Prior to the significant cost reductions of printers and scanners, textbook companies had a technological monopoly. Students could either purchase the book from the college bookstore or another retail environment, or not acquire the books at all. Much to the chagrin of publishers, students developed a thriving formal and informal market for used textbooks, firmly permitted under the First Sale doctrine.[41] Publishers fought these markets with frequent new editions, lowering the value of older (even recent) editions,[42] by including floppy discs, CD-ROMs, DVDs, or one-time-use Internet codes alongside the books for access to additional content, and later by licensing use or rental of some textbooks, rather than outright sale. Although many classes require use of only a small portion of a larger book, publishers sell textbooks whole.[43] In Kirtsaeng v. John Wiley & Sons, Inc.[44] Kirtsaeng, a student at Cornell University and the University of Southern California, realized he could exploit a market inefficiency—although the textbooks for sale in Ithaca or Los Angeles cost a great deal, the same content was available in his home country in international editions of these textbooks, at a steep discount, reflecting different prices that the same publisher charges in different countries.[45] Kirtsaeng’s attempt at international arbitrage was met with hostility by the textbook publishers who filed a suit for violation of their copyright in these works.[46] The Supreme Court ruled in Kirtsaeng’s favor, allowing first sale to apply even for textbooks purchased overseas.[47] While the Kirtsaeng case describes somewhat extreme steps taken to obtain textbooks at a lower price, other college students took a simpler route. While many chose to go without required textbooks due to their cost,[48] with the advent of low cost scanners and printers (which sometimes were included with purchased computers at no additional cost), students could simply break the binding of a book, put the pages through a scanner, and share or print additional copies.[49] In that way, multiple students could split the initial expensive cost of a textbook. Even though their copy would not be as nicely bound, many cost-conscious students felt such a sacrifice was acceptable if it meant significantly cutting the cost of textbooks. As with the music and movie industries, once the technological impediments to reproduction of textbooks fell, the only monopolies protecting such works were the legal and moral monopolies. Students, who had watched the prices of textbooks increase significantly,[50] even as they were forced out of the used market by rapid arrivals of new editions, may have felt fewer moral pangs in copying these books. Once that moral monopoly fell, the legal monopoly of copyright law was not sufficiently strong to prevent students from copying and sharing textbooks.

C. Similarities and Differences of Copyright and Patent Law

Just as copyright law provides a legal monopoly for expressions created and placed in a tangible medium, so too patent law provides protection for new, non-obvious, and useful methods and manufactures. Both regimes create legal monopolies wherein the owner of the creation can determine if, how, when and where the item is distributed as well as the price (if any) charged to access the item. This next section deals with what may be called the “copyrightization” of patent law. Patent law and copyright can be thought of to have traditionally protected different aspects of intellectual property law, the embodiment of an idea and the expression of an idea.[51] When an author obtains a copyright in a work, she or he isn’t protecting the physical embodiment of a book or a record in the store, but the expression of the creative content that is incorporated into that physical book or record, such as the plot, character development and dialog.[52] Conversely, a patent could be obtained on a new type of book format[53] or a new method of displaying text in a book (such as using backlight liquid crystal display), regardless of the content expressed in that book. With 3-D printing, however, the lines between the two forms of intellectual property protection begin to blur. Unlike writings, songs, movies and other works of creativity fixed in a tangible medium, the core of what is protected by copyright law,[54] the design of a tangible product does not have such protection. Small aspects of a physical product may be protected by copyright, such as the writing on the product or its packaging, or software that makes the product run. The name, symbols, logos and slogans of a product may be protected by trademark law.[55] Design patents protect new and non-obvious non-functional aspects of a physical product. Additionally, in some cases, the unique and well-known shape of a product itself may take on protections under the trade dress aspects of trademark law.[56] But the design and functionality of an item are aspects intended to be protected by patent law.[57] In fact, in today’s technological landscape, a single product may have components protected by various patents, expiring at different times, and also protection for the product as a whole.[58] Patent applications are expensive, complicated, and time consuming to create, file and prosecute to issuance, and although patent lawsuits alleging infringement are common, those alleging direct copying are not common.[59] Patent law does not have an administrative process as copyright does following the passage of the Digital Millennium Copyright Act (DMCA).[60]

IV. Using the Legal System to Enforce Copyright Backfired and Set a Price on Violations

When Napster and other file sharing technologies were released and experienced significant uptake, especially in the beginning by college students, the members of the Recording Industry Association of America chose to act in a way that was acceptable under the law but, for the reasons detailed below, was a fundamental error in business judgment. By suing college students and others across the country, the industry certainly brought attention to the issue of file sharing of copyrighted work without consent, but it did so in a way that turned copyright violation from a moral issue into a market issue. Without intending to do so, the industry set a price on violating copyright law, and the price it set was lower than the cost of purchasing material legally. It should be noted that the intention of this article is not to vilify the leadership or members of entertainment industry organizations[61] who made these choices when they came upon forces that were fundamentally changing their business model, and not (in their view) in a positive way. The organizations did not, at that time, have the benefit of the hindsight used in the analysis here, and it would be unfair to expect them to have had that insight at such a turbulent time. Behavioral economists have two theories that amply explain the reaction of entertainment industry members to the distribution of their intellectual property via peer-to-peer protocol: the status quo bias and the endowment effect. The status quo bias explains a phenomenon wherein individuals have a significantly exaggerated preference for the status quo, even if changes they are offered would be beneficial. To adopt a change, therefore, the units of gain in the change must be significantly higher than the units of gain by simply leaving things the way they are.[62] Napster came out at a time that the recording industry was enjoying record profits from compact disc sales.[63] Napster and other peer-to-peer services represented a fundamental shift in the method of providing content to consumers, and it was not immediately apparent to industry leadership how they could monetize this system in as robust a manner as their current sales. Now, with the benefit of hindsight, we can point out steps the industry should have taken: purchasing Napster,[64] launching their own robust competitors, or agreeing to an iTunes style sales format at an earlier stage. They did not, as it is very hard to move away from a success into the wild west of a new system. In a manner similar to the status quo bias, the endowment effect occurs when individuals are unwilling to part with an asset they have invested in, even when it is taking a loss. People will hold onto stocks or homes that are losing money, hoping that they return to positive territory, and will hold them all the way down to zero or very low valuations, rather than selling at a loss.[65] For the recording industry, and slightly later, the movie and television industries, their reference point for the revenue and profit earned by distributing entertainment content was set during a very successful decade for sales.[66] Even as the value of these assets decreased when fewer and fewer consumers purchased content in traditional retail environments, with sliding sales taking profits alongside, it was very difficult for the entertainment industry companies to cut their perceived losses and switch to another method. Just as we are loath to sell a losing stock, hoping that it will come back into positive territory so we can sell it at a profit, so too, industry representatives wished strongly for a return to the heyday of the late 1990’s, and may have assumed that a vigorous campaign of legislative lobbying and lawsuits would return them to these profits. There is disagreement among researchers as to whether or not Napster and other digital sharing have hurt overall content sales in the long run.[67] Ultimately, although sales of physical copies of content continued their decline, sales of digital content have risen significantly and less than a decade after Napster’s debut all music sales hit its highest level ever, 70% of which were legal digital downloads.[68] While it is not helpful to cast blame and aspersions backwards, when the same choices arise for physical goods manufacturers, they will likely possess the same status quo bias and endowment effect that the entertainment industry possesses. The purpose here is to note that we are quickly approaching an inflection point in the ability to reproduce physical items, and to chart a different path wherein those manufacturers can still find success, albeit only if they overcome these natural biases. The latter sections of this article lay out choices the industry can make that will significantly impact its relationship with its customers and its economic path forward.

V. Morals to Markets: A Fine is a Price

To some renown, the music industry unwittingly turned the act of piracy from a moral issue to a market issue by suing college students accused of sharing music in violation of the copyright law and quickly settling those claims. Once the lawsuits turned exchange of copyrighted files over peer-to-peer networks from a moral issue to a market issue, the question was not right or wrong, but simply what is the price? If the price of legal options was higher than the price of violative options, then a market actor would take the economically appropriate route—access content even if it violates the copyright law. In a seminal study of behavior and pricing, Uri Gneezy and Aldo Rustichini took on the classical economics theory that assessing a price will always lower demand.[69] More specifically, the authors wanted to look at the classical deterrence theory, which says that punishment deters “future crimes on the assumption that a higher expected punishment produces lower levels of criminal behavior.”[70] Stated otherwise, “the higher the cost of committing crimes, all else being equal, the lower will be the crime rate.”[71] The authors studied private daycare facilities in Israel that did not charge parents an additional fee for retrieving their children late, but such late retrievals required that an uncompensated teacher stay late to care for the child, and thus caused a guilty feeling among tardy parents.[72] They looked at 10 private facilities, observing them for a period with no treatment to count the number of parents who retrieved a child late.[73] The authors then added a treatment to six randomly chosen centers; a small fine imposed for parents who retrieve a child late, while four centers remained static as controls.[74] The fine was not steep or devastating,[75] 10 New Israel Shekels (NIS)[76] for those at least 10 minutes late, and was assessed per child retrieved late (without regard to how late the parents arrived).[77] The fine was posted on a board that could be seen by all parents[78] and was added to monthly tuition charges paid to the principal, not to the teachers who remained late.[79] Then, after several weeks of treatment, the fine was removed with no further explanation as to why it was removed.[80] Classic deterrence theory would postulate that with the assessment of a fine, the incidence of late retrieval would decrease, and then return to its stasis after the fine was removed. But that is not what occurred. Instead, while the incidents of late retrieval in the control group remained constant, in the treatment group, the “number of occurrences of delay increased steadily in the first 3–4 weeks after the introduction of the fine . . . [and] finally settled, at a level that was higher, and almost twice as large as the initial one.”[81] Just as interesting, when the fine was later removed, the incidents of late retrieval did not return to its initial levels, but remained stable at the higher level attained when the fine was imposed.[82] There are several possible explanations for this phenomenon, which cuts against everything we learn in classical deterrence theory.[83] One explanation is that in the initial weeks, parents felt an unstated push to keep late retrievals rare, since there is an incomplete contract in place—they do not know what will happen if they retrieve their child late too many times. Once the fine is imposed, however, the consequence for late retrieval is certain, albeit worse than the unstated. The parent can make a cost/benefit decision whether to arrive late.[84] In such an explanation, once the fine is removed, the parents still see the fine as the worst possible outcome, and still behave in this manner.[85] A highly theoretical explanation posed in a later paper on the topic is that “there is a unique social norm…that prescribes that individuals should be on time and not late. The introduction of a monetary fine for parents who come late is deemed to reduce the psychological cost arising from the violation of the social norm,[86] and this, in turn, erodes the bite or effectiveness of the social norm against delinquency.”[87] That erosion, therefore, explains why parents increasingly arrive late and why lateness is sustained after the fine is removed.[88] The more compelling explanation, however, is that of a change in social norms from a nonmarket activity (here referred to as moral activity) to a market activity. Gneezy and Rustichini posit that the “introduction of the fine may have changed the perception of the two relevant acts: the parents coming late and the teachers taking care of the children after closing time.”[89] Prior to the addition of the small fine, parents “may have interpreted the action of the teachers . . . as a generous, nonmarket activity” where the teacher is kindly staying late and the parent should not take advantage of that generosity of spirit.[90] The fine changes it from a moral question of not taking advantage of a generous teacher to a simple market transaction. The authors argue that the parents feel justified in late retrievals, reasoning that the “teacher is taking care of the child in much the same way as she did earlier in the day. In fact this activity has a price . . . [and] I can buy this service as much as needed.”[91] While the authors acknowledge that the fee assessed was a minor fee, and believe it “true that a ‘large enough’ fee would eventually reduce the behavior,”[92] they theorize that “[w]hen help is offered for no compensation in a moment of need, accept it with restraint. When a service is offered for a price, buy as much as you find convenient.”[93] This is where they draw their conclusion that “a fine is a price.” Yet even after the fine was removed, parents still retrieved children late. This is because even with the fine removed, the activity remains one of market terms or, as the authors refer to it, “[o]nce a commodity, always a commodity.”[94] In the third period, the activity of late retrieval simply switched from a commodity with a low price to a commodity with a zero price.[95] This is not the only study to find changes in behavior when an action switches from a moral activity to a market activity. Called “motivation crowding,” the effect occurs when external financial incentives or punishments undermine or strengthen an individual’s internal motivations to act in a certain way.[96] That is to say, external factors such as financial payment or cost will “crowd out” the individual’s natural internal compass. Citizen’s willingness to have a “hazardous waste treatment plant in their local neighborhood decreased if monetary compensation was offered,”[97] paying for blood donations reduces willingness to donate blood,[98] and many Norwegian club members who volunteer annually for community service said they would participate less if offered a fee.[99] Intrinsic motivations to pay taxes based on “civic virtue” can be crowded out by extrinsic threats of penalties for noncompliance, and increasing the penalties for tax evasion may crowd out that intrinsic motivation as “people feel they pay their taxes because they have to, rather than because they want to.”[100] One reason that financial or other extrinsic rewards can “crowd out” natural motivation to undergo a task is that an individual’s self-view becomes murky as to whether they are undertaking an “activity to ‘do good’ or to ‘do well.’”[101]

VI. Peer-To-Peer File Sharing: A Lawsuit Settlement Sets a Price

With the advent of peer-to-peer file sharing of copyrighted material, the entertainment industry, which historically had filed suits against commercial and large scale copyright infringers,[102] and which did so in this domain with a series of lawsuits filed against Napster and other peer-to-peer file sharing software providers,[103] for the first time set its sights on consumers of unlicensed copyrighted content, thousands of college students and others who uploaded unlicensed material using peer-to-peer protocols.[104] Yet, even with the threat of lawsuits, downloading activity increased.[105] For young people at that time, the price of accessing a single song was very high, at least as measured in how long one had to work at minimum wage to obtain that song legally. In 1998, at the advent of Napster, compact discs were sold for $12, $15, or even $20 each, and only a few songs were available as singles for individual purchase.[106] In order to listen to a single song, someone making the minimum wage of $5.15 per hour in 1998[107] had to work four hours. Today, by contrast, single songs can be purchased legally on a variety of sites, including iTunes, Amazon, and Wal-Mart for an amount that hovers between one dollar and two dollars (and sometimes less), while the minimum wage is $7.25.[108] Today, one need work mere minutes to earn enough income to cover the price of legally purchasing a song. The first truly accessible, global legal option for obtaining copyrighted material did not arrive until the release of Apple’s iTunes in 2001.[109] In this three year window preceding the availability of legal downloading options, consumers were presented with a binary choice—they could purchase music and other content in the older compact disc or tape format from stores or other retail outlets at a price that had a serious cost in terms of hours worked to obtain the content,[110] or they could access the same content, in the newer and more portable MP3 format and with no out-of-pocket cost, but in a manner that violated copyright law.[111] All consumers wish to be treated fairly in their transactions,[112] and, despite industry statements to the contrary, do not act out of pure self-interest, do not “free ride” as often as they are accused, and will usually act in a pro-social manner.[113] Interpretations of fairness disdain transactions where one party seems to be gouging the other party, especially when compared to the reference price at which one believes they ought to pay.[114] When those meting out a punishment “can make profit by punishing, neither those who observe the punishment nor the punishment recipients view punishment as expressing social norms.”[115] For college students, as Napster and its progeny spread, with no comparable legal offering from the recording industry, the reference price for a single song switched from that required by purchasing a compact disc to, essentially, free. To purchase during that wave was to pay more than the reference price (which millions still did). As the price of legal music rose, however, fewer were willing to pay the even higher prices for legal access when the same content was available free, even if it violated the copyright law.[116] Even worse than simply eschewing legal purchases for accessing content through Napster and other peer-to-peer protocol, economists have found that those who feel they are being mistreated or gouged in a transaction are more willing to punish that unfairness.[117] In fact, feelings of reciprocal punishment for perceived negative behavior are even stronger than feelings of reciprocal reward for perceived positive behavior.[118] The external monetary motivation of the industry lawsuits crowded out the internal incentive to act in an honest way and pay for the content one acquires.[119] “Civic virtue (a particular manifestation of intrinsic motivation)…bolstered if the public laws convey the notion that citizens are to be trusted,”[120] was undermined by the industry’s actions in pursuing lawsuits against individuals. Conversely, when citizens feel that they are not trusted, they react by breaking the law if they expect the cost of doing so to be low.[121] In a study, students who already shared files reported that heavy sanctions led them to believe their behavior was more ethical than moderate sanctions did.[122] Individuals are less likely to steal actual cash than they are to engage in theft of credit or cash value that is not itself hard currency.[123] So, too, those who would never steal a compact disc from a store may be more willing to engage in file sharing of copyrighted content since there is some separation from the physical good or cash value. It is likely that the anonymous nature of file sharing along with its separation from cash transactions may have diffused the moral guard against taking what one does not own.

A. Incentives to Settle for Plaintiffs and Defendants

It is expensive to defend oneself in a copyright infringement case. The Copyright Act uses strict liability, meaning intention to violate is not relevant.[124] According to an American Intellectual Property Association report, defending a copyright claim for an amount in controversy below one million dollars “costs on average $303,000 through the end of discovery, and $521,000 through trial”[125] in addition to the significant statutory violations which can be awarded in lieu of actual damages.[126] This provides a strong incentive for defendants to settle.[127] But there are also strong reasons for plaintiffs to settle these claims. The cost to litigate is expensive, and consumer defendants who are found liable may be essentially judgment proof. In two notable cases that did go to trial, juries assessed verdicts in the hundreds of thousands or millions of dollars against single mother Jammie Thomas-Rassert and Boston University student Joel Tenenbaum.[128] The cases have gone through many appeals and proceedings, but despite all the legal expenses,[129] it does not appear that the recording industries have collected a penny. Further, there was a general public feeling in response to these hefty awards that the amounts were “disproportionate and excessive.”[130] Rather than striking fear into the heart of potential copyright infringers, the high awards led to a backlash against the industry. Settlement for plaintiffs gives surety as to the amount they will expend compared to the revenue they will bring in. Although the civil statutory penalties for violation of the copyright law are set at $750 to $150,000 per infringement,[131] with $30,000 to $150,000 the penalties for willful infringement[132] (alongside the potential for criminal copyright penalties),[133] the industry chose to give potential defendants[134] (quite often college and university students) the opportunity to settle the claims against them for a fee of $3,000 to $4,000.[135] As a further incentive to settle, plaintiffs reportedly doubled the settlement costs for those who delayed in responding or actively challenged the claim against them.[136] Alongside subpoenas that sought the identity of individuals who shared files at the Internet protocol (IP) address observed by an industry contractor’s software, legal representatives for the industry plaintiffs would send colleges and universities pre-litigation settlement letters.[137] Plaintiffs would request that the institutions forward these letters to the individuals who matched the IP addresses caught sharing files. Nothing in the copyright law compelled institutions to so share these settlement offers, but many institutions, afraid that their students could face financial ruin if a jury assessed the statutory penalties against them, and perhaps considering the blowback when such defendants learned they could have, theoretically,[138] bought off their troubles for a fraction of the cost, chose to share the letters with the accused students.[139] Recipients of the letters could go to a Web site, enter a specified code, and settle claims against them for a designated fee.[140] College students (or their parents) were even given the option of paying by credit card. While reportedly over 20,000 settled their cases,[141] there are no precise public statistics of how many settled claims in this matter or who they were. The process and cost associated with settlement certainly became known to the settlers, their friends, and other students through social media, the popular press, and word-of-mouth. Just as in the daycare study, the cost of the fine was, on average, small. Further, just as the daycare fines were paid to the principal, not to the teacher who stayed late, the settlement fines were paid to record companies, and there was a perception among students that the funds were not returned to the artists who created the works.[142] Even though the recording industry stopped filing new lawsuits in December of 2008,[143] the price had been set as it was in the daycare study, and the transaction had been permanently transitioned from a moral activity to a market activity. While the industry probably could not have predicted it, the lawsuit campaign was not a classical economics disincentive to action, but merely the setting of a price. That price was lower than the cost of purchasing content legally, and consumers acted accordingly.

B. With the Market Price Set, Prospect Theory Predicts Risk Taking in Avoiding Loss

In a paper that led to the Nobel Prize in Economics, Daniel Kahneman and the late Amos Tversky laid out a theory of assessing and engaging in risk when in positions of losses and gains.[144] Prospect theory was a deviation from the long-taught expected utility theory and explained how people actually behave in cases of prospects (or gambles).[145] The economists found that survey answers violated expected utility theory—people overweight outcomes they consider certain relative to outcomes they consider probable[146] and “discard events of extremely low probability.”[147] Individuals do not, in fact, weigh all outcomes and then choose without emotion. How questions are framed (as a positive or a negative) significantly impacts how individuals make choices[148] and individuals treat losses of an amount as more painful than a gain of the same amount is pleasurable.[149] When they are in a position of accruing gains, people are risk averse; when they are in a position of suffering loss, people are risk seeking.[150] Given choice between two prospects, both of which are negative, people are willing to take on larger risk to avoid a more painful prospect over a less painful, but more certain, prospect; those same individuals are unwilling to take those risks in choosing between positive prospects.[151] With the price of violating the copyright law set in popular culture at $3,000 to $4,000 dollars, with an extremely rare judgment for a large amount of money, individual users could make an actual or implicit cost/benefit analysis for engaging in violations of the copyright law that left morality and legality out of the equation.[152] They would accurately assess a small likelihood of being caught.[153] Purely based on probability, an individual could assess his or her subjective analysis of the likelihood they would be caught and multiply it by the published rate for being so caught. Such individuals, often young people, may have an overdeveloped sense of invulnerability, which may have further lessened their perceived chance of being caught.[154] When Napster came out, the choice to access a single song was binary—either purchase a compact disc in a store at significant cost, or acquire the song illegally over peer-to-peer file sharing, but with no out-of-pocket cost. That retail cost was certain. The cost of a lawsuit or settlement for peer-to-peer file sharing, incredibly small, would, according to prospect theory, be disregarded. From an economics standpoint (in this new market activity), the choice is clear. Even years later when iTunes arrived, it was still a choice between a gamble of a potential fine that is so small and unlikely that it might be disregarded entirely, and a sure ninety-nine cent cost for a song. For instance, even acknowledging that individuals have difficulty with precision in making small calculations,[155] if a student at a college of 20,000 students saw an e-mail from the technology office saying that five students were caught illegally uploading files and had to pay settlements/fines of $3,000 each, they could do a little subconscious math[156] to determine their average chance of being caught is roughly .00025, or too small to even measure. Due to coherent arbitrariness in our assessments, while we are able to perceive changes in valuations or comparisons between two choices of value or risk in an orderly manner, we are very poor assessors of chance of an event occurring or value of an item without available anchors to help us make that assessment.[157] If one multiplied that very small chance of being caught against the cost of settling a claim with the industry, they would result in a fee of seventy five cents,[158] less even than the cost of purchasing the same song on iTunes, when that service arrived in 2001. As stated earlier, however, students may have looked at that news announcement and concluded that those caught file sharing were not smart enough to do so without being caught. In such a case, they may have concluded that the chance of being caught approached zero, making the calculated potential cost of a $3,000 penalty also close to zero. For such individuals, with the legal and moral questions already cast aside by the published price on violating the rules and the technological problems solved by peer-to-peer technologies that allowed for easy and increasingly anonymous sharing of files, even the economic disincentive would not have been present. Like the Israeli daycare parents, a fine was assessed and then, in all practicality, removed. The result was an activity that was classified by users as market, but with no out-of-pocket cost associated with the activity. Further, when the penalty calculation is comparatively small, and the perceived chance of being caught is exceptionally low, individuals may take pride in avoiding being caught, and look down on those caught. Those who study accidents and road mileage could probably, given enough data, pinpoint the financial cost to the economy and society of each mile driven over the speed limit. By measuring the increased risk of an accident for each mile-per-hour over the speed limit, multiplying that by the average cost of such an accident, and by the estimate that speeding is involved in about one third of all accidents,[159] we can arrive at a projected cost for each mile driven over the speed limit, X. We can then add X to a calculation of the average final cost of a speeding ticket (after plea bargaining), multiplied by the percentage chance that the marginal additional mile would cause a police officer to pull into traffic to pull a driver over, Y and come up with Z, an average cost for each mile-per-hour over the speed limit that one drives. That number, however, would be so small as to be incalculable and, thus, in all practicality, irrelevant for most people. Drivers do not do this calculation.[160] They do not consider the long-term moral cost or the potential economic damages of speeding when they depress the accelerator. Instead, drivers operate based upon recent road conditions and experience with the police. When a driver sees a police car on the side of the road, he or she slows down. As the police car fades into the rearview mirror, the speedometer slowly creeps up again.[161] When drivers are pulled over, that ignominious feeling that creeps over one as a police officer slowly approaches the vehicle is not a feeling of shame over violating the law, or a feeling of immorality at having, through increased speed, needlessly risked the lives and well-being of themselves, their passengers and their fellow travelers. Rather it is simply a worry over how much this ticket will cost and whether accompanying points will result in raised insurance premiums. By establishing a regime of fines for speeding, and robust plea bargaining for lesser financial penalties, municipalities converted a moral matter to a market transaction; in setting a price on speeding, societies changed the calculus from a concern about violating the law or a set of moral standards to a simple economic calculation. In addition to the lawsuit campaign turning a moral activity into an economic activity by setting a price on violating copyright law through peer-to-peer file sharing, researchers found that the sanctions could raise significant anti-copyright feelings[162] among the group of consumers who are both likely to purchase the products legally and likely to engage in peer-to-peer file sharing. Specifically, the stronger the sanction and likelihood of the sanction coming to pass, the higher the aversion to the policy of enforcement,[163] and the higher the expectation for continued downloading,[164] especially when compared with the lower anti-copyright impact of moderate sanctions. When technological changes offer those faced with sanctions the opportunity to resume downloading with less fear of sanction, those who faced the most severe sanctions indicate they would download more than those who faced moderate sanctions.[165] The fact that only a few were sanctioned lead to a sense that they were “singled out” for punishment.[166] While they probably could not have predicted it at the time, and may still believe that the lawsuits had a positive impact,[167] ultimately, the lawsuit campaign against consumers by the Recording Industry Association of America and later the Motion Picture Association of America,[168] failed to decrease file sharing,[169] bring in new revenue for artists or bring positive attention to the record companies.[170] Just as the driver speeds up as the police car fades into the background, users of peer-to-peer file sharing services, cognizant that a price has been set upon their illegal actions, may become more tempted to violate the law as the memory of those who were punished fades into the past. While a user of a peer-to-peer file sharing service may think twice about opening the program in the hours or even days after a report of a major fine assessed against a fellow user, as memory of that fine fades into the distance, the economic calculus will shift, the perceived penalty will decline and, with no moral or legal hesitancy remaining, the user will choose to share the files if the economic advantage seems to outweigh the cost.

VII. Using the Legislative System to Crack Down on Copyright Violations

Another tactic used by the entertainment industry to attempt to stem the tide of peer-to-peer sharing of copyrighted material was to seek assistance from Congress and various state legislatures. While it would be fair to say that Congress was eager to respond to the lobbying entrees of the industry,[171] and quick to pass civil[172] and criminal laws,[173] often drafted by industry representatives,[174] and meant to impede improper sharing of copyrighted material,[175] it is not clear that such lobbying and legislation served the industry’s long-term interests. Some would argue that the legislative results, and the one-sided manner in which they came about, caused consumers to question whether Congress was acting as a fair dealer. In some cases, it led to open revolt against further legislation. Some scholars and consumers take the view that in recent decades, copyright moved away from its traditional role as a cradle of creativity to a regime of protecting producers and distributors at the expense of creators and consumers.[176]

A. Interest Group Politics Historically Carried the Day on Intellectual Property Changes

The response to peer-to-peer file sharing by content producers and distributors is a classic example of special interest group politics.[177] While opposition to changes in copyright law is diffused,[178] and may be held slightly by a large population, a small group with passionate beliefs in favor of stricter laws, especially a group with access to campaign donations,[179] a story that impresses Congress,[180] and celebrity testimony, can carry the day.[181] To accomplish their goals, intellectual property owners used impassioned testimony, including from famous celebrities, artists and musicians, and also used statistics and reports to prove their points to members of Congress. Unfortunately, not all of the statistics used in defense of stricter civil and criminal penalties for violations of copyright law have been completely accurate—conclusions have been overstated[182] and data has been based upon guesses or press releases.[183] The statistics and reports worked, however, and were accepted by Congress with little questioning or dissent.[184] While for decades these tactics worked with little or no opposition, the feeling by the electorate and consumers that industry can enact any law it likes regardless of the consequences has a dispiriting impact on their views of that industry.[185] Citizens are willing to comply with laws they view as legitimate and aligned with their values,[186] even if they disagree with the law[187] or compliance goes against their self-interest, and such feelings of legitimacy are a better predictor of compliance than are deterrent actions.[188] Of the two methods that are used to shape behavior, incentives and deterrence,[189] “coercion rarely succeeds in forcing compliance with laws that significantly depart from shared societal values”[190] and can even cause a backlash against such laws.[191] Further, on top of the perceived fairness of the laws themselves, citizens “perceptions of how they are treated by the authorities strongly affect their evaluation of authorities and laws, and their willingness to cooperate with them.”[192] Legislative dominance by a small interested group, seeking legislation that others would not consider pro-social, has led some to develop an intense anti-copyright culture,[193] or at least to question the legitimacy of heavy-handed punishment of file sharing.[194]

B. Diffuse Opposition Solidifies and Strengthens Through the Internet and Social Media

The Internet has had an interesting impact on interest group politics. In addition to the impact of traditional news and interest groups on the Internet, individuals have organized themselves into new and more finely grained interest groups that can challenge traditional organizations.[195] Those interest groups did not limit their discourse and activity to the online environment; they also and to great effect pursued “their interests in traditional regulatory forums.”[196] Unlike the run up to the Digital Millennium Copyright Act (DMCA) and other copyright laws, the response to two pieces of legislation meant to add additional protections against online copying of protected material as well as physical counterfeiting of goods was vigorous and well organized. The House version, the Stop Online Piracy Act (SOPA)[197] and the Senate version, the Protect IP Act (PIPA)[198] had differences, but at base they both sought to provide the Federal government and intellectual property holders with the ability to administratively shut down Web sites and online purveyors of products infringing intellectual property protections. The proposed laws gathered momentum and co-sponsors, with significant support[199] and lobbying from the entertainment industry.[200] But industry’s push for the relief sought in SOPA and PIPA was unsuccessful. Technology companies that opposed the legislation, who are themselves quite a powerful lobby,[201] joined with advocacy groups and ordinary citizens,[202] to vigorously oppose the legislation. Scholars breathlessly (and perhaps with some stretching) claimed the bill would violate everything from the First Amendment[203] to human rights,[204] and thousands of Web sites, including Wikipedia,[205] Google,[206] and Facebook[207] either were blacked out[208] or included messages of opposition to the bills. While individual consumers and organizations interested in the issue may have little or no clout alone, when aggregated through the organizing power of the Internet and social media, their opinions cause Congress to take notice.[209] Members of Congress withdrew support,[210] and neither SOPA, nor PIPA, came up for a vote.

VIII. More People Violating Copyright Law Leads More People to Violate Copyright Law

Another tack that industry representatives took (understandably) in trying to raise the profile of the problem of peer-to-peer file sharing was to state (and sometimes overstate)[211] the percentage of people, particularly college-aged, who shared music and movie files in violation of copyright law. The “principle of social proof” states that “we determine what is correct by finding out what other people think is correct.”[212] An individual’s relationship to their reference group is important in setting their course of actions. The perceived prevalence of tax evasion leads people to evade their taxes,[213] violating the law when they believe that “everyone is doing so.” Further, threats of significant punishment may lead individuals to feel that such punishment must mean law breaking is more widespread than it is.[214] Similarly, when the entertainment industry publicized and asked Congress to require that colleges and universities publicize information about file sharing and the prevalence of such actions, rather than reducing the number of file sharers or causing potential sharers to think twice, it may have left users feeling that they are not alone, “everyone is doing it,”[215] and therefore, the harm would be diminished.[216] In fact, students sampled in a 2004 study believed file sharing to be widespread.[217] “The greater the number of people who find any idea correct, the more a given individual will perceive the idea to be correct.”[218] Scholar Robert Cialdini tells the story of how, after the invention of the super market shopping cart, no one would use the cart until the proprietor hired actors to walk around with carts; seeing others use the carts led people to use the carts themselves, until the actors were no longer needed.[219] Similarly, with peer-to-peer file sharing, as consumers saw others using the technology, and especially when the industry, through its lawsuit campaign, turned the activity from a moral question to a market question, those who saw their friends use the technology with no consequences saw it as more and more normalized.[220] In turn, they would then model this behavior for other friends and family members, as the practice spread.[221] As users become more comfortable with an action, newly possible with the fall of a technological monopoly, thinking that such an action, even if ostensibly illegal, is the moral norm, combined with an extremely low legal cost to taking such an action in the cost-benefit analysis, will result in diminished moral resistance. This is especially the case since people are “inclined to construe facts in ways that align with their own preconceptions.”[222] The impact of social norms on such decision making is, in many cases, a stronger “determinant[] of behavior than formal sanctions.”[223] In such a case, all three legs of the intellectual property monopoly as deterrence triangle—technological, legal and moral—fall and there is little friction against taking such an action. While each individual action has but a minor effect on the market as a whole, the collective action engendered by such reasoning can be devastating to companies or industries that previously maintained a rock-solid grasp on all three monopolies.

IX. A Technological Problem with a Technological Solution?

The mass-market entertainment industry has generally viewed the issue of peer-to-peer file sharing of copyrighted content as a technological problem that could be ameliorated with legal and technological solutions.[224] The industry has, at times, worked with colleges and universities,[225] commercial Internet service providers,[226] and the Federal government in an attempt to limit file sharing via technological means. Yet experience shows that, like the carnival game whack-a-mole, each time a source of improperly shared content is removed from the Internet, several rise in its place.[227] Blocking technology can be overcome through encryption of files; new technology to decrypt such files then begets even more advanced encryption technology. Attempts at technological solutions thus result in an arms race between industry and file sharers.[228] Even worse, the industry can only seek to disrupt copyright violations that it can see and that it has jurisdiction over. But it does not have practical jurisdiction over all users (even if it has legal jurisdiction):
• Users who are overseas in countries with lax intellectual property laws still have access to the same content and can often share files in the same manner as if they were stateside. • Anonymizing software can hide or spoof an IP address, making it difficult to determine location and identity. • It is exceedingly difficult to capture downloading of files. Almost all of the transfers that the industry found and acted upon have been uploads or sharing of files on peer-to-peer or bit torrent protocols. • There are many sites available wherein individuals can access content over streaming protocols such as YouTube, equally in violation of the spirit and likely the letter of copyright laws, but in such situations, industry is unable to stop the streaming, and it is unclear whether it could prove the necessary factors to act against those who stream. Even if it could, the industry would ignite a firestorm of controversy if it chose to do so.
What that industry has not come to realize, and what the physical goods industries may want to pay attention to, is that the issue of sharing files in violation of intellectual property laws is not a legal[229] or technological issue; it is a behavioral issue and an opportunity for a change in business practices. As long as the behavioral aspects are minimized in favor of a rush to newer technology to block the latest iteration of sharing or streaming files, little or no progress will be made towards shifting to a culture of respect for intellectual property. As argued above, when the technological monopoly for an intellectual or tangible good falls, the legal monopoly is insufficient to alone protect the monopoly. This is not a new concept, but has simply been placed in more stark relief by the almost unlimited power of an individual to improperly share a piece of someone else’s intellectual property with users the world over. Never before the last decade-and-a-half has the rate of intellectual property law violations been so severe, but this is a difference of degree, not of kind, with historical practice. Technological solutions lack the discerning judgment of a human, especially in cases of license or fair use of material, and so lead to false positive claims of infringement. False positives occur when technological searches for intellectual property violations find not only actual violations, but also actions that software believes are violative, but are actually legal.[230] This could be because the use is licensed,[231] or is fair use (for instance a transformative use, parody, or an educational fair use[232]), or is otherwise not a violation of copyright law.[233] False positives are an inevitable side effect of automatic search and enforcement technologies,[234] such as those used to search for music, movie, and literature copyright violations, with automatic cease and desist letters or DMCA takedown notices issued alongside.[235] Such false positives enact a significant cost on society, as they dissuade individuals from engaging in proper use, potentially chilling creativity,[236] and are expensive and complicated to fight,[237] even for those making absolutely legitimate and lawful use of content.[238] Like the lawsuits against consumers and aggressive legislative actions to strengthen copyright violation penalties, false positives “imperil the legitimate property interests of rights holders by diminishing public respect for, and adherence to, copyright law.”[239] Inasmuch as sharing files in violation of the copyright law is primarily a behavioral and economic problem, not a technological one, it can only be resolved through behavioral and economic solutions. Just as automated processes resulted in false positives in copyright notifications and takedowns, the same or similar automated processes may catch and deter legal use and sharing of 3-D printing files. As 3-D printing becomes more prevalent, manufacturers of tangible goods should be extremely cautious before using automated processes to discover and take action against patent violators, lest the false positives squelch appropriate use and make enemies of potential and actual consumers of their products.

X. Pricing Monopoly and Market Goods

Prior to the loss of a technological monopoly, a manufacturer can feel secure using monopoly pricing methods to distribute their product. Once the technological monopoly falls, however, to retain sales, manufacturers should switch to an imperfect market pricing model[240] for their product. To the extent that 3-D printers can make a precise copy of their product, manufacturers can utilize a bifurcated sales model wherein they charge one price to purchase the item in a retail environment, and charge a much lower price to access a computer application that can be used to print a precise version of the same product on a home 3-D printer. Classical economists recognized monopolies as less efficient than market systems and of having the effect of keeping the market under stocked with desired goods.[241] Monopolies occur when either one company provides all of a certain good or, as more relevant here, where there are no close substitutes to a good. Economists identify three classes of “barriers to entry” that help to facilitate control of a market by one firm or a small number of firms. Those barriers include “natural barriers, such as economies of scale;[242] actions on the part of firms that create barriers to entry;[243] [and] governmentally created barriers.”[244] These classic barriers match up well with the monopolies discussed earlier. The governmentally created barriers are principally the constitutional and other legal protections of copyright and patent, and the natural barriers include the inability to technically replicate an item for a price that compares to the retail cost of manufactured goods. As stated, this article is not discussing pure monopolies (such as a local utility company), but monopolistic competition markets wherein various companies make similar products that are not perfect replacements,[245] but each individual product within the class maintains monopolistic protections due to governmental barrier, such as afforded by copyright and patent law. The advantage of a monopoly is the ability to use monopoly pricing, which, short of regulation, is almost always more profitable than market pricing. While the price cannot be set so high as to scare off customers, a monopoly firm can charge up to the price allowed by the demand curve of individuals seeking that good.[246] The consumer surplus that exists in a perfect market intersection of the demand and supply curve is reduced significantly in a monopoly, as much of the consumer surplus is transferred to the monopoly producer surplus,[247] and the amount not transferred to the producer surplus is simply deadweight loss.[248] The benefit to consumers of this good relative to the price paid, therefore, is significantly reduced in a monopoly regime. The price of production may also be less than perfectly efficient. Whether a firm has a natural monopoly, or one that results from governmental protections (such as copyright or patent law protection), since that firm does not have to worry about competition and keeping costs low, it will often produce in a less efficient manner.[249] Economists call this “x-inefficiency.”[250] This results in higher cost to consumers (and less consumer surplus), but without the concomitant rise in producer surplus that would occur without the inefficiency. At the same time, economists believe that such producers are less innovative, and less likely to develop new technologies and means to make current products at lower cost.[251] One of the mistakes that the recording industry made when Napster and other file sharing sites allowed users to share copyrighted content without paying was to raise their prices to compensate for the loss.[252] This may have temporarily stabilized profits, but ignored the demand curve and resulted in a regime where individuals who would have legally paid price X were unwilling to pay a rate higher than X, and either went without or acquired the content illegally.[253] This, of course, led to further increases in prices to stabilize profits, and further flight from the legal content market, forming a sort of death spiral (or at least a grievous injury spiral) for the entertainment companies. The entertainment industry would have been better served by addressing the market factors and switching themselves psychologically from a monopoly system to an imperfect market system. As discussed below, producers of tangible goods, when inevitably faced with some of the same concerns, should strike a different path.

XI. Taking the Lessons of the Recording Industry to Heart for Tangible Goods

Like copyright law violations prior to the late 1990’s, patent law has traditionally been battled out in litigation between large corporations, or between an inventor and another firm that infringed the patent in manufacturing a product, but not against end users or consumers who use infringing products.[254] That began to change in recent years as companies that (sometimes dubiously) hold patents for technologies used by millions every day, sent letters requesting settlements to end users and consumers. For manufacturers and end users of 3-D printers, the question of patent infringement becomes increasingly complicated. In order for a patentee to recover they must prove that the defendant either directly or indirectly infringed the claims of the patent.[255] The most obvious vulnerability for end users comes from a patentee’s claim of direct infringement. Conversely, while manufacturers of 3-D printers likely avoid the question of direct infringement entirely, they remain vulnerable to attacks on indirect infringement grounds.[256] Within the realm of indirect infringement, the patentee can show that the defendant engaged in either induced infringement or contributory infringement.[257] Turning first to the question of end users, a patentee can bring a suit for direct infringement against any person that “makes, uses, offers to sell, or sells any patented invention within the United States” without the authority of the patentee.[258] The most obvious liability for end users of 3-D printers comes from the “makes” and “uses” prongs, given the functionality of most 3-D printers.[259] In its current form, patent law provides no exception for individual end users and, unlike copyright law, does not allow for a fair use defense by the infringer.[260] Turning to the manufacturer side, contributory infringement occurs when a party sells or offers to sell “a component of a patented machine . . . constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article . . . suitable for substantial noninfringing use.”[261] According to the Federal Circuit, a finding of contributory infringement requires the patentee to show, by substantial evidence: direct infringement; accused infringer’s knowledge of the patent; that the component has no substantial noninfringing uses; and that the component is a material part of the invention.[262] Under a theory of contributory infringement, a patentee could claim that a 3-D printer manufacturer sells the printer while knowing that the end user will use the 3-D printer to make, use, or sell a patented device.[263] While contributory infringement is likely not the optimal litigation strategy for patentees, given the requirement that the device shall have no substantial noninfringing uses, the issue has yet to be conclusively addressed. Induced infringement occurs when a manufacturer “actively and knowingly aid[s] and abet[s] another’s direct infringement.”[264] These cases most commonly arise when a manufacturer creates a product that infringes an existing patent, and then instructs the end user on how to infringe the patent. For example, in Global-Tech Appliances v. SEB S.A., Global-Tech, through its subsidiary, copied a patented deep fryer, manufactured infringing copies, and then sold them to third-party distributors in the U.S.[265] While that case turned on 35 U.S.C. § 271(b)’s scienter requirement, the underlying factual background offers insight into how manufacturers can induce unknowing users to infringe a valid patent.[266] Traditionally, patentees have favored induced and contributory infringement as a way to target deep pocket defendants. Such suits also avoid negative media coverage of suing average citizens who unwittingly use a patented device or method. However, that trend has changed in recent years, as so-called patent trolls have targeted easily intimidated end users. The term patent troll[267] is often applied to inventors who do not manufacture a product but seek to prosecute their patent. That term is sometimes unfairly used against small inventors who obtain a patent and later approach a company that is clearly infringing on that patent, only to be told by the company that it will cost millions to sue the company for infringement and that the company will stretch the litigation out for years.[268] Often such claims will be against a company that manufactures a product that violates the patent, under a doctrine known as inducement to infringe. Inducement to infringe allows a patent holder to sue the manufacturer and avoid pursuit of the end users who are actually using the product in violation of the patent. While those inventors have valid inducement claims against these large corporations, other companies are taking the unfortunate route of pursuing for direct infringement the end users who (unknowingly) purchased a product that violates a patent. In 1996, a company called Personal Audio applied for a patent on a concept that is similar to what today is known as podcasting.[269] The priority date patent predated actual podcasting, and even predates iTunes and the iPod. While the company never created a device for podcasting, they have recently sent letters to for-profit podcasters asking for a settlement fee to avoid litigation.[270] The letters do not specify a price but are an invitation to begin negotiations to avoid litigation.[271] Ultimately, Personal Audio’s patent represents an emblematic case for patent trolls. The patent is incredibly broad, holds a priority date long before the patented invention had actually been put into practice, and attacks an already developed industry. Perhaps even more interestingly, Innovative Wireless Solutions sued Starbucks, Marriott, and other hotel and restaurant chains for allowing patrons to use wireless Internet at their locations, allegedly infringing a series of patents protecting “information network access apparatus and methods for communicating information packets via telephone lines.”[272] These are not manufacturers infringing in their manufacturing of a product, but end users utilizing a common product in the marketplace.[273] Pursuing end users for direct infringement allows patent holders to avoid the deep pockets and sterling defense teams of the corporations that induce infringement, but it comes at the cost of making enemies out of the end users who purchase and use common products. While the market for intellectual property is large and valuable, the market for physical goods is much larger and more valuable.[274] On the legislative front, it is certainly within the zone of imagination for manufacturers to push for an expansion of individual patent violation definitions, similar to the expansions that the entertainment industry sought and achieved in copyright law, or to push for administrative programs similar to the DMCA or increased penalties for individual patent violations. To date, the market for tangible goods has not yet followed the path of the market for more virtual forms of intellectual property. It is cheaper for an individual to buy essentially any toaster sold in any store whether brick-and-mortar or online, than to manufacture a toaster.[275] The same goes for sneakers, beer bottles, staplers, and almost any other tangible good we can think of. There have always been, and continue to be, craftspeople who can create tangible goods of the same or better quality than those available in the mass market, but such craftspeople usually do not threaten the technological monopoly of mass manufacturers, regardless of whether they infringe on the mass marketers’ patent rights. The copyrightization of patent law arrives when these physical goods are reduced to the same ones and zeros of computer code that have vexed intellectual property producers for the last decade and a half when, like an MP3 music file or a copied textbook, a consumer can easily and cheaply scan and print a physical item. Traditionally, music lovers would purchase a record, tape, or compact disc whose form patent law could protect and whose content was protected by copyright law. Once users started to share digital files of those same songs (and other content), there was no need to utilize those patent-protected media and the only question was whether and how this ran afoul of copyright law. In a future day when one can print the parts of a toaster (or even eventually an entire working toaster) on a 3-D printer, the toaster, as it was, will be reduced to simple ones and zeros just like a song, and patent protections look and act more like copyright protections. While the muddying of waters between copyright and patent may not be such a new idea,[276] the arrival of 3-D printers will bring the concept to the fore and represent a major shift in the protection regimes for intellectual property. Now that 3-D printers are likely entering a period of rapid decrease in price paralleled by increase in quality, it is time to consider the future of tangible goods, the technological, legal and moral monopolies that protect those who design and manufacture these goods, and whether the market for tangible goods will follow the market for intangible intellectual property. It is probably just as difficult for a sneaker or hair dryer manufacturer to imagine that their market share will be diminished by individuals printing such items at home, as it would have been for a record company twenty years ago to imagine that a score of years in the future, individuals could choose to purchase music on a compact disc, or as a digital download without ever visiting a music store, or could simply make an exact copy of a song file owned by a friend or a confederate anywhere on earth. The biggest, and arguably most permanent, error that the tangible goods industries can make when addressing those who share patented designs with others who can print them on 3-D printers, would be to treat this as a legal problem rather than a market or business problem,[277] and to use the civil litigation and legislative process to seek redress. To use litigation against consumers is to risk simply establishing a price for violations of intellectual property law in 3-D printers. Just as with entertainment and literature, those few who are sued and are not otherwise judgment proof will have to pay dearly, or will settle for reasonable albeit large sums. The danger is not with them, it is with those who learn of them. They will either camouflage their sharing of such designs, or calculate their likelihood of being caught (and therein the practical average price for violating the law). For example, consider an item that costs $100 at a retail store but can be printed for $10 in material. If the home printer estimates he or she has a one percent chance of being caught and sued, and if such a suit results in a $2,000 settlement, it makes economic sense to violate the law and print the item at home with a purloined design. Printing at home in this scenario averages out to a $30 real cost[278] over many tens of thousands of users, while the retail price is more than three times as much. Lest the reader believe that the solution therefore is to raise the penalty so high that it causes users to recalculate this decision, research shows that when “enforcement reaches levels that are perceived as normatively excessive, this can have the inadvertent effect of moving behavior in the opposite direction from that intended by the law.”[279] A fine or price that works to deter at one level, may not work better, or even as well, at a higher level.[280] Such tactics will only lead to the poor relationship with consumers that the entertainment industry faced, and to a higher value on anonymizing and other masking software that can protect uploaders and downloaders from being caught. A higher price is still a price, and when we move from a moral relationship to a market relationship, the parties will still behave in the manner appropriate to that relationship. One solution is to bifurcate the pricing structure. One of the mistakes the entertainment industry made when Napster debuted (and was then shut down by court order, with various other peer-to-peer protocols rising in its wake) was to lag in filling the vacuum. If the industry had immediately launched an easy to use and search method for obtaining MP3 files, users may have flocked to it. Instead, as detailed earlier, years passed with poor, restrictive services and half measures before Apple in 2001 corralled the industry to offer songs through iTunes. Manufacturers of tangible goods should embrace the opportunity 3-D printing provides to offer print at home designs that are equivalent to items available in stores, but at much lower prices. While the release online of a product design which allows a product to be successfully printed at home on a 3-D printer spells the end of monopoly pricing for that product, it does not mean that all economic benefit to the rights holder is lost. Many industries engage in third degree price discrimination[281] wherein different groups of purchasers are identified and different prices are charged to the members of each group. Examples include student or senior citizen discounts (all members of one group pay a lower price than others) and different airline ticket prices charged to tourists and business travelers.[282] Manufacturers can use these time tested price discrimination techniques to advance a bifurcated pricing scheme wherein one price is charged in stores, and a different price is charged for access to an application or Web service allowing consumers to print the product at home. The higher price (although not as high as in monopoly pricing regimes) in stores can justify the overhead, transportation, and sales costs of maintaining the product in a retail environment. The significantly lower print at home price reflects cost savings in creation, shipping, storage and sale. In fact, home printing may increase sales by making retail products available to those living far from stores. Companies can sell licenses to digital files for printing individually or can adopt a Netflix style model where users can subscribe to unlimited access to a brand’s designs.[283] Take as an example Lego bricks. Lego currently holds no patent on its standard bricks and blocks[284] Small companies and hobbyists use 3-D printers to fabricate Lego style pieces and accessories that Lego will not manufacture, either because they will not sell well or, as in the case of modern weaponry, due to company policy.[285] Lego maintains an online service, called the Lego Digital Designer CAD program, wherein users can upload custom designs that Lego manufactures and ships to the user, just like any other Lego set.[286] It is not hard to imagine a world where Lego and similar companies extend these programs to allow users to print at home on 3-D printers. These items can carry the trademarks of the company, be accessible, searchable and customizable, and have appropriate safety and reliability built into the designs.[287] Lego may be able to further price discriminate by charging one price in stores, a second price to print an individual design, and a third price to subscribe to unlimited printing of Lego designs. Bifurcated pricing opens up new possibilities, and breaks the cycle[288] of binary choice for consumers between purchasing legal, but expensive goods in stores and obtaining illegal, but free, goods in instantaneous digital form.[289] Although the entertainment industry makes a credible complaint that “it is impossible to compete with free,” there have actually been several documented cases of artists who have successfully competed with those who offered their work for free in violation of copyright law.[290] Of course, individual examples are insufficient to declare a trend.[291] Yet there are studies showing that the availability of content for purchase can decrease file sharing, and the unavailability of legal content for purchase can result in increased peer-to-peer sharing, in violation of copyright law.[292] If given the opportunity, rational consumers will purchase digital content that is appropriately priced, free of viruses, and of high quality. With physical products, consumers will consider printable designs that they know will work and are virus free, if those designs are priced appropriately.

A. Manufacturers Can Hang Together, or Hang Separately

It should be noted that users may be inclined to paint industries with a broad brush. In the music industry lawsuits, although suits only derived from a limited number of entertainment companies, many users adopted a “plague [on both your] houses”[293] attitude that led to economic damage for companies that participated in the lawsuits, as well as those who did not.[294] Producers of tangible goods should likewise understand that a series of lawsuits filed by one or a few manufacturers in a class may lead to an “us versus them” feeling against all members of a product class, and a concomitant loss of sales both for those producers who file suits, and those who do not. Much as the designs must be priced appropriately, pursuit of serial infringers must be judicious and considered. However, to paraphrase Benjamin Franklin, in adopting the regime ascribed here, if all manufacturers do not hang together, they will all hang separately.[295]

XII. A Moral Solution When Technological and Legal Monopolies Fail

Whether it is months, years or decades down the line, at some point for almost all physical goods, the technological monopoly will be broken by inexpensive 3-D printers that will allow individuals to easily print the item at home. At first, printing such an item at home will be more expensive than purchasing it in stores and may be mainly the province of hobbyists and early adopters. Eventually, however, the price and ease of access of printing that particular item will fall so that it will be on par with, and then may fall below, the price of purchasing the item in a store. There is good news, however, that may help makers of physical goods avoid the (at best uncertain and at worst financially crippling) fate of the music and movie industries. When the technological monopoly falls, it is unwise to try to salvage market share by exploiting the legal system to uphold the legal monopoly. Companies should instead adjust the price of their goods to aggressively compete against the cost of power, time and raw material needed to print the item at home. Concurrently, companies should aggressively work to ensure that users have a positive view of the firm, since the moral monopoly will be the lone standing reason for individuals to choose to purchase goods in the traditional manner. Different companies will hit this mark at different times. Single medium items with no moving parts (as in the Lego bricks referenced earlier) will be the first and easiest to manufacture at home. Complex goods that use multiple materials, complex structure, moving parts, and skilled soldering of electronics will take much longer to develop at home printable alternatives. Once each product passes the point where it becomes as possible to manufacture that class of good at home as in the factory, the question will shift from a physical question to one that is solely about the intellectual property aspects of the good. Such intellectual property designs of goods can ostensibly be shared via peer-to-peer or bit torrent protocols just as easily as one can now share songs, books, or movies. Once the technological monopoly falls, the accompanying legal monopoly provides little relief (and can actually be a hindrance) in protecting market share, and makers of tangible goods will have to depend on moral values to maintain their business. For consumers to feel a moral reason for continuing to purchase from the traditional manufacturer, the manufacturers will have to engage in business practices that consumers find laudatory, lest they feel it is actually in their best interests to print at home in defiance of intellectual property law, and starve the company of business. For instance, reports of mistreatment of workers in factories currently lead to boycotts or negative articles, Facebook pages calling for change, or word-of-mouth discussions,[296] but if a consumer wants the specific phone, shirts or pair of sneakers made only or primarily by that company, they do not have a choice to acquire it elsewhere. That is to say, consumers who disapprove of a company now have a binary choice: stand on principal and eschew the good, or hold your nose while purchasing the item. In a world of 3-D printers, as the technology advances to make printing of more and more items possible in the home, consumers will be left with a third choice, one they may find highly desirable. If the consumer wants to have a certain physical good, but does not want to support a corporation because of an actual or perceived view that the company abuses workers or the environment, gouges shoppers on prices for the product, or otherwise acts in an anti-social manner, the consumer may choose to print that item at home. Further, they may even justify violating intellectual property laws in improperly obtaining the design to print at home, if they believe that doing so is striking a blow against a company whose actions they detest. Therefore, the reputations of such companies can play a greater role in whether consumers will choose to purchase items in the traditional fashion, through bifurcated print at home offerings, or will instead improperly obtain the design to items and print those items at home with no remuneration to manufacturers and inventors. With the increasing use of social media and the ability of even small journalistic groups and private citizens to become modern muckrakers, it will become incumbent on firms to act pro-socially. Users will often be able to tell the difference between real moral imperative and whitewashing of moral imperative. This transparency may lead to improvements in corporate culture. The company in question may sacrifice a lot of hard-earned goodwill if users learn of illegal working conditions or unethical conduct. In order to prevail on customers to keep the company in high regard, and to keep purchasing the economically appropriately priced goods so as to keep the workers employed and the company doing good work, the company will have to walk the walk of corporate responsibility, and not simply talk the talk. Frankly, this may not just be good for the bottom line, but may represent a new and positive era in the relationships between consumers and producers, workers and employers.

XIII. An Alternative Thesis[297]

There is, of course, a possibility that widespread use of 3-D printers will remain the stuff of science fiction. When photo printers became available with the advent of digital photography, many happy consumers snapped them up,[298] only to find that the photos printed on a home photo printer were never quite the quality of those published at commercial facilities. Further, having to keep purchasing ink and paper, combined with the utility efficiency and declining prices of brick-and-mortar and online photo printers, meant that printing slightly lower quality photos at home was not exactly less expensive either. Sales of home printers fell.[299] The same may happen with 3-D printers. It is possible that these may remain in the domain of hobbyists and, while they may eventually print consumer goods at low cost, they may never be quite as good as those manufactured by traditional producers. If so, the creators of tangible goods will have dodged a significant bullet. Yet one of the things that aided retail and Internet photo printers with preserving market share after widespread sales of lower quality home photo printers was their significant reduction in price with accompanying increase in quality, options for printing, and speed from order to delivery[300] (at many retail businesses,[301] consumers can print high quality photos at low cost just seconds after inputting data, and online services offer extensive customization options at lower prices[302]). To that end, market rules will still apply to tangible goods when 3-D printers arrive in homes. Depending on quality of manufacturing the 3-D printers, the devices may produce products that are the same quality as manufactured goods, or they may be of slightly lower quality. If they are, a price comparison to manufactured goods will still be important, as many users would accept a deeply discounted inferior product to the precisely manufactured, but more expensive, product available from manufacturers. After all, home photo printers may not be of the same quality as commercial photo printers, but they are still available for sale at electronics and home goods stores.[303] Of course, the history of home printers has not yet run its course.[304] It may be that the quality versus price for these printers simply has not yet made it worth the cost. As the quality continues to increase and the price continues to decrease, depending upon the market offerings of retail stores for print-on-demand photos, there may yet come a time when it is cheaper and more efficient to print photos at home, and where the quality of such photos rivals those printed in a retail store.

Conclusion

Creators of tangible goods would do well to study lessons learned by the entertainment industry, and the difficulties it faced with consumers reacting to the litigation and legislative strategies utilized to fight copyright violations through peer-to-peer protocols. When the inevitable occurs and individuals begin to use 3-D printers to fabricate items protected by patent, manufacturers should not engage in a litigation strategy of suing individual consumers or a legislative strategy of seeking to increase fines or criminal penalties for such violations. Rather, the path forward is through good business practices and engagement with consumers. Manufacturers should acknowledge their loss of a technical monopoly, and the concomitant loss of legal monopoly protection that practically accompanies such a paradigm shift. In acknowledging this change, manufacturers should adjust retail prices of affected goods so as to compete with home 3-D printers, and should bifurcate their offerings into more expensive retail items offered in stores, and less expensive digital applications that allow consumers to pay a reasonable cost to print the item at home, safely and accurately. This way consumers will not resort to seeking zero cost plans to print these items through peer-to-peer protocols. Competing in the market is the way to retain market share. Lobbying and lawsuits is the way to manufacture divisiveness with the very consumers that purchase these items. “Those who cannot [learn from] the past are condemned to repeat it.”[305] Manufacturers of tangible goods should learn the lessons detailed above, so as not to repeat the mistakes.

* Joseph Storch is an Associate Counsel in the State University of New York’s Office of General Counsel and the Chair of the Student Affairs Practice Group. He concentrates his practice and research on intellectual property issues faced by higher education institutions, and on student affairs and the First Amendment. He is a graduate of the State University of New York at Oswego, summa cum laude, where he served as Vice President of the Student Association, and of Cornell Law School where he served as Chancellor of the Moot Court Board. The author wishes to thank the following individuals for substantive comments on earlier drafts: Larry Edelman, David Liebschutz, Naomi Storch, Will Versfelt, Heidi Wachs, and Stephen Weinberg. The views represented in this article are those of the author and do not necessarily represent the views of the State University of New York.
[1] See Chris Anderson, Makers: The New Industrial Revolution 8–9, 58–59 (2012); Clive Thompson, We Need a Fixer (Not Just a Maker) Movement, Wired (June 18, 2013, 6:30 AM), http://www.wired.com/2013/06/qq_thompson.
[2] For a well-written discussion of the technical elements of 3-D printing, potential market plans for utilizing the technology, and some of the potential technological and economic difficulties, see Anderson, supra note 1, at 89–98.
[3] Andy Kessler, How We Got Here 29-30 (2004); Anderson, supra note 1, at 48–51.
[4] Kessler, supra note 3, at 30–31.
[5] Id. at 31.
[6] Id. Although Kessler’s book tells the story as fact, others believe that the story of Ned Ludd is apocryphal. In the following years, those who were attempting to slow technology by destroying machines paid homage to Ludd as luddites. Whether the story is factual or apocryphal, the point is the same—for many, many years, those who stand to lose business through the creative destruction caused by new technology will often take action to block that technology, even temporarily. Sometimes that effort is through violence, sometimes through legislative action and lobbying, and sometimes through the judicial process.
[7] Economist Joseph Schumpeter coined the term “creative destruction” to define the process of new industries destroying old ones as they grow which, despite the destruction of the older, and often very important, industries, is actually a long-term gain for the economy and society as a whole. Joseph Schumpeter, Capitalism, Socialism, and Democracy (1942).
[8] Copyright scholar William Patry discusses the artificial scarcity created by gatekeepers defined by intellectual property law, such scarcity creating monopoly value for those who own the intellectual property rights. William Patry, How to Fix Copyright, 23, 3841 (2011).
[9] See Mark A. Lemley, Is the Sky Falling on the Content Industries, 9 J. on Telecomm. & High Tech. L. 125, 125–32 (2011); Donald P. Harris, The New Prohibition: A Look at the Copyright Wars Through the Lens of Alcohol Prohibition, 80 Tenn. L. Rev. 101, 157 (2012); Peter J. Alexander, Peer-to-Peer File Sharing: The Case of the Music Recording Industry, 20 Rev. Indus. Org. 151, 154 (2002); Peter S. Menell, Envisioning Copyright Law’s Digital Future, 46 N.Y.L. Sch. L. Rev. 63, 99, 101–03 (2003). The articles lay out how the dire predictions of waste laid to whole industries by dint of new technologies never came to pass.
[10] N. Gregory Mankiw, Principles of Microeconomics, 313 (2009).
[11] Patry, supra note 8, at 8–41.
[12] U.S. Const. art. I § 8.
[13] The author is grateful here to the American Council on Education and the briefs of its General Counsel Ada Meloy in the cases of Cambridge University Press v. Becker and The Authors Guild, Inc. v. Hathitrust which the author came upon in the course of research and which do an excellent job of collecting cases and analysis on the framework of Constitutional intellectual property law. See Brief for the Higher Education Associations as Amicus Curiae, Authors Guild, Inc. v. Hathitrust, 2013 WL 603193 (S.D.N.Y. 2013), on appeal; Brief for American Council on Education et al. as Amicus Curiae, Cambridge University Press v. Becker, 863 F.Supp.2d 1190 (N.D.Ga. 2013), on appeal. For an exploration of the benefits of sharing information in patents with society (as opposed to keeping the idea entirely secret) so that others can build on that idea, and the application of this ideal to the open-source movement, see Anderson, supra note 1, at 108–10.
[14] United States v. Paramount Pictures, Inc., 334 U.S. 131, 158 (1948).
[15] Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 349 (1991).
[16] Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984).
[17] Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975). It is noted that there are other strong factors affecting creation outside of pecuniary gain, namely the approval of others for a useful invention or artistic work, fame, the need to create, the satisfaction of desired social norms, and the ability to influence. Studies have shown that these non-financial factors often outweigh the financial incentive to create or invent. See William Hubbard, Inventing Norms, 44 Conn. L. Rev. 369, 373–75, 378–88, 400–02 (2011).
[18] William Boyes & Michael Melvin, Microeconomics 286 (2002).
[19] Calling it a technological monopoly is not to say that it is not technologically possible to copy an item, but to say that the economics of doing so provides practical protection as few would choose to make such a copy.
[20] Individuals like to look at themselves as moral and honest, and feel a “warm glow” from pro-social activities. This self-identity as an honest person is as important as a good reputation to others. Stephan Meier, A Survey of Economic Theories and Field Evidence on Pro-Social Behavior, in Economics and Psychology: A Promising New Cross-Disciplinary Field 54-55, 60-61 (Bruno S. Frey & Alois Stutzer eds., 2007); see also Bruno S. Frey & Reto Jegen, Motivation Crowding Theory, 15 J. Econ. Surveys 589-591 (2001); see generally Uri Gneezy, Stephan Meier, and Pedro Rey-Biel, When and Why Incentives (Don’t) Work to Modify Behavior, 25 J. Econ. Persp. 191, 194 (2011).
[21] Individuals’ identities as a pro-social or anti-social person can derive from their own actions and perceptions of those actions, the actions and perceptions of others, the way they view the actions of others, and their background, schooling and type of employment. George A. Akerlof & Rachel E. Kranton, Economics and Identity, 115 Q.J. Econ. 717, 720-27 (2000).
[22] The Beatles, The Beatles (The White Album) (EMI 1968).
[23] Krzysztof Bebenek, Strong Wills, Weak Locks: Consumer Expectations and the DMCA Anticircumvention Regime, 26 Berkeley Tech. L. J. 1457, 1470–71 (2011).
[24] Sound Recording Act of 1971, P.L. 92-140 (1971); Menell, supra note 10, at 105–06, 131–32.
[25] George Orwell, Nineteen Eighty-Four: A Novel (1949).
[26] Menell, supra note 9, at 105–06.
[27] Danwill David Schwender, Reducing Unauthorized Digital Downloading of Music By Obtaining Voluntary Compliance with Copyright Law Through the Removal of Corporate Power in the Recording Industry, 34 T. Jefferson L. Rev. 225, 235–36 (2012).
[28] See Menell, supra note 9, at 66.
[29] Ernest Hemingway, For Whom the Bell Tolls (1940).
[30] Schwender, supra note 27, at 235–37.
[31] Menell, supra note 9, at 105–06.
[32] Prior to the Internet, it was incredibly burdensome and expensive to go after end users, not to mention the difficulty locating infringement of copyrighted works. It was far more efficient to seek redress from major copiers of works farther up the economic food chain. Intellectual property scholar Jane Ginsburg opined that,
Copyright owners have traditionally avoided targeting end users of copyrighted works. This is in part because pursuing the ultimate consumer is costly and unpopular. But the primary reason has been because end users did not copy works of authorship—or if they did copy, the reproduction was insignificant and rarely the subject of widespread further dissemination. Rather, the entities creating and disseminating copies (or public performances or displays) were intermediaries between the creators and the consumers: for example, publishers, motion picture producers, and producers of phonograms. Infringements, rather than being spread throughout the user population, were concentrated higher up the chain of distribution of works. Pursuing the intermediary therefore offered the most effective way to enforce copyright interests. By contrast, in cyberspace individuals will often commit the unauthorized acts, both for private consumption and for further dissemination to other individuals.
Jane C. Ginsburg, Putting Cars on the “Information Superhighway”: Authors, Exploiters, and Copyright in Cyberspace, 95 Colum. L. Rev. 1466, 1488 (1995); see also Ben Depoorter & Sven Vanneste, Norms and Enforcement: The Case Against Copyright Litigation, 84 Or. L. Rev. 1127, 1131–32 (2005).
[33] Bebenek, supra note 23, at 1470–71; Ben Depoorter and Robert Kirk Walker, Copyright False Positives, 89 Notre Dame L. Rev. 319, 327, 339 (2013); Ben Depoorter, Francesco Parisi & Sven Vanneste, Problems with the Enforcement of Copyright Law: Is There a Social Norm Backlash?, 12 Int. J. Econ. Bus., 361 (2005); Ben Depoorter, Alain Van Hiel & Sven Vanneste, Copyright Backlash, 84 S. Cal. L. Rev. 1251, 1264 (2011); Menell, supra note 9, at 159; Schwender, supra note 27, at 264.
[34] Steve Knopper, Appetite for Self-Destruction 113–49 (2009); Kal Raustiala and Christopher Sprigman, The Knockoff Economy 21618 (2012).
[35] MP3 is short for “Motion Picture Experts Group-Layer 3,” a powerful method to compress audio while maintaining most of the sound. Alexander, supra note 9, at 153; Knopper, supra note 34, at 115–21.
[36] Napster’s adoption was the fastest software adoption ever to that point. Alejandro Zentner, Measuring the Effect of File Sharing on Music Purchases, 49 J.L. & Econ. 63 (2006).
[37] Patry, supra note 8, at 39; Menell, supra note 9 at 114–17.
[38] Within five years of Napster’s release, the numbers of downloaders were more spread across the population with 27% of Americans between 30 and 49 and 12% of Americans over 55 reporting that they engaged in file sharing. Yuval Feldman & Janice Nadler, The Law and Norms of File Sharing, 43 San Diego L. Rev. 577, 582–83 (2006). “Internet penetration…increased from 16 percent in 1997 to 47 percent in 2000. And broadband connection…stood in early 2003 at 40 percent of connected households.” Rafael Rob & Joel Waldfogel, Piracy on the High C’s: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students, 49 J.L. & Econ. 29, 32–33 (2006). See Joseph Storch & Heidi Wachs, A Legal Matter: Peer-To-Peer File Sharing, The Digital Millennium Copyright Act, and the Higher Education Opportunity Act: How Congress and the Entertainment Industry Missed an Opportunity to Stem Copyright Infringement, 74 Alb. L. Rev. 313, 345–46 (2011).
[39] See Storch & Wachs, supra note 38, at 345–46.
[40] According to a Government Accountability Office survey, textbook prices increased by 82 percent in the 10 years between 2003 and 2013. Danya Perez-Hernandez, Open Textbooks Could Help Students Financially and Academically, The Chronicle of Higher Education (Jan. 28, 2014), http://chronicle.com/blogs/wiredcampus/open-textbooks-could-help-students-financially-and-academically-researchers-say/49839.
[41] The First Sale Doctrine is an aspect of copyright law that provides non-owners of a right with the opportunity to sell (and not retain) a copyrighted work that they own. An owner of a tangible copy of a work does not hold a copyright in that work, but he or she may sell or give away that copy of the work and not violate the law. The First Sale Doctrine does not, however, allow the owner of a single legal copy of a tangible work to make a subsequent copy of that work and give away the copy. To do so violates the copyright owner’s exclusive rights to make copies. Used bookstores, used textbooks, and garage sale transfers of old VHS tapes are all completely legal under the First Sale Doctrine. The Doctrine does not cover photocopies, or files shared using P2P software, as the sharer retains a copy.
[42] Molly Redden, 7 in 10 Students Have Skipped Buying a Textbook Because of Its Cost, Survey Finds, The Chronicle of Higher Education (Aug. 23, 2011), https://chronicle.com/article/7-in-10-Students-Have-Skipped/128785/; see also Make Textbooks Affordable, Student PIRGs, http://www.studentpirgs.org/campaigns/sp/make-textbooks-affordable (last visited Apr. 9, 2014).
[43] Joseph Storch, Needed: A Single Source for Textbooks, The Chronicle of Higher Education (Feb. 6, 2009), http://chronicle.com/article/Needed-A-Single-Electronic/30496.
[44] Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351 (2013).
[45] The publishing companies engage in price discrimination based on geography, offering the same content at different prices to audiences with different willingness to pay. The publisher cannot actually charge different prices to different individuals based on their wealth and interest in the book, so it engages in third degree price discrimination by charging different rates in different countries. See supra text accompanying notes 281 & 282 for a discussion of third degree price discrimination. Wiley would include a statement in the international editions of its textbooks that they may not be removed from certain countries without permission and that to do so violates the law. Kirtsaeng, 133 S. Ct. at 1356.
[46] The District Court and the Second Circuit ruled in opposite directions and the Supreme Court reviewed the case. The case hinged on the Supreme Court’s interpretation of the “First Sale Doctrine.”
[47] Kirtsaeng, 133 S. Ct. at 1358. The Court looked at the phrase “lawfully made under this title” of the first sale doctrine and determined that lawfully made did not exclude works that are made outside of the United States. The Court found that the language of 17 U.S.C. §109(a), when read in the context of the common law development of the first sale doctrine, favored a reading that was non-geographical, for reasons both linguistic and practical. Id. at 1358–64. Read in the way that Wiley desired, the Court believed that the statute would significantly impinge on scholarship and research as well as the used market for books and other creative works. Id. at 1364–1367.
[48] Hernandez, supra note 40; Marc Parry, Students Get Savvier About Textbook Buying, The Chronicle of Higher Education (Jan. 37, 2013), http://chronicle.com/article/Students-Get-Savvier-About/136827/?cid=wc&utm_source=wc&utm_medium=en.
[49] Randall Stross, First It Was Song Downloads. Now It’s Organic Chemistry, N.Y. Times (JulySeet 1458, 1463-64. 3,0149gs/wiredcampus/open-textbooks-could-help-students-financially-and-academic-oints; will change citation 27, 2008), http://www.nytimes.com/2008/07/27/technology/27digi.html?pagewanted=all&_r=0; John Timmer, Campus Copyright Battle Moves to Textbook Torrents, ARS Technica (July 1, 2008), http://arstechnica.com/tech-policy/2008/07/campus-copyright-battle-moves-to-textbook-torrents. The Huffington Post even posted a “how to guide” for students who wish to scan and share textbooks. Luke Turcotte, How to Digitize Your Textbooks, The Huffington Post (Sep. 19, 2010), http://www.huffingtonpost.com/hack-college/how-to-digitize-your-text_b_730879.html.
[50] See Sabri Ben-Achour, Rise of the Digital College Textbook, Marketplace (Feb. 26, 2014), http://www.marketplace.org/topics/business/education/rise-digital-college-textbook (“Publishers dealt with the fact that they only make money the first year a new textbook edition is out by raising prices. Students then bought fewer textbooks. Then, publishers raised prices again. ‘Some prices are astronomical,’ says [Columbia Economics Professor] Mishkin. ‘My book sells for $225. That’s just a lot of money.’”).
[51] Richard Watt describes the distinction using a clear phrase, writing that “[p]atents protect application of ideas, and copyrights protect expression of ideas.” Richard Watt, A Unifying Theory of Copyrights and Patents, 12 Int. J. Econ. Bus. 389–02, 390 (Nov. 2005).
[52] The wording of the statute, discussing reproductions in “copies” or “phonorecords” as in 17 U.S.C. § 106 can cause confusion, but the purpose of copyright isn’t to protect the physical medium itself, but the content therein.
[53] For instance, an e-reader such as the Amazon Kindle.
[54] 17 U.S.C. § 101 (2006).
[55] 15 U.S.C. § 1127 (2006).
[56] 15 U.S.C. § 1125(a) (2006).
[57] The patent law makes it a violation of the law if one, “without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.” 35 U.S.C. § 271 (2006).
[58] Ben Depoorter, The Several Lives of Mickey Mouse: The Expanding Boundaries of Intellectual Property Law, 9 Va. J.L. & Tech. 4, 42 (2004).
[59] See generally Christopher A. Cotropia & Mark A. Lemley, Copying in Patent Law, 87 N.C. L. Rev. 1421 (2009).
[60] U.S. Const. art. I § 8; 35 U.S.C. § 35 (2006) et seq.; see especially 35 U.S.C. § 271 (2006).
[61] Through other research projects, this author has come to know decision makers in the entertainment industry organizations who, among others, made the decision to use the legislative process to expand the rights of copyright holders and increase the penalties for violation of the copyright law and/or who made the decision to pursue civil lawsuits against peer-to-peer file sharers. Many in the anti-copyright movement discussed below, or in the “copyleft” tar such individuals with a broad brush as evil or anti-consumer, but this author believes that charge is wrong and oversimplified.
[62] See Colin F. Camerer, Prospect Theory in the Wild: Evidence from the Field, in Colin Camerer et al. eds., Advances in Behavioral Economics 154 (2003).
[63] Knopper, supra note 34, at 40–65, 81–104; Raustiala, supra note 34 at 215–16.
[64] Record company negotiations to purchase Napster and turn it in to a legal service, ongoing alongside the lawsuits, did not result in a sale until it was too late to create a useful model. See Knopper, supra note 34 at 138–48; See also Menell, supra note 9, at 171 (entertainment industry failure to develop new online business models); Raustiala, supra note 34, at 218–19 (arguing that the major labels should have purchased Napster and built on the Napster model).
[65] See Camerer, supra note 62, at 148–51; Daniel Kahneman & Amos Tversky, Choices, Values, and Frames, 39 Am. Psychologist 341, 348 (1984).
[66] See Knopper, supra note 34, at 40–65, 81–104; Raustiala, supra note 34, at 214–16.
[67] Menell, supra note 9 at 101–03; Alexander, supra note 9 at 155–57; Rob and Waldfogel, supra note 38, at 29–33, 53–60 (showing through survey analysis that “one downloaded album reduces music purchases by roughly one-fifth of an album,” finding that respondents downloaded music that they valued less than the music they purchased, and finding that “downloading reduces per capita expenditures by individuals . . . from $126 to $101 per capita”); Zentner, supra note 36, at 66, 85–86 (finding that downloads reduce the probability that a user will purchase music by 30 percent).
[68] Lemley, supra note 9, at 131, citing Ken Barnes, Music Sales Boom, but Albums Fizzle, USA Today, Jan. 2, 2009, at 6D.
[69] Uri Gneezy & Aldo Rustichini, A Fine is a Price, 29 J. Legal Stud. 1 (2000). Further, the “standard theory of optimal deterrence argues that when the probability of detecting norm violators is low, the severity of the punishment should be high.” Erte Xiao, Profit-Seeking Punishment Corrupts Norm Obedience, 77 Games & Econ. Behav. 321, 322 (2013).
[70] Gneezy & Rustichini, supra note 69, at 2.
[71] Chung-cheng Lin & C.C. Yang, Fine Enough or Don’t Fine at All, 59 J. Behav. & Org. 195 (2006).
[72] Gneezy & Rustichini, supra note 69.
[73] Id. at 3–4.
[74] Id. at 2–4.
[75] The authors add some useful comparisons to show the relative pain caused by such a fine. The authors called the fine “relatively small but not insignificant” and, as a comparison, wrote that at the time of the article, “the fine for illegal parking is NIS 75; the fine for driving through a red light is NIS 1,000 plus penalties; the fine for not collecting the droppings of a dog is NIS 360 . . . . [A] baby-sitter earns between NIS 15 and NIS 20 per hour[, and t]he average gross salary per month in Israel at the time of the study was NIS 5,595 . . . . ” Id. at 5.
[76] Depending on exchange rates, 10 NIS ranges between two and three U.S. dollars.
[77] Gneezy & Rustichini, supra note 69, at 4–5.
[78] Id.
[79] Id. at 5.
[80] Id.
[81] Id. at 7.
[82] Id. at 8.
[83] Frey & Jegen, supra note 20, at 590–91.
[84] In that explanation, the social norms are the same, “but parents have now reason to believe that a fine is the worst that can happen.” Gneezy & Rustichini, supra note 69, at 10.
[85] Id. at 11.
[86] A social norm is defined as “a behavioral regularity; that is…based on a socially shared belief of how one ought to behave; which triggers…the enforcement of the prescribed behavior by informal social sanctions.” Ernst Fehr & Simon Gachter, Fairness and Retaliation: The Economics of Reciprocity, 14 J. Econ. Persp. 159, 166 (2000).
[87] Lin & Yang, supra note 71, at 197.
[88] Id.
[89] Gneezy & Rustichini, supra note 69, at 13.
[90] Id. at 13–14.
[91] Id. at 14.
[92] Id. at 15.
[93] Id. at 14.
[94] Id. at 14, 16; see also Lin & Yang, supra note 71, at 196.
[95] Gneezy & Rustichini, supra note 69, at 14.
[96] Frey & Jegen, supra note 20, at 589–95; Kristina Shampanier, Nina Mazar and Dan Ariely, Zero as a Special Price: The True Value of Free Products, 26 Marketing Science 742, 743 (2007).
[97] Kjell Arne Brekke, Snorre Kverndokk and Karine Nyborg, An Economic Model of Moral Motivation, 87 J. Pub. Econ. 1967, 1968 (2003) (emphasis supplied).
[98] Frey & Jegen, supra note 20, at 589.
[99] Brekke, Kverndokk and Nyborg, supra note 97, at 1968, 1981.
[100] Joel Slemrod, Cheating Ourselves: The Economics of Tax Evasion, 21 J. Econ. Persp. 25, 39 (2007).
[101] Gneezy, Meier, and Rey-Biel, supra note 20, at 201–02; Meier, supra note 20, at 68–71.
[102] Depoorter, Parisi and Vanneste, supra note 33, at 361; Depoorter and Vanneste, supra note 32, at 1131-1132.
[103] For analysis of the various cases, including those against MP3.com, Aimster, Grokster, and others, see Storch & Wachs, supra note 38, at 316–19; Menell, supra note 9, at 143–152; Depoorter, Van Hiel and Vanneste, supra note 33, at 1258–59; Irina D. Manta, The Puzzle of Criminal Sanctions for Intellectual Property Infringement, 24 Harv. J.L. & Tech. 469, 502–03 (2011); Harris, supra note 9, at 129–30; Ben Depoorter, Technology and Uncertainty: The Shaping Effect on Copyright Law, 157 U. Pa. L. Rev. 1831, 1832–33 (2009).
[104] See Storch & Wachs, supra note 38, at 319–23; Depoorter & Vanneste, supra note 32, at 1132–34; Depoorter, Parisi and Vanneste, supra note 33, at 361; Depoorter, Van Hiel and Vanneste, supra note 33, at 1259–63; Schwender, supra note 27, at 249–51.
[105] Depoorter & Vanneste, supra note 32, at 1134; Depoorter, Parisi and Vanneste, supra note 33, at 361; Depoorter, Technology and Uncertainty, supra note 103, at 1833, 157 U. Pa. L. Rev. 1831, 1833 (2009); Harris, supra note 9, at 145–47.
[106] Knopper, supra note 34, at 81, 105-107; Raustiala, supra note 34 at 229–30.
[107] Changes in Basic Minimum Wages in Non-Farm Employment Under State Law: Selected Years 1968 to 2010, U.S. Dept. Lab., http://www.dol.gov/whd/state/stateMinWageHis.htm.
[108] Id.
[109] Apple Introduces iTunes—World’s Best and Easiest to Use Jukebox Software, Apple (Jan. 9, 2001), http://www.apple.com/pr/library/2001/jan/09itunes.html.
[110] This led to a sense of anger at the recording companies, especially when tied with the perception that dollars spent went to the recording companies, not the artists. See Feldman & Nadler, supra note 38, at 587.
[111] In a section entitled “The Fallacy of Enforcement,” Patry argues that if demand is created to access an item in an online environment, the best way to prevent access of that content through unauthorized means is to “flood the market with authorized goods.” If they are unable to access content legally, at least some consumers will still seek to access that content in any way they are able, including through methods outside of what is allowed under intellectual property law. Patry, supra note 8, at 256–62.
[112] Daniel Kahneman, Jack L. Knetsch and Richard Thaler, Fairness as a Constraint on Profit Seeking: Entitlements in the Market, 76 Am. Econ. Rev. 728 (1986).
[113] Meier, supra note 20, at 51.
[114] Kahneman, Knetsch and Thaler, supra note 112, at 729–33.
[115] Xiao, supra note 69, at 323. That is to say, the impact of punishment is “significantly diminished…when the punishment becomes a source of revenue for enforcers.” Id., at 332.
[116] Storch & Wachs, supra note 38, at 349.
[117] Kahneman, Knetsch & Thaler, supra note 112 at 736–37; Meier, supra note 20, at 56–57; Xiao, supra note 69, at 332.
[118] Fehr & Gachter, supra note 86, at 162–63.
[119] See Frey & Jegen, supra note 20, at 590.
[120] Id. at 604–05.
[121] Id.
[122] Depoorter & Vanneste, supra note 32, at 1152–54.
[123] College students will take cans of Coke left in refrigerators, but will not take dollar bills left alongside, and are less willing to cheat on a standardized problem set if the reward is cash even over a token that can immediately be exchanged for cash. Dan Ariely, The (Honest) Truth About Dishonesty 32–34, 84 (2012).
[124] 17 U.S.C. § 501(a) (2012). Ciolino and Donelon wrote that,
Federal copyright law sets forth a seemingly straightforward standard for copyright infringement: ‘[a]nyone who violates any of the exclusive rights of the copyright owner is liable for copyright infringement.’ By branding as an infringer ‘anyone’ who infringes a copyright, the Copyright Act casts a wide net that ensnares infringers of all different stripes. Indeed, the Act treats all infringers alike—from the most innocent to the most nefarious. In copyright’s strict liability scheme, the infringer’s faultlessness or culpability is of anomalously little relevance.
Dane Ciolino & Erin Donelon, Questioning Strict Liability in Copyright, 54 Rutgers L. Rev. 351, 351 (2002); see also Steven Hetcher, The Immorality of Strict Liability in Copyright, 17 Marq. Intell. Prop. L. Rev. 1 (2013).
[125] Depoorter & Walker, supra note 33, at 343.
[126] Statutory damages range from $750 to $150,000. 17 U.S.C. § 504 (2012).
[127] Depoorter & Walker, supra note 33, at 35557.
[128] See Sony BMG Music Entm’t v. Tenenbaum, No. 07cv11446-NG, 2009 U.S. Dist. LEXIS 115734 (D. Mass. Dec. 7, 2009); Capitol Records, Inc. v. Thomas-Rasset, No. 06-CV-01497 (MJD/LIB), 2009 WL 2030495 (D. Minn. June 18, 2009); Storch & Wachs, supra note 38, at 320, 321–23; Harris, supra note 9, at 137–38; See also David Kravets, Jury in RIAA Trial Slaps $2 Million Fine on Jammie Thomas, Wired (June 18, 2009, 6:57 PM), http://www.wired.com/2009/06/riaa-jury-slaps-. 2-million-fine-on-jammie-thomas; David Kravets, RIAA Jury Finds Minnesota Woman Liable for Piracy, Awards $222,000, Wired (Oct. 4, 2007, 2:34 PM), http://www.wired.com/2007/10/riaa-jury-finds/.
[129] See infra note 171.
[130] Depoorter, Van Hiel & Vanneste, supra note 33, at 1265.
[131] 17 U.S.C. § 504 (2012).
[132] Id.
[133] Unlike for patent infringement, the United States Code includes potential criminal sanctions for copyright violations. Manta, supra note 103, at 470–85, 488 (recounting the history, increasing severity, and utilization of criminal sanctions for copyright violations).
[134] Service of these letters on college campuses (and through them college students) often occurred prior to serving students with notice of actual live litigation, which is why the letters were called pre-litigation settlement letters. See Storch & Wachs, supra note 38.
[135] Depoorter, Van Hiel & Vanneste, supra note 33, at 1260; Harris, supra note 9, at 137–38.
[136] Nate Anderson, RIAA Doubles Settlement Cost for Students Fighting Subpoenas, Ars Technica (June 12, 2008), http://arstechnica.com/tech-policy/news/2008/06/riaa-doubles-settlement-cost-for-students-fighting-subpoenas.
[137] See Storch & Wachs, supra note 38, at 320, 326–29.
[138] While it would make future litigation less likely for the specific violation referenced in the claim, the letter was specific that settlement did not bar the industry from future legal action for this or other copyright violations.
[139] See id.
[140] See Mitch Bainwol & Cary Sherman, Explaining the Crackdown on Student Downloading, Inside Higher Ed (Mar. 15, 2007), http://www.insidehighered.com/views/2007/03/15/sherman; Storch & Wachs, supra note 38, at 320–21; Bobby Cummings, RIAA Offers Settlements to College Students for File Sharing, N.Y. Times, Mar. 2, 2007.
[141] Depoorter, Van Hiel & Vanneste, supra note 33, at 1254–55.
[142] David Kravets, File Sharing Lawsuits at a Crossroads, After 5 Years of RIAA Litigation, Wired (Sep. 4, 2008), http://www.wired.com/threatlevel/2008/09/proving-file-sh/; Peter Lauria, Infringement!, N.Y. Post (Feb. 27, 2008), http://nypost.com/2008/02/27/infringement/ (describing efforts by artists to obtain some of the lawsuit settlement money); J.R. Raphael, RIAA’s New Piracy Plan Poses a New Set of Problems, Washington Post (Dec. 20, 2008), http://www.washingtonpost.com/wp-dyn/content/article/2008/12/19/AR2008121902930.html; Schwender, supra note 27, at 234 (noting perception of peer-to-peer file sharing users that musicians are not profiting from record sales).
[143] Sarah McBride & Ethan Smith, Music Industry to Abandon Mass Suits, Wall St. J. (Dec. 19, 2008), http://online.wsj.com/article/SB122966038836021137.html; Storch & Wachs, supra note 38, at 321; Jonathan M. Barnett, What’s So Bad About Stealing, 4 J. Tort L. 1, 3 (2011).
[144] Daniel Kahneman & Amos Tversky, Prospect Theory: An Analysis of Decision Under Risk, 47 Econometrica 263 (1979).
[145] This theory assumes that rational individuals faced with a choice calculate the expected utility of each choice and then choose the one with highest utility, without emotion, and that such analyses are not impacted by other factors.
[146] Kahneman & Tversky, Prospect Theory, supra note 144, at 265.
[147] Id. at 282-83, 285. See also Kahneman & Tversky, Choices, supra note 65, at 341, 345 (1984).
[148] Kahneman & Tversky, Prospect Theory, supra note 144, at 273; Kahneman & Tversky, Choices, supra note 65, at 343–44, 346, 349.
[149] Kahneman & Tversky, Prospect Theory, supra note 144, at 279.
[150] Id. at 268; Kahneman & Tversky, Choices, supra note 65, at 342–43.
[151] Kahneman & Tversky, Prospect Theory, supra note 144, at 268–69; Kahneman & Tversky, Choices, supra note 65, at 342–43.
[152] Depoorter & Vanneste, supra note 32, at 1136–37. Similarly, in tax compliance,
taxpayers decide whether and how much to evade taxes in the same way they would approach any risky decision or gamble—by maximizing expected utility—and are influenced by possible legal penalties in just the same way they are influenced by any other contingent cost. Optimal tax evasion depends on the chance of getting caught and penalized, the size of the penalty for evasion, and the individual’s degree of risk aversion.
Slemrod, supra note 100, at 35–36.
[153] Depoorter & Vanneste, supra note 32, at 1127–28; Depoorter, Van Hiel & Vanneste, supra note 33, at 1255. In a study of willingness to cheat on standardized problem sets and everyday market interactions, Dan Ariely found that those who cheated did so equally, regardless of whether the experiment administrator was visibly blind (and could not detect the cheating) or not, suggesting that in cheating, probability of being caught is not a substantial influence on whether to act. Ariely, supra note 123, at 2127.
[154] See generally Patrick L. Hill et al., Subjective Invulnerability, Risk Behavior, and Adjustment in Early Adolescence, 32 J. Early Adolescence 489 (2012); Anthony P. Kontos, Perceived Risk, Risk Taking, Estimation of Ability and Injury Among Adolescent Sport Participants, 29 J. Pediatr. Psychol. 447 (2004).
[155] See Kahneman & Tversky, Prospect Theory, supra note 144, at 282–83, 285; Amos Tversky & Daniel Kahneman, Judgment Under Uncertainty: Heuristics and Biases, 185 Science 1124 (1974).
[156] 5/20,000 = 0.00025.
[157] See generally Dan Ariely, George Lowenstein & Drazen Prelec, “Coherent Arbitrariness”: Stable Demand Curves without Stable Preferences, 118 Q. J. Econ., 73, 74 (2003). That is to say, initial valuations of a wide range of items and experiences are arbitrary, even for those with experience in an area; relative valuations of a similar item or a change to the initial item after learning the initial valuation are more orderly.
[158] 0.00025 x $3,000 = $0.75.
[159] See e.g. Traffic Safety Facts, U.S. Dept. of Transp. (May 2012), http://www-nrd.nhtsa.dot.gov/Pubs/811397.pdf.
[160] See Feldman & Nadler, supra note 38, at 579.
[161] Indeed this is consistent with economists’ studies of coherent arbitrariness in criminal deterrence. While an individual has great difficulty determining their probability of being caught committing a certain crime, when there is a change in enforcement, that change has a short-term deterrent effect, but little or no measurable long-term impact in reducing crime. In the same way, passing a police car has a short-term deterrent effect, but as the car fades, the determined probability of being caught speeding fades back to its stasis level. See Ariely, Lowenstein & Prelec, supra note 157, at 100–01.
[162] Depoorter & Vanneste, supra note 32, at 1127, 1129, 1140–41; Harris, supra note 9, at 142–43.
[163] The Supreme Court wrote that, the “very breadth of the software’s use may well draw the public directly into the debate over copyright policy…. and the indications are that the ease of copying songs or movies using software like Grokster’s and Napster’s is fostering disdain for copyright protection” Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 929 (2005); see also Depoorter, Van Hiel & Vanneste, supra note 33, at 1272–82, 1284; Depoorter & Vanneste, supra note 32, at 1149.
[164] Depoorter & Vanneste, supra note 32, at 1146, 48.
[165] Depoorter, Van Hiel & Vanneste, supra note 33 at 1272–82, 1284; Depoorter and Vanneste, supra note 32 at 1154–56.
[166] “[I]f the rate of apprehension is low, elevated sanctions become more salient because they may create the perception that a few individuals are being singled out.” Depoorter, Van Hiel & Vanneste, supra note 33, at 1287. Professor Harris writes similarly:
Judging from the lawsuits filed by the RIAA, the majority of which were against college students, enforcement against filesharing may also cut across class or culture lines, which would undermine views on the legitimacy of filesharing laws…. selective enforcement doomed this regulatory scheme…. while millions of individuals engaged in unauthorized filesharing, the RIAA brought suit against a small proportion of these individuals. There is an anti-democratic and anti-rule-of-law feel to a legal regime in which some individuals are harshly punished for behavior that most individuals engage in with impunity.
Harris, supra note 9, at 138. See also Schwender, supra note 27, at 281–82.
[167] In announcing that the Recording Industry Association of America was ending its litigation campaign against end users, Mitch Bainwol, the Chair of the RIAA stated that although they were trying a new approach, the litigation had succeeded in raising public awareness of illegal file sharing and added that he believed online copyright infringement would have been worse without the lawsuit campaign. McBride & Smith, supra note 143. See also Depoorter, Van Hiel & Vanneste, supra note 33, at 1271 (addressing the industry’s belief in the effectiveness of the lawsuits against end users); Schwender, supra note 27, at 251–52 (discussing RIAA publications that claimed the lawsuit campaign more than doubled awareness of copyright law and that the lawsuits led to the large increase in digital sales of music); Zentner, supra note 36, at 71, 87–88.
[168] Depoorter & Vanneste, supra note 32, at 1133–34.
[169] Harris, supra note 9, at 104; Depoorter, Van Hiel & Vanneste, supra note 33, at 1263; Schwender, supra note 27, at 271–72.
[170] See Patry, supra note 8, at 179; Depoorter, Van Hiel & Vanneste, supra note 33, at 1290; Feldman & Nadler, supra note 38, at 589–90. One activist noted that the lawsuits cost tens of millions in legal and investigative fees annually to recover a few hundred thousand dollars in settlements each year. Ray Beckerman, Ha ha ha ha ha. RIAA Paid Its Lawyers More Than $16,000,000 in 2008 to Recover Only $391,000!!!, Recording Industry vs The People (July 13, 2010), http://recordingindustryvspeople.blogspot.com/2010/07/ha-ha-ha-ha-ha-riaa-paid-its-lawyers.html.
[171] Harris, supra note 9, at 130–33. Further, Patry tells an interesting history of the 1999 amendment to the work for hire element of the copyright law. The work for hire doctrine allows companies, employers or other principals to hire a creator or artist as an agent, pay the creator for the work, but maintain in the principal all copyright rights. The agent gets a payment, but retains no rights. This is handy for companies that seek to have photographers take pictures for marketing copy, or hire artwork creators for advertising campaigns. In 1999, Congress amended the law to add sound recordings as a work for hire category. This particular amendment to the copyright law was not to address end users accessing content outside of copyright, but to change the relationship between musical artists and performers and the recording companies who signed them to record deals (and not in a way that benefited the artists). Patry comments on the law as follows:
The purpose of the 1999 amendments was to deny performers and their estates the right to terminate old contracts. This denial would occur because if performers were considered to be employees of the record label, they would not have any copyright interest at all: the right to terminate old contracts is limited to authors. The seriousness of this effort to strip performers of status as authors is seen in a recent court decision holding that classic albums by Bob Marley were works for hire of Island Records and thus owned 100 percent by the label. According to the court, Marley was a mere employee of Island Records, acting under the label’s supervision and direction, and possessing no authorship interest at all. To believe this is to believe pigs can fly.
Patry, supra note 8, at 171–72, citing Fifty-Six Hope Road Music Ltd. V. UMG Recordings, Inc., 2010 WL 3564258 (S.D.N.Y. Sep. 10, 2010). Artists and performers were very upset at the change, which could cost them significantly in long-term ownership and control of their music, and which was passed by Congress without debate, hearings or markup. In fact, Patry reports, the amendment
was snuck through at the request of the Recording Industry Association of America (RIAA)…. placed in an unrelated bill on satellite retransmission of copyrighted works, at the very end of the Congress, without a bill having been introduced, and without hearings. The House Judiciary Committee staffer who snuck the provision in was shortly thereafter hired by [the] RIAA for a very well-paying position.
Patry, supra note 8, at 172; see also Depoorter, Van Hiel & Vanneste, supra note 33, at 1290.
[172] Depoorter, Several Lives, supra note 58, at 35-37; Schwender, supra note 27, at 238-39; see also Menell, supra note 9, at 129–38 (comprehensively tracing the modern history of copyright law expansions); Storch & Wachs, supra note 38, at 347–50 (discussing the process of passage of legislation requiring colleges to take actions to protect against file sharing).
[173] Manta, supra note 103, at 511–12; Menell, supra note 9, at 133, 161–62.
[174] Harris, supra note 9, at 132, 144 (analyzing changes to copyright law and noting that “[m]embers of Congress openly recognized their lack of expertise in copyright and as a result, delegated to industry representatives the task of drafting substantive statutory provisions”); Schwender, supra note 27, at 280–81.
[175] A study by Richard Posner and William Landes found that there has been more legislative activity in the realm of copyright law, than any other aspect of intellectual property. Depoorter, Technology and Uncertainty, supra note 103, at 1856-57, citing William M. Landes & Richard A. Posner, The Political Economy of Intellectual Property Law 2–3 (2004). See also Harris, supra note 9, at 104–05; Further, “[m]ore pages of copyright law have been added to the U.S. Code [in the 1990’s] than in the prior 200 years of the republic.” Menell, supra note 9, at 65.
[176] See Patry, supra note 8, at 8–41; Depoorter, Several Lives, supra note 58, at 16; Depoorter & Walker, supra note 33, at 346.
[177] See Charles Wheelan, Naked Economics 72–73, 137–48 (2002); see generally Lawrence Lessig, Remix: Making Art and Commerce Thrive in the Hybrid Economy (2008); Patry, supra note 8; See also Depoorter, Several Lives, supra note 58 at 18; Depoorter, Technology and Uncertainty, supra note 103, at 1857–59; Aaron Burstein, Will Thomas DeVries, & Peter S. Menell, The Rise of Internet Interest Group Politics, 19 Berkeley Tech L. J. 1, 6–7 (2004); Harris, supra note 9, at 134–35.
[178] The average citizen may have opinions about intellectual property, even strongly held ones, but when they go into the voting booth in elections, other issues often come to the fore. Patry, supra note 8, at 138.
[179] Depoorter, Several Lives, supra note 58, at 19; Harris, supra note 9, at 134-35.
[180] Patry, supra note 8, at 13-41, 137-38.
[181] See Depoorter, Several Lives, supra note 58, at 18.
[182] Id. at 37–38.
[183] Patry, supra note 8, at 62–63, 13738; Kenneth C. Green, Views: The Movie Industry’s 200% Error, Inside Higher Ed (Jan. 29, 2008), http://www.insidehighered.com/views/2008/01/29/green.
[184] Patry, supra note 8, at 63, 137–38.
[185] Depoorter & Walker, supra note 33, at 346; Bebenek, supra note 23, at 1458; Harris, supra note 9, at 138.
[186] Patry, supra note 8, at 164–72; Depoorter, Van Hiel & Vanneste, supra note 33, at 1267–72; Harris, supra note 9, at 105–06; Schwender, supra note 27, at 232–33; Depoorter & Vanneste, supra note 32, at 1131–40.
[187] Patry, supra note 8, at 166.
[188] See Depoorter, Parisi & Vanneste, supra note 33, at 362–63; Daniel Houser et al., When Punishment Fails: Research on Sanctions, Intentions and Non-Cooperation, 62 Games & Econ. Behav. 509, 512, 522–23 (2008).
[189] See Patry, supra note 8 at 164–72 (citing Tom Tyler, Why People Obey the Law (1990, 2006) and Tom Tyler, Compliance with Intellectual Property Law: A Psychological Perspective, 29 N.Y.U. J. Int’l L. & Pol. 219 (1997)); see generally Harris, supra note 9, at 121–26.
[190] Patry, supra note 8, at 165. Patry believes that the current copyright legal regime fits this bill and concentrates on coercion to address behavior, even when those whose behavior is modified do not always agree with the copyright law in question.
[191] Depoorter, Van Hiel & Vanneste, supra note 33, at 1257; see also Clive Thompson, Technology Wants to Be Free, Wired, Dec. 2013, at 66-68 (describing popular efforts to change the law regarding phone unlocking and the movement’s impact on the White House and Congress).
[192] Frey & Jegen, supra note 20, at 606; see also Depoorter, Van Hiel & Vanneste, supra note 33 at 1256 (“If individuals perceive enforcement as excessive, this may reinforce or even strengthen a belief that the legal regime is not legitimate or that a legal rule is unjust”); Slemrod, supra note 100 at 39 (“tax evaluation decisions may depend on perceptions of the fairness of the tax system. If, the argument goes, perceived tax equity strengthens the social norm against evasion, then evasion becomes more costly in terms of bad conscience [if not caught] or bad reputation [if caught]”).
[193] Depoorter, Technology and Uncertainty, supra note 103, at 1853–54; Depoorter, Parisi & Vanneste, supra note 33, at 367. For international survey results on the backlash against copyright enforcement, see Patry, supra note 8, at 173–76.
[194] Depoorter, Parisi & Vanneste, supra note 33, at 362–63; Depoorter, Van Hiel & Vanneste, supra note 33, at 1264–72.
[195] See Nicco Mele, The End of Big: How the Internet Makes David the New Goliath (2013).
[196] Burstein, DeVries & Menell, supra note 177, at 6–7.
[197] Stop Online Piracy Act, H.R. 3261, 112th Cong. (2011).
[198] Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011, PROTECT IP Act of 2011, S.B. 968 (2011).
[199] See Greg Sandoval, Hollywood’s SOPA Testimony Links Job Loss to Piracy, CNet (Nov. 16, 2011), http://news.cnet.com/8301-31001_3-57325783-261/hollywoods-sopa-testimony-links-job-loss-to-piracy.
[200] See Stephen Totilo, Gaming Industry Spent As Much As $190,000 Pushing for Senate Version of SOPA Last Spring and Summer, Kotaku (Jan. 16, 2012), http://kotaku.com/5876493/gaming-industry-spent-as-much-as-190000-pushing-for-senate-version-of-sopa-last-spring-and-summer; Ben Dimiero, How Much Did Media Companies Spend Lobbying On SOPA And PIPA?, Media Matters (Feb. 3, 2012), http://mediamatters.org/blog/2012/02/03/how-much-did-media-companies-spend-lobbying-on/184807; David Goldman, Millions in SOPA Lobbying Bucks Gone to Waste, CNN Money (Jan. 27, 2012), http://money.cnn.com/2012/01/27/technology/sopa_pipa_lobby/.
[201] Depoorter, Several Lives, supra note 58, at 19. Professor Jonathan Barnett postulates that “firms that sell goods and services that facilitate the uncompensated use of creative goods—hardware manufacturers or internet intermediaries (e.g. Google/YouTube)—promote and endorse” norms that he considers “inverted” in that they “immunize or even encourage and glamorize borrowing practices.” Their reason, he argues, “is simple: increased opportunities for theft lower the price of content available to users and increase demand for the theft technologies by which to obtain, consume and disseminate that content.” Barnett, supra note 143, at 24–25, 28; Burstein, DeVries, & Menell, supra note 177, at 14–15. For an interesting analysis of the difficult disagreements between technology firms and IP producers, see Menell, supra note 9, at 164–168, 195.
[202] Edward J. Black, Internet Users, Free Speech Experts, Petition Against SOPA, Huff. Post (Dec. 13, 2011), http://www.huffingtonpost.com/edward-j-black/stop-online-piracy-act-vote_b_1145949.html.
[203] David Carr, The Danger of an Attack on Piracy Online, N.Y. Times (Jan. 1, 2012), http://www.nytimes.com/2012/01/02/business/media/the-danger-of-an-attack-on-piracy-online.html.
[204] Trevor Timm, Proposed Copyright Bill Threatens Whistleblowing and Human Rights, Electronic Frontier Foundation (Nov. 2, 2011), https://www.eff.org/deeplinks/2011/11/proposed-copyright-bill-threatens-whistleblowing-and-human-rights.
[205] Wikipedia SOPA Initiative (Feb. 24, 2012), http://en.wikipedia.org/wiki/Wikipedia:SOPA_initiative/Learn_more.
[206] Ryan Germick, SOPA/PIPA Image Blackout (Jan. 18, 2012), http://www.google.com/doodles/sopa-pipa.
[207] Brett Molina, Facebook CEO speaks out against SOPA, PIPA, USA Today (Jan. 18, 2012), http://content.usatoday.com/communities/technologylive/post/2012/01/facebook-ceo-speaks-out-against-sopa-pipa/1#.UzuQaq1dVwM.
[208] The blackouts were an interesting form of corporate protest that represented the Internet companies’ belief that the Acts would stifle their ability to do business and, perhaps moreso, empower private corporations to squelch Internet speech that might be protected, alongside actions that violate the law.
[209] Jenna Wortham, With Twitter, Blackouts and Demonstrations, Web Flexes Its Muscle, N.Y. Times (Jan. 18, 2012), http://www.nytimes.com/2012/01/19/technology/protests-of-antipiracy-bills-unite-web.html?pagewanted=all; Depoorter, Several Lives, supra note 58, at 19; Depoorter, Technology and Uncertainty, supra note 103, at 1865–66; Barnett, supra note 143, at 26–27.
[210] Timothy B. Lee, Under Voter Pressure, Members of Congress Backpedal (Hard) on SOPA, ArsTechnica (Jan. 13, 2012), http://arstechnica.com/tech-policy/2012/01/under-voter-pressure-members-of-congress-backpedal-on-sopa/; Grant Gross, SOPA Author to Remove ISP Blocking Provision, Computer World (Jan. 13, 2012), http://www.computerworld.com/s/article/9223444/SOPA_author_to_remove_ISP_blocking_provision.
[211] Patry, supra note 8, at 62–63, 137138; Green, supra note 183.
[212] Robert B. Cialdini, Influence: Science and Practice 99 (5th ed. 2009). Visitors to a forest where the disappearance of petrified wood threatens the future of the forest stole five times more wood when a sign used social proof by recounting that many past visitors had stolen petrified wood (thus harming the park) than when a simple sign asked visitors to please not remove petrified wood; in fact, the social proof sign resulted in more stolen wood than no sign at all. Yes!: 50 Scientifically Proven Ways to Be Persuasive 20–25 (2008).
[213] Fehr & Gachter, supra note 86, at 167; Lin and Yang, supra note 71, at 196, (citing S.M. Sheffrin and R.K. Triest, Can Brute Deterrence Backfire? Perceptions and Attitudes in Taxpayer Compliance, in Alan J. Auerbach et al. ed., Why People Pay Taxes: Tax Compliance and Enforcement (1992); Meier, supra note 20, at 58–60; Frey and Jegen, supra note 20, at 589, 605-06; Depoorter, Technology and Uncertainty, supra note 103, at 1852. Notably, tax evasion is heterogeneous, meaning that “within any group defined by income, age, or other demographic category, there are some who evade, some who do not, and even some who overstate tax liability.” Slemrod, supra note 100, at 30–31. Tax evasion is spread across the populace, but perceptions may not be equal to that actual distribution. Even more interesting is the observation that based on the extremely low chance of being audited, and the general tolerance for risk among the citizenry, tax evasion is significantly lower than it would be calculated to be. Slemrod, supra note 100, at 38–39. This may reflect intrinsic motivation to pay taxes that is outside of the extrinsic impact of potential penalties.
[214] Feldman & Nadler, supra note 38, at 593.
[215] Social norms have a significant impact on behavior. Knowing and believing the feelings and beliefs of others can have positive or negative social impacts and encourage or discourage appropriate behavior. Fehr & Gachter, supra note 86, at 167–168. In a study, researchers found that litigation did not deter file sharing as, “[i]n general, students believe that others will continue to download regardless of the enforcement policy . . . [they believe that as to other students from whom they may take social cues] nothing will stop their peers from downloading. Depoorter, Parisi & Vanneste, supra note 33, at 367; Schwender, supra note 27, at 265.
[216] See generally Depoorter, Parisi & Vanneste, supra note 33, at 363.
[217] Feldman and Nadler, supra note 38, at 611.
[218] Cialdini, supra note 212, at 108–09.
[219] Id. at 10910 (2009).
[220] See Ariely, supra note 123, at 195–210 (discussing the influence of peers on willingness to cheat).
[221] Ironically, a great example of social proof arose in the nineteenth century when opera singers and managers would hire outsourced employees to applaud appreciatively at shows, in the hope that paying customers would join in on the cheerful response. As the practice grew and branched out, opera singers and managers could request specialty cheering, such as an audience member who could weep on cue, someone who would yell “encore,” and even a specialist who possessed an infectious laugh. Cialdini, supra note 212, at 132.
[222] Depoorter, Technology and Uncertainty, supra note 103, at 1851.
[223] Depoorter & Vanneste, supra note 32, at 1139.
[224] Bainwol & Sherman, supra note 140.
[225] See generally Storch & Wachs, supra note 38; Depoorter, Van Hiel & Vanneste, supra note 33, at 1260.
[226] Joan Cheverie, Copyright Alert System Goes Into Effect, EDUCAUSE (Feb. 26, 2013), http://www.educause.edu/blogs/cheverij/copyright-alert-system-goes-effect; Anne Flaherty, Music, Movie Industry to Warn Copyright Infringers, Law Technology News (Mar. 12, 2013), http://www.lawtechnologynews.com/id=1202591859334.
[227] Lemley, supra note 9, at 132; Depoorter, Van Hiel & Vanneste, supra note 33 at 1258–59; Alexander, supra note 9, at 157–58.
[228] Depoorter, Technology and Uncertainty, supra note 103, at 1855; Depoorter, Several Lives, supra note 58, at 30–31.
[229] Patry, supra note 8, at 141–45.
[230] Depoorter & Walker, supra note 33, at 32021.
[231] Depoorter & Walker tell the story of the “Hugo Awards” ceremony, an awards ceremony to honor achievement in science fiction. The awards ceremony was streamed on Ustream.com, and was playing licensed clips and programming for nominated television shows. During author Neil Gaiman’s acceptance speech for his award for Doctor Who, an automated software robot disrupted the stream and took the awards ceremony off the air. This was an automatic takedown of specifically licensed and authorized use of clips, which may have been fair use even if not specifically licensed, resulting in removing the official stream of the award ceremony, which was the only live broadcast of the awards. Depoorter & Walker, supra note 33, at 33435.
[232] After an Australian record label threatened to sue copyright scholar Lawrence Lessig over amateur dance videos set to a clip from the Phoenix song Lisztomania that Lessig used in an online lecture, and sought to have YouTube remove the clip, Professor Lessig decided instead to sue the record label. Nick DeSantis, Harvard Professor’s Online Lecture Prompts Fight With Record Company, Chronicle of Higher Education (Aug. 27, 2013), http://chronicle.com/blogs/ticker/harvard-professors-online-lecture-prompts-fight-with-record-company/65261. According to a declaration the record label filed in court, they had a single employee use YouTube’s automatic content takedown process and, when Lessig challenged that takedown claiming fair use, that same employee threatened to sue Lessig, apparently without ever actually reviewing the lecture video in question. Corynne McSherry, Lawrence Lessig Settles Fair Use Lawsuit Over Phoenix Music Snippets, Electronic Frontier Foundation (Feb. 27, 2014), https://www.eff.org/press/releases/lawrence-lessig-settles-fair-use-lawsuit-over-phoenix-music-snippets. Perhaps feeling that it picked a fight with the wrong defendant, a renowned copyright scholar who obtained the assistance of the law firm Jones Day and the Electronic Frontier Foundation, the label settled, agreeing that the lecture made fair use of the song and pledging to amend its policies so that human review is required prior to issuing a takedown. Id.
[233] Depoorter & Walker, supra note 33, at 32021; Depoorter, Several Lives, supra note 58, at 30–31. For detailed answers to frequently asked questions about the DMCA and content removal, see Joseph Storch, Heidi Wachs & Kent Wada, FAQ for DMCA Designated Agents at Higher Education Institutions, EDUCAUSE Institute of Computer Policy and Law (Apr. 2011), http://www.educause.edu/icpl/dmcafaq.
[234] For a substantive criticism of the role of automatic algorithms and problems that ensue when algorithms replace important human decision making, see Evgeny Morozov, To Save Everything, Click Here 140–80 (2013).
[235] Depoorter & Walker, supra note 33, at 32023, 326–27.
[236] Depoorter & Vanneste, supra note 32, at 1148; Depoorter, Technology and Uncertainty, supra note 103, at 1859–60; Manta, supra note 103, at 502–16; Harris, supra note 9, at 127.
[237] Depoorter & Walker, supra note 33, at 338.
[238] Id. at 320–22.
[239] Id. at 327.
[240] File sharing in violation of intellectual property law will not actually change the system to a perfect market system where the price charged will be where supply meets demand, as the legal producer of the good will always maintain some advantages over violative producers, notably the moral imperative to purchase legal items, the knowledge that an item purchased legally is safer and more reliable than one otherwise obtained, the fact that not every consumer has access to the technology to retrieve copies, and the goodwill from the legal producers’ marketing efforts. Therefore, this article refers to the system as an imperfect market pricing model. A similar shift occurs when a product, such as a drug or medical device, protected by patent loses that protection. Others enter the marketplace and the model shifts from monopoly to market, albeit with significant advantages for the original manufacturer. Mankiw, supra note 10, at 345–61.
[241] Thomas Sowell, On Classical Economics 13-14 (2006); Boyes and Melvin, supra note 18, at 249.
[242] For instance, utilities often have economy of scale advantages in addition to government-authorized monopolies. While not impossible, even if a company receives permission to operate in an area, it is extremely expensive to lay cable or phone wiring in an area to offer service.
[243] For instance, Coca-Cola expends significant effort to keep the exact formula for its flagship soda a secret. Leon Stafford, Coke Hides Its Secret Formula in Plain Sight in World of Coca-Cola Move, Atlanta Journal-Constitution (Dec. 8, 2011), http://www.ajc.com/news/business/coke-hides-its-secret-formula-in-plain-sight-in-wo/nQPMm/; Ira Glass et al., Original Recipe, This American Life (Feb. 11, 2011), http://www.thisamericanlife.org/radio-archives/episode/427/original-recipe/recipe.
[244] Boyes & Melvin, supra note 18, at 237.
[245] Mankiw, supra note 10, at 345–61.
[246] See generally Boyes & Melvin, supra note 18, at 245.
[247] Id. at 249–50.
[248] Id. at 251.
[249] Id. at 252.
[250] Id. at 252.
[251] Id. at 252–53.
[252] See Storch & Wachs, supra note 38, at 348-49, citing Ashlee Vance, Music Sales Rise Despite RIAA‘s Best Efforts, REG. (U.K.) (Oct. 21, 2004) http://www.theregister.co.uk/2004/10/21/riaa_mid2004_salesshock.
[253] See Storch & Wachs, supra note 38, at 349.
[254] For example, Apple and Samsung have spent millions of dollars in legal fees litigating patent disputes over the iPhone and Galaxy cell phones. See Dimitra Kessenides, When Apple and Samsung Fight, the Lawyers Win, Bloomberg Businessweek (Dec. 9, 2013) http://www.businessweek.com/articles/2013-12-09/apple-samsung-patent-wars-mean-millions-for-lawyers. While each company has sued and countersued the other, neither has sued customers using their rival’s phone, even though it is those customers who are directly infringing the patent.
[255] Infringement is also possible through the doctrine of equivalents, but that doctrine is of limited utility in this context. See generally Warner-Jenkinson Co., Inc. v. Hilton Davis Chem. Co., 520 U.S. 17, 24 (1997).
[256] As explained below, one must “make[], use, offer[] to sell, or sell” a patented invention in order to face liability for direct infringement under 35 U.S.C. 271(a).
[257] 35 U.S.C. § 271(b) & (c).
[258] 35 U.S.C. § 271(a).
[259] While it is certainly possible that an end user might choose to sell his or her 3-D printed patented creations this is a smaller subset of the overall users of 3-D printers and therefore less likely to face liability.
[260] However, patent law does allow an infringer to raise defenses of “noninfringement,” “experimental use,” and “repair” to name a few.
[261] 35 U.S.C. § 271(c) (2006).
[262] Fujitsu Inc. v. Netgear Inc., 620 F.3d 1321, 1326 (Fed. Cir. 2010).
[263] See Davis Doherty, Downloading Infringement: Patent Law As A Roadblock to the 3d Printing Revolution, 26 Harv. J.L. & Tech. 353, 361 (2012).
[264] 35 U.S.C. § 271(b). Induced infringement is not limited to manufacturers but rather can also apply to instances where a party instructs its users on how to infringe a patent. See C.R. Bard, Inc. v. Advanced Cardiovascular Sys., Inc., 911 F.2d 670, 675 (Fed. Cir. 1990).
[265] Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2064 (2011).
[266] See id.
[267] See Randall R. Radar et al., Make Patent Trolls Pay in Court, N.Y. Times, June 4, 2013, at A25, available at http://www.nytimes.com/2013/06/05/opinion/make-patent-trolls-pay-in-court.html. Patents are not the only area where individuals and corporations will rent seek for revenue without actually seeking to protect rights. There are also owners of valid copyrights in works that bring enforcement actions not to protect their rights or recoup damages, but simply as a primary or secondary revenue stream. Depoorter and Walker, supra note 33, at 34445, citing James DeBriyn, Shedding Light on Copyright Trolls: An Analysis of Mass Copyright Litigation in the Age of Statutory Damages, 19 UCLA Ent. L. Rev. 79, 79 (2012). Xiao’s study shows that the “expression function [of punishment or a fine] is significantly diminished…when the punishment becomes a source of revenue for enforcers.” Xiao, supra note 69, at 332.
[268] One example is Robert Kearns, an engineer who was blind in one eye and severely bothered by the constant back and forth of windshield wipers. He invented an intermittent windshield wiper, took out a patent, and built a factory to fulfill orders from the car manufacturers. Those manufacturers broke off contact and simply developed their own intermittent windshield wipers. Kearns engaged in costly litigation (financially and emotionally) with deep pocketed car companies and eventually won or settled for millions of dollars from Ford and Chrysler. See Anderson, supra note 1, at 120–22.
[269] U.S. Patent No. 8,112,504 (filed Mar. 4, 2009). In fact, the ‘504 patent issued from a divisional application and therefore retained the priority date of the original application, filed in 1996. Cf. MPEP (9th ed. Rev. Mar. 2014) § 201.06; MPEP (8th ed. Rev. Aug. 2012) § 201.11. The invention contained in the ‘504 patent was originally claimed in the 1996 patent application but the patent examiner declared a division because the patent application contained more than one patentable invention.
[270] Ira Glass et al., When Patents Attack… Part Two!, This American Life, (last visited March 30, 2014), http://www.thisamericanlife.org/radio-archives/episode/496/when-patents-attack-part-two.
[271] See id. However, Personal Audio has initiated several suits against prominent podcasters in the Eastern District of Texas alleging infringement of the ‘504 patent. See Complaint, Pers. Audio, L.L.C. v. Ace Broad. Network, L.L.C., No. 2:13-cv-00014 (E.D. Tex. Jan. 1, 2013).
[272] David McAfee, Starbucks, Marriot Sued in WiFi Hotspot Patent Blitz, Law360 (Apr. 24, 2013, 5:14 PM), http://www.law360.com/articles/435737/starbucks-marriott-sued-in-wifi-hotspot-patent-blitz.
[273] To its credit, the White House has taken notice of these types of patent lawsuits, and included protecting “off-the-shelf use by consumers and businesses” of such products in its White House Task Force on High-Tech Patent Issues. Exec. Office of the President, Patent Assertion and U.S. Innovation 5-7 (2013). Attorneys general have also joined in the effort. See Erin E. Harrison, GCs and AGs Join Hands to Tackle Patent Litigation, Inside Counsel, Jan. 2014.
[274] See Anderson, supra note 1, at 9 (comparing a $20 trillion dollar digital economy with a $130 trillion dollar economy of “real stuff”).
[275] In fact, author Thomas Thwaites spent about nine months and quite a bit of money attempting to build from scratch a toaster that would cost about $6.00 (US) in an English retail store. Although his tale is interesting, and certainly entertaining, readers of his book would probably surmise that it is not, currently, less expensive to manufacture one’s own toaster than it is to purchase one. See Thomas Thwaites, The Toaster Project: Or a Heroic Attempt to Build a Simple Electric Appliance from Scratch (2011).
[276] See Watt, supra note 51, at 389–402, 391 (“[the need for new definitions outside of the clear separation of copyright and patent] is not a recent development. As early as 1930 Justice Learned Hand stated ‘Nobody has ever been able to fix that boundary [between ‘ideas’ and ‘expression’] and nobody ever can,’” citing Nichols v. Universal Pictures Corp., 45 F.2d 119, 121 (2d Cir. 1930)).
[277] Patry, supra note 8, at 141–42.
[278] $2,000 x 0.01 = $20 plus $10 in material = $30 total averaged cost.
[279] As detailed earlier, legitimacy of a legal regime is crucial to having citizens follow the rules set by the regime. Excessive penalties above the normative opinion of fairness for a violation can lessen the legitimacy of any legal regime. Depoorter, Van Hiel and Vanneste, supra note 33, at 1255–56, 1270.
[280] Patry, supra note 8, at 173–76.
[281] For an explanation of price discrimination, see Mankiw, supra note 10, at 326–31.
[282] Airplanes will sell tickets for less money to price conscious tourists than to expense-account utilizing business persons. They do this by discounting early purchases and those who stay over on a Saturday night (which are attractive to tourists), while charging more for last-minute purchases and short stays (which is acceptable to businesspeople). By doing so, airlines can separate the two groups and charge group members different prices.
[283] For a description of Netflix and other subscription models used by the entertainment industry, see Raustiala, supra note 34, at 229–32.
[284] David C. Robertson and Bill Breen, Brick By Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry 6–7, 42 (2013); See also Jamie Condliffe, Lego Was First Patented 55 Years Ago Today, Gizmodo (Jan. 28, 2013, 5:24 AM), http://gizmodo.com/5979430/lego-was-first-patented-55-years-ago-today (noting that LEGO bricks were patented over 55 years ago on January 28, 1958, patents which have, therefore, long expired).
[285] See Anderson, supra note 1, at 192–96. Lego as a company policy will sell futuristic and fantastical weapons, and ancient weapons such as swords, but will not sell modern guns, grenades or other weapons.
[286] Id. at 214.
[287] Lego does not pursue hobbyists who create Lego accessories “as long as they don’t violate Lego’s trademarks and include cautions about keeping pointy or easy-to-swallow toys away from young children. Indeed, Lego has even issued informal guidance on using the best plastics that are non-toxic and including holes in parts that could be a choking hazard, to allow for air passage.” Id. at 194. The company could extend such protections to the items that users can print on home 3-D printers.
[288] See text accompanying footnotes 89– 101, 112– 115, and 119– 123, supra.
[289] If there is demand for an item, but there are no legal alternatives available, at least some consumers will seek to satiate that however they can, even if it is outside of what is allowed by law. See Patry, supra note 8, at 256–62.
[290] Examples cited by Patry include science fiction author Neil Gaiman whose sales rose as his work was pirated, and comedy group Monty Python which released all of their work at no cost on YouTube with a “click to buy” button for fans to purchase content. He tells the story of a period when NBC content was not available legally on iTunes for purchase correlating with a significant rise in torrent sharing of that same content. Patry, supra note 8, at 157–61. The bands Radiohead and Nine Inch Nails (admittedly, already famous and successful artists) created sensations and brought in revenue by releasing albums free to the Internet and/or peer-to-peer file sharing protocols, relying on donations or other digital downloading opportunities. See generally Lemley, supra note 9, at 125, 127, 134; Schwender, supra note 27, at 296-297. The band Dispatch even used Napster itself to release tracks, growing its audience to where it was playing large concert arenas. Knopper, supra note 34, at 133–34. Raustiala and Sprigman provide additional examples of artists such as Colbie Caillat who built successful and lucrative careers by giving their music away. Raustiala, supra note 34, at 222–27, 230–32.
[291] Chris Anderson devoted an entire text to examples of ways to successfully compete with free or to co-opt free products for significant gain. Chris Anderson, Free: The Future of a Radical Price (2009).
[292] Danaher et al., Understanding Media Markets in the Digital Age: Economics and Methodology, NBER Working Paper Series 12, 622 (2013), http://www.nber.org/papers/w19634. Specifically, the authors found that when NBC Universal content was removed from the iTunes store due to a contract dispute, illegal file sharing of that content increased 11%; when ABC content was added to Hulu, there was an approximately 20% drop in illegal file sharing of that content; and when cyberlocker Megaupload.com was shut down, revenue from legally accessed digital movies increased by 6–10%.
[293] William Shakespeare, Romeo and Juliet act 3, sc. 1.
[294] Patry, supra note 8, at 160.
[295] “We must all hang together, or assuredly we shall all hang separately.” Benjamin Franklin, at the signing of the Declaration of Independence, July 4, 1776. John Bartlett, Familiar Quotations 361 (10th ed. 1919) available at http://www.bartleby.com/100/245.21.html.
[296] See, e.g., Simon Birch, How Activism Forced Nike to Change Its Ethical Game, The Guardian Green Living Blog (July 6, 2012), http://www.theguardian.com/environment/green-living-blog/2012/jul/06/activism-nike; Max Nisen, How Nike Solved Its Sweatshop Problem, Bus. Insider (May 9, 2013, 10:00 PM), http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5; Jennifer Lin, Students Target Gap Stores: Protesters on College Campuses Decry Working Conditions Overseas. Gap Says It Combats Sweatshops, Philly.com (Nov. 12, 1999), http://articles.philly.com/1999-11-12/business/25494387_1_sweatshop-gap-saipan; Press Release, ILRF, Workers’ Rights Groups to Protest at Gap Shareholder Meeting (May 20, 2013), http://laborrights.org/releases/workers%E2%80%99-rights-groups-protest-gap-shareholder-meeting; PR Newswire, To Demand Gap and Walmart Join Fire and Safety Agreement Signed by 50 Apparel Companies, Labor Rights Groups Protests at Retailers in Over 30 Cities Saturday, MarketWatch (June 26, 2013), http://www.marketwatch.com/story/to-demand-gap-walmart-join-fire-and-safety-agreement-signed-by-50-apparel-companies-labor-rights-groups-protest-at-retailers-in-over-30-cities-saturday-2013-06-26.
[297] This thesis was initially postulated by the author’s friend Reuben Ingber, a technologist, Web designer, and podcaster who blogs at http://reubeningber.com.
[298] See James Bandler, A New Picture, Wall St. J. (May 19, 2003, 12:01 AM), http://online.wsj.com/news/articles/SB105293562153220600.
[299] See Steve Johnson, Hewlett-Packard Stirs More Concern With Decline in Printing, San Jose Mercury News (Dec. 12, 2009, 4:48 PM), http://www.mercurynews.com/ci_22147261/hewlett-packard-stirs-more-concerns-decline-printing; Melissa Riofrio, Lexmark Exits the Inkjet Market: Are Printers Doomed?, PCWorld (Aug. 28, 2012, 8:32 PM), http://www.pcworld.com/article/261564/lexmark_exits_the_inkjet_market_are_printers_doomed_.html.
[300] See Karen M. Cheung, Digital Camera Market Expected to Rise, While Printer Market Falls, Reviewed.Com (June 29, 2006), http://cameras.reviewed.com/news/digital-camera-market-expected-to-rise-while-printer-market-may-fall.
[301] See Press Release, CVS, CVS/pharmacy Adds Camera-Phone Photo Printing (Apr. 28, 2005), available at http://info.cvscaremark.com/newsroom/press-releases/cvspharmacy-adds-camera-phone-photo-printing; Press Release, CVS, CVS/pharmacy Photo Takes Convenience to the Next Level With Express Pick Up (Oct. 22, 2010), available at http://info.cvscaremark.com/newsroom/press-releases/cvspharmacy-photo-takes-convenience-next-level-express-pick; Press Release, CVS, Accessing Smartphone Images is Easier Than Ever With a New Image Uploading Option at CVS/pharmacy Photo Centers (Nov. 14, 2012), available at http://info.cvscaremark.com/newsroom/press-releases/accessing-smartphone-images-easier-ever-new-image-uploading-option.
[302] See Lamont Wood, Is the Market for Personal Printers Dying?, Computerworld (July 31, 2012, 6:00 AM), http://www.computerworld.com/s/article/9229651/Is_the_market_for_personal_printers_dying_.
[303] See, e.g., Photo Printers, Best Buy, http://www.bestbuy.com/site/all-printers/photo-quality-printers/abcat0511006.c?id=abcat0511006 (last visited Mar. 30, 2014).
[304] See, e.g., Carlo Sicoli, Why Printing Photos Could Be Digital’s – and Kodak’s- Future, TheRichest (Feb. 7, 2014), http://www.therichest.com/business/companies-business/is-photo-printing-obsolete-or-an-opportunity.
[305] George Santayana, The Life of Reason: Or, The Phases of Human Progress, Vol. 1, 284 (1906).

Bridging the Gap: Improving Intellectual Property Protection for the Look and Feel of Websites

Bridging the Gap: Improving Intellectual Property Protection for the Look and Feel of Websites
By Liz Brown* A pdf version of this article may be downloaded here.  

Introduction

Every company strives for a unique and memorable website. There is a growing threat, however, that this valuable investment in website design will be copied by competitors without effective legal remedy and with potentially devastating consequences. The “look and feel” of a website—the immediate impression that makes a website recognizable, easy to use, and deserving of consumer trust—is not adequately protected by copyright, trademark, or any other intellectual property doctrine. No intellectual property doctrine currently provides companies with a predictable way to ensure that a competitor does not copy their websites’ look and feel. Website look and feel protection falls into a chasm between copyright on one hand and trade dress on the other, neither of which adequately addresses this modern problem. While copyright protects fixed texts, it cannot offer the scope and fluidity of protection needed to capture the look and feel of entire websites. Trade dress falls short because existing law does not adequately address the blend of form and function essential to website protection. This article proposes the adoption of a multi-factor test adapted from trade dress law in order to secure more effective protection for websites and clarify that trade dress is the proper doctrinal home of “look and feel” protection. In evaluating the potential legal protections for web sites, it is important to distinguish the parts from the whole. Some website elements are relatively easy to protect. These elements include the array of fonts, text size, colors and spacing mainly controlled by a cascading style sheet, or CSS. Copyright may protect CSS, like other code, along with specific images or text on any particular web page.[1] The business name and logo qualify for trademark protection. While copyright law protects a website’s source code and fixed elements and trademark law can protect logos, intellectual property law does not protect the more fluid look and feel of the site overall. A competitor may copy a website’s look and feel without infringing the original site’s copyright in any particular text. A website’s look and feel is different from, but partly dependent on, the specific code that defines how the text and images appear on the website. It is the composite effect of the technical elements, together with design features, that creates a unique user experience. The lack of effective protection for the look and feel of websites presents a serious legal and economic problem. Websites are essential to modern business, the electronic bridge between companies and their customers and the basis of all e-commerce. As companies as large as Facebook are discovering, those vital assets are susceptible to outright copying without permission. Because of gaps in intellectual property law, competitors can copy the overall look and feel of a trusted website, tricking customers into patronizing a different website, with few clear repercussions. Unless this gap is filled, the problem is likely to get worse over the coming years with potentially severe commercial impact. The cost to businesses, in the forms of revenue, trust and goodwill, of such copying is vast. The cost to consumers, who provide confidential data and payments based on misimpression of commercial source, has sparked investigations by the Department of Homeland Security[2]. Although look and feel protection is not a particularly new issue, courts and scholars continue to struggle with it. Some courts have suggested that website look and feel protection should stem from copyright law, which protects the expression of ideas.[3] Others have adopted trade dress, with its emphasis on protecting a firm’s impression on consumers, as a more appropriate basis for protecting website look and feel.[4] Scholars have noted the doctrinal confusion in the few cases addressing look and feel protection but have not proposed a workable solution.[5] Recent case law and technological developments make it clear that a comprehensive solution must be found soon. The ubiquity of website copying, combined with the increasing commercial value of website look and feel, creates a significant but ineffectively regulated threat to online commerce. As no satisfactory judicial approach to the problem of website copying has yet emerged, the questions remain: What is the best way to protect the look and feel of websites from illicit copying? What is the proper doctrinal basis for such protection? What is the optimal mechanism for putting it in place? The underlying thematic differences between copyright and trade dress law—in essence, the difference between protecting a website owner’s expression and protecting consumer impression—suggest that trade dress is the more appropriate basis for look and feel protection. While copyright law protects the expression of ideas, trade dress law essentially protects the consumer’s association between a given product or place (or perhaps a website) and a particular source. The latter is more relevant to the harms posed by website look and feel infringement. courts across the country, however, continue to struggle with this issue. This article explains the nature of the problem, analyzes recent case law, explores the limits of copyright and trade dress as bases for protecting website look and feel, and proposes a multi-factor judicial test for look and feel infringement. Part I discusses why the gap in website look and feel protection exists and its potential impact on businesses and consumers. Part II explores why neither copyright nor trade dress protects the look and feel of websites well enough, and the ways in which recent cases expose the gaps in this area of the law. In Part III, I propose a new judicial approach in the form of a multi-factor test for look and feel infringement, adapted from trade dress law and modified to address technological realities. Part IV concludes by offering additional advice for addressing these issues under current law and suggesting possible next steps in resolving these and related issues.

I. Copying Websites’ Look and Feel: A Growing Threat to E-Commerce

The “look and feel” of a website refers to the overall visual impression that allows a consumer to identify the website with a particular service provider or merchant, and confirms that the user is on the website she intended to visit.[6] As one court explained, “when a person visits a web site, she is comforted by the distinctive design, knowing that the look and feel is clearly associated with a specific brand name. This branding facilitates the association with a firm’s reputation.”[7] At least, it should. Website look and feel infringement disrupts the consumer’s trusted association of site with source, resulting in damage to both the merchant and the consumer.

A. The Nature of Look and Feel Copying

The following hypothetical illustrates the problem of copying look and feel. Assume there are two similarly worded websites: restaurant.com and restaurants.com. Although their domain names are similar, they have different business models. Restaurant.com offers discounted vouchers to a range of participating restaurants. Consumers can buy $25 vouchers for local restaurants at the discounted price of $10, or $5 during one of their frequent promotions. The main function of Restaurants.com, in contrast, is to aggregate customers’ restaurant reviews. It also offers some discounts, but vouchers are not the heart of its business. These websites’ patrons may not always remember the domain name of the website they want to visit. While some consumers bookmark a favorite website enabling their computer to recall the specific site, many others rely on a search engine. They can do so because they know that when they click on the “right” website, it will look familiar. Familiarity and past positive experience engender the trust necessary to encourage consumers to purchase a restaurant voucher and for the website to profit. When two similar domain names like restaurant.com and restaurants.com come up near each other in a web search, the visual distinctiveness of a website is especially important.[8] When websites look different from each other, and are viewed on a large enough screen, this works well. A problem arises, however, when one company decides to mimic the look and feel of a competitor’s website. If restaurants.com were struggling, it might consider a new business and marketing strategy, perhaps focusing more on voucher sales. It could then redesign its website to look more like restaurant.com, a leading competitor in that field. By changing its font to mimic the restaurant.com site, adjusting its spacing, changing its colors, rearranging its layout, and redesigning the search box, it can make its site looks more like restaurant.com. By doing so, it can siphon business from restaurant.com consumers who reached restaurants.com in error but do not realize their mistake before entering their credit card information.[9] If the copycat restaurants.com redesigns its website in this way, the original restaurant.com faces significant potential losses in what is, more or less, a zero-sum game. It loses customers, income, trust and good will. The original site, restaurant.com, can sue for infringement of the look and feel of its website. Restaurants.com will respond that it is competing legally because it has not infringed any of restaurant.com’s copyrights or trade dress rights. Who wins? There is no reliable answer to this question. No published case has established a claim for protecting the look and feel of websites. Although there is a growing body of case law on this issue, the few reported decisions do not form a coherent precedent. This problem, however, is far from hypothetical. It is something that even the largest websites face, including Facebook. In 2008, Facebook sued a German rival, StudiVZ, for infringement of its website look and feel.[10] StudiVZ had developed a website that looked and operated like Facebook, although it used a red background instead of blue. The StudiVZ site launched in Europe, where Facebook’s popularity had begun to grow.[11] Facebook brought suit in Northern California and Germany but retreated a year later, settling with StudiVZ in the United States because it could not succeed on its legal claims.[12] Athleta, a Gap-owned brand, faced a similar problem in 2012. One of its competitors, Pitbull, gradually changed its athletica.net website design over the course of three years to more closely resemble athleta.com. Athleta sued Pitbull for trademark infringement, unfair competition and false advertising, among other claims, in the Central District of California. It accused Pitbull of copying large parts of its website, misleading consumers into thinking that Athleta operated the athletica.net website. Pitbull’s copying included the adoption of athleta.com’s graphic layout and even extended to including consumer reviews “that were identical to the ones appearing on plaintiff’s site describing plaintiff’s products.”[13] As the court noted, the defendants were “generally adopting a similar look and feel to plaintiff’s website for their athletica.net website.”[14] The court granted Athleta’s motion for a preliminary injunction.[15]

B. The Economic Impact of Look and Feel Infringement

Businesses increasingly rely on websites as their calling cards and on e-commerce as their main source of income. As the commercial importance of website look and feel increases, so has the ease with which websites can be copied in their entirety. Many video tutorials demonstrate how to copy a website in five minutes or less.[16] Alternatively, several companies offer website copying services. One example is clonewebsite.com, which offers to copy a website for a flat fee of $49. As the frequency of look and feel copying has grown, entrepreneurs have created profitable businesses premised on look and feel infringement. Rocket, the company that created Facebook’s competitor StudiVZ, is a prime example. It has created successful knockoffs of well known websites including Fab, Priceline, and others. One journalist noted that Rocket’s clone of Zappos “now dominates six European markets and is estimated to be worth $1 billion by Financial Times Deutschland.”[17] The financial impact of website look and feel copying is potentially vast, as there is a lucrative market to capture. Websites are a powerful source of revenue. According to some scholars, “E-commerce in the United States is predicted to grow by over 40% between 2011 and 2015, reaching more than $270 billion in sales accounting for 15% of total retail sales excluding food products. In 2010, more than three-quarters of the North American industrial businesses that reported growth said that websites made a significant contribution to that growth. Overall, global e-commerce revenue is forecasted to hit $960 billion by 2013 and $1.4 trillion in 2015.”[18] Because e-commerce is growing so rapidly, the look and feel of a website provides a competitive advantage. The overall visual impression a website creates is the primary source identifier for businesses on the Internet.[19] The look and feel of a website increases in importance as people use smaller screens to access the Internet. In 2013, the Pew Research Center reported that 63% of mobile phone owners use their phones to access the Internet, and 34% of them use their phones, rather than a laptop or home computer, as their primary Internet device.[20] Nearly half of respondents in the 18–29 age group said that their mobile phone is their primary device for the Internet.[21] As more consumers view websites on mobile devices, on which it is often impossible to read domain names, businesses and consumers rely increasingly on the website’s overall visual impression as a source identifier.[22] The rapid growth of consulting companies that specialize in designing mobile-friendly web sites, like Mobiquity, attest to the impact increased mobile usage is having on web site development.[23] The smaller the screen, the more important visual recognition of the website becomes to the user’s brand, because the domain name becomes illegible. Knockoff websites pose risks for consumers who are fooled into buying counterfeit goods from them. In July 2012, the Department of Homeland Security announced an investigation into 70 different knockoff websites that had sold counterfeit goods to American consumers. John Morton, director of the department’s U.S. Immigrations and Customs Enforcement unit, noted that the copycat websites were using increasingly sophisticated methods to pass themselves off as genuine. “The fake sites and the real sites are almost indistinguishable,” Morton said. “And the fake sites aren’t offering obvious knockoffs. They are trying to masquerade as the real deal.”[24] The fake web sites had confused consumers, who bought goods on the fake sites under the misimpression that they were legitimate businesses. When consumers lose money due to website copying, the original website owners suffer as well. When Athleta sued its competitor for mimicking the look and feel of its website, for example, the court noted that Athleta had established a likelihood of confusion by demonstrating actual consumer confusion.[25] Consumers who mistakenly paid for goods through a competitor’s knockoff website “have called or emailed Athleta with complaints that they have not received order status confirmation emails from Athleta, that products they ordered have not yet arrived, or that their Living Social discount codes that they purchased are not being accepted by Athleta’s website.”[26] The court agreed that it damaged Athleta in the form of lost goodwill and reputation. “These consumers have expressed frustration to plaintiff with regards to the untimely shipment of merchandise or the non-receipt of confirmation emails, when in fact these consumers have ordered from defendants’ website.”[27] The fact that Pitbull was selling poor quality copies of Athleta’s goods caused further damage. “[T]o the extent the parties’ goods differ in quality, consumers’ satisfaction with plaintiff’s products may decrease as a result of these consumers purchasing defendants’ products.” The resulting loss of goodwill and reputation in the marketplace led the court to rule that Athleta was being irreparably injured by the defendants’ copying.[28]

II. Using Copyright or Trade Dress to Protect Website Look and Feel

When victims of website copying have turned to the courts, they have brought claims under a variety of theories, including intellectual property infringement and unfair competition. The two most promising and commonly discussed intellectual property claims related to this kind of copying are copyright and trade dress. As described below, neither offers entirely effective protection.

A. The Ambiguous Nature of Look and Feel Protection

Although there is relatively little case law on look and feel infringement, a few key decisions illustrate the confusion often wrought. The lack of certainty as to which intellectual property doctrine best protects the look and feel of websites is obvious from the plaintiffs’ claims and the courts’ responses in these cases. In one of the most frequently cited look and feel cases, Blue Nile v. Ice.com, a 2007 case from the Western District of Washington, the court struggled with the legal nature of plaintiff’s look and feel infringement claim.[29] An initial problem was that the plaintiff’s claims were less than clear. Blue Nile had asserted copyright protection for certain elements of its website, including some search features, and had registered them with the Copyright Office. At the same time, Blue Nile alleged state law claims relating to the “look and feel” of the website, which it claimed were outside of the purview of copyright. In stating those claims, however, Blue Nile incorporated by reference its copyright claims. The court crossly pointed out that “Plaintiff cannot both expressly rely on the copyright allegations in all of its state law claims and assert that the state law claims are outside copyright’s subject matter for purposes of avoiding preemption.”[30] The ambiguity in the court’s own language is also striking. In some respects, the court’s reasoning is internally inconsistent. At one point, the court asserted that the look and feel of a website is a matter of copyright law rather than trade dress (“The look and feel of plaintiff’s website is within the subject matter of copyright.”).[31] At another point, the court allowed that the look and feel of a website might also be a matter of trade dress law rather than copyright (“[What] portions of the website relate to the look and feel of its trade dress claims require greater factual development”).[32] Had the litigation continued, presumably, the court could have evaluated more precise claims as to what specific elements comprised the “look and feel” of the websites at issue. Unfortunately for scholars, the Blue Nile litigation ended with dismissal two weeks after the court ruled on the motion to dismiss. [33] There was also confusion on both sides of the bench in Conference Archives, Inc. v. Sound Images, Inc., an unreported case from the Western District of Pennsylvania.[34] Although Sound Images admitted that it copied Conference Archives’ website and “the facts [were] largely uncontroverted,” the court denied both parties’ summary judgment motions.[35] The court acknowledged the unsettled nature of the issue it faced, noting that “while protection of source code and other electronic processes have found refuge in copyright or patent law, protection of the “look and feel” of a website remains unclear” and calling the matter “a case of first impression in this Circuit.”[36] The novelty of the issue apparently perplexed the plaintiff, too. The court observed that “Plaintiff’s motion for summary judgment is nebulous as to what ground of intellectual property law it relies on.”[37] In its complaint, Conference Archives referred to its claim as rooted in copyright law and yet acknowledged that “no federal copyright claim is asserted here.”[38] It stated that the “’look and feel’ of a web site can be ‘protected in multiple ways, such as by copyrights, trademark, [and] trade dress [sic].’”[39] Taking matters somewhat into its own hands, the court decided to consider the website copying claims under trademark, trade dress, trade secret and copyright theories.[40] The parties, however, apparently settled before trial. In addition to doctrinal uncertainty, another problem with existing case law is the number of decisions that have issued at a preliminary stage rather than after a full hearing on the merits. For example, the often-cited Blue Nile v. Ice.com decision resolved only the defendant’s motion to dismiss on preemption grounds.[41] In most cases, the courts have evaluated the claims under the relatively minimal standards of pleading sufficiency, or to resolve basic questions of preemption, instead of issuing a more complete evaluation of the issues after a trial. The preliminary stage at which these decisions are issued means that many of the critical issues have not yet been played out, including the extent to which functionality might bar a trade dress claim. In Salt Optics v. Jand, for example, the defendant had asserted that the plaintiff could not claim trade dress rights in the look and feel of its website because the website “is functional on its face and […] the “look and feel” of Plaintiff’s website has not acquired secondary meaning.”[42] While the court ruled that the Plaintiff had pled the elements of non-functionality and secondary meaning well enough to state a claim, it reserved “a more exacting factual analysis of these elements […] for a later stage of the case.”[43] The case settled, however, before the court could carry out such an analysis. While courts are slowly gaining more experience with look and feel claims there is still some confusion as to the proper nature of these claims. Website owners most frequently assert one of two kinds of claims: copyright and trade dress. The next sections address the viability of each.

B. The Limits of Copyright Law in Protecting Look and Feel

Because copyright law generally protects both legible text and software code, it is logical to start there as a potential basis for website protection.[44] Copyright law protects many components of a website, including the text an end user can read and the software code that specifies how that code will be displayed. Unlike more traditional art forms, the design features of a web page are controlled through a specific kind of code called a Cascading Style Sheet (CSS), which can be embedded in a website’s HTML. Like other kinds of software, CSS may be subject to copyright.[45][46] In order to bring a copyright claim for infringement of a website’s look and feel, however, the website owner must meet the threshold requirements of any copyright claim.[47] Specifically, the plaintiff must show (1) that it owns a valid copyright, (2) that the copyright has been registered with the Copyright Office, and (3) that the defendant has copied its protected work, which requires both copying-in-fact and substantially similar copying.[48] Applying these requirements in the context of website look and feel is not straightforward. Copying-in-fact can be demonstrated either by direct evidence or by showing access to the work and probative similarities.[49] Given the public nature of websites, it is hard to imagine a defendant successfully challenging the issue of access. While it is easier to establish access to the copied work, it may be more difficult to establish substantial similarity among websites, in part because of their interactivity. “An allegedly infringing work is considered substantially similar to a copyrighted work if ‘the ordinary observer, unless he set out to detect the disparities, would be disposed to overlook them, and regard their aesthetic appeal as the same.'”[50] Some simple changes in a copied website design may lead a court to conclude that no such substantial similarity exists, even where there is direct evidence of intentional copying-in-fact. In the New York case of Crown Awards Inc. v. Trophydepot, for example, the defendant conceded that it had intentionally copied plaintiffs’ website. Because the defendants had changed some colors and added some text, however, the court found that the knockoff website was not “substantially similar” and denied plaintiff’s copyright claim on that basis.[51] Facebook, however, pursued claims against StudiVZ for look and feel infringement even though the knockoff site used red as its primary color instead of Facebook’s hallmark blue.[52]
1. The Copyright Office May Not Register “Look and Feel” Elements
The registration of a valid copyright is required to assert copyright claims.[53] While the Copyright Office will accept registration of the specific source code or text to be used in a website, it sends conflicting signals as to whether it will accept registration of the website’s look and feel overall. As at least one court has recognized, source code itself is not a proxy for the look and feel of the website. In Athleta v. Pitbull, the defendants argued that the court should compare the source code of their website with that of the plaintiffs’ website in order to evaluate their similarity.[54] The court rejected that argument, noting that any similarity between the source codes of the website was irrelevant to the main harm claimed, which was a likelihood of confusion by consumers who might mistake the defendants’ website for that of the plaintiffs. “The court does not see how the source code of the parties’ respective websites could create a likelihood of confusion as to the source of defendants’ goods or to defendants’ affiliation with plaintiff; it is the overall look and feel of defendants’ website vis-a-vis plaintiff’s that causes confusion.”[55] Stepping back from the source code, then, the questions remains as to whether the Copyright Office will register websites overall. Its own publications suggest that it will not register websites, website designs or website layouts. In Circular 66, the Copyright Office offers guidance for registering online works. It advises authors completing an application for registration to do the following:
Use terms that clearly refer to copyrightable authorship. Examples are “text,” “compilation,” “music,” “artwork,” […] Do not use terms that refer to elements that are not protected by copyright or may be ambiguous, for example, “website,” “interface,” “format,” “layout,” “design,” “look of website,” “lettering,” or “concept.”[56]
The Copyright Office’s inclusion of the terms “website” and “look of website” among the “elements that are not protected by copyright or may be ambiguous” dissuades companies wishing to copyright their websites as a whole. This language is somewhat vague, since it is not clear whether “website” and “look of website” fall into the category of ambiguous elements or unprotectable elements. Regardless, this language suggests that neither may be registered. The Copyright Office explains that while the code underlying a website may be registered for copyright protection, the resulting website content may not be included in that protection unless it can be described according to the Office’s requirements:
For a claim in a computer program that establishes the format of text and graphics on the computer screen when a website is viewed (such as a program written in html), registration will extend to the entire copyrightable content of the computer program code. It will not, however, extend to any website content generated by the program that is not present in the identifying material received and that is not described on the application.[57]
The Copyright Office also suggests that it will not register the spatial arrangement of individually registered elements or the appearance of the website. A prior version of Circular 66 stated that “in general, formatting of web pages is not copyrightable” and that its “longstanding practice … is to deny registration of the arrangement of elements on the basis of physical or directional layout in a given space, whether that space is a sheet of paper or a screen of space meant for information displayed digitally.”[58] The July 2012 revision of Circular 66 deleted that language, but did not replace it with any more specific or encouraging guidance for website creators. One reason for the Copyright Office’s reluctance to register websites is their mutability. The frequently changing nature of web sites may be fundamentally incompatible with the fixation requirement of copyrightable works. Copyright traditionally protects only texts that are fixed and unchanging.[59] Indeed, the Copyright Office requires that a web page’s source code and text be separately registered each time they are updated, revised or otherwise changed, unless they are databases, serials or newsletters. Again, Circular 66 provides the following guidance:
Many works transmitted online, such as websites, are revised or updated frequently. Generally, copyrightable revisions to online works that are published on separate days must each be registered individually, with a separate application and filing fee[.][60]
Characteristically, and increasingly, website texts are not fixed.[61] They must change frequently in order to fulfill one of their purposes: as a means of updated communication between the business and the consumer. Consumers expect websites to change often to reflect, for example, news that affects the company, daily or weekly sales or promotions, and any other element of a marketing campaign. A strict reading of Circular 66 suggests that a website owner would have to register new content with the Copyright Office on a daily basis to ensure protection since each change is likely to result in a new work, even if the overall look and feel of the website remains the same. The administrative burden of filing new paperwork daily with the Copyright Office is probably more than most website owners wish to expend.
2. Judicial Use of Copyright Claims in Look and Feel Cases
Given the Copyright Office’s directives, one might expect that copyright law would not protect the look and feel of websites effectively. While the Copyright Office may register both the individual elements of a website and the overall arrangement of those elements in theory, its advice to authors suggests that it is unlikely to do so in practice. That seemed to be the case after Darden v. Peters.[62] In Darden, the plaintiff had created a website designed to help users locate real estate appraisers nearby. The website consisted largely of maps taken from census sources, which were colored and labeled. When Darden tried to register its website with the Copyright Office, the clerk denied his request. The adaptation of the maps, the clerk reasoned, did not reflect an original work of authorship and therefore was not entitled to copyright registration. Darden sued to overturn the denial. The court sided with the Copyright Office, concluding that the website was primarily a compilation of maps rather than an original work. While certain creative compilations may be entitled to copyright protection, the court ruled, it upheld the denial because it did not find anything especially original about Darden’s compilation.[63] In a later case, Salt Optics v. Jand, the court again refused to allow copyright protection for either the specific elements of a website or its arrangement of them.[64] The case arose from competition between two online eyewear sellers. Plaintiff Salt Optics had created a distinctive, modern-looking website to sell its line of eyewear, featuring sparse white backgrounds and blocky black type. Defendant Jand operates the popular eyewear website Warby Parker. Salt Optics asserted that the Warby Parker website had an “overall look and feel” that was confusingly similar to Salt’s, and claimed both trade dress and copyright infringement.[65] The court granted Jand’s motion to dismiss Salt Optics’ claim for copyright protection in the specific elements of its website. It based its decision on its view that Salt Optics had not claimed anything particularly original about the basic elements or their layout. The court categorized the elements as “(1) eyeglasses bearing names (2) smaller images of products displayed on one side of a web page, (3) an image of a model wearing the product on the other side of the web page, (4) a close-up photograph of the product shown at a distinct angle (5) multiple smaller images of the product displaying color choices, and (6) two different views of a model wearing the product.”[66] The court saw nothing protectable about any of them, and deemed them all incidental to the sale of eyeglasses online. “Each of these elements, considered alone, are, on their face, commonplace expressions naturally associated with the idea of selling a fashion accessory over the Internet,” the court observed.[67] As such, none was eligible for copyright protection individually. In addition, the court saw no reason why Salt Optics’ arrangement of these elements might qualify for copyright protection. Nor, it pointed out, had Salt Optics alleged that its arrangement was creative enough to merit such protection. As the court stated, “[a]lthough certain combinations of unprotectable elements may qualify for copyright protection (e.g. music notes combined together to form a composition), “commonplace” or “typical” combinations do not.”[68] Implicit in that observation, however, was the possibility of copyright protection for a demonstrably original array of elements on a website. Unfortunately for Salt Optics, the court regarded its particular compilation of elements as “standard, stock and common” and therefore unworthy of protection.[69] In at least one case, however, a court denied copyright protection for individual elements of a website but upheld copyright protection for their arrangement. The case, Allen v. Ghoulish Gallery, concerned two competitors who “design, create, market and sell ‘changing portraits’ in the haunt industry.”[70] Both the plaintiff and defendant were artists who “take an antique photo and use lenticular technology to make the portrait ‘change’ into a haunted spirit, vampire or other spooky creature.”[71] The plaintiff alleged, among other things, that the defendant copied the look and feel of its website. Although the court found that there was nothing copyrightable about the individual elements of the plaintiff’s website, it held that he was entitled to copyright protection for “the selection, arrangement and presentation of the contents of his website.”[72] Two other federal courts have suggested that copyright law may protect website design and layout.[73] The Darden and Salt Optics courts’ refusals to allow copyright protection has not stopped other companies from alleging copyright infringement as a means of protecting their websites from illicit copying. Indeed, more recent decisions also suggest that the Copyright Office may be more willing to register website elements than its publications imply. In an unpublished 2011 case from the District of New Jersey, an educational organization sued its former webmaster for converting its website and copying it for another organization. The plaintiff brought a number of state law claims including conversion and trespass to chattel.[74] The court noted that the defendant “registered the website contents […] with the U.S. Copyright Office, effective July 1, 2009” and that the “registration application included text, software, code and graphical elements taken from the [plaintiff’s] website.”[75] The Copyright Act, the court ruled, preempted the state law claims, prompting the removal of the case to federal court.[76] The parties apparently settled before any ruling issued on the copyright claim. While the Copyright Office may be increasingly willing to register certain components of a web page, whether the Copyright Office will register the entire site as a unit is a separate question. Under Darden and Salt Optics, the protection will not extend to the entire web page unless that page is a particularly innovative composition of elements. Whether a website’s design is innovative, however, is a different inquiry from whether it has a distinctive look and feel. Darden led at least one commentator to conclude that “a copyright claim concerning the overall layout and design of a website would be weak.”[77] Even if the Copyright Office were willing to register the overall composition of a website, it is not clear that copyright would effectively protect the look and feel of the site. The user’s overall impression of the website depends on more than the static visual layout that copyright would protect. It depends in part, for example, on the user’s interaction with the menus and other functionality of the site. It transcends the specific colors used in one part of the website or another, although such minor changes might prevent a competing website from being similar enough for infringement. The limits of copyright law to protect look and feel are becoming more obvious. Even if a website owner copyrights every page of its website, it will need to bring trade dress claims for the look and feel of that site because the overall impression of a website is more than the sum of the appearance of its pages. In Express Lien v. National Association of Credit Management Inc., plaintiff Zlien did exactly that.[78] It alleged that defendant NACM violated copyright law by copying Zlien’s compilation of materials related to mechanics’ liens and bond claim laws, as it appeared on Zlien’s website.[79] It also alleged that NACM violated trade dress law by copying its “stylistic choices along with the content of the website, including the color, font, and hyperlinks, in a manner that is confusingly similar to Zlien’s website.”[80] Zlien’s decision to assert separate copyright claims to protect its pages and compilation and trade dress claims to protect the look and feel of its website reflects an evolving awareness of each doctrine’s proper use in website copying cases. In sum, copyright is a less effective basis for website look and feel protection. The Copyright Office’s guidance on what may be registered for copyright protection is somewhat at odds with at least some case law. The level of detail at which these cases are reported makes it difficult to parse exactly what makes an element of a website, or the composition of a website, sufficiently original to merit copyright protection. Even if a plaintiff could demonstrate originality, the formal requirements of copyright registration, including the obligation to register revised text on a daily basis, diminish the appeal of using copyright to protect websites’ look and feel. The uncertainty of copyright as protection for the look and feel of websites may explain why Facebook did not include a copyright claim with the eight other causes of action in its complaint against StudiVZ.[81]

C. The Limits of Trade Dress Law to Protect Website Look and Feel

Given the limits of copyright, some plaintiffs turn to trade dress law instead to protect the look and feel of their websites. Trade dress, one of the less common forms of intellectual property, protects the overall image of a product, store, or potentially a website, which connotes a particular source, from illicit copying. Like trademark law, trade dress protection is primarily defined by the Lanham Act.[82] Perhaps the most famous example of such protected packaging is the iconic Coca-Cola bottle. Another well known example of trade dress protection is the size, shape and graphic design of National Geographic magazine. Its signature yellow border identifies the magazine with its source, regardless of whether one can read the “National Geographic” title on the cover. In August 2012, a jury in the Northern District of California found that Samsung had diluted Apple’s trade dress in the iPhone 3G because several of Samsung’s phones, including the Galaxy, had confusingly similar designs.[83] Trade dress protection is also available for retail stores, hotels and restaurants. This protection ensures that customers can reliably identify a particular business by the overall look and feel of the commercial interior. The characteristic white walls, floors, and fixtures of an Apple Store, together with other key design elements, are protectable as trade dress. So too is the combination of taupe walls, green accents and pale wood fixtures that tell a customer she is in Starbucks. In other words, it protects the affiliation in the consumer’s mind between a specific interior design scheme and a commercial source. Websites are in many ways the storefront equivalents of today’s commercial environment.[84] Trade dress therefore provides the most logical basis of intellectual property protection for the look and feel of a website. Yet the particular requirements of trade dress and the case law applying this type of protection to the look and feel of websites make its likelihood of success unclear. Indeed, even in July 2013, the District Court for the Eastern District of New York wrote that “the application of trade dress law to websites is a somewhat ‘novel’ concept” and an issue of “first impression in this Circuit.”[85]
1. Articulating the Elements of the Alleged Trade Dress
In order to bring a trade dress infringement claim for website copying, the plaintiff must first articulate the elements of the website that make up the trade dress at issue. Specificity and finality are both critical to the success of a trade dress infringement claim, especially for website copying. This point was underscored in Sleep Science Partners v. Lieberman, a 2010 decision from the Northern District of California.[86] Plaintiff Sleep Science made a mandibular repositioning (e.g., snore-reducing) device and sold it on its website. Sleep Science showed its product and website to Avery Lieberman. He showed them to two Vermont residents, who allegedly copied the website and launched a similar one under the corporate name Sleeping Well. Sleep Science alleged, among other things, that the Sleeping Well website “has the same format, design and feel as [its] website.”[87] It alleged trade dress infringement, and described its trade dress as the “unique look and feel of SSP’s website, including its user interface, telephone ordering system and television commercial[.]”[88] Sleep Science itemized various features of its website in its complaint, including the ability to view its commercial, user testimonials, a screening questionnaire and “the PureSleep method.”[89] Sleeping Well argued that this listing was too vague to give it sufficient notice of the trade dress claim.[90] The court agreed with Sleeping Well. “Although it has catalogued several components of its website, Plaintiff has not clearly articulated which of them constitute its purported trade dress,” the court observed.[91] The open-ended nature of the list also worried the court: “Notably, Plaintiff employs language suggesting that these components are only some among many . . . . Without an adequate definition of the elements comprising the website’s ‘look and feel,’ Sleeping Well is not given adequate notice.”[92] This decision underscored the importance of explaining both (1) the elements that give rise to a website’s look and feel and (2) the interaction among those elements clearly and specifically to the trier of fact.
2. Proving Distinctive Trade Dress
Articulating the elements of a claimed trade dress in the look and feel of a website is necessary but not sufficient. A plaintiff must also show that the alleged trade dress is distinctive and non-functional, and that there is a likelihood of consumer confusion between its alleged trade dress and that of the defendant.[93] Of these requirements, distinctiveness is the most elusive in the context of websites. Although Section 43(a) of the Lanham Act itself does not require distinctiveness, distinctiveness is required for registration under Section 2. As the Supreme Court has noted, “Nothing in § 43(a) explicitly requires a producer to show that its trade dress is distinctive, but courts have universally imposed that requirement, since without distinctiveness the trade dress would not ‘cause confusion . . . as to the origin, sponsorship, or approval of [the] goods,’ as the section requires.”[94] Two legal standards of distinctiveness in trade dress law have evolved in case law. This branching evolved in Wal-Mart Stores, Inc. v. Samara Brothers, Inc.[95] In Wal-Mart, the Supreme Court ruled that the distinctiveness of product design is measured differently from that of product packaging.[96] The difference between product packaging and product design is somewhat elusive. Product packaging refers to the appearance of the package a product comes in, as well as to interior design schemes found in stores, restaurants and hotels.[97] In order to be eligible for trade dress protection, the product packaging must meet the “inherently distinctive” standard, set in the Court’s 1992 ruling in Two Pesos, Inc. v. Taco Cabana Inc.[98] “Inherently distinctive” trade dress suggests a particular source to consumers without need for repeated association.[99] Product design, in contrast, refers to the way a product looks and feels. Product design can only be distinctive enough to warrant trade dress protection if it has acquired “secondary meaning.”[100] Secondary meaning refers to a level of distinctiveness acquired by longstanding use in the market, as opposed to the inherent design of the site.[101] In part because it must evolve over time, secondary meaning is intrinsically more difficult to demonstrate than inherent distinctiveness. Given the case law, it is unclear whether websites must be inherently distinctive or have acquired secondary meaning. One argument posits that because websites are more akin to storefronts than to tangible products, the inherent distinctiveness standard of Two Pesos is more appropriate. On the other hand, that standard may be hard to apply to website design in practice. In a commercial world where many different websites may have similar general layouts, as dictated by principles of efficient user experience, what should qualify as “inherently distinctive”? The few published decisions applying trade dress law to website copying suggest that the owners must demonstrate secondary meaning to state a trade dress claim, although no published decision has discussed whether this standard logically applies to websites in particular.[102]
3. Secondary Meaning in the Website Context
Courts consider several factors in order to determine whether secondary meaning exists, including:
i. Whether consumers in the relevant market associate the trade dress with the maker; ii. The degree and manner of advertising under the claimed trade dress; iii. The length and manner of use of the claimed trade dress; iv. Whether the use of the claimed trade dress has been exclusive; v. Evidence of sales, advertising, and promotional activities; vi. Unsolicited media coverage of the product; and vii. Attempts to plagiarize the trade dress.[103]
In Wal-Mart, Justice Scalia noted that it was entirely reasonable to require proof of secondary meaning in order to secure trade dress protection. Questioning the value of an “inherently distinctive” standard for product design, he observed that:
[T]he game of allowing suit based upon alleged inherent distinctiveness seems to us not worth the candle. That is especially so since the producer can ordinarily obtain protection for a design that is inherently source identifying (if any such exists), but that does not yet have secondary meaning, by securing a design patent or a copyright for the design . . . . [104]
In other words, the Court reasoned that any inherently distinctive design could be protected as well by copyright or by a design patent. The implication seems to be that manufacturers could seek relief from infringement of their allegedly proprietary product designs by resorting to copyright or patent law instead of or in addition to trade dress law. Unfortunately for website owners, as we have seen, copyright does not protect web sites effectively. It is also unlikely that a website would qualify for a design patent because it is not an “ornamental design for an article of manufacture” as 35 U.S.C. § 171 requires.[105] It is tempting to question the relevance of secondary meaning in today’s commercial context. One factor traditionally used to demonstrate secondary meaning is length of time the product design has been used in the market. Length of time in the modern marketplace, however, is not an efficient proxy for consumer identification. On the Internet, companies that have only been in business for a short time, and thus have only had operational web sites for a relatively short time, can develop stronger consumer associations than more established companies with less striking or resonant websites.
4. The Difficulty of Proving Non-Functionality
Protectable trade dress cannot be functional. The Ninth Circuit Court described the functionality test as follows:
“A product feature is functional if it is essential to the product’s use or if it affects the cost and quality of the product . . . . “Functional features of a product are features which ‘constitute the actual benefit that the consumer wishes to purchase, as distinguished from an assurance that a particular entity made, sponsored or endorsed a product.’”[106]
This raises a difficult set of issues for website protection. Every company wants its website to be functional, in that it encourages consumer use, but the overlap between website functionality and the “benefit the consumer wishes to purchase” can vary greatly. While some websites merely describe the product the customer wishes to purchase, other websites, such as search engines, review sites or booking sites, are the product the customer wishes to purchase. Accordingly, it is impossible to impose a single trade dress standard for all website look and feel cases with regard to their functionality. Courts have approached the non-functionality requirement in website cases in different ways. At least one court has denied trade dress protection for a website based on its functionality. In an unpublished 2008 opinion, the District Court of New Jersey analyzed whether visuals illustrating various features of the bond market on the plaintiff’s website were protectable under copyright or trade dress.[107] Because the visuals were inextricably linked to their function, the district court held that they could not meet the non-functionality requirement of trade dress. It found, however, that these functional features were entitled to copyright protection because of their creativity and “unique expression.” The decision did not extend copyright protection, however, to the look and feel of the website as a whole. Few cases discuss the functionality as a potential bar to trade dress protection of websites. In SG Services, Inc. v. God’s Girls, plaintiff (“SG”) owned an adult services web site and claimed that the defendant (“GG”) had copied various elements of SG’s web site.[108] Among other claims, SG asserted that GG had infringed its trade dress by using (1) the color pink and (2) certain stock phrases, including “they’re the girl next door” and “so you wanna be a suicide girl?” on its website. The SG Services court agreed with the plaintiff that the color and stock phrases were “merely adornment” and therefore eligible for trade dress protection.[109] Non-functionality is somewhat easier to assess in the context of a website promoting a physical product. In Card Tech International v. Provenzano, for example, the District Court for the Central District of California concluded that both the website for a cleaning card, which is used to clean the slots of credit card machines and other card readers, and the packaging of the card were nonfunctional and qualified as trade dress.[110] “There is nothing about the layout or overall appearance of the trade dress, both packaging and website, that enables the package or website, respectively, to function. […] The content of the website can be arranged differently; the package can have a different appearance. Neither the appearance of the packaging nor the website provides a benefit apart from identifying the source of the product.”[111] The court concluded on this basis that protecting the website as trade dress would not “impair competition in the industry.”[112] That said, courts have allowed trade dress claims to go forward where the copied website provided a service as well. In Conference Archives v. Sound Images, an unpublished case from the Western District of Pennsylvania, a competitor admitted copying a product that “displays recorded video within a web browser.”[113] The court ruled that the presence of some functional features in the website does not exclude the possibility of trade dress protection. The determination of functionality, the court held, should properly focus on the “look and feel” of the website overall than on the function of its individual elements. “Look and feel” could serve “several possible functions,” only some of which might bar trade dress protection: First, it can provide ‘branding, helping to identify a set of products from one company, [and s]econd, it [can] increase[] ease of use, since users will become familiar with how one product functions (looks, reads, etc.) and can translate their experience to other products with the same look and feel. If a ‘look and feel’ becomes functional, it can no longer avail itself of trade dress protection. Thus the look and feel must be distinctive, but nonfunctional. But, the mere presence of functional elements does not by necessity preclude trade dress protection. Rather, a web site may be protectable ‘as trade dress if the site as a whole identifies its owner as the creator or product source.’[114] The court’s observation that the look and feel of a website must be “distinctive, but non-functional” serves as a guide for other courts assessing the potential for trade dress protection.
5. Likelihood of Confusion in Look and Feel Cases
The last requirement for trade dress infringement is proof of likelihood of consumer confusion. While the specific factors vary among the circuit courts, the Ninth Circuit’s eight-factor test to assess this likelihood, including the following, is illustrative:
1. The similarity of the two trade dresses; 2. The relatedness of the two companies’ products or services; 3. The advertising or marketing channels each party uses; 4. The strength or distinctiveness of the plaintiff’s trade dress; 5. The defendant’s intent in selecting the mark, including evidence of intent to infringe; 6. Evidence of actual confusion; 7. The likelihood of expansion in product lines leading to more direct competition down the line; and 8. The degree of care that consumers are likely to use.[115]
Likelihood of confusion plays an important role in website look and feel cases. In Faegre & Benson LLP v. Purdy,[116] the plaintiff law firm sued a group that had copied its website, alleging trade dress infringement. Although the defendant had labeled every page of its website as a “parody,” the plaintiff alleged that the defendant’s website “feature[d] the same color scheme, layout, buttons, fonts and graphics” as its own.[117] The court concluded that the “overall dissimilarity” between the two sites, however, created a “low likelihood of confusion,” and the parody disclaimer further reduced that likelihood.[118] Consumer confusion on fake websites can cause real harm to the public as well as the website owners. As noted above, the Department of Homeland Security has launched an investigation into scores of knockoff websites because of the harm that results to defrauded consumers. One would expect state Attorneys General to investigate these knockoff websites as a matter of consumer protection. As more government agencies step up their investigations, it may become easier to develop proof of actual consumer confusion. Although trade dress is imperfectly suited to protect the look and feel of websites, it is the most sensible basis for an improved test for website look and feel infringement. The complexities inherent in proving secondary meaning, establishing non-functionality, and validating evidence of actual consumer confusion required by traditional trade dress law in the context of website claims suggest that a new solution is needed to address this unique form of infringement. The multi-factor test described in Part III will clarify many of these issues.

D. The Threat of Copyright Preemption in Look and Feel Cases

One problem resulting from the lack of clarity surrounding look and feel cases is the ongoing question of copyright preemption. Because neither copyright nor trade dress provides a sure basis for protecting the look and feel of websites, plaintiffs have asserted both claims at once. When they do so with insufficient clarity, they face the threat of copyright preemption. “Claims for copyright infringement under the Copyright Act and claims for Trade Dress Infringement under the Lanham Act are mutually exclusive,” one court explained. “Plaintiff[s] cannot receive a remedy for both.”[119] Whether or not a plaintiff claims copyright infringement, its claims may be preempted if the defendant can prove that the gist of its claims is within the scope of copyright law. Courts have “long limited application of the Lanham Act so as not to encroach on copyright interests.”[120] The preemption defense played a key role in Blue Nile v. Ice.com.[121] Blue Nile developed a unique website that allows consumers to search for a specific diamond from its inventory, and then select a setting for the diamond, resulting in a customized piece of diamond jewelry. The diamond search feature of Blue Nile’s website allowed consumers to perform a search using a number of preferences, including carat size, cut, and clarity, which are presented in a distinct layout. Blue Nile alleged that the defendant, Ice.com, copied its proprietary search tool and incorporated that tool it in its own website. It also alleged that Ice.com effectively infringed the “look and feel” of its website. While these were two distinct allegations, they are in some ways hard to separate in fact. The alleged copying of various elements was integral to copying the overall look and feel of the website. Blue Nile asserted both copyright and trade dress claims against Ice.com, in addition to a number of state law claims. Ice.com moved to dismiss the trade dress claims on the basis that relief for the gist of those claims was available under the Copyright Act. If there is an adequate relief for a claim under the Copyright Act, defendants argued, relief under the Lanham Act should be preempted. The court did not agree. It acknowledged that “[c]ourts limit application of the Lanham Act in areas traditionally occupied by copyright or where the copyright laws ‘provide an adequate remedy.’”[122] It also observed that “[p]arallel claims under the Copyright Act and Lanham Act, however, are not per se impermissible.”[123] That was not the end of the preemption analysis. “Although the Ninth Circuit has not addressed the issue of whether a website’s “look and feel” is protected under § 102, other circuits have held that a work may be unprotected by copyright under § 102(b) and yet be within copyright’s subject matter for preemption purposes.”[124] In effect, the court warned, certain elements might fall into a legal no-man’s land, where they could not be protected by either copyright or any other intellectual property law. A critical issue for the court, then, was whether allegations of copying the design and presentation of specific search features on a website should be analyzed under trade dress or copyright law. While the look and feel of a website might be protected by trade dress, the court reasoned, more evidence was needed to isolate exactly what constituted the look and feel of the website at issue.[125] The defendant also asserted copyright preemption as a basis for its motion to dismiss in Salt Optics v. Jand, but the court denied its motion. Relying in part on Darden v. Peters, and apparently in part on intuition, the court held that look and feel of a website as a whole cannot be copyrighted: “Although the Ninth Circuit has yet to rule on this issue, existing precedent and common sense indicates that, absent special circumstances, a website’s overall “look and feel” is not entitled to protection under the Copyright Act.”[126] Because it falls outside of the scope of copyright, the court ruled, there can be no preemption of that type of claim.[127] It was possible, the court observed, to obtain copyright and trade dress protection at the same time without running afoul of preemption standards. “Indeed, relevant to the present case, a website may contain original works that infringe another’s copyright and simultaneously present an overall “look and feel” that violates another’s trade dress.”[128] Adopting a multi-factor test for look and feel infringement rooted in trade dress law will mitigate the risk that a website owner’s look and feel claims will be preempted by copyright law. It will do so by dispelling the confusion that currently surrounds the proper judicial treatment of website infringement and clarifying the proper scope of any copyright claims the website owner may also assert. Until courts adopt some form of the multi-factor test, plaintiffs in look and feel infringement cases can best avoid dismissal based on copyright preemption by pleading their trade dress and copyright claims in the alternative. In Sleep Science Partners, for example, the “either/or” nature of the plaintiffs’ claims compounded the problem of determining preemption. “Plaintiff may have plead its trade dress claim in the alternative, accounting for a possibility that its website may not be copyrightable,” noted the court, but it did not. The court found it hard to tell where the trade dress claim ended and the copyright claim began. “[If] it intends to maintain a Lanham Act claim based on its website’s “look and feel,” in addition to articulating clearly the website features that comprise its alleged trade dress, Plaintiff must plead a “look and feel” that does not fall under the purview of the Copyright Act.”[129]

E. New Technology Requires a New Framework

Rather than offering a coherent precedent for litigants to follow, look and feel infringement cases offer inconsistent and incomplete reasoning on the best approach to website protection. In general, they compound rather than resolve the questions surrounding the legal protection of websites’ look and feel. Why has this issue been so difficult to resolve? One possible explanation is that websites represent a relatively new hybrid of product, text, service and marketing functions. They integrate decorative elements and functional ones in a way that is fundamentally novel and that has never required protection before. The appearance of a product used to be relatively straightforward and limited to two or three dimensions. Whether it was a can of soda or a motorcycle, each item looked more or less the same to everyone. Websites, however, are mutable. They often have multiple levels, and their specific appearance depends on the user’s interaction. Complicating this further is the fact that websites may look different depending on where and how they are viewed. Two consumers may see even the same page of a website differently if, for example, one of them is viewing the website on an iPad and the other is viewing it on an iPhone. The shape of the screen and its orientation (vertical or horizontal) will vary across devices. On tablets and phones, the view may change depending on how the device is held. The characteristic look and feel of a site may not be defined by a static screen, but by something that can be generalized across different devices.

III. Proposing a Trade Dress-Based Solution for Look and Feel Infringement

If the two most obvious doctrinal homes for a solution are copyright and trade dress law, as discussed above, the nature of the doctrines makes it clear that the latter is more appropriate. One productive way to think about these two areas is the difference between protecting expression, through copyright, and protecting impression, through trade dress. While websites express many things, the gravamen of this problem is protecting the user’s first impression of the source of the site. That is what the Lanham Act was written to protect. Trade dress, with its emphasis on impression rather than expression, source identification and consumer confusion, is inherently better suited to protect website look and feel. Grounding a new solution in trade dress law might happen in either of two ways. One option would be to amend the Lanham Act to address the infringement of website trade dress specifically. Laws do evolve to address changes in technology, although they generally move much more slowly than technology itself. In 1999, for example, Congress passed the Anti-Cybersquatting Consumer Protection Act, amending the Lanham Act to prohibit the registration and use of domain names based on another person’s trademark.[130] In 2003, Congress amended the Criminal Code to make computer hacking illegal.[131] While there may be a legitimate need for a Lanham Act amendment to protect website look and feel, the urgency of the problem demands another potential solution. An alternative idea is to encourage courts to adopt an infringement test that is well suited to the unique nature of websites and yet grounded in the traditional concerns of trade dress law. This test might resemble, in its basic form, the multi-factor test for likelihood of confusion that courts have developed based on the Polaroid Corp v. Polarad Electronics case.[132] One form of such a test follows.

A. A Multi-Factor Test for Website Look and Feel Infringement

A test to determine whether the look and feel of a website has been infringed should take a number of factors into account. The range of factors should be calibrated to ensure that a court does not restrict fair competition in the process of protecting and encouraging innovation in website development. An outline of the factors looks like this:
1. Overall Similarity

a. Fonts and Formatting

b. Color Scheme

c. Sounds, Animations, Visual Effects

d. Symbols, Logos and Marks

e. Layout and Arrangement

f. User Experience Design

2. Proximity of Products or Services in the Relevant Market(s) 3. Intentional Copying 4. Likelihood of Consumer Confusion
In taking all of these sub-factors into account, no single element should be dispositive. It is possible to have confusingly similar websites even when, for example, the colors of the two websites are somewhat different. The determination of overall similarity should be holistic. In addition, the trier of fact should be guided by expert testimony from user experience designers, as described in more detail below.
1. Overall Similarity
The first factor is the similarity of the overall impression between the two websites, when comparing views on similar devices. The look and feel of a website is the result of multiple elements working together in a complex way. The imperative, stated in cases like Sleep Science Partners, for plaintiffs alleging trade dress infringement to explain which elements of the website work together to create that proprietary look and feel reflects that fact.[133] In Salt Optics v. Jand, the court required the website owner to provide both a detailed list of the elements giving rise to its website’s distinctive look and feel and an explanation of how they work together.[134] The court granted Jand’s motion to dismiss the trade dress claims, with leave to amend, on the grounds that Salt Optics did not give sufficient notice as to what constituted the look and feel of the website. Although the plaintiff had listed some elements of its alleged trade dress, the court observed that “absent from the FAC is any attempt to synthesize these elements in order to describe the way that the listed elements, in conjunction, combine to create the website’s protectable ‘look and feel.’ The lack of any such synthesis, in conjunction with Plaintiff’s expressly stated intention to incorporate other elements of the website into the trade dress claim at a later stage, gives the court pause.”[135] When Salt filed an amended complaint, Jand moved to dismiss again.[136] This time, however, the court was satisfied with Salt’s amended claims.[137] It noted with approval that Salt had submitted a “fixed and finite” list of website elements, helpfully juxtaposing images from Salt’s website with images from the competing website so that the court could appreciate the overall similarities between the two. Because it is difficult to assess overall similarity without more specific points of comparison, the test should include several sub-factors to help the court assess similarity.
i. Fonts and Formatting
One such sub-factor concerns the fonts used on the senior website and the junior website. The court should compare the specific fonts used in each site, taking into account any customization of the fonts and any associated text formatting. Many corporations customize fonts for their marketing materials, [138] including website texts, often at great expense[139]. Examining the specific fonts used on each of two competitive websites can increase the granularity of the comparison process.
ii. Color Scheme
Another sub-factor that helps a trier of fact assess overall similarity is the website’s color scheme. As the court noted in Conference Archives, website colors can be ascribed precisely because they are determined in accordance with a specific hexadecimal notation system. That is, each color on a website has a six-digit code. Accordingly, when a court compares the color scheme of two websites, it can make a more specific comparison than “light blue vs. medium blue.” The court’s comparison should include not only the exact colors of each site but the predominance of each color on the websites. In Conference Archives, the court parsed the technology behind the look and feel of a website in more detail than any court had done before. The court noted that there are “three technical elements that determine how a web site appears: colors, orientation and code elements.”[140] It explained that the colors used on websites can be described more exactly than traditional paint colors because of their digital nature. Website colors are coded according to a hexadecimal notation system that converts every color into a six number code known as a hex triplet. As a result, the court noted, it was possible to reach a greater degree of specificity when comparing the colors of two websites. This greater specificity, the court noted, allowed a greater degree of certainty about potential copying: “While some colors are more common than others, if two products utilize the same exact hex triplet, there is a likelihood that the color was copied.”[141] An effective comparison of website colors will include not only their technical differences but also the resulting difference in user experience.[142] Website colors are chosen carefully, not only to reflect firm branding but also to improve user experience and maximize accessibility (for example, to color-blind users). Effective use of color is integral to good website design.[143] The impact of different colors on website users has been well documented, but the consequences of certain color changes may not be immediately obvious to a trier of fact.
iii. Sound Effects and Animation
A third sub-factor is the similarity of sounds, animations, and other effects associated with the two websites at issue. As an increasing number of websites incorporate unique sound effects, fixed animations, and embedded videos, these should be taken into account when comparing the overall look and feel of a website. Although none of these would be apparent from a singular screen shot of a website (or even a series of screen shots), they all contribute to the overall user experience and the likelihood of consumer confusion.
iv. Symbols, Logos and Other Marks
In addition to the sounds and animations, the comparison must also take into account the similarity of any symbols, logos, marks, motifs, or other non-textual visual elements on the site. The court need not resolve the question of trademark infringement to find that similarities between marks contribute to the overall similarity of two websites’ look and feel. In Athleta v. Pitbull, for example, the court compared the logos of the two sites.[144] In mid-2012, Pitbull had affixed an “athletic” logo to its goods that closely resembled that of Athleta.com:
Original Athletica Logo
By the time of the lawsuit, Pitbull had changed its logo to look somewhat more distinctive.
Later Athletica Logo
Even with the change in Athletica’s logo, the court found that the similarity between the two marks contributed to consumers’ likelihood of confusion. Importantly, the court ruled that the marks should be viewed in the larger context of the websites overall. “[T]he marks themselves are only part of the inquiry. These marks coexist in a marketplace that has changed as a result of defendants’ gradual encroachment on plaintiff’s marks. […] [T]his encroachment has taken many forms, including defendants’ … generally adopting a similar look and feel to plaintiff’s website for their athletica.net website.”[145] The court’s reasoning has merit. Whether a competitor’s mark infringes a trademark is a separate inquiry from whether the use of that competitor’s mark contributes to the overall similarity of the look and feel of the websites at issue. A competitor’s use of marks should play a role in the look and feel assessment, but as with every other factor, should not be dispositive in itself.
v. Layout and Arrangement
Moreover, the court should consider the layout and arrangement of all content on the website, including its menus, navigational elements and visual elements, even though many of those elements may themselves be functional. The fact that graphic layouts can be described by reference to the number of pixels between elements might allow the court to infer copying by comparing pixel distance instead of merely eyeballing similarities between layouts.[146] Importantly, the court’s comparison should ensure that the websites are viewed on comparable devices. Many websites are designed to adapt their appearance to the device that is being used to view them, like technological chameleons. This aspect of website development is called responsive design. Responsive design is an increasingly common element of website design. Its purpose is to ensure that users have a consistent, intuitive experience of the website, no matter what device it is viewed on. Responsive design also helps website owners address differences in detail across viewing platforms. Because laptop screens allow users to view a website in relatively greater detail than a smart phone, for example, a responsively designed website will display different but equivalent displays on each device. Although the specific display will differ from device to device, the overall look and feel of the website will be the same.
vi. User Experience Designer Testimony
The few issued look and feel decisions suggest that courts are not uniformly well equipped to assess the effect of these factors on the user’s experience of a website. Indeed, it can be difficult for any lay person to appreciate the ways in which graphic and interactive factors affect the overall user experience of a website. The interactivity of a website adds another dimension to what has traditionally been a fairly straightforward comparison of appearance in trade dress cases. In Sleep Science Partners v. Lieberman, the court suggested that the “look and feel” of a website is something more than, or different from, a rote list of the website’s constituent elements. This raises the possibility that courts would benefit from reliable evidence as to what, exactly, gives rise to the specific look and feel of a website. Plaintiffs may benefit from introducing, for example, expert testimony from user experience designers. These designers can testify about the impact of connections among specific website elements on the look and feel of a website from the user’s point of view.[147] They can also help the court assess usability as a potential element of the website’s overall look and feel. Such testimony would be more helpful to the trier of fact than the court’s own subjective impressions.[148] Just as courts consider expert testimony in assessing economic damages, it may be helpful for a trier of fact to receive testimony from an expert in website design. Such expert testimony should include (1) an exhaustive list of all website elements that give rise to the unique look and feel of the website and (2) a description of how each one of these elements affect user experience and contribute to the users’ ability to connect the website with its source. The list should be finite and final. It is important to avoid disclaimers that imply the possibility of later amendment, such as “by way of illustration, not limitation.” As Salt Optics v. Jand demonstrates, such open-ended claims provide an easy mark for the defendants’ motion to dismiss. A lack of finality in the list of alleged trade dress elements may well be read as a lack of sufficient notice for the defendant. While the defendant will submit its own supporting expert testimony, as in Markman hearings, the detailed descriptions provided by both sides will help the trier of fact reach a more informed decision.
i. Proximity of Products or Services in the Relevant Market(s)
In addition to overall visual similarity, several other indicia of likely copying should factor into the court’s analysis. One additional factor should be the proximity of the products and/or services offered on the senior and junior websites. As with trademarks, the likelihood of consumer confusion is heightened when the two competing websites are in the same field. Because similar products can be marketed in the same way, the extent of similarity among other websites in the same industry or field should be taken into account as well.
ii. Intentional Copying and Other Fraudulent Measures
Any evidence of intentional copying, including replication of HTML and/or CSS code, should play into the court’s analysis as well.[149].[150] Unlike traditional print media, websites can be replicated by copying code. As discussed above, there is a thriving website copying industry, and providers of such services are ubiquitous. While intent has been criticized as a factor in some kinds of IP infringement cases,[151] courts should consider it here because of the deterrent impact it would likely have on future infringement. Reviewing evidence of intentional copying would allow the court to consider the extent to which the website copying was strategic, as opposed to accidental. Fake websites can use a variety of strategies to lure consumers into providing their credit card information and other sensitive data. One common strategy is “typo-squatting,” in which the infringer registers the copycat website at a domain name that is a close misspelling of the original site, hoping that consumers who mistype the domain name will not notice the difference. [152] Another is the use of meta-tags, in programs such as Google AdWords, which drive traffic on search engines to a knockoff website instead of the original.[153]
iii. Likelihood of Confusion
As with more traditional Lanham Act claims, evidence of likely consumer confusion should play a central role in the court’s analysis. The court should consider evidence of actual consumer confusion, as indicated by customer surveys and other data, in addition to likely confusion. As with all such data, the weight accorded to these reports should depend in part on the methodology used. While evidence of actual confusion may be the best indicator of likely confusion, it may also be the hardest to prove. User comments tending to suggest that the users are confused about which website they have visited may be tempting to include in a complaint. Because so many people use fictitious or partial names when commenting on websites, however, it may be nearly impossible to verify their identity, let alone get them to sign sworn testimony. In order to prove likelihood of confusion, as required for trade dress infringement claims, plaintiffs should submit side-by-side comparisons of their original websites and the alleged infringing site. A comprehensive comparison of the two websites will help the court understand every point of similarity. Including technical details for each page of the website, including the hexadecimal notation of the colors used and the pixel distance between elements, will also support a finding of likelihood of confusion.[154] A side-by-side comparison, however, illustrates the effects of these technical details on the consumer and, in turn, the likelihood of confusion.
iv. Additional Considerations
One issue that should not play a role in the court’s decision is the proximity of competitor’s site in search engine results. Search results differ based on a variety of factors, including the skills of a coder in search engine optimization and the geographic location where the search is being performed. The fact that two websites come up next to or near each other in a search engine result should not be considered evidence of “look and feel” infringement or its absence.

B. Designing an Effective Damage Scheme

Designing a damages scheme that provides a sufficient deterrent to website copying is a particularly important issue for further study. Because it is so easy to copy another website, as we’ve seen, courts must ensure that their damages awards are severe enough to deter such copying. But what is the most effective and efficient form of penalty for copying the look and feel of a website? While a full answer to this question deserves greater study, some starting points are clear. Courts may adapt remedies for website infringement from notable trade dress cases. One noteworthy example is the trial court’s penalty in Taco Cabana v. Two Pesos. The Two Pesos restaurant chain, found guilty of willful trade dress infringement, was required to post a sign on the interior and exterior of each of its locations for one year, notifying customers that it had been found guilty of copying Taco Cabana’s concept.[155] Adapting this “sign of shame” remedy to websites, a court could require an infringing website to post a banner advertisement explaining the verdict and directing users to the original website. At least one court has issued a similar directive.[156] Some observers have characterized changing a website’s colors as a relatively simple process, and one that is less time consuming than redesigning a product or a store interior. On that basis, it is tempting to conclude that requiring a look and feel infringer to redesign a website, may not be as effective a deterrent as it might be in the retail context:
Losing a trade dress claim involving a tangible product like a children’s toy could cost the copycat millions in packaging redesign, withdrawing and destroying infringing packages, revising promotional materials, and retooling factories. By contrast, losing a web site trade dress case may mean little more than asking a junior IT consultant to spend a few hours changing the site’s design and color scheme.[157]
Although a website can be changed quickly, quick changes are not always effective from a marketing or user experience perspective. The perspective quoted above on the time it takes to revamp a website is too dismissive, and reflects a misperception that good website design is arbitrary. In fact, compelling website design is as much science as art. Most companies hire professional website designers who understand that the apparently simple act of “changing the site’s … color scheme” is not so simple. As noted above, for example, the choice of color can have a significant psychological effect on a user’s experience of the site, so a site-wide color change cannot be undertaken lightly without changing the potential effect on consumers.[158] Even so, changing a website’s colors may not be enough to distinguish its look and feel from a competitor if other graphic elements are identical. StudiVZ, the knockoff website that incited Facebook to sue, featured red as its predominant color instead of Facebook’s blue – yet Facebook still concluded that the similarities between the sites were troubling enough to merit a set of lawsuits. The scope of a proper remedy requires attention to the realities of website design. Some courts have issued injunctions that go too far in response to look and feel claims, without regard to these concerns. The Athleta v. Pitbull case, for example, suggests the dangers of an insufficiently specific injunction in remedy for look and feel infringement. In that case, Athleta successfully argued that it was suffering irreparable harm as a result of Pitbull’s look and feel infringement. The court issued a preliminary injunction forbidding Pitbull from, among other things, using “any graphic, textual or other design elements on athletica.net website that are similar to plaintiff’s website.”[159] The terms of that injunction are troublingly vague. What constitutes “graphic, textual or other design elements,” for example? Athleta’s website, like most, contains an elliptical search button, links to customer support information, and other graphic and textual elements that may not contribute to its distinctive look and feel but are essential to a legitimate consumer-facing website. Prohibiting another website from using any of those elements prevents that website from competing fairly in the online marketplace. Another example of courts’ overreaching in the definition of a protectable look and feel comes from the Conference Archives decision.[160] Unlike earlier decisions concerning the look and feel of a website, the court suggested that “look” and Feel’ be considered separately. In distinguishing a website’s “look” from its “feel,” the court noted that websites are unlike posters, in that they involve user interaction. It went on to describe a website as having a series of functional “layers.” One layer, it noted, was the visual design or appearance of the site on the screen. A second layer is the user’s interaction with the website, or the interface design. The court characterized the visual design as the “look” and the interface design as the “feel” of a website.[161] Functioning in harmony, the court noted, these elements can give rise to a protectable website “experience:” “Combined, the ‘look’ and ‘feel’ coalesce to form a protectable virtual experience that provides the user with ‘cognitive absorption’ […]. This interface promotes the efficient, predictable, and reliable use of a web site. The hallmark of a protectable “look and feel” trade dress is a graphical user interface that promotes the intuitive use of the web site.[162] This last statement reflects a troubling view of protectability. Extending protection to a graphical user interface because it “promotes the intuitive use” of a website is not in the best interests of consumers. In general, all web sites should be intuitive and easy to use. The professional fields of user experience design and computer-human interaction are dedicated in part to maximizing the intuitive use of websites. To be sure, two well designed websites that are not confusingly similar can both be easy to use. There should be no protection for this essentially functional aspect of a website. Ease of use is one aspect of website design that should be ubiquitous rather than proprietary.

IV. Additional Issues

There is a rich stream of issues related to the look and feel of websites that is beyond the scope of this article. Additional scholarship on these issues will improve our understanding of the best approach to protecting websites from illicit copying. One critical issue is the extent to which global intellectual property laws can protect U.S. companies against website look and feel copying abroad. As the Facebook vs. StudiVZ case demonstrates, the websites of U.S. companies may be copied overseas without an obvious, effective remedy. Even if U.S. law ultimately provides a satisfactory defense against website look and feel copying, the borderless nature of the Internet and global commerce in general demands a global response to the problem. Whether the problem can be remedied adequately through the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) binding on all WTO members, or requires protection through a different treaty or another form of intervention, bears further study. Given the borderless nature of the Internet, one critical area for further study might be a comparison of the legal protection available for the look and feel of websites in other countries and in the European Union. Facebook’s unsuccessful attempt to sue the creators of StudiVZ in Germany, their host country, invites questions as to how any United States corporation might protect the look and feel of its websites abroad. Another question is the extent to which the World Intellectual Property Organization is a proper venue for resolving look and feel claims. In at least one case, the WIPO agreed to transfer the domain name of a knock-off website to another party in response to a look and feel infringement claim.[163] The complainant owned LeSportsac, a trademark used on women’s handbags and luggage in use since 1974. In August 2012, the respondent, an Arizona resident, registered the name “Lesportsacaustralia.com” for a website carrying counterfeit LeSportsac goods. In evaluating LeSportsac’s claims, the arbitrator noted that “Respondent’s site shares many of the distinct elements of the ‘look and feel’ of Complainant’s website, including the prominent use of the LESPORTSAC mark at the top left and a vertical column on the left side of the home page in which LeSportsac products are divided by category.”[164] Finding that the respondent used the website in bad faith, the arbitrator ordered the transfer of the Lesportsacaustralia.com domain name to LeSportsac.[165] An additional area of research might be to compare the effectiveness of private law remedies, including breach of contract claims, with some intellectual property theories described in this article as a basis for protecting the look and feel of websites. The provision that “no part of this website may be reproduced or transmitted” is often included in a website’s “Terms and Conditions.”[166] Competitors who access websites for the purpose of copying them arguably subscribe to those terms. Website owners therefore may protect against illicit copying by asserting breach of contract claims against such competitors. A particularly interesting topic for smaller companies is the extent to which they may be liable for website copying based on their adaptation of a standard website template. Companies such as Hubspot and WordPress offer “one stop shopping” convenience for companies in need of a new website. While the range of basic website models they offer may be impressive, it is limited. It would seem to be only a matter of time before the owner of one website finds a competing website developed from the same professional source. While adopting a specific test can clarify the legal issues surrounding website look and feel infringement, it is an imperfect solution. The issue of copyright preemption, for example, is still troubling. The Copyright Act intended to provide an exclusive remedy for anything subject to copyright protection, and it may be difficult in practice to draw the line between copying several individually copyrightable web pages and copying the look and feel of a website. A more detailed trade dress law, no matter how carefully crafted, cannot encroach on that territory. If courts were to grant copyright protection for creative and original compilations on websites, it would be more difficult for website owners to argue that their trade dress claims were not preempted by the Copyright Act. As always, in matters of intellectual property protection, the legal system must strike a delicate balance. If the courts were to grant website designers too much protection, that practice could result in a monopoly of highly intuitive, useful website designs. On the other hand, too little protection could stifle innovative website design, increase the chances of consumers being defrauded by counterfeit websites, and impede the normal growth of e-commerce.

Conclusion

There is a critical gap in the legal protection available for one of today’s most valuable business assets: the consumer-facing website. Although every company strives for a unique and memorable website, there is a growing threat that what makes a website memorable – its “look and feel” – may be copied wholesale by competitors without clear legal recourse for the website’s owners. Website look and feel protection falls into a chasm between copyright on one hand and trade dress on the other, neither of which adequately addresses this modern problem. The lack of effective protection for the look and feel of websites presents a serious legal and economic threat. The cost to businesses, in the forms of revenue, trust and goodwill, of such unlicensed copying is vast. The cost to consumers, who provide confidential data and payments based on misimpression of commercial source, has sparked investigations by the Department of Justice. This article has explained the nature of the problem, analyzed recent case law, explored the limits of copyright and trade dress as bases for protecting website look and feel, and proposed a multi-factor judicial test for assessing look and feel infringement. The underlying thematic differences between copyright and trade dress law – in essence, the difference between protecting commercial expression and protecting consumer impression – suggest that trade dress is the more appropriate basis for look and feel protection. Adopting a trade-dress based multi-factor test will increase the stability of intellectual property protection for the look and feel of websites and provide greater security for businesses and consumers alike.
* Assistant Professor of Business Law at Bentley University in Waltham, Massachusetts. The author gratefully acknowledges the assistance generously given by participants in the 2013 American Business Law Journal Invited Scholars Colloquium, who discussed a draft of this paper. The author can be reached at ebrown1@bentley.edu.
[1] See, e.g., H.R. Rep. No. 94-1476, at 54 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5667 (“The term ‘literary works’ . . . includes . . . computer programs to the extent that they incorporate authorship in the programmer’s expression of original ideas, as distinguished from the ideas themselves.”); accord Atari Games Corp. v. Nintendo of Am., Inc., 975 F.2d 832, 838 (Fed. Cir. 1992).
[2] See infra note 23.
[3] See, e.g., Allen v. Ghoulish Gallery, No. 06CV371 NLS, 2007 WL 4207923 (S.D. Cal. Nov. 20, 2007).
[4] See, e.g., Card Tech Int’l, LLLP v. Provenzano, No. CV 11-2434 DSF PLAX, 2012 WL 2135357 (C.D. Cal. June 7, 2012).
[5] See, e.g., Lisa M. Byerly, Look and Feel Protection of Web Site User Interfaces: Copyright or Trade Dress? Santa Clara Computer & High Tech. L.J. 221, 246 (1997); Xuan-Thao N. Nguyen, Should It Be a Free For all? The Challenge of Extending Trade Dress Protection to the Look and Feel of Web Sites in the Evolving Internet, 49 Am. U. L. Rev. 1233 (2000); Gary Franklin & Kevin Henry, Protecting Your Company’s Website: The Application of Intellectual Property to the Digital Marketplace, 37 Vt. B. J. 28 (2012).
[6] The term “look and feel” has evolved in the case law. See, e.g., Blue Nile, Inc. v. Ice.com, Inc., 478 F. Supp. 2d 1240, 1241-42 (W.D. Wash. 2007); Conference Archives, Inc. v. Sound Images, Inc., No. CivCiv. 3:2006-76, 2010 WL 1626072, at *11 (W.D. Pa. Mar. 31, 2010); Sleep Sci. Partners v. Lieberman, No. 09-04200 CW, 2010 WL 1881770, at *8 (N.D. Cal. May 10, 2010); Athleta, Inc. v. Pitbull Clothing Co., Inc., No. CV 12-10499-CAS FMOX, 2013 WL 142877 at *7 (C.D. Cal. Jan. 7,, 2013).
[7] Conference Archives, Inc., 2010 WL 1626072, at *1515.
[8] The issue of look and feel infringement is different from that of cybersquatting. Two websites legitimately may have similar domain names even if they have similar or identical business models. Unlike trademarks, domain name registration does not require a unique field of use. Look and feel infringers need not have similar domain names in order to confuse customers into false associations. Similarly, cybersquatters need not have visually similar websites to the websites from which they divert traffic.
[9] Purchasing Google Adwords or using other tagging strategies can maximize the success of this mimicking strategy. Scholars have debated whether doing so should support additional claims of trademark or copyright infringement. See, e.g., Rachel Friedman, No Confusion Here: Proposing a New Paradigm for the Litigation of Keyword Advertising Trademark Infringement Cases, 12 Vand. J. Ent. & Tech. L. 355 (2010), and Stephanie Lim, Can Google be Liable for Trademark Infringement? A Look at the Trademark Use Requirement as Applied to Google AdWords, 14 UCLA Ent. L. Rev. 265 (2007).
[10] See Complaint at 75-119, Facebook, Inc. v. Studivz Ltd., No. C08 03468., 2008 WL 2914576, at *1 (N.D. Cal. July 18, 2008).
[11] See Caroline Winter, How Three Germans are Cloning the Web, Businessweek (Feb. 29, 2012),), http://www.businessweek.com/articles/2012-02-29/the-germany-website-copy-machine.
[12] Facebook settled its Northern District of California case with StudiVZ in September 2009, three months after a German court ruled against Facebook in its German litigation, finding inter alia that StudiVZ’s actions did not constitute copyright infringement under German law. See Kevin D. Hughes & David E. Rosen, Screen Grabbing: The Marketplace, Rather than the Courthouse, May Determine the Ultimate Winner in Web Site Infringement Battles, 33 Los Angeles Lawyer 4, 40 (2010), http://www.lacba.org/Files/LAL/Vol33No4/2716.pdf.
[13] Athleta, Inc. v. Pitbull Clothing Co., Inc., No. CV 12-10499-CAS FMOX, 2013 WL 142877 at *3 (C.D. Cal. Jan. 7, 2013).
[14] Id. at *7.
[15] Id. at *13.
[16] See, e.g., Phentic Tutorials, How to Copy Any Website, YouTube (July 1, 2010), http://www.youtube.com/watch?v=OGM47jJm7Gs; Ilan Patao, Tutorial – How to Copy / Duplicate Web Sites, YouTube (May 19, 2008), http://www.youtube.com/watch?v=cue_uZWNfUY.
[17] Winter, supra note 12. Rocket also invested in copycat versions of Facebook and YouTube, which sold for $112 million and $36 million respectively. When Rocket cloned Groupon, the resulting site became Europe’s most popular deal-of-the-day site within five months of its launch. Id. Its success indicates that there is a lot of money to be made from knockoff websites, if the law permits. But see Katie Linsell, Facebook Wins Competition of Clones as Europeans Seek Global Network: Tech, Businessweek (Nov. 7, 2011), http://www.bloomberg.com/news/2011-11-07/facebook-wins-competition-of-clones-as-europeans-seek-global-network-tech.html
[18] Franklin & Henry, supra note 6.
[19] Cf. Peep Laja, First Impressions Matter: The Importance of Great Visual Design, Conversion XL (Nov. 15, 2012), http://conversionxl.com/first-impressions-matter-the-importance-of-great-visual-design/#.
[20] Pew Research Internet Project, Cell Internet Use 2013, http://www.pewinternet.org/2013/09/16/cell-internet-use-2013.
[21] Id.
[22] See Global Entertainment and Media Outlook: 2013-2017: Internet Access, PricewaterhouseCoopers, http://www.pwc.com/gx/en/global-entertainment-media-outlook/segment-insights/internet-access.jhtml (last accessed Feb. 23, 2014) (showing penetration of mobile-Internet services will reach 54% by year-end 2017 compared with 51% for fixed broadband); see also Chaitrali Amrukar et al., Measuring SSL Indicators on Mobile Browsers: Extended Life, or End of the Road?, In Proceedings of the 15th international conference on Information Security (ISC’12) 86, 91 (Dieter Gollmann & Felix C. Freiling eds. 2012) (describing mobile browser’s limitation on visibility of domain name when rendering screens).
[23] See Erika Morphy, What’s Ahead for the Net: Mary Meeker Explains It All, ECommerce Times (May 30, 2013), http://www.ecommercetimes.com/story/78166.html (predicting explosive growth of mobile technology and wearable computing); Dave Uhler, Catching the Mobile Commerce Wave, ECommerce Times (Apr. 7, 2012), http://www.ecommercetimes.com/story/74807.html (noting prediction that mobile commerce will grow at a compound annual rate of 39 percent through 2016 and advising that “[a]t this moment, every enterprise should be devising new strategies for reaching customers through mobile applications in addition to the web.”).
[24] Benny Evangelista, Feds Crackdown on 70 Fake Websites that “Copy Cat” Real Sites, SF Gate (July 12, 2012), http://blog.sfgate.com/techchron/2012/07/12/feds-crackdown-on-70-fake-websites-that-copy-cat-real-sites/.
[25] See Athleta, Inc. v. Pitbull Clothing Co., Inc., No. CV 12-10499-CAS FMOX, 2013 WL 142877 at *3 (C.D. Cal. Jan. 7, 2013).
[26] See id. at *3.
[27] See id. at *10.
[28] Id.
[29] Blue Nile, Inc. v. Ice.com, Inc., 478 F. Supp. 2d 1240, 1247 (W.D. Wash. 2007).
[30] Id.
[31] Id. at 1245.
[32] Id. at 1248.
[33] Blue Nile did succeed in asserting a copyright claim four years later, however, when another competitor copied images from the bluenile.com website and used them on its own website without permission. See Blue Nile, Inc. v. Ideal Diamond Solutions, Inc., No. C10-380Z, 2011 WL 3360664, at *3 (W.D. Wash. Aug. 3, 2011).
[34] See Conference Archives, Inc. v. Sound Images, Inc., No. Civ. 3:2006-76, 2010 WL 1626072, at *2 (W.D. Pa. Mar. 31, 2010).
[35] Id.
[36] Id. at *1.
[37] Id. at *9.
[38] Complaint at 3, Conferences Archives, Inc. v. Sound Images, Inc., Civil No. 3:2007-76, 2010 WL 1626072 (W.D. Pa. Mar. 21, 2006), 2006 WL 6495532.
[39] Conference Archives, Inc., 2010 WL 1626072, at*10.
[40] See id. at *10-11.
[41] See also Int’l Union of Operating Engineers, Local 150, AFL-CIO v. Team 150 Party, Inc., No. 07C3972, 2008 WL 4211561 (N.D. Ill. Sept. 5, 2008).
[42] Salt Optics, Inc. v. Jand, Inc., No. SACV 10-0828 DOC, 2010 WL 4961702 at *11 (C.D. Cal. Nov. 19, 2010).
[43] Id.
[44] See, e.g., Franklin & Henry, supra note 6.
[45] See, e.g., 1st Lake Mobile Website, Copyright TXu001885424 (2013-07-16).
[46] An author can register computer code with the Copyright Office under class TX.
[47] As an initial matter, only the author of a copyrightable work may sue for copyright infringement, unless the work is made “for hire.” Most corporations hire a website developer to create an online presence and the developer is the default author for copyright purposes. In order to sue for copyright infringement, the contract with the developer must include a specific work for hire provision. Without such a provision, there may be no basis for claiming rights to the website in the first place. See Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 738 (1989) (stating that the work does not satisfy the copyright requirements for a work for hire because there was no written agreement). These provisions are relatively common, but not universal.
[48] See Kelly v. Arriba Soft Corp., 336 F.3d 811, 817 (9th Cir. 2003) (Stating that “the plaintiff must show ownership of the copyright and copying by the defendant”); see also LGS Architects, Inc. v. Concordia Homes of Nevada, 434 F.3d 1150, 1156 (9th Cir. 2006); 17 U.S.C. § 411 (2008) (“no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title”).
[49] See, e.g., La Resolana Architects, PA v. Reno, Inc., 555 F.3d 1171, 1178 (10th Cir. 2009).
[50] Boisson v. Banian, Ltd., 273 F.3d 262, 272 (2d Cir. 2001) (quoting Folio Impressions, Inc. v. Byer Cal., 937 F.2d 759, 763 (2d Cir. 1991)).
[51] See Crown Awards, Inc. v. Trophydepot, No. 2:03-CV-02448-DRH, 2003 WL 22208409, at *13 (E.D.N.Y. Sept. 3, 2003).
[52] See Complaint, Facebook, Inc. v. Studivz Ltd, supra note 11, at 7.
[53] See 17 U.S.C.§ 411(a).
[54] See Athleta, Inc. v. Pitbull Clothing Co., Inc., No. CV 12-10499-CAS FMOX, 2013 WL 142877, at n.6 (C.D. Cal. Jan. 7, 2013).
[55] Id.
[56] United States Copyright Office, Copyright Registration for Online Works (2002), available at http://www.copyright.gov/circs/circ66.pdf.
[57] Id. at 1.
[58] Darden v. Peters, 402 F. Supp. 2d 638, 643 (E.D.N.C. 2005) (quoting United States Copyright Office, Copyright Registration for Online Works 3 (2009)).
[59] The problems of requiring fixedness in online text are also apparent in the debate over fluid trademarks, an emerging area of concern. See, e.g., Johanna Pyhälä & Erkki Holmila, Are Fluid Trademarks Your Cup of Tea?, World Trademark Review, http://www.worldtrademarkreview.com/issues/article.ashx?g=d1b0a0a9-5bd2-411a-8d9a-781e47a2c019 (last accessed Feb. 23, 2014).
[60] United States Copyright Office, supra note 57, at 2.
[61] A work need not be entirely fixed to receive copyright protection, however. Video games, for example, satisfy copyright’s fixation requirement by having effects that can be “’reproduced, or otherwise communicated’ for more than a transitory period.” Williams Elecs., Inc. v. Artic Int’l, Inc., 685 F.2d 870, 874 (3d Cir. 1982) (citing Stern Elecs., Inc. v. Kaufman, 669 F.2d 852, 855-56 (2d Cir. 1982)).
[62] Darden v. Peters, 402 F. Supp. 2d 638, 643 (E.D.N.C. 2005).
[63] See id. at 487.
[64] See Salt Optics, Inc. v. Jand, Inc., No. SACV 10-828, 2010 WL 4961702 (C.D. Cal. Mar. 4, 2011).
[65] See id. at *1-2.
[66] Id. at *12-13.
[67] Id. at 13.
[68] Id.
[69] See id.
[70] Allen v. Ghoulish Gallery, No. 06CV371 NLS, 2007 WL 4207923, at *1 (S.D. Cal. Nov. 20, 2007).
[71] Id.
[72] Id. at *4. The Court did not find that there was copyright infringement, however, because there was no substantial similarity between the two websites. Id. at *6.
[73] See Kantemirov v. Goldine, No. C05-01362 HRL, 2005 WL 1593533 (N.D. Cal. June 29, 2005) (“[g]iven the flexible definition of works falling with the scope of the Copyright Act design and layout within the general subject matter of the Copyright Act”); Order, TheStreet.com, Inc. v. Wall St. Interactive Media Corp., No. 98 CIV. 6974 (LAP), 1998 WL 34194887 (S.D.N.Y. Nov. 9, 1998) (enjoining alleged infringer from copying design or layout of website).
[74] Infantry Div., World War II Living History Ass’n v. Oprendek, No. Civ.A.11–165, 2011 U.S. Dist. LEXIS 140014 (D. N.J. Aug. 4, 2011).
[75] Id. at *3-4.
[76] See Id. at *21-22.
[77] Franklin & Henry, supra note 6.
[78] Express Lien v. National Association of Credit Management Inc., Civil Action No. 13–3323, 2013 WL 4517944 (E.D. La. August 23, 2013).
[79] Id. at *1.
[80] Id. at *4.
[81] See Complaint, Facebook, Inc. v. Studivz Ltd., supra note 11, at 75-119.
[82] 15 U.S.C. § 1125 (2012).
[83] See Apple Inc. v. Samsung Elecs. Co., 888 F. Supp. 2d 976 (N.D. Cal. 2012).
[84] In fact, the terms “storefront” and “web storefront” are becoming synonymous with e-commerce retail websites.
[85] Parker Waichman LLP v. Gilman Law LLP, No. 12-CV-4784 JS AKT, 2013 WL 3863928, at *4 (E.D.N.Y. July 24, 2013).
[86] See Sleep Sci. Partners v. Lieberman, No. 09-04200 CW, 2010 WL 1881770 (N.D. Cal. May 10, 2010).
[87] Id. at *2.
[88] Id. at *6.
[89] Id. at *9.
[90] See id. at *6.
[91] Id. at *3.
[92] Id. at *8-9.
[93] 15 U.S.C. §§ 1125(a)(3), (c)(2)(B).
[94] Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 210 (2000).
[95] See id.
[96] See id. at 215.
[97] See, e.g., id. at 212-13.
[98] 505 U.S. 763, 768 (1992).
[99] Two Pesos, 505 U.S. at 768..
[100] See Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 215 (2000).
[101] See id. at 211; see also Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 163 (1995).
[102] See, e.g., SG Servs. Inc. v. God’s Girls Inc., No. CV 06-989 AHM, 2007 WL 2315437, at *9 (C.D. Cal. May 9, 2007); cf. Card Tech Int’l, LLLP v. Provenzano, No. CV 11-2434 DSF PLAX, 2012 WL 2135357, at *22 (C.D. Cal. June 7, 2012) (suggesting that either standard may apply to web sites).
[103] First Brands Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1383 (9th Cir. 1987).
[104] See Wal-Mart Stores, 529 U.S. at 214.
[105] See, e.g., Ex parte Tayama, 24 U.S.P.Q.2D (BNA) 1614, 1614 (B.P.A.I. 1992) (rejecting design patent for computer icon because it is not a design for an article of manufacture).
[106] Rachel v. Banana Republic Inc., 831 F.2d 1503, 1506 (9th Cir. 1987) (citation omitted).
[107] See Mortgage Mkt. Guide, LLC v. Freedman Report, LLC, No. CIV.A. 06-CV-140-FLW, 2008 WL 2991570, at *1 (D. N.J. July 28, 2008).
[108] See SG Servs. Inc. v. God’s Girls Inc., No. CV 06-989 AHM, 2007 WL 2315437 (C.D. Cal. May 9, 2007).
[109] See id. at *9. Even so, the court ruled in favor of the defendant on the trade dress infringement claim as a whole because the plaintiff failed to prove either distinctiveness or likelihood of confusion. In addition, plaintiff’s sole evidence in support of its infringement claim was a declaration that did not meet the federal evidentiary standards, as it was not signed under penalty of perjury, and was therefore inadmissible. See id. at *34.
[110] See Card Tech Int’l, LLLP v. Provenzano, No. CV 11-2434 DSF PLAX, 2012 WL 2135357 (C.D. Cal. June 7, 2012).
[111] Id. at *6.
[112] Id.
[113] See No. 3:2006-76, 2010 WL 1626072, at *1 (W.D. Pa. Mar. 31, 2010).
[114] Id. at *58-59 (citations omitted).
[115] AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 349 (9th Cir. 1979).
[116] 367 F. Supp. 2d 1238, 1240 (D. Minn. 2005).
[117] Id. at 1244.
[118] Id. at 1245.
[119] Conference Archives, Inc. v. Sound Images, Inc., No. 3:2006-76, 2010 WL 1626072, at *12 (W.D. Pa. Mar. 31, 2010)
[120] 1 Melvin B. Nimmer & David Nimmer, Nimmer on Copyright, § 1.01[D][2] (2013).
[121] 478 F. Supp. 2d 1240, 1243 (W.D. Wash. 2007).
[122] Id.
[123] Id.
[124] Id. at 1248.
[125] See id at 1245.
[126] Salt Optics, Inc. v. Jand, Inc., No. SACV 10-0828, at 4 (C.D. Cal. Mar. 4, 2011), available at http://www.americanbar.org/content/dam/aba/administrative/litigation/materials/2012_hot_topics_in_ip_lit/2012_aba_panel3_salt_optics_inc_v_jand_inc_et_a_doc_42.authcheckdam.pdf; Salt Optics, supra note 40, at *8.
[127] See id.
[128] Salt Optics, Inc. v. Jand, Inc., No. SACV 10-0828, at 9.
[129] Sleep Sci. Partners v. Lieberman, No. 09-04200 CW, 2010 WL 1881770, at *5 (N.D. Cal. May 10, 2010).
[130] See 15 U.S.C. § 1125(d)(1) (2008).
[131] See 18 U.S.C. § 1030 (2008) (criminalizing fraud and related activity in connection with computers); see also 18 U.S.C. § 2701 (proposed legislation criminalizing unlawful access to stored communications).
[132] See Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961); see also Conference Archives, Inc. v. Sound Images, Inc., No. 3:2006-76, 2010 WL 1626072, at *18 (W.D. Pa. Mar. 31, 2010).
[133] See, e.g., Sleep Sci. Partners, 2010 WL 1881770, at *7-9.
[134] See Salt Optics, Inc. v. Jand, Inc., No. SACV 10-0828, 2010 WL 4961702, at *5 (C.D. Cal. Nov. 19, 2010).
[135] Id.
[136] Mot. of Def. Jand, Inc. to Dismiss Pl.’s Second Am. Compl. for Failure to State a Claim, Salt Optics, Inc. v. Jand, Inc., No. SACV 10-0828, 2011 WL 1158953 (C.D. Cal. Jan. 3, 2011).
[138] Times New Roman, for example, originated as a proprietary font designed in 1931 for the British newspaper The Times. See A Brief History of Times New Roman, Practical Typography, http://practicaltypography.com/times-new-roman.html (last visited Feb. 23, 2014).
[139] See, e.g., Stefan Thiemert et al., A Digital Watermark for Vector-Based Fonts, Proceedings of the 8th Workshop on Multimedia & Security 120 (2006), http://dl.acm.org/ft_gateway.cfm?id=1161387&ftid=374839&dwn=1&CFID=453511040&CFTOKEN=12224932.
[140] Conference Archives, Inc. v. Sound Images, Inc., No. 3:2006-76, 2010 WL 1626072, at *4 (W.D. Pa. Mar. 31, 2010).
[141] Id. at *5.
[142] Traditional consumer surveys, such as those endorsed in Eveready, would be useful here. See Union Carbide Corp. v. Ever-Ready, Inc., 531 F.2d 366, 385-88 (7th Cir. 1976); see, e.g., 65 J. Thomas McCarthy, Trademarks and Unfair Competition § 32:175 (4th ed. 2007). In designing those surveys, however, comparison on similar devices is critical because of the potential effect of adaptive site design differences on user experience.
[143] See, e.g., Dianne Cyr et al., Colour Appeal in Website Design In and Across Cultures: A Multi-method Evaluation, 68 Int. J. Human-Computer Stud. 1-21 (2010); Christian Vasile, How Colors Help Make Websites Successful, 1st Web Designer, http://www.1stwebdesigner.com/design/colors-in-web-design-make-websites-successful/ (last visited Feb. 23, 2014); Vishal Verma, The Importance of Color Theory, Webdesign.org (Oct. 29, 2007), http://www.webdesign.org/web-design-basics/color-theory/the-importance-of-color-in-web-designing.12437.html.
[144] Athleta, Inc. v. Pitbull Clothing Co., Inc., No. CV 12-10499-CAS FMOX, 2013 WL 142877, at *2, *7 (C.D. Cal. Jan. 7, 2013).
[145] Id. at *7.
[146] Conference Archives, Inc. v. Sound Images, Inc., No. 3:2006-76, 2010 WL 1626072, at *19 (W.D. Pa. Mar. 31, 2010).
[147] See, e.g., Frank Guo, More Than Usability: The Four Elements of User Experience, Part I, UX Matters (Apr. 24, 2012), http://www.uxmatters.com/mt/archives/2012/04/more-than-usability-the-four-elements-of-user-experience-part-i.php.
[148] Whether the court ought to protect a website because it is more usable than another, however, is a difficult question. One could argue that usability is akin to functionality, in that enforcing protection of these qualities might have the unwanted effect of stifling competition and/or undercutting the overall goal of consumer protection.
[149] See, e.g., Sally Beauty Co. v. Beautyco, Inc., 304 F.3d 964, 973 (“Proof that a defendant chose a mark with the intent of copying the plaintiff’s mark may, standing alone, justify an inference of likelihood of confusion.”).
[150] See, e.g., Blake Tierney, Missing the Mark: The Misplaced Reliance on Intent in Modern Trademark Law, 19 Intell. Prop. L.J. 229 (2011); Soonbok Lee, Induced Infringement as a Strict Liability Claim: Abolishment of the Specific Intent Requirement, 4 Hastings Sci. & Tech. L.J. 381 (2012).
[151] In many cases, the website owner will bring claims of unfair competition alongside the infringement claims. See, e.g., Allen v. Ghoulish Gallery, No. 06CV371 NLS, 2007 WL 4207923 (S.D. Cal. Nov. 20, 2007); Card Tech Int’l, LLLP v. Provenzano, No. CV 11-2434 DSF PLAX, 2012 WL 2135357 (C.D. Cal. June 7, 2012). Whether the court’s consideration of intent, or scienter, in connection with these unfair competition claims is sufficient to accomplish the deterrent effect suggested here is subject to further debate.
[152] See Hughes & Rosen, supra note 13, at 44.
[153] See, e.g., FragranceNet.com, Inc. v. FragranceX.com, Inc., 679 F. Supp. 2d 312, 315 (E.D.N.Y. 2010) (plaintiff alleged trademark infringement, inter alia, when defendant used plaintiff’s trademarks as meta-tags for its own site).
[154] See Conference Archives, Inc. v. Sound Images, Inc., No. 3:2006-76, 2010 WL 1626072, at *19 (W.D. Pa. Mar. 31, 2010) (describing plaintiff’s exhibit comparing to website in great technical detail and characterizing it as “very instructive to the Court’s analysis.”).
[155] The sign was to read, in one-inch block letters: “Notice: TACO CABANA originated a restaurant concept which Two Pesos was found to have unfairly copied. A court order requires us to display this sign to inform our customers of this fact to eliminate the likelihood of confusion between our restaurant and those of TACO CABANA.” Hughes & Rosen, supra note 13, at 45.
[156] See Garden of Life, Inc. v. Letzer, 318 F. Supp. 2d 946, 968 (C.D. Cal. 2004).
[157] Hughes & Rosen, supra note 13, at 44.
[158] See generally, George A. Agoston, Color Theory and Its Application in Art and Design (Dr. Jay M. Enoch et al., eds., 1979); Wyszecki, Color In Business, Science, and Industry (Stanley S. Ballard ed., 3d ed. 1975); Bleicher, Contemporary Color Theory & Use (2005).
[159] Athleta, Inc. v. Pitbull Clothing Co., Inc., No. CV 12-10499-CAS FMOX, 2013 WL 142877, at *12 (C.D. Cal. Jan. 7, 2013). As of Apr. 27, 2014, athletica.net was no longer a functioning website.
[160] See Conference Archives, Inc. v. Sound Images, Inc., No. 3:2006-76, 2010 WL 1626072 (W.D. Pa. Mar. 31, 2010).
[161] See id. at *14.
[162] See id. at *15.
[163] Lesportsac, Inc. v. Kathy Clapp, No. D2012-2506, 2013 WL 1146701, at *6 (2013).
[164] Id. at *2.
[165] See id. at *6.
[166] See, e.g., Sleep Sci. Partners v. Lieberman, No. 09-04200 CW, 2010 WL 1881770, at *1 (N.D. Cal. May 10, 2010).

License and Registration, Please: Using Copyright “Conditions” to Protect Free/Open Source Software

License and Registration, Please: Using Copyright “Conditions” to Protect Free/Open Source Software
By Victoria Nemiah* A pdf version of this article may be downloaded here.  

Introduction

There are three types of people who should care about free and open-source software (FOSS[1]): FOSS software developers, the attorneys who help them license their creations, and absolutely everyone else. Why everyone else? While FOSS has historically been billed as “too difficult” for the average consumer to use and “too technical to understand,”[2] it is fast becoming a popular option, even for technophobes, as evidenced by Firefox’s position as the second most popular browser by market share.[3] FOSS has also started to gain a foothold in other areas, from blog publishing platforms to image-editing software. Consumers are catching onto FOSS offerings like OpenOffice, a word-processing and productivity suite; GIMP, an image-editing Photoshop alternative; Linux, a completely open-source operating system; VLC Media Player, a cross-platform multimedia player; and 7-Zip, a file archiver. This Note is primarily targeted towards the first two categories of people: developers and their attorneys. FOSS has been a novel and exciting model for developers. It provides several key advantages over the traditional route for those looking to release software they’ve finished (or even just started) writing: once the source code has been publicly released, other developers who choose to use the software themselves can contribute fixes and improvements back to the project. People have become accustomed to finding free options for most of their computing needs, so no-fee software is likely to gain a foothold in these markets. The project is more likely to survive where outsiders are actively participating in its continued maintenance. Where there is a disagreement on what slate of features or overall design approach to choose, forking[4] can occur. Opening the source code provides the opportunity for volunteer programming support, which can take the place of hiring paid developers (though one blogger notes that choosing to “open” one’s source code is akin to opening a door, and that developers should not assume that volunteers will be waiting on the other side of the door to come in and help with the project[5]). Making a project open source allows for the use of previously released FOSS or open source code snippets within the project. Lastly, releasing a project’s code may be aligned with the developer’s personal convictions that his software should be free and available to all. With so many advantages to making a project open source, it has become an easy choice for many developers. The legal process that follows, however, has not been nearly as simple. As a general matter, the open source model is one that stymies many of contract law’s core tenets, from the “exchange of promises” to the issue of consideration. Further, open source licensing serves as a voluntary renunciation of several rights the copyright system grants to software creators. Lawyers and developers have made many attempts to word a license so as to restrict certain behavior while allowing otherwise unrestricted distribution of the software, but to date there have been few cases on the subject, so much of this wording is untested. In fact, while the first FOSS licenses were created in the late 1980s (with the GPL, MIT License, and BSD license all published between 1988 and 1989[6]), it was not until 2004 that a court issued an opinion regarding the viability of FOSS licenses. In a federal case in the Northern District of Illinois, the court explained the GNU General Public License (“GPL”) as a release of the content into the public domain, with restrictions in place solely because “once the programs are freely released into the public domain, the creators intend for them to stay free.”[7] Fortunately for embracers of FOSS, judicial attitudes towards FOSS have changed significantly since this opinion, and “the court’s comments should be viewed with skepticism.”[8] A few relevant cases in the last five years help to clarify the approach lawyers and others working with licensing language should take. I use these as the backbone of this paper to ensure that their takeaways are fully incorporated into licensors’ approaches. In particular, I highlight the construction of a license provision as either a “condition” or a “covenant,” a designation that will determine what remedies are appropriate, an issue recently brought to light in a non-FOSS case in the Ninth Circuit.[9] Making sure that attorneys understand the state of the law surrounding FOSS licenses is important because a future court decision against a FOSS license has the potential to cripple a burgeoning industry whose community-based development principles depend on protection from commercial exploitation of that openness. Thus, I start in Part II by examining the history of the development of the FOSS community. In Part III, I break down several cases relevant to issues of FOSS licensing, highlighting important conclusions by courts that are buried within the sometimes dense language of the opinions. Finally, in Part IV, I summarize several best practices for lawyers and other license drafters. Additionally, I provide an analysis of legal arguments regarding license violations, based on criteria such as copyright registration and wording of license terms. By doing so, I highlight the importance for developers of taking care to follow all the necessary steps to protect their projects, including harnessing the power of conditions.

I. History of FOSS

A. First Applications of Open Source Licenses

Software developers have been sharing code with each other for as long as software development has been a pursuit, but it was not until at least 1969 that the beginnings of what would become the FOSS movement started to emerge. In 1965, Bell Labs joined forces with the Massachusetts Institute of Technology (MIT) and General Electric (GE) to work on the development of MULTICS (the MULTiplexed Information and Computing Service), which was intended to develop a “dynamic, modular [computer] system capable of supporting hundreds of users.”[10] By 1969, however, Bell Labs, displeased by the project’s lack of advances and continued drain on monetary capital, pulled out of the MULTICS project:[11] Bell Labs “had a million dollars worth of equipment in the attic that was sitting there being played with by three people. It became clear that we were a drag on the computer center’s budget.”[12] This abandonment of the MULTICS project did not quash the interest of the Bell Labs researchers in the construction of such a system, so four of the most heavily involved researchers in the Lab’s participation started to work towards the construction of a different system.[13] One of the four has explained that their motivation in working on this new system was simple; they did not want to give up the computing power they had personally been able to exploit via the MULTICS machine:
We didn’t want to lose the pleasant niche we occupied, because no similar ones were available; even the time-sharing service that would later be offered under GE’s operating system did not exist. What we wanted to preserve was not just a good environment in which to do programming, but a system around which a fellowship could form.[14]
The group lobbied hard for the purchase of a new machine.[15] By 1970, they had put together a pitch based on a proposed new operating system and Bell Labs agreed to purchase a new machine for about $65,000.[16] A year later, they had the machine running their new operating system, which they called UNIX.[17] Due to a consent order signed by AT&T in 1956, Bell Labs could not legally sell any products on the software market, and thus agreed to share UNIX (including its source code) with academic institutions for the price of media.[18] Ken Thompson, one of the original authors of the UNIX system, returned in 1976 to teach UNIX in the Computer Science department at his alma mater, the University of California at Berkeley (UCB).[19] His classes, coupled with further work by students, led to a system called the Berkeley Standard Distribution (BSD), which is considered by some to be UNIX’s first fork.[20] A graduate student named Bill Joy spearheaded the work, and in 1978 the first BSD was released to the public.[21] In his history of BSD, Bruce Montague explains, “UCB made BSD available for the cost of media, under what became known as ‘the BSD license’. A customer purchased Unix from AT&T and then ordered a BSD tape from UCB.”[22] As the cost of this license from AT&T continued to increase, users started to request that Berkeley break out their own code and provide it under terms that did not require concurrent acquisition of an AT&T source license.[23] In 1989, Berkeley responded to these requests by releasing Networking Release 1, the first freely distributable Berkeley code. The terms of the license for this release were liberal:
A licensee could release the code modified or unmodified in source or binary form with no accounting or royalties to Berkeley. The only requirements were that the copyright notices in the source file be left intact and that products that incorporated the code indicate in their documentation that the product contained code from the University of California and its contributors. . . . [A]nyone was free to get a copy from anyone who already had received it. Indeed, several large sites put it up for anonymous ftp shortly after it was released.[24]
This BSD release and accompanying license formed the basis for today’s BSD License, which remains one of the most popular “academic” open source licenses in use.[25] In 1984, a researcher at MIT’s Artificial Intelligence Lab named Richard Stallman quit his job to start writing his own software, determined that unlike UNIX and other fully contained options available at the time, his would be open to all to freely use and modify.[26] Due to drama surrounding the commercialization of a derivative of one of his first programs,[27] Stallman was intent upon ensuring that his newest program, a text editor GNU Emacs, would be perpetually available to the public, and thus decided to use a “copyleft” license that he called the Emacs General Public License.[28] The license’s preamble explains that the software is not in the public domain, but that the restrictions placed on it are “designed to permit everything that a good cooperating citizen would want to do”:[29]
Specifically, we want to make sure that you have the right to give away copies of Emacs, that you receive source code or else can get it if you want it, that you can change Emacs or use pieces of it in new free programs, and that you know you can do these things. . . . To make sure that everyone has such rights, we have to forbid you to deprive anyone else of these rights. For example, if you distribute copies of Emacs, you must give the recipients all the rights that you have. You must make sure that they, too, receive or can get the source code. And you must tell them their rights.[30]
While distributing GNU Emacs, Stallman continued working on building an operating system. The result was a free operating system that was compatible with UNIX, which Stallman named “GNU” (a recursive acronym for “GNU’s Not Unix”).[31] Those developing GNU decided to share it under the principle of “copyleft” touched on above.[32] In an effort to encourage others to follow his lead, Stallman started the Free Software Foundation, a group that now publishes the second version of the GNU GPL, currently the most popular open source software license available.[33]

B. Subsequent Growth of the FOSS Model

Since the creation and success of FOSS like BSD and GNU,[34] such software has gone on to see remarkable success. As mentioned above, many popular software options today are FOSS, from Firefox to WordPress. Contributions to FOSS have grown exponentially over the last fifteen to twenty years, as shown in a chart by researchers Amit Deshpande & Dirk Riehle:[35]
Contributions to FOSS
One of the many forks[36] of Linux, the commercial venture RedHat, saw its revenues grow by 25% in 2012, finally crossing the $1 billion mark at the end of its fiscal year on February 29 of that year, which made it the first FOSS company to reach that point.[37] In the market for web servers, FOSS favorite Apache holds 54.37% of the market share, with its next closest competitor holding only 12.91%.[38] Most promising, however, are reports of the public’s increased acceptance of the FOSS model. A 2010 survey of three hundred large organizations in the public and private sectors found that 50% of respondents are “fully committed to open source in their business”, while another 28% say they are “experimenting with open source and keeping an open mind to using it.”[39]

C. Development of the FOSS Community

Of course, along with any movement espousing such a political message (that software should be fundamentally free) comes spirited debate. Within the FOSS community, this has mainly taken the form of differing definitions of, and terms for, “free” sharing of software. The two terms most often at odds are “free software” and “open source software”, each with different origins and definitions. From this divergence have come the clunkier terms FOSS (free/open source software) and FLOSS (free/libre/open source software). When Richard Stallman decided to take his “copyleft” approach in distributing the projects he worked on, he used the term “free software.” The Free Software Foundation (FSF) defines “free software” as “software that respects users’ freedom and community. Roughly, the users have the freedom to run, copy, distribute, study, change and improve the software. With these freedoms, the users (both individually and collectively) control the program and what it does for them.”[40] Thus, the FSF explains, “you should think of ‘free’ as in ‘free speech,’ not as in ‘free beer’.”[41] Conversely, the Open Source Initiative (OSI) prefers the term “open source software”, and explains that “[o]pen source doesn’t just mean access to the source code.”[42] The OSI requires compliance with ten criteria: free redistribution, distribution of the source code (not simply the compiled software), permission to create derivative works, limited restrictions for the purpose of protecting the original “integrity,” no discrimination against people or groups, no discrimination against fields of endeavor, automatic application of the same license terms to redistributed copies, lack of reference within the license to a specific product, lack of restrictions on other software, and technological neutrality.[43] While the term “free open source software” was first mentioned in a newsgroup in March 1998,[44] the term developed primarily as an option for those who did not wish to pick a side in the battle between the FSF and OSI definitions. In an early use of the term, in 2002 a Google Groups user wrote, “99% of the software on my computer is F/OSS (Free/Open Source Sofware).”[45] The term FLOSS was likewise created by Rishab Aiyer Ghosh in an attempt to “somehow unify ‘Free Software’ and ‘Open Source’ concept into software.”[46] By adding the term “libre,” Ghosh hoped to highlight both the “free” (no cost) and “libre” (free from restrictions) aspects of the software.[47] While those representing developers should be aware of the differences in implications of the various terms, both “FOSS” and “FLOSS” have become umbrella terms that cover many variants of freely shared software.

II. Important FOSS Cases

The field of FOSS law is a bit like an undisturbed minefield: much ground has yet to be covered, so it’s unclear where the problem areas are or how big their scope will be. Thus, the best thing a lawyer or license drafter can do is use an understanding of the existing cases to make sure that their license terms protect the software to the fullest extent possible. One of the most important elements of a secure FOSS license is the phrasing of clauses that restrict the licensee’s behavior. For instance, a FOSS licensor might want to ensure that his licensee follows such FOSS precepts as attribution, sharing alike, and non-discrimination. To enforce a violation of these demands, he may be able to sue under two theories: copyright violation and breach of contract. Since a license is a contract in the traditional sense, a breach of contract claim is easily reached. However, to succeed on a claim of copyright infringement, the licensor must demonstrate either that no license was granted in the first place, or that the license was conditional upon the licensee not undertaking such behavior, and thus that due to a violation of the conditions002C the license effectively did not exist. To make this distinction easier to understand, consider the following scenario.[48] Amy and her family own a house with a large field behind it. Bob wishes to cut through Amy’s field to make his commute to work shorter, so he approaches Amy. She is fine with the proposal, so long as Bob does not engage in any lewd activities in the field that might be visible to her children. She and Bob agree to the following language: “Amy grants Bob the right to traverse Amy’s field whenever he pleases. Bob agrees that he will not engage in any lewd activities while in Amy’s field.” If Bob later streaks through Amy’s field on his way home from the bar one night while Amy’s children watch out the window, Amy may sue him only for breach of contract, because the grant of a right to traverse her field was not made conditional upon Bob conducting himself with decorum, and thus would be considered a covenant. Now consider an identical scenario where the agreement reads as follows: “So long as Bob does not engage in any lewd activities, Amy grants Bob the right to traverse her field whenever Bob pleases.” Here, because Bob was engaging in lewd conduct (nudity) when he tried to traverse Amy’s field, he effectively had no permission to do so; Amy’s grant of permission contained a condition. This was a key distinction in several of the cases discussed below, as well as more nuanced questions about the permitted scope of conditions (e.g., should Amy be allowed to condition Bob’s easement on something irrelevant to the land, like Bob not wearing a hat while crossing her field?).

A. Graham v. James

In the 1998 case of Graham v. James, the Second Circuit dealt with claims of copyright ownership and infringement from both parties and laid out several fundamental principles of contract law as they relate to licenses. In the late 1980s and early 1990s, Richard Graham sold CD-ROMs containing compilations of software programs that were free due to their status as shareware, freeware, or public domain software.[49] In 1991, he got in touch with defendant Larry James, a programmer, to commission a file-retrieval program to go on the discs. Graham described “in general terms” the type of program he wanted.[50] James agreed that in exchange for credit on the final project and a CD-ROM disk drive, he would write a file-retrieval program. Graham included this program in his next release.[51] Soon after, James wrote a new version in C++ (“the C++ version”). This version was an entirely new program, and Graham’s only contributions were communicating the program’s general requirements and collaborating on the organization of the files retrieved by the program. The C++ version also included authorship and copyright notices in James’ own name.[52] When Graham discovered this notice, he removed it and released a new version of the disc.[53] Graham subsequently released several other compilations containing the C++ version. During this period, James also sold his C++ version to another CD-ROM publisher.[54] Graham eventually brought suit against James for this sale of the program, claiming ownership of the C++ version’s copyright under the work-for-hire doctrine and alleging that James’s sale to a publisher constituted an infringement of Graham’s copyright. James counterclaimed that he was the rightful owner of the copyright and that Graham’s inclusion of the program on later compilations (and removal of James’s copyright notice) constituted infringement. He also alleged breach of contract.[55] Since the issue of who owned the copyright needed to be decided before the court could address the copyright infringement claims, the district court looked at each party’s evidence and found that “the parties had orally agreed that James would provide Graham with a file retrieval program written in . . . C++” and that Graham would pay James for each version.[56] The district court granted a preliminary injunction barring James from “publishing, copying, selling, marketing or otherwise disposing of” programs that were substantially similar to the C++ version.[57] However, at trial the district court held that as an independent contractor James owned the copyright to the C++ version, and that Graham’s releases with substantially similar programs infringed this copyright. The court awarded various damages and permanently enjoined Graham from using the program.[58] Graham appealed to the Second Circuit, claiming that he had a license to use the copyrighted work.[59] The court acknowledged that “[u]nder federal law, ‘nonexclusive licenses may . . . be granted orally, or may even be implied from conduct,’”[60] and pointed to the fact that the district court had found an implied license for the amount of Graham’s payments between the two parties. They also expressed concern over the awarded copyright damages, since “a copyright owner who grants a nonexclusive license . . . waives his right to sue the licensee for copyright infringement.”[61] Regarding Graham removing the attribution notice mentioning James, the court noted that the prevailing view under copyright law is that an author who sells or licenses her work “does not have an inherent right to be credited as author of the work,” and explained that when a licensee omits such a notice, it has been held not to be infringing.[62] James claimed that even if there had been a license, it had been rescinded for nonpayment or non-attribution, but the court felt the existence of a license was “essentially uncontested.”[63] Instead, the court found the question at hand to be one of the scope and duration of the license. In situations where the question is simply the scope of a license, the court pointed out that the copyright owner has the burden of proof that the use in question is outside the activity authorized by the license.[64] Ultimately, the court felt the issue of whether Graham had infringed James’s copyright rested on one question: were the payment of royalties and inclusion of a notice “crediting James’s authorship” considered covenants or conditions?[65] First, the court noted that under New York state law, terms of a contract are assumed to be covenants, not conditions.[66] Second, the court pointed to the fact that James tendered a copy of the C++ version to Graham for use before any royalties were paid and that the first version of the compilation with the C++ version was published with proper attribution. Both of these facts were relevant because New York does not treat as conditions those contractual obligations that are to be performed after partial performance by the other party.[67] Presented with these precedents, the Court of Appeals found that the attribution and royalty payment obligations were covenants. James advanced a final argument that even if the obligations were covenants, Graham’s breach of the two covenants had terminated the license.[68] In previous cases, both the Ninth and D.C. Circuits had held that a “material breach” could give rise to a right of rescission: “even if the counterclaims asserted merely constitute a breach of contract, an action for copyright infringement would lie if the breach is so material that it allows the grantor power to recapture the rights granted so that any further use of the work was without authority.”[69] New York law generally allows rescission of a contract where the breach is “material and willful, or, if not willful, so substantial and fundamental as to strongly tend to defeat the object of the parties in making the contract.”[70] However, in order to find that a contract has been rescinded, the non-breaching party (here, James) must have taken some affirmative steps towards rescission.[71] Ultimately, the court held that James had not sufficiently demonstrated that the contract had been successfully rescinded or otherwise terminated and remanded the case for further determination. Graham was notable for a few reasons: first, it highlighted the important distinction between covenants and conditions in both awarding damages and succeeding in a case against a licensee run amok. Second, it laid out the difference between questions of the existence of a license and questions of a license’s scope or duration. Third, it raised questions of whether a failure of attribution could ever constitute a violation of a condition, though there has been speculation that this holding was influenced by the lack of a written instrument.[72] Thus, Graham’s primary lessons were the importance of putting agreements regarding software in writing and of framing important provisions as explicit conditions to the license.

B. Sun v. Microsoft

The case of Sun Microsystems v. Microsoft Corp. posed somewhat similar questions to those in Graham, with one particularly notable change: there was a written agreement. In 1996, Microsoft was looking to license the right to use Sun’s Java programming language in other products that it would create and distribute.[73] Sun[74] originally created Java “so that programmers could write a single program that would work on any operating system,” and was determined to ensure that Microsoft distributed only versions of Java that maintained this cross-platform compatibility.[75] This demand became especially important when, midway through negotiations, talks broadened from use only in Microsoft’s internet browsers and software development tools to a broader license that would allow Microsoft to include Java in its operating systems.[76] Sun’s license agreements with other Java partners required products developed by licensees to pass Sun’s compatibility tests, which Sun termed the JCK (Java Compatibility Kit) test suite.[77] If a product passed the test suite, the licensee was granted the right to display Sun’s “JAVA Compatible” trademark on its product. The terms of Sun’s new agreement with Microsoft were recorded in a “Technology License and Distribution Agreement” (the “TLDA”).[78] The TLDA granted Microsoft the right to a non-exclusive development license to use the source code of Sun’s technology “for the purposes of developing, compiling to binary form and supporting [Microsoft’s own] Products.”[79] In addition, Sun granted Microsoft a non-exclusive distribution license to “make, use, import, reproduce, license, rent, lease, offer to sell, sell or otherwise distribute to end users as part of a Product or an upgrade to a Product, the Technology and Derivative Works thereof in binary form.”[80] In a later clause within the same section, the TLDA placed compatibility requirements on Java-containing commercial distributions by Microsoft.[81] The TLDA likewise required that any Java compiler developed and distributed by Microsoft meet compatibility requirements.[82] On September 30, 1997, Microsoft released the new version of its web browser, Internet Explorer (“IE 4.0”), on its website.[83] Microsoft claimed that IE 4.0 “incorporate[d] and [was] fully compatible with” the required version of Java, and displayed Sun’s “JAVA Compatible” trademark in close proximity to the IE 4.0 logo on both its website and CD-ROM versions. Testing by Sun revealed that IE 4.0 failed to pass the test suite, and on October 7, 1997, Sun notified Microsoft of the failure and requested that they commit to becoming compliant. Microsoft responded, claiming that IE 4.0 fully complied with requirements and that they would therefore continue to use the trademark.[84] Outside testing ultimately confirmed that IE 4.0 did not pass the test suite, a flaw that jeopardized the compatibility of the Java contained within IE 4.0.[85] Sun took the case to court to request multiple forms of relief, starting with a preliminary injunction to stop Microsoft’s supposedly TLDA-violating conduct. In Sun II, the district court granted a preliminary injunction relating to Sun’s copyright infringement and unfair competition claims,[86] and it was this copyright infringement claim that provoked Microsoft’s appeal to the 9th Circuit in Sun III. The 9th Circuit found that the license provisions at issue could be either covenants or conditions.[87] Thus, the court vacated Sun II’s injunction and remanded the case for further determination. In Sun V, the court denied Sun’s request to reinstate the preliminary injunction, holding that Sun had not “definitively established” that it had a case for copyright infringement, rather than breach of contract.[88] However, it was not until Sun VI that the issue of whether the violated license agreement provisions were covenants or conditions (referred to by the court as “license restrictions”) was addressed. Quoting Graham v. James, the court pointed out that a copyright owner who grants a nonexclusive license generally waives his right to sue the licensee for copyright infringement.[89] As in Graham, the court then moved on to principles found in state law regarding the interpretation of contracts. California law requires that in reviewing the intent suggested by the language of the TLDA, the court examine the “four corners of the instrument.”[90] The court held that “[t]he language and structure of the TLDA suggest that the compatibility obligations are separate covenants and not conditions of, or restrictions on, the license grants.”[91] Specifically, the court highlighted the fact that the language actually granting the software license made no reference to meeting compatibility requirements. The court contrasted this with Sun’s use of conditions in the TLDA’s “Trademark License” section, where the grant was limited to goods “that fully meet the certification requirements” and the license was later specified as only applying to versions that passed the JCK test suite.[92] In addition, the court read the remedies section to suggest a scheme where compatibility breaches, rather than immediately triggering a copyright violation, could be remedied within thirty days without penalty. Given these pieces of evidence, the court concluded, “the only reasonable interpretation of the TLDA is that the compatibility provisions of Section 2.6 are independent covenants, rather than limitations on the scope of Microsoft’s pre-termination license.” Thus, the court granted Microsoft’s motion for summary judgment and dismissed Sun’s claim for relief based on the allegation of copyright infringement. Sun VI follows Graham’s precedent, but serves as an important case because it exemplifies the dangers still at hand for a licensor when there is a written agreement. When drafting clauses that grant any rights to the licensee, it is crucial that the sentence or clause containing such a grant include any restrictions that are fundamental to the licensor’s willingness to provide a license. The Sun cases also serve as a warning to those drafting clauses regarding available remedies, particularly when a licensor enters negotiations with a licensee before the terms of a license are agreed upon (as contrasted with situations where software is provided with a pre-attached license). First, drafters should write damages clauses that avoid suggesting either that a violation of a condition (or other important covenant) is insignificant or that such a violation does not qualify as a material breach of the agreement. Additionally, licensors should carefully consider the ways in which licensees might violate the terms of a license agreement before allowing the inclusion of a clause restricting or barring the ability to obtain an injunction against a licensee. Ultimately, the Sun cases serve as a warning to developers and lawyers alike: even the big guys can mess up.

C. Jacobsen v. Katzer

While a 2001 case in the 11th Circuit acknowledged that FOSS licensed under the GPL was not simply released into the public domain,[93] it was not until 2007 that a case progressed far enough[94] to fully discuss the merits of a FOSS license and whether its requirements could constitute conditions. In Jacobsen v. Katzer, plaintiff Robert Jacobsen worked at the Lawrence Berkeley National Laboratory and taught physics as a professor at the University of California, Berkeley.[95] A model train hobbyist, he was a leading member of the “Java Model Railroad Interface” (JMRI) Project, a SourceForge-based community that builds model railroad computer controls.[96] Through contributions by many JMRI participants, the project created an application called DecoderPro that “allows model railroad enthusiasts to use their computers to program the decoder chips that control model trains.”[97] JMRI made DecoderPro available through SourceForge for free, but included a copyright notice and a reference to the included “COPYING” file, which contained the terms of the Artistic License, another popular FOSS license, in each of the package’s files.[98] The defendant, Matthew Katzer, was the CEO and chairman of the board of directors for Kamind Associates, Inc. (KAM), a Portland, Oregon-based software company that developed software for model railroad enthusiasts.[99] KAM offered a competing software product called Decoder Commander, which is also used in the programming of decoder chips.[100] During the development of Decoder Commander, a KAM employee allegedly downloaded “decoder definition files” from DecoderPro and used portions of them in the code for Decoder Commander.[101] The files containing DecoderPro definitions violated the terms of the Artistic License in five ways, neglecting to include “(1) the authors’ names, (2) JMRI copyright notices, (3) references to the COPYING file, (4) an identification of SourceForge or JMRI as the original source of the definition files, and (5) a description of how the files or computer code had been changed from the original source code.”[102] In addition, KAM changed the file names of various DecoderPro files without providing a reference to the original JMRI files or information about where to obtain the original versions.[103] Jacobsen brought suit against Katzer and KAM, alleging that they “fraudulently secured patents for their software and, despite knowing the patents were invalid and unenforceable, sought to enforce the patents and collect patent royalties, and threatened litigation.”[104] In addition to seeking declaratory judgment of the unenforceability and invalidity of the patents and non-infringement of DecoderPro, Jacobsen brought claims against the defendants for antitrust, unfair competition, cybersquatting, libel, copyright infringement, trademark claims under 15 U.S.C. § 1125, and unjust enrichment.[105] While the court threw out many of his other claims, Jacobsen’s claim of copyright infringement and related motion for a preliminary injunction became major issues in the case.[106] In Jacobsen I, the district court for the Northern District of California addressed Jacobsen’s motion for a preliminary injunction enjoining the defendants from “willfully infringing [his] copyrighted material.”[107] The court noted that Jacobsen alleged copyright infringement, arguing that the defendants “without permission or consent, has [sic] made copies, distributed copies to the public, or created derivative works in violation of the exclusive rights.”[108] The court then cited the three relevant provisions of the Artistic License which together state that those with access to the files may make copies, distribute and create derivative works from the software, provided that they give proper credit to the JMRI project: (a) that potential licensees may “make or give away verbatim copies of the source form . . . without restriction provided that [the licensee] duplicate all of the original copyright notices and assorted disclaimers,” (b) that the licensee can distribute the copyrighted work “in a more-or-less customary fashion, plus [have] the right to make reasonable modifications,” and (c) that the licensee may “distribute [the material] in aggregate with other (possibly commercial) programs as part of a larger (possibly commercial) software distribution provided that [the licensee] not advertise [the material] as a product of [his] own.”[109] The court found that the license represented a choice by Jacobsen to distribute the decoder definition files “by granting the public a nonexclusive license to use, distribute, and copy the files.”[110] It noted that the license was subject to several requirements (such as attribution), but held that implicit in a nonexclusive license is “the promise not to sue for copyright infringement.”[111] In a major blow to FOSS goals, the court held that “[t]he condition that the user insert a prominent notice of attribution does not limit the scope of the license.”[112] The court then acknowledged that actions exceeding the scope of the license could still give rise to a copyright infringement claim, but held that in granting rights to “any member of the public” to “use and distribute the [material] in a more-or-less customary fashion, plus the right to make reasonable accommodations,” Jacobsen had made the scope of the nonexclusive license “intentionally broad.”[113] Thus, the court found that Jacobsen only had a case for breach of the Artistic License, not copyright infringement, and denied Jacobsen’s motion for a preliminary injunction.[114] Jacobsen appealed to the Federal Circuit (Jacobsen II). The Federal Circuit considered the history of “public licenses” (“often referred to as ‘open source’ licenses”).[115] It noted that one of the amici curiae, Creative Commons, provided free copyright licenses to allow parties to either release works into the public domain or license certain uses while keeping other rights reserved, and pointed to MIT’s use of a Creative Commons license for their course system, as well as uses of FOSS licenses by Apache, Firefox, and Wikipedia, as evidence that “open source licensing has become a widely used method of creative collaboration that serves to advance the arts and sciences in a manner and at a pace that few could have imagined just a few decades ago.”[116] The court also noted several advantages of FOSS licensing and collaborations, such as faster writing and debugging of programs and lower development costs.[117] While it acknowledged that traditionally copyright holders have sold their copyrighted material “in exchange for money”, the court argued that FOSS licensing’s lack of monetary compensation “should not be presumed to mean that there is no economic consideration.”[118] To support this statement, the court cited the generation of market share, reputational gains, and improvements by outside contributors as gains created by FOSS licensing. The court established that there was no dispute regarding the fact that Jacobsen held the copyright to certain materials throughout the website (a presumption established by his copyright registration), nor that portions of the DecoderPro software’s code were copied, modified, and distributed within Decoder Commander.[119] Given these facts, the court found a prima facie case of copyright infringement, subject to a finding that the defendants were acting outside the scope of the license. The court looked to the language of the Artistic License, which granted rights to copy, modify and distribute the software:
provided that [the user] insert a prominent notice in each changed file stating how and when [the user] changed that file, and provided that [the user] do at least ONE of the following: a) place [the user’s] modifications in the Public Domain or otherwise make them Freely Available . . . . b) use the modified Package only within [the user’s] corporation or organization. c) rename any non-standard executables so the names do not conflict with the standard executables, which must also be provided, and provide a separate manual page for each nonstandard executable that clearly documents how it differs from the Standard Version, or d) make other distribution arrangements with the Copyright Holder.[120]
The court highlighted the covenant–condition distinction, explaining that if the terms were found to be conditions, a claim would lie under copyright, while if they were merely covenants, Jacobsen’s only claim would be for breach of contract. It noted that the district court in Jacobsen I had not acknowledged this distinction, but had clearly been proceeding under the assumption that the terms were contractual covenants.[121] In his brief, Jacobsen argued that the terms should be read as conditions, while Katzer and KAM argued that they were covenants, citing Gilliam v. ABC for the premise that copyright law does not recognize a cause of action for non-economic rights (in the case of Gilliam, moral rights[122]).[123] Ultimately, the Federal Circuit held that the terms were conditions, giving rise to a claim of copyright infringement. First, the court pointed to the fact that the Artistic License stated on its face that it created conditions: “The intent of this document is to state the conditions under which a Package may be copied.”[124] Each grant of a copyright-related right (copying, modifying, and distributing) within the License was also granted “provided that” the conditions were met, and California law generally construes “provided that” as creating a condition. The court also noted the importance of the attribution condition in allowing users of derivative works to backtrack to the original software. Further, the court explained its position on FOSS very clearly, writing that “[c]opyright holders who engage in open source licensing have the right to control the modification and distribution of copyrighted material.”[125]
Copyright licenses are designed to support the right to exclude; money damages alone do not support or enforce that right. The choice to exact consideration in the form of compliance with the open source requirements of disclosure and explanation of changes, rather than as a dollar-denominated fee, is entitled to no less legal recognition. Indeed, because a calculation of damages is inherently speculative, these types of license restrictions might well be rendered meaningless absent the ability to enforce through injunctive relief.[126]
Vacating Jacobsen I (thus denying a preliminary injunction) and remanding the case, the court explained that the Artistic License contained “clear language” creating conditions to protect the copyright holder’s rights and that those terms were enforceable copyright conditions. Jacobsen II serves as a beautifully-written ode to FOSS, clearly laying out the various gains available to a FOSS licensor and demonstrating that where a FOSS licensor takes care to choose a license with sufficiently clear wording of its FOSS conditions, courts are willing to recognize these conditions as restrictions on the license grant.

D. MDY v. Blizzard

The last case of particular relevance to the condition-covenant licensing distinction is one that did not involve FOSS, and perhaps due to that fact threatens to open up a dangerous line of defense for FOSS license violators. In the 2010 case MDY v. Blizzard, the 9th Circuit dealt with license restrictions imposed by a video game manufacturer on players, in a case where game manufacturer Blizzard brought claims of copyright infringement against the creator of an automated game-playing program under theories of contributory and vicarious liability. In 2004, Blizzard Entertainment created World of Warcraft (WoW), a massively multiplayer online role-playing game (MMORPG) in which players interact with a “virtual world” containing other players and interactive experiences, while advancing through the game’s seventy levels.[127] Players role-play as different characters including humans, elves, and dwarves, advancing through the game’s levels by participating in quests and battling monsters.[128] Blizzard requires players to read and accept an End User License Agreement (EULA) and Terms of Use (ToU) on multiple occasions.[129] The EULA pertains to the installed game client itself, and a player must agree to it upon both install and first running the game. The ToU covers the online service, and a player agrees to it both when creating an account and when first connecting to the service. Declaratory judgment plaintiff MDY Industries was a software company run by Michael Donnelly. In 2005, Donnelly developed a software bot called Glider that automated the gameplay of WoW’s early levels, intending it solely for his personal use. Glider did not alter or copy WoW’s game client software in any way, did not allow users to avoid Blizzard’s monthly fees, and was not initially designed to avoid detection by Blizzard.[130] Later in 2005, Donnelly reviewed Blizzard’s EULA and client-server manipulation policy, reached the conclusion that bots were not prohibited under their terms, and began to sell Glider through MDY’s website for $15 to $25 per license.[131] Blizzard soon discovered Glider and in response launched a technology called Warden, which prevented players who used unauthorized third-party software (such as bots) from connecting to the WoW servers. In response, MDY altered Glider to evade detection by Warden, even advertising this alteration on its website.[132] In 2006, after Blizzard threatened to sue, MDY commenced an action for a declaratory judgment that Glider’s files did not violate Blizzard’s copyright on the intellectual property contained in WoW (MDY I).[133] Blizzard counterclaimed against MDY and Donnelly for copyright infringement, asserting that the license it granted players to use the game (and therefore to copy the game to their computer’s RAM) was conditioned upon not using bots, and thus that MDY was contributorily and vicariously liable for the unauthorized “copying” of WoW that occurred when Glider users played the game.[134] In response, MDY argued that when players used Glider, they were simply breaching a contract, not infringing a copyright.[135] The district court cited MAI Systems, Corp. v. Peak Computer, Inc., which held that copying software to RAM qualifies as “copying” under section 106 of the Copyright Act.[136] Thus, the court focused on the threshold issue of whether the “no bots” clauses within the EULA and ToU constituted covenants or conditions. The first paragraph of the EULA stated, “IF YOU DO NOT AGREE TO THE TERMS OF THIS AGREEMENT, YOU ARE NOT PERMITTED TO INSTALL, COPY, OR USE THE GAME.”[137] Later, the EULA granted rights to install and use the game via the following language: “Subject to your agreement to and continuing compliance with this License Agreement, Blizzard hereby grants, and you hereby accept, a limited, non-exclusive license to (a) install the Game Client . . . and (b) use the Game Client . . . . ”[138] Considered “in their entirety,” the district court found that the “subject to” and “limited” language in the EULA and ToU established limitations on the scope of the license.[139] The court pointed to a section governing behavior in interactions between users as an example of Blizzard’s use of independent covenants, pointing out that “[a] single contract clearly can contain both [covenants and conditions].”[140] Ultimately, the court held that Glider users acted outside the scope of this limited license and granted partial summary judgment to Blizzard based on a finding that Glider sales contributorily and vicariously infringed Blizzard’s copyrights.[141] Soon after, MDY appealed to the Ninth Circuit (MDY II). In a deviation from previous cases like Jacobsen, the court looked to Delaware law (as provided for in the EULA and ToU) and found that “[c]onditions precedent are disfavored because they tend to work forfeitures.”[142] Noting that while the contract should be construed according to its terms if unambiguous, the court stated that where conflicting interpretations are possible, equity construes ambiguous provisions as covenants rather than conditions.[143] Given these standards of interpretation, the court found the bot and third-party software prohibitions to be covenants rather than copyright-enforceable conditions.[144] Specifically, the court claimed, “we have held that the potential for infringement exists only where the licensee’s action (1) exceeds the license’s scope (2) in a manner that implicates one of the licensor’s exclusive statutory rights.”[145] While the court believed a derivative works ban was grounded in copyright, it felt that the anti-bot provision was not, and thus that the provision was a covenant. The court justified its decision by claiming that were it to hold otherwise, a software copyright holder could designate “any disfavored conduct during software use” as copyright infringement, citing RAM copies made during this conduct as a violation of the rights holder’s exclusive right to copy. Ultimately, the court believed that for a term to be a condition whose violation would give rise to a claim of copyright infringement, there needed to be a “nexus between the condition and the licensor’s exclusive rights of copyright.” As a result, the Ninth Circuit reversed the district court’s grant of summary judgment for Blizzard and vacated a related permanent injunction.[146] The impact of MDY on FOSS licenses has yet to be fully felt: of the fourteen cases to cite the decision since it came down, none have dealt with a FOSS license or other similarly uncompensated license. Thus, it remains to be seen whether a court in the Ninth Circuit, following the precedent set by MDY, would uphold a FOSS license’s attribution clause (the type of clause at issue in Graham), since it does not “implicate[] one of the licensor’s exclusive [copyright] rights.”[147] Since the Copyright Act grants only the rights to reproduce the work, prepare derivative works, distribute copies, perform the work publicly, and display the work publicly,[148] it remains to be seen whether any of the common FOSS requirements of distribution of derivative works’ source code, application of an identical license to derivative works, notation of changes between the original and derivative works, and nondiscrimination would be held unenforceable.

III. Drafting and Arguing for FOSS Licenses

A. First Considerations

Before reaching the covenant–condition distinction, a licensor must take an important first step: copyright registration. 17 U.S.C. § 411 reads, “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made.”[149] Further, while a copyright owner can technically bring an action for copyright infringement at any time after registration (regardless of how long after publication the registration happens), § 412(2) limits the availability of certain copyright remedies to those works whose registration “is made within three months after the first publication of the work.”[150] While some jurisdictions allow the application for the copyright to satisfy § 411, most jurisdictions require full completion of registration before a suit can be brought.[151] Where a creator wishes to file suit and needs to first complete an expedited registration, the applicable fee can be several hundred dollars more than the usual fee.[152] Thus, prompt registration of a software program’s copyright is crucial. The rewards for having previously registered a work’s copyright are important for the FOSS community. Under the copyright statute, the available remedies for copyright infringement are injunctions,[153] impoundment and destruction of illegal copies,[154] damages and profits (including statutory damages),[155] and costs and attorney’s fees.[156] Of course, under a breach of contract theory, injunctions and monetary damages may be available, but there are two important advantages to requesting remedies under a copyright infringement theory. First, a category of copyright-only remedies becomes available. Assuming timely registration, a rights holder can, at any time during trial, opt to seek statutory damages—an award of “not less than $750 or more than $30,000 as the court considers just” (but up to $150,000 for willful violations)—in lieu of actual damages.[157] In a situation where actual damages are speculative or otherwise difficult to calculate (as is often the case with FOSS infringements), statutory damages provide a mechanism for a rights holder to dispatch with the expensive process of proving damages, instead receiving what the court views to be a “just” sum. The copyright-only remedies category also includes recovery of costs and attorney’s fees under § 505. Second, copyright registration invokes a slightly different approach towards injunctions. Where a plaintiff has demonstrated a likelihood of success on the merits, courts have historically relied on a judicially created presumption of irreparable harm, rather than undertaking an analysis to consider whether the plaintiff has demonstrated a likelihood of such harm.[158] However, in the 2010 case eBay v. MercExchange, the Supreme Court held that courts should not rely on this presumption and should instead utilize the traditional four-factor test for injunctions.[159] This would seem to suggest that the injunctions available under a copyright theory had been made commensurate with those under a breach-of-contract theory, especially since both the Second and Ninth Circuits have affirmed eBay’s holding.[160] However, the Federal Circuit—the first circuit to address eBay’s holding (in Jacobsen, no less)—“declined to invoke eBay‘s standards, and instead applied the Ninth Circuit’s pre-eBay presumption of irreparable harm,” the same presumption later overturned by the Ninth Circuit itself.[161] Likewise, many district courts have continued to apply the presumption.[162] Since courts are clear that the “granting of an injunction to restrain a breach of contract rests largely in the sound discretion of the court,”[163] even post-eBay copyright-based injunction requests may be looked at more favorably than ones for breach of contract, and thus still provide advantages for a rights holder.

B. Best Practices

In a perfect world, FOSS licenses and their publication would be so well handled as to avoid review by courts in the first place. Following best practices can provide enough clarity to avoid infringement by confused licensees and can also strengthen the licensor’s position if he ends up in court nonetheless. Before licensing his software, a FOSS developer’s first step should be to register his copyright. As touched on above, this registration process can open the doors to vastly preferable remedies, such as statutory damages. Beyond the actual availability of statutory damages, their existence as a possibility can keep a licensor out of court in the first place: a licensee who is aware that statutory damages are available may be more willing to negotiate a settlement. Since the advent of the Copyright Office’s Electronic Copyright Office (eCO) system, registering a copyright has become a relatively simple process. A developer must simply go online to access the application form,[164] complete its fields, and pay a $35 basic application fee.[165] Second, any developer or lawyer working on a FOSS license should be careful that the license’s language properly defines important provisions of the license as conditions. For instance, references to an attribution requirement or “share-alike” policy for derivative works should be included within the granting sentence, introduced by conditional language such as “provided that” or “on the condition that.” In addition, suggestive words like “limited” should be used in describing the license, as courts have shown a belief that such language hints at a license’s conditional restrictions.[166] Finally, any conditions should be explicitly referred to as “conditions.” Third, license drafters should keep in mind the possibility of rescission. Drafters may opt to include some type of termination clause (as in the Sun-Microsoft license) or may otherwise mention the licensor’s ability to rescind or terminate the license upon material breach. Outside of this, a licensor should, as a safety measure, send notice of license termination where he believes the licensee has materially breached the contract, since this will make copyright remedies available if the court finds the violated term is a covenant and holds that the violation is “material.” Lastly, developers may wish to provide prominent notice to their users that the software is licensed under a FOSS scheme, explaining the purpose and breadth of requirements such as attribution and sharing alike. By doing so, licensors make it clear that the FOSS content is not in the public domain and thus alert users who intended to borrow code, thereby inadvertently violating the license, that such behavior is not condoned. Through careful attention to the act of licensing FOSS, a developer and his attorney can drastically reduce the risk of misuse and resulting damages to the software’s FOSS goals.

C. Arguing a License Violation

When a licensee has misused FOSS software, especially where the scope of the license is unclear, it is important to understand the categories that FOSS violations can fall into as well as the licensor’s strongest available arguments. A preliminary distinction can be made between cases where there is some form of license and cases where there is none. In FOSS cases, the software is generally distributed with a pre-attached license for all users, which means that the category of cases involving no license is largely irrelevant. Thus, I will only consider approaches for cases where some semblance of a license is involved. The first path a FOSS owner can take is to argue that while there is a license, the licensee has violated a condition of that license, and thus is liable for copyright infringement, not simply breach of contract. A simple example would be a license whose grant of rights read, “Licensor grants licensee a limited license to distribute the work provided that the licensee distributes the work with all attributions and notices intact.” Here, if a licensee distributed the work with attribution to the licensor stripped away, the licensor could argue that he had never provided a license for such conduct. Essentially, the licensor would argue that the licensee had acted outside the scope of the license, and was therefore liable for copyright infringement.[167] If a court holds a FOSS license term to be a covenant due to a reading of either the language of the license or the limitations of MDY, a licensor can argue that the licensee’s breach constituted a “material breach.” In many jurisdictions, such a breach could give the licensor the ability to rescind the contract.[168] If a licensor can establish rescission of the contract, the license is essentially stripped away, re-exposing the licensee to copyright liability. However, to succeed in making a claim of rescission, the licensor must have undertaken an “affirmative act” to indicate rescission, such as “transmitting a notice of termination.”[169] Thus, it is important that a licensor attempt to notify a licensee of termination where the licensor believes there has been a material breach. When a licensor cannot succeed in arguing that a condition was violated or that rescission resulted from a material breach, the licensor’s options are more limited. Without the ability to reach the copyright remedies available to a rights holder whose copyright was infringed, a licensor must resort to a breach of contract claim. This means that in order to collect any monetary damages, he will need to establish his actual damages and/or any profits reaped by the defendant. However, where irreparable harm can be demonstrated, injunctions may still be available, thus making such a claim useful in certain situations.

Conclusion

Lawyers as a group are not known for their tech savvy or rapid embrace of emerging technologies. In an interview regarding law firms’ adoption of online tools for lawyers and firms, a partner at the Boston firm Foley & Lardner joked that “law firms must innovate to finally move into the 20th century.”[170] For every lawyer who cannot find the ‘any’ key, however, there is a lawyer working with software developers, crafting the licenses for tomorrow’s killer apps. It is this latter category of attorneys who must make sure that they understand the ‘covenant versus condition’ distinction, because the next time this issue comes to bear, it might be more than model trains or a video game at stake.
* Victoria is a 2014 J.D. candidate at NYU School of Law. Her professional interests are in the fields of software licensing and software-as-a-service agreements for Web 2.0 companies. She received a B.A. in Sociology from Boston University in 2011. She would like to thank Christopher Sprigman, the JIPEL Editorial Staff, and her family for their help throughout the editing process.
[1] There are a myriad of terms used to refer to software that has any of the qualities of being made collaboratively, being shared freely, or being shared pursuant to a promise to “share alike” (to use an identical license on derivative works). Since this paper is not meant to address the intricacies or politics of the software community’s preferences for different terminology (though I do cover the issue briefly in Part II.C.., I choose to refer to these forms of software simply as “FOSS”, for both clarity and space’s sake. I would include in my “FOSS” umbrella software termed “free software”, “open source software”, “free/open source software” (“FOSS”), or “free/libre/open-source software” (“FLOSS”), and I invite the reader to impose upon my use of the term any definition that helps make the paper relevant to his or her projects.
[2] Matt Kohut, Lenovo’s Worldwide Competitive Analyst, argued, “Linux, even if you’ve got a great distribution and you can argue which one is better or not, still requires a lot more hands-on than somebody who is using Windows . . . . You have to know how to decompile codes and upload data, stuff that the average person, well, they just want a computer.” John Pospisil, Lenovo analyst: Linux on netbooks is doomed, Tech.Blorge (Apr. 21, 2009), http://tech.blorge.com/Structure:%20/2009/04/21/lenovo-analyst-linux-on-netbooks-is-doomed.
[3] Top Browser Share Trend: June, 2010 to April, 2011, NetMarketShare, http://www.netmarketshare.com/report.aspx?qprid=1&qpct=2&qptimeframe=M&qpsp=137&qpnp=11 (last visited Feb. 28, 2014).
[4] See generally Fork (software development), Wikipedia, http://en.wikipedia.org/wiki/Fork_(software_development) (last visited Feb. 13, 2014).
[5] Eric Wilhelm, Open Source Benefits for Developers, ScratchComputing.com, http://scratchcomputing.com/articles/open-source_benefits_developers.html (last visited Feb. 28, 2014).
[6] Gottfried Hofmann et al., A Dual Model of Open Source License Growth 2 (2013), available at http://dirkriehle.com/wp-content/uploads/2013/04/oss2013.hofmann.pdf.
[7] Computer Associates Int’l v. Quest Software, Inc., 333 F. Supp. 2d 688, 698 (N.D. Ill. 2004). The court refers to GPL’s requirement that subsequent derivative works based on a GPL-licensed program must then themselves be GPL-licensed.
[8] Heather J. Meeker, Open Source and the Age of Enforcement, 4 Hastings Sci. & Tech. L.J. 267, 270 (2012).
[9] MDY Indus., LLC v. Blizzard Entm’t, Inc., 629 F.3d 928 (9th Cir. 2010).
[10] Gordon M. Brown, Unix: An Oral History, Princeton U., http://www.princeton.edu/~hos/frs122/unixhist/finalhis.htm (last visited Feb. 28, 2014).
[11] Id.
[12] Brown, supra note 10.
[13] Id.
[14] Dennis M. Ritchie, The Evolution of the Unix Time-sharing System, Bell Laboratories, http://cm.bell-labs.com/cm/cs/who/dmr/hist.html (last visited Feb. 28, 2014).
[15] Brown, supra note 10.
[16] Ritchie, supra note 14.
[17] Id. The name “UNIX” was (an altered spelling of “UNICS”, which was a pun on MULTICS). Id.
[18] Bruce Montague, Unix from a BSD Licensing Perspective, FreeBSD, http://www.freebsd.org/doc/en/articles/bsdl-gpl/unix-license.html (last visited Mar. 21, 2014).
[19] Id. See also UNIX/Linux History, Digital-Domain, http://digital-domain.net/lug/unix-linux-history.html (last visited Feb. 28, 2014).
[20] See sources cited supra note 19. See generally Wikipedia, supra note 4 (for an explanation on forking).
[21] Peter H. Salus, A Quarter Century of UNIX 142 (1994).
[22] Montague, supra note 18.
[23] Marshall Kirk McKusick, Twenty Years of Berkeley Unix, in Open Sources: Voices from the Open Source Revolution 21, 25 (Chris DiBona & Sam Ockman eds., 1999).
[24] Id.
[25] Bennett M. Sigmond, Free/open Source Software Licensing-Too Big to Ignore, Colo. Law., Dec. 2005, at 89, 90.
[26] Richard Stallman, The GNU Project, GNU.org, http://www.gnu.org/gnu/ thegnuproject.html (last visited Feb. 28, 2014).
[27] Stallman’s legal battle with James Gosling, creator of a C-based version of Stallman’s Emacs program, is a highly entertaining read. It is detailed in an article by Li-Cheng Tai, and vivified by comments given by Stallman at a lecture in Sweden. Li-Cheng Tai, The History of the GPL, FREE-SOFT.ORG (July 4, 2001), http://www.free-soft.org/gpl_history; Richard Stallman, RMS Lecture at KTH (Sweden), 30 October 1986, GNU.ORG, http://www.gnu.org/philosophy/stallman-kth.html (last visited Feb. 28, 2014).
[28] Tai, supra note 27.
[29] Emacs General Public License, Free-soft.org, http://www.free-soft.org/gpl_history/emacs_gpl.html (last visited Feb. 28, 2014).
[30] Id.
[31] Stallman, supra note 26.
[32] 1 GNU’s Bulletin, no. 5, June 1988, http://www.gnu.org/bulletins/bull5.html.
[33] Sigmond, supra note 25 at 90.
[34] GNU has gone on to become one of the two contributions that make up the Linux operating system.
[35] Amit Deshpande & Dirk Riehle, The Total Growth of Open Source, in Open Source Development, Communities and Quality 197, 202 (Barbara Russo et al. eds., 2008).
[36] See Linux Distribution, Wikipedia, http://en.wikipedia.org/wiki/Linux_distribution (for a beautiful graphic illustration of the various forked distributions of Linux) (last visited Feb. 17, 2014).
[37] Charles Babcock, Red Hat: First $1 Billion Open Source Company, InformationWeek (Mar. 29, 2012, 9:49 AM), http://www.informationweek.com/development/open-source/red-hat-first-1-billion-open-source-comp/232700454.
[38] May 2013 Web Server Survey, NetCraft (May 3, 2013), http://news.netcraft.com/archives/2013/05/03/may-2013-web-server-survey.html.
[39] Investment in Open Source Software Set to Rise, Accenture Survey Finds, Accenture (Aug. 5, 2010), http://newsroom.accenture.com/article_display.cfm?article_id=5045.
[40] The Free Software Definition, GNU (Feb. 28, 2013), http://www.gnu.org/philosophy/free-sw.html.
[41] Id.
[42] The Open Source Definition, Open Source Initiative, http://opensource.org/osd (last visited Mar. 21, 2014).
[43] Id.
[44] History, Free Open Source Software (last updated Sept. 14, 2012), http://freeopensourcesoftware.org/index.php?title=History.
[45] Heikki Orsila, using m$ products is supporting them, Google Groups (Feb. 18. 2002, 6:37 AM), https://groups.google.com/forum/#!msg/comp.sys.amiga.games/Z8Kh3jciTHA/ VQzhmaguGUo.
[46] Ricardo García Fernández, Floss Developers, Un año con el Máster de Software Libre en la URJC (Oct. 24, 2012), http://mastersfwlurjc.blogspot.com/2012/10/floss-developers.html.
[47] Frederick Noronha, Book Review: Free/Open Source Software: Network Infrastructure and Security by Gaurab Raj Upadhyaya, Free Software Magazine (Aug. 16, 2007), http://fsmsh.com/2331.
[48] Given the intricacies of modern property law, we will assume for the purposes of this example that such a property-based contract would behave identically to a license agreement for intellectual property.
[49] Graham v. James, 144 F.3d 229, 232–33 (2d Cir. 1998).
[50] Id. at 233.
[51] Id.
[52] Id.
[53] Id. at 234.
[54] Id.
[55] Graham, 144 F.3d 229 at 234.
[56] Id. at 233.
[57] Id. at 234.
[58] Id.
[59] Id. at 235.
[60] Id. (quoting 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 10.03[A][7], at 10–43); see also I.A.E., Inc. v. Shaver, 74 F.3d 768, 775–76 (7th Cir. 1996).
[61] Graham, 144 F.3d at 236.
[62] Id.
[63] Id.
[64] Id.
[65] Id. at 237.
[66] Id.; see also Grand Union Co. v. Cord Meyer Dev. Co., 761 F.2d 141, 147 (2d Cir. 1985) (“In the absence of more compelling evidence that the parties intended to create a condition, the negotiation provision must be construed as a promise or covenant.”).
[67] 22 N.Y. Jur.2d Contracts § 265 (1996); see also Jacob Maxwell, Inc. v. Veeck, 110 F.3d 749, 754 (11th Cir. 1997) (holding that royalty payments and author attribution were covenants because “[the song’s composer] expressly granted [the licensee] permission to play the song before payment was tendered or recognition received”).
[68] Graham, 144 F.3d at 237.
[69] Costello Publ’g Co. v. Rotelle, 670 F.2d 1035, 1045 (D.C. Cir. 1981); see also Rano v. Sipa Press, Inc., 987 F.2d 580, 586 (9th Cir. 1993).
[70] Callanan v. Powers, 92 N.E. 747, 752 (N.Y. 1910).
[71] 22A N.Y. Jur.2d Contracts § 497 (1996) (“The failure of a party to perform his part of a contract does not per se rescind it. The other party must manifest his intention to rescind within a reasonable time.”).
[72] Evan Brown, Open Source Software and the Covenant-Condition Dichotomy, Internetcases (Feb. 20, 2009), http://blog.internetcases.com/2009/02/20/open-source-software-and-the-covenant-condition-dichotomy (“It is difficult to ascertain how the licensor in Graham would have, in reality, viewed the use of his software without a copyright notice as being authorized (and therefore within the scope of the license). Perhaps the most plausible explanation for the contrary holding in Graham was the absence of a written agreement, and a presumption arising under New York law that the parties intend a covenant and not a condition.”).
[73] Sun Microsystems, Inc. v. Microsoft Corp., 81 F. Supp. 2d 1026, 1028 (N.D. Cal. 2000) [hereinafter Sun V].
[74] In 2010, Sun Microsystems was acquired by Oracle Corporation, another large computer technology corporation, who continued to market Sun’s software portfolio. Oracle and Sun Microsystems, Oracle, http://www.oracle.com/us/sun/index.html (last visited May 22, 2013).
[75] Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115, 1118 (9th Cir. 1999) [hereinafter Sun III].
[76] Sun Microsystems, Inc. v. Microsoft Corp., 21 F. Supp. 2d 1109, 1113 (N.D. Cal. 1998) [hereinafter Sun II], vacated, 188 F.3d 1115 (9th Cir. 1999), reinstated, 87 F. Supp. 2d 992 (N.D. Cal. 2000).
[77] Sun Microsystems, Inc. v. Microsoft Corp., 999 F. Supp. 1301, 1303 (N.D. Cal. 1998) [hereinafter Sun I].
[78] Sun V, 81 F. Supp. 2d at 1027.
[79] Id. at 1028 (quoting TLDA § 2.1(a)).
[80] Id. (quoting TLDA § 2.2(a)(iii)).
[81] Id. (quoting TLDA § 2.6(a)(vi)).
[82] Id. (TLDA § 2.6(b)(iv) reads “[A]ny new version of a Product that includes the Java Language compilation function that Licensee makes commercially available to the public after the most recent Compatibility Date shall include a mode which a Tool Customer may use to permit such Product to pass the Java Language Test Suite that accompanied the Significant Upgrade.”).
[83] Sun I, 999 F. Supp. 1301, 1305 (N.D. Cal. 1998).
[84] Id.
[85] Id.
[86] Sun II, 21 F. Supp. 2d 1109, 1127–28 (N.D. Cal. 1998)
[87] Sun III, 188 F.3d 1115, 1119–24 (9th Cir. 1999).
[88] Sun V, 81 F. Supp. 2d 1026, 1033 (N.D. Cal. 2000).
[89] Sun Microsystems, Inc. v. Microsoft Corp., No. C 97-20884RMWPVT, 2000 WL 33223397, at *3 (N.D. Cal. May 8, 2000) [hereinafter Sun VI].
[90] Machado v. S. Pac. Transp. Co., 284 Cal. Rptr. 560, 562 (Ct. App. 1991).
[91] Sun VI, 2000 WL 33223397, at *3.
[92] Id.
[93] Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1198 (11th Cir. 2001) (“That the Software had been distributed pursuant to a GNU General Public License does not defeat trademark ownership, nor does this in any way compel a finding that [plaintiff] abandoned his rights in trademark. Appellants misconstrue the function of a GNU General Public License. Software distributed pursuant to such a license is not necessarily ceded to the public domain and the licensor purports to retain ownership rights, which may or may not include rights to a mark.”).
[94] Around the same time, the Software Freedom Law Center filed the first of several suits challenging violations of the “share-alike” provision of the GPL (mandating that the source code for derivative works be released) in regards to the FOSS product BusyBox. On Behalf of BusyBox Developers, SFLC Files First Ever U.S. GPL Violation Lawsuit, Software Freedom Law Center (Sept. 20, 2007), http://www.softwarefreedom.org/news/2007/sep/20/busybox. However, most of these suits were eventually settled. Of the four relevant decisions available on the Westlaw legal research service, none discuss the terms of the GPL.
[95] Jacobsen v. Katzer, No. C 06-01905 JSW, 2007 WL 2358628, at *1 (N.D. Cal. Aug. 17, 2007) [hereinafter Jacobsen I], vacated in part, 535 F.3d 1373 (Fed. Cir. 2008).
[96] What is JMRI?, JMRI, http://jmri.sourceforge.net (last visited Mar. 21, 2014). Sourceforge is a website that provides software developers a place to collaborate on development, and offers both developers and companies a place to distribute their software. About, SourceForge, http://sourceforge.net/about (last visited Mar. 21, 2014).
[97] Jacobsen v. Katzer, 535 F.3d 1373, 1376 (Fed. Cir. 2008) [hereinafter Jacobsen II].
[98] Id.
[99] Jacobsen I, 2007 WL 2358628, at *1.
[100] Jacobsen II, 535 F.3d at 1376.
[101] Id.
[102] Id.
[103] Id. at 1376–77.
[104] Jacobsen I, 2007 WL 2358628, at *1.
[105] Id.
[106] Jacobsen II, 535 F.3d at 1373.
[107] Jacobsen I, 2007 WL 2358628, at *5.
[108] Id. at *6 (quoting Amended Complaint at ¶ 100).
[109] Id. (quoting Amended Complaint at ¶ 100 and Suppl. Jacobsen Del. at ¶ 2, Ex. A).
[110] Id.
[111] Id.
[112] Jacobsen I, 2007 WL 2358628, at *7.
[113] Id.
[114] Id. Note that unlike infringement of a copyright, a breach of contract creates no presumption of irreparable harm.
[115] Jacobsen II, 535 F.3d 1373, 1378 (Fed. Cir. 2008).
[116] Id.
[117] Id. at 1378–79.
[118] Id. at 1379.
[119] Id.
[120] Jacobsen II, 535 F.3d at 1380 (emphasis added).
[121] Id.
[122] Gilliam v. Am. Broad. Cos., Inc., 538 F.2d 14, 24 (2d Cir. 1976) (“American copyright law, as presently written, does not recognize moral rights or provide a cause of action for their violation, since the law seeks to vindicate the economic, rather than the personal, rights of authors.”).
[123] Jacobsen II, 535 F.3d at 1381.
[124] Id.
[125] Id.
[126] Id. at 1381–82.
[127] MDY Indus., LLC v. Blizzard Entm’t, Inc., 629 F.3d 928, 934 (9th Cir. 2010) [hereinafter MDY II].
[128] Id. at 935.
[129] Id.
[130] Id.
[131] Id. at 936.
[132] Id.
[133] MDY II, 629 F.3d at 937.
[134] MDY Indus., LLC v. Blizzard Entm’t, Inc., No. CV-06-2555-PHX-DGC, 2008 WL 2757357, at *3 (D. Ariz. July 14, 2008) [hereinafter MDY I].
[135] Id.
[136] Id. (citing MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 518–19 (9th Cir. 1993)).
[137] Id. at *4.
[138] Id. (emphasis added).
[139] Id. at *6.
[140] Id.
[141] MDY II, 629 F.3d at 937.
[142] Id. at 939 (citing AES P.R., L.P. v. Alstom Power, Inc., 429 F.Supp.2d 713, 717 (D. Del. 2006)).
[143] Id.
[144] Id. at 940.
[145] Id. (emphasis added).
[146] Id. at 941–42.
[147] Id. at 940.
[148] 17 U.S.C. § 106.
[149] 17 U.S.C. § 411.
[150] § 412(2).
[151] 5 Patry on Copyright § 17:78 (2013) (“Then Solicitor General Elena Kagan found, and every court of appeals to address the issue, as well as over 100 district courts, has held that actual registration, not mere application, is required to satisfy section 411(a), with the exception of the Fifth and the Ninth Circuit which have held that it is sufficient if the Copyright Office receives the application, deposit, and fees. District courts in the District of Columbia have also split on the issue, with most requiring actual registration.”).
[152] United States Copyright Office, Circular 4: Copyright Office Fees, Copyright.gov, http://www.copyright.gov/circs/circ04.pdf (“The fee for expedited searches is $445 an hour.”).
[153] 17 U.S.C. § 502.
[154] § 503.
[155] § 504.
[156] § 505.
[157] § 504(c)(1)–(2).
[158] Erin V. Klewin, Reconciling Federal Circuit Choice of Law with Ebay v. MercExchange’s Abrogation of the Presumption of Irreparable Harm in Copyright Preliminary Injunctions, 80 Fordham L. Rev. 2113, 2115 (2012).
[159] Id. at 2116.
[160] Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010); Perfect 10, Inc. v. Google, Inc., 653 F.3d 976 (9th Cir. 2011).
[161] Klewin, supra note 158.
[162] 6 Patry on Copyright § 22:44 n.14 (2013) (citing cases in North Carolina, Oregon, New York, and California).
[163] 43A C.J.S. Injunctions § 152 (2013).
[164] The Electronic Copyright Office (eCO) form is available at http://www.copyright.gov/forms. Instructions for submitting a paper application are also available at http://www.copyright.gov/circs/circ61.pdf.
[165] United States Copyright Office, Fees, Copyright.gov, http://www.copyright.gov/docs/fees.html.
[166] See, e.g., MDY I, No. CV-06-2555-PHX-DGC, 2008 WL 2757357 at *4 (D. Ariz. July 14, 2008) (“The title—‘Grant of Limited Use License’—makes clear that the license is limited, as does the later reference to a ‘limited, non-exclusive license.’”)
[167] Note, however, that in a situation where the condition involves attribution (as in the above example), the defendant could argue that such language could only be read as a covenant under MDY, since attribution doesn’t “implicate a statutory right.”
[168] See sources cited supra note 69.
[169] Jay Dratler, Jr., Licensing of Intellectual Property § 1.06[1] at 1–50.13 (2003).
[170] Scott Kirsner, Start-ups Take on Tough Customers: Lawyers, Boston Globe (Sep. 1, 2013), http://www.bostonglobe.com/business/2013/08/31/tech-start-ups-target-tough-customer-law-firms/fyznk5CXkhnCqQzHpGEIGO/story.html.

Where the Trade Secret Sits: How the Economic Espionage Act Is Inflaming Tensions in the Employment Relationship, and How Smart Employers and Employees Are Responding

Where the Trade Secret Sits: How the Economic Espionage Act Is Inflaming Tensions in the Employment Relationship, and How Smart Employers and Employees Are Responding
By Adam Waks* A pdf version of this article may be downloaded here.
 
“We dance round in a ring and suppose, But the Secret sits in the middle and knows.” Robert Frost, The Secret Sits, 1942.

I. Introduction

Homaro Cantu’s Chicago restaurant, Moto, is a unique destination. Customers entering the space are greeted, not by a floral arrangement or bubbling fountain, but by a Class IV laser set on a pedestal.[1] What draws most patrons to Moto however is not the unusual décor but the inventive food, which includes an edible menu, synthetic “champagne,” and dessert flapjacks frozen to -273 degrees Fahrenheit.[2] To foodie diners familiar with molecular gastronomy, such bizarre fare is par for the course. For these customers, the real surprise comes when Moto’s signature cotton candy “paper” dessert[3] arrives and they see the following written in edible ink on the confection itself: Confidential Property of and © H. Cantu. Patent Pending. No further use or disclosure is permitted without prior approval of H. Cantu.[4] As remarkable as it is for restaurant customers to see a claim of ownership on their food, it is not surprising that Chef Cantu wants to protect what he considers his intellectual property. The inventive Chef is notoriously secretive, and for good reason: in addition to twelve prospective patents awaiting approval by the Patents and Trademarks Office (“PTO”), Chef Cantu has both invented and perfected a bevy of techniques, materials, machines, and processes that he chooses to keep as trade secrets.[5] Chef Cantu’s desire to protect his intellectual property extends to his employees as well: eager chefs seeking apprenticeships receive a full background check and must sign a confidentiality agreement before ever entering his kitchen.[6] This state of affairs creates a vexing problem for those who study under Cantu: when they move on to other restaurants or open one of their own, what knowledge and information are they allowed to take with them, and what, if anything, are they required by law to leave behind? Trade secrets have always created headaches in the employment relationship. However, as exemplified by Chef Cantu, the dawning of the information age, coupled with a greater understanding of the value of intellectual property, has increased the quantity of economically valuable confidential information businesses (high-tech and low-tech alike) choose to classify as trade secrets. As a result, employers and employees frequently find themselves in convoluted legal and contractual relationships beyond their own expectations or comprehension. Further complicating the matter is the Economic Espionage Act (“EEA”), passed by Congress in 1996. It is the first federal statute to criminalize the theft of trade secrets, and it increases the stakes of employer-employee conflict throughout the nation by allowing the use of government resources to criminally prosecute alleged trade secret misappropriation. This Note is organized into three sections. In Part I, I outline the current status of trade secrecy law at both the state and federal levels. In Part II, I discuss the conflicts created in the employment relationship by trade secrets, and explore how the EEA and its recent amendments are exacerbating these conflicts. In Part III, I provide a summary of best practices aimed at allowing employers to maintain their trade secrets, while allowing employees to preserve their ability to accumulate general knowledge and skill on the job and still retain an optimum level of job mobility.

II. The Current Status of Trade Secrecy Law

A. Civil Law: The Uniform Trade Secrets Act

Trade secrets predate any specific legal regime; they are not statutory creations, but rather secrets kept by one entity to gain advantage over other entities.[7] Over time, laws were developed to provide basic rights to trade secret holders.[8] Modern civil trade secrecy law is primarily governed by state law, which is heavily influenced by the Uniform Trade Secrets Act (“UTSA”).[9] With a few notable exceptions,[10] the laws in states that have adopted the UTSA are relatively uniform. While there are differences in the laws of states that have not adopted the UTSA,[11] those differences are largely procedural and do not effect a merits-based determination of a trade secret’s existence or its misappropriation.[12] A trade secret is broadly defined as information which (1) is secret and (2) has value from being unknown to the general public.[13] Information is considered “secret” if the trade secret holder takes reasonable steps to prevent the secret from discovery,[14] and the information has “value” if it can be defined as having worth in general economic terms (although there is some disagreement between states as to how that worth should be calculated).[15] A trade secret is “misappropriated” when an individual or company (1) obtains the trade secret through improper means, (2) obtains the trade secret through proper means but uses or discloses it against the wishes of the owner, or (3) obtains the trade secret from a third party and knows or has reason to know that the trade secret was not properly obtained or disclosed by that party.[16] The remedies available for misappropriation in the civil context include both monetary damages[17] and injunctions.[18] General monetary damages are measured by economic loss and unjust enrichment, and usually take the form of a reasonable royalty for the period of time it would have taken the violator to discover the trade secret independently.[19] In extreme cases, a damages award may be doubled as punishment to the violator.[20] A successful suit can also leave the violator liable for the trade secret holder’s attorney’s fees.[21] Injunctions can be tailored to fit the needs of any given situation, but the general practice requires barring the violator from utilizing the misappropriated secret for as long as is necessary to eliminate any commercial advantage gained or potentially gained through the misappropriation.[22] An injunction is even available in limited circumstances to prevent an employee possessing trade secrets from joining a competitor.[23]

B. Criminal Law: Enter the Economic Espionage Act

The federal government passed the Economic Espionage Act in 1996[24] in an attempt to create a “comprehensive and systematic” approach to address trade secrecy misappropriation through the federal criminal justice system.[25] The EEA’s definition of “trade secret” is similar to, and informed by, the definition in the UTSA,[26] requiring that the information be both “secret” and have “value” from being generally unknown.[27] The EEA definition of “misappropriation” includes the three acts prohibited by the UTSA, as well as attempt and conspiracy, for which there is no corresponding civil liability.[28] The EEA also contains a mens rea element not required by the UTSA: there is no criminal misappropriation unless the violator (1) intends to misappropriate the secret and (2) either intends to use it for the economic benefit of someone besides the owner or intends or knows that the use of the misappropriated secret will injure the owner.[29] No criminal liability will attach under the EEA unless the misappropriated property is used or intended for use in interstate or foreign commerce.[30] Remedies under the EEA for violations by an individual include a fine with no enumerated cap and a prison sentence of up to ten years.[31] Organizations convicted under the EEA can face fines of up to $5 million.[32] Courts have significant discretion when determining the amount of the fine.[33] A separate provision of the EEA, meant to discourage foreign economic espionage, criminalizes trade secret misappropriation intended to benefit a foreign government, instrumentality, or agent.[34] A violation of this section by an individual carries a maximum fine of $5 million and a prison sentence of up to fifteen years.[35] An organization that violates this provision will be fined the greater of $10 million or “three times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the secret that the organization has thereby avoided.”[36]

C. The Impact of the Economic Espionage Act on Trade Secrets Generally

While there are some substantive differences between the EEA and existing civil trade secrecy laws,[37] the main practical difference is that the EEA is a federal criminal statute. As a result, violators of the EEA are subject to criminal penalties, and prosecutions are financed with public funds. Criminal prosecutions also implicate constitutional protections for defendants not implicated in civil trials, including the Fifth Amendment protection against self-incrimination, the Sixth Amendment guarantee to a speedy/prompt/timely trial, and the higher burden placed on prosecutors of proof beyond a reasonable doubt.

III. Trade Secrecy Law in the Employment Context

An economically efficient trade secrecy regime should allow employers to feel secure in their possession of trade secrets[38] and allow employees to gain general knowledge and skills in the workplace[39] while retaining an appropriate level of job mobility.[40] Such a regime requires that participants be able to distinguish between unprotected information that employees can take with them to subsequent jobs and protected information that they cannot. Current trade secrecy laws do a poor job of making this distinction and, as a result, create tension in the employment relationship.

A. Trade Secrecy and the Employment Relationship: Policy

To date, much of the commentary on trade secrecy in the employment context has focused on striking a balance between an employer’s interest in protecting proprietary information and an employee’s interest in gaining and using knowledge and skill to earn a living.[41] In reality, these interests are complementary: employers and employees both benefit from a regime that seeks to maximize the protection of these interests.[42] Although there are strong public policy rationales for favoring a trade secrecy regime that recognizes the relative importance of these complementary interests, this Note focuses on the practical implications for each party in the employment relationship.[43] Employees benefit from laws protecting trade secrets because if employers do not feel secure in their possession of a trade secret, they will superficially limit the employee’s access to that information. Employers will do this by hiring fewer employees, by unduly limiting which existing employees may work with the secret, or by installing economically inefficient safeguards in the workplace,[44] all of which result in negative outcomes for employees.[45] Meanwhile, employers benefit when their employees gain knowledge and skill on the job, as the fruits of an experienced employee generally accrue to the employer. Employers also benefit from a high level of employee mobility: if an employee suspects that experience or knowledge gained on the job is a trade secret, and thus not marketable, the employee has less of an incentive to acquire the experience or knowledge in the first place. Furthermore, employers do not want to limit themselves to the employees they already have; they also want to be able to hire new, highly skilled, highly knowledgeable employees away from their competitors.[46] In a world where trade secrecy laws unduly restrict employee’s mobility, employers will be left with a disillusioned workforce with little incentive to expand their knowledge and experience, while also lacking the ability to hire new, quality employees.

B. Trade Secrets or “Know-How” v. General Knowledge and Skill

Whether a particular piece of information is a protectable trade secret owned by an employer, or general knowledge and skill an employee may take between jobs, is the crux of the issue creating tension in the employment relationship regarding trade secrets. Unfortunately, it is impossible to draft a set of rules ex ante to describe the millions of potential scenarios involving the classification of a particular piece of information as protectable or not.[47] This issue is significant—if too much information is protected as trade secrets employees lose job mobility, but if too little information is protected employers lose some of the economic value of their information when their employees leave for a new company. As described above, either scenario will have adverse impacts on both employees and employers. Historically, courts have attempted to distinguish unprotectable “general knowledge and skill” from protectable trade secrets or “know-how,”[48] on the basis that the former stem from an employee’s “education, ability, and experience,”[49] while the latter “derive their economic value from not being public information or general knowledge within an industry”[50] or are “informational and experiential expertise related to [the] practical application of specifics.”[51] Courts often rely on lists of factors, such as those enumerated in past versions of the Restatement of Torts, for additional guidance.[52] While this approach provides some direction, balancing multiple lists of factors and wading through complex judicial prose is a heady task for those formally trained in legal analysis, let alone the average American, and there remain many circumstances in which an employee or employer will be unsure ex ante whether a piece of information is general knowledge or skill or a protected trade secret. This confusion results in a system of after-the-fact litigation, even in cases where neither party is aggressively flouting cultural or legal norms. An example of information that can be difficult to classify is “negative information,” a form of legally protected know-how that “has commercial value from a negative viewpoint.”[53] Put simply, negative information is the knowledge that some technique, process, formula etc. does not work. The UTSA expressly protects negative information as a trade secret, but gives no express justification for doing so.[54] On the one hand, the thought that an employee cannot take and utilize negative information seems strange; we, as a society, want inventors to find solutions to problems, and the knowledge that something does not work is precisely the sort of information we think of as a starting point that can lead to scientific and cultural breakthroughs.[55] On the other hand, it makes perfect sense that an employer would want to keep and protect this information if it is not generally known in the industry.[56] Regardless of whether a given piece of information is protected or not, unless the employer and the employee agree on its classification up front, there may be legal ramifications down the road if that information turns out to be valuable.

C. How the EEA Increases Conflict in the Employment Relationship

As of September 2012, only 124 cases have been filed under either Section 1831 or 1832 of the EEA, with the vast majority brought under Section 1832.[57] However, the dearth of prosecutions under the act to date should not be taken as proof that the EEA is not currently affecting employment relationships. To begin with, Congress recently amended the Act,[58] and President Obama has stated that he intends to step up prosecutions under the Act as amended.[59] The broad bipartisan support for these amendments, coupled with the President’s statement, has already led the Department of Justice (“DOJ”) to place an increased emphasis on prosecuting trade secrecy misappropriation under the EEA.[60] Furthermore, regardless of the number of prosecutions the DOJ brings, the Act is still likely to have a chilling effect on job mobility and innovation as employees must consider the “worst-case scenario” when making decisions about how to treat potentially actionable information. The lack of clarity about what information is protected, combined with the potential for massive fines and jail time for misappropriation, likely deters employee action to an extent above and beyond what is suggested by the number of prosecutions actually filed.
1. Issues for Employers
The EEA benefits employers in two ways: (1) employers do not need to use private money to prosecute alleged violators and (2) criminal penalties provide a strong deterrent to potential violators. However, these benefits are not easily realized. For one, while the federal government will use public money to prosecute alleged EEA violators, trade secret holders must first convince the DOJ to take their case.[61] In the past, this has required trade secret holders to invest considerable time and money, up to and including actually preparing the case for the DOJ.[62] Moreover, the increased deterrent created by the EEA cuts both ways for employers: while the threat of criminal sanctions may prevent an employer’s employees from leaving to join a competitor and taking trade secrets with them, that employer may not be able to hire competitors’ employees, since those employees too fear the risk of changing jobs. Even worse, employers now have to worry about exposing themselves to the threat of criminal sanctions for misappropriating trade secrets when hiring employees from a competitor. The EEA also has the potential to hurt employers in other ways. First, the federal government will receive the money from any fines assessed for a criminal conviction of trade secret misappropriation, meaning there will be fewer assets available to compensate the intellectual property holder for economic damages caused by the misappropriation.[63] In fact, it is feasible that an intellectual property holder might spend significant time and money working up a case for the DOJ, only to find that there is no money left to compensate the intellectual property holder when the criminal case is over, leaving the intellectual property holder worse off than he or she was before initiating the prosecution. Second, a criminal trial means that the intellectual property holder may be forced to disclose private financial information he or she would prefer to keep secret,[64] and possibly even be required to disclose the trade secret itself.[65]
2. Issues for Employees
For employees, the EEA is uniformly negative. The creation of serious federal criminal penalties results in over-deterrence, as employees who genuinely believe they possess unprotected information may still choose not to utilize it, fearing that if the information is later found to be protected, they will face jail time, large monetary fines, and the stigma associated with a criminal conviction. As a result, fewer employees will move between companies to new positions where they would be more economically useful, and fewer employees will leave to start businesses that compete with those of their current employers. Furthermore, employees generally now have less of an incentive to gain experience on the job, knowing that their employer might appropriate any knowledge or skill the employee gains simply by classifying it as a trade secret.

IV. Best Practices

As companies increase the amount of valuable, protectable information they create, and as the EEA provides for the federal prosecution of, and criminal penalties for, trade secret misappropriation, employers and employees are placed in an uncomfortable position regarding the classification and use of trade secrets. While this state of affairs is clearly adding to the inherent tension trade secrets generate in the employer/employee relationship, the question remains: what actions can employers and employees take to exploit new incentives produced by this regime, while minimizing their exposure to new risks?

A. For Employers

1. Protecting Your Trade Secrets
a. Make Sure Your Intellectual Property Satisfies the Trade Secrecy Requirements
For information to qualify as a trade secret, the information must be secret and derive value from being generally unknown.[66] Value is something information usually does or does not have, and, while “value” is defined differently in different statutes,[67] there are few practical things you as an information holder can do to ensure your information has value.[68] More important, from the standpoint of practical action, you must ensure that your information remains secret. The secrecy condition has three requirements: you must (1) identify the information as a trade secret, (2) notify others that you consider the information a trade secret, and (3) take precautions against reasonably foreseeable intrusions.[69] The first requirement simply implies that you, as a possessor of information, should determine whether that information is a trade secret, as opposed to general knowledge or skill.[70] This requirement can be satisfied with some generality, but it is important: taking time ex ante to determine what information you consider proprietary places you in a better position to satisfy the next two requirements of the test, and to prevail in court if litigation becomes necessary. There is a large body of literature concerning what it takes to satisfy the second and third requirements of notification and protection against intrusion.[71] Generally speaking, no one expects a trade secret owner to hold daily meetings to apprise employees of what information is or is not protected, but employers are expected to make some effort to notify employees where trade secrets exist. Potential actions include updating employee and contractor contracts, agreements, and handbooks to include information on trade secrecy, marking trade secrets in the workplace as “confidential,” and posting notices reminding workers that they are working with trade secrets.[72] Regarding efforts to protect the information from intrusion, examples of steps an intellectual property owner can take include installing computer security (such as firewalls and passwords) and physical restrictions (such as locked doors and locked file cabinets) where trade secrets are stored.[73]
b. When Hiring a New Employee
i. Contract and Employee Hiring Materials Contracts are the single most important factor affecting the outcome of trade secrecy litigation and are the primary means by which employers and employees negotiate the boundaries between “know-how” and “general knowledge and skill” ex-ante.[74] Through contracts, you can tell your employees exactly what you expect of them, including what information they need to keep secret. While employees have a common law duty not to reveal an employer’s trade secrets,[75] it is in both parties’ interest to have an express, written contractual agreement addressing trade secrecy.[76] Contracts can contain either general trade secrecy provisions or a separate non-compete agreement (“NCA”) or non-disclosure agreement (“NDA”).[77] You should have your employees sign your trade secrecy agreement when you first hire them, ensuring that the secrecy provisions are considered part of your overall business arrangement, and thus obtained in return for valuable consideration.[78] If you require additional contractual protection at a later date, you may need to give the employee additional consideration in return.[79] If you do not have a formal employment contract with some of your workforce, you should require all such individuals working with or around protectable information to sign an NDA. When contracting for trade secrecy protections and limits to employee mobility, specificity is key. If a contract is too broad, an employee may refuse to sign it, or may demand compensation beyond what you are willing to pay. In the worst-case scenario for an employer, an employee may agree to the terms of a contract, only to have a court find the contract unenforceable or modify it.[80] All employees should receive and sign an employee handbook, updated regularly, to remind them about your trade secrets and their duty to safeguard them. Additionally, all contracts, handbooks, and NDAs should specify what information you consider proprietary.[81] When hiring someone specifically to develop or improve intellectual property you intend to keep as a trade secret, you should include contractual provisions expressly assigning any and all information developed in the course and scope of the employment (if the individual is an employee) or project (if the individual is a contractor) to you. Where negative information is a concern, you should announce your intention to retain this information up front to avoid confusion later.[82] You may also wish to ask the employee/contractor to assign to you any intellectual property he or she is bringing into the relationship that relates to the work-product being developed.[83] In limited circumstances, you may also want to have your employees sign an NCA. While NCAs do not generally influence trade secrecy litigation,[84] NCAs can be useful as a blunt instrument to protect intellectual property whose usefulness is of limited duration. Several states, including California, will not enforce NCAs on general policy grounds.[85] In states that do enforce NCAs, courts will require that the NCA comply with the “rule of reason,” meaning that any restraints placed on the employee are (1) no greater than necessary to protect the employer, (2) not unduly oppressive to the employee, and (3) reasonable in light of sound public policy. If the judge finds, on balance, that the NCA does more to limit employee mobility than is necessary, the judge can either find the NCA unenforceable altogether or limit its terms to the extent the judge deems sufficient to protect the employer.[86] Specificity is helpful for a “rule of reason” analysis: the more specific the agreement limiting an employee’s right to work, the more likely a court will find that it satisfies the rule of reason.[87] ii. Have Certain Employees Conduct a Brain Dump[88] Employees who leave their jobs to start ventures that compete with their former employers will often claim that they had the idea for their venture before beginning employment, and that any information they learned on the job was general knowledge and skill, not protected intellectual property.[89] This tactic is a common defense to allegations of trade secret misappropriation, and if successful, allows these employees to retain the intellectual property for themselves. The best way to prevent this defense is to ask all employees to conduct a “brain dump” prior to beginning the employment relationship, wherein they lay out all relevant intellectual property they own.[90] Employees should retain a copy of the brain dump and should give you a copy for your records. Brain dumps benefit both employees and employers. A brain dump will put the employee at ease regarding ownership of the items the employee records, facilitate the transition into the employment relationship, and give you clear notice regarding what the employee believes he or she is bringing into the relationship. The brain dump will also provide you with specific knowledge regarding the boundaries of the employee’s claims to any intellectual property developed for you. A further benefit is that brain dumps are notoriously under-inclusive, and you may actually capture some otherwise protectable intellectual property the employee brings into the relationship.[91] Some employees may push back against writing this information down and handing it to their employer – they may worry that you will appropriate this information and use it yourself. You can try to answer the employee’s concerns by letting the employee know that the purpose of the exercise is specifically to make sure the employee gets to keep his or her prior intellectual property. You can also emphasize that it is up to the employee to phrase the brain dump, so the employee can control the conversation by writing down just enough to keep his or her intellectual property without actually giving away potential business ideas. In some cases this will not assuage the employee, who will refuse to hand any brain dump over to you.
c. Terminating an Employee/When an Employee Chooses to Leave
i. Exit Interview The exit interview gives you an opportunity to remind your employee of his or her contractual obligations regarding your intellectual property.[92] Where no contract exists, the exit interview provides you with a chance to tell the employee about his or her common law duties not to reveal your trade secrets.[93] The exit interview also enables you to control the conversation regarding potential future conflicts by telling the employee exactly what information you consider proprietary.[94] Equally important, the exit interview allows you to learn where your soon-to-be ex-employee is going. This information can help you determine how much attention you should pay to the employee’s future activities to ensure no trade secrets are misappropriated. Knowing your employee’s plans will also help you determine whether this is one of the rare instances in which you should seek a preliminary injunction to prevent your employee from taking the new position.[95] Additionally, knowing where the employee is going enables you to contact the employee’s new employer with any concerns you may have. Any conversation with, or letter to, the new employer should include the statement that your ex-employee possesses trade secrets, and should be as specific as possible without placing your trade secrets in danger of disclosure.[96] When deciding whether or not to contact the new employer, it is important to remember that conversations between competitors can raise the specter of anti-trust issues: any conversation you have with your employees’ future employer should steer well clear of any topics which might even suggest the appearance of impropriety regarding competition for employees.[97] Finally, the exit interview gives you the ability to maintain your relationship with your ex-employee, or at the very least, end the relationship on a professional, civil note. This simple touch can, in some cases, make an employee think twice before walking away with information he or she suspects might be a trade secret. While only successful in this capacity on the margins, the cost of an exit interview is an hour of time, as opposed to the massive monetary, emotional, and reputational costs of litigation. There is no reason not to try it, and every reason to hope it works. ii. Do Not Delete the Employee’s Records When an employee leaves, it is not always immediately clear whether he or she has misappropriated a trade secret. Upon receiving notice of the employee’s upcoming departure, you should prepare an inventory of sensitive information the employee worked with, placing you on notice of what potential misappropriation, if any, you should be concerned about. You should also plan to retain the employee’s records in case they are needed later for litigation. If the employee’s physical workstation is required for another employee, you should have your IT department make a copy of the employee’s hard drive and store it in order to maintain these records.
d. If You Need to Sue
i. Civil, Criminal, or Both? If you determine that your trade secrets have been misappropriated, you will likely want to seek a legal remedy. Which legal remedy is right for you will depend on many case-specific factors, including but not limited to the extent of your damages, what assets the violator has, the expected cost of civil litigation, whether you plan to seek a preliminary injunction, and whether the additional weight of criminal sanctions on the violator might harm your prospects of receiving damages. Before you can make an informed decision regarding a legal remedy however, you must first conduct a preliminary investigation to obtain all the relevant details about the misappropriation. This information will benefit you regardless of your eventual decision.[98] Following the investigation, you can weigh your options and decide whether to initiate a private civil lawsuit, refer the issue to the DOJ for criminal prosecution, or pursue a dual suite strategy.[99] ii. Be “White of Heart and Empty of Head”[100] At every stage in a trade secrecy case, from the initial discussions between a trade secret holder and an accused violator, to the time a verdict is handed down by a judge or jury, facts trump law.[101] This means that you should not do anything that gives even the appearance of impropriety. Instead, you should contract up front to protect your trade secrets, be clear with employees about what information you consider protected, and remind outgoing employees of their continuing contractual obligations and what you consider protected information. Above all, you should be reasonable regarding what information you claim is protected – inevitable disclosure doctrine aside,[102] judges tend to have little patience for employer’s attempts to wrest legal protection from employees they failed to bargain with up front or to prevent employees from seeking meaningful employment elsewhere.[103]
2. Protecting Yourself From Liability For Misappropriating Others’ Trade Secrets
Employers must be as careful to protect themselves from violating the trade secrets of their competitors as they are when protecting their own trade secrets. The civil liability for trade secret misappropriation can be large,[104] and the criminal liability can be even larger.[105] The key to protecting yourself from civil liability under the UTSA is defeating the “knowledge” requirement in the statute,[106] while in the criminal context, avoiding liability under the EEA is most easily accomplished by defeating the statute’s “intent” requirement.[107] Fortunately, there are several simple steps employers can take to essentially guarantee this freedom from liability.
a. Employment Contract and Acknowledgement Forms
The employee contract and/or employee handbook should state that you take trade secrecy seriously, that it is your employees’ responsibility to police their own actions regarding their previous employer’s trade secrets, and that employees should report any concerns they have to you. You should require new employees to sign a statement acknowledging your policy and agreeing to its terms. The handbook should also give an overview of state trade secrecy laws and the EEA, and you should require new employees to sign a statement that the laws have been explained to them, that they understand them, and that they acknowledge their responsibility to use all possible efforts to avoid misappropriating a previous employer’s trade secrets.
b. Entrance Interview With the New Employee
An entrance interview will let you discern what, if any, potential trade secrets your new employee possesses from previous employment. Whether or not you are aware of any red flags, during the entrance interview you should repeat the admonishment contained in your employment contract and acknowledgement forms: it is the employee’s responsibility to police his or her actions with respect to his or her former employer’s trade secrets, that you take trade secrecy seriously, and that the employee should immediately bring any concerns he or she has to your attention. If there are any red flags, you should take the additional steps discussed below.
c. Contact the Employee’s Previous Employer[108]
Contacting your new employee’s previous employer has two benefits. First, it allows you to form a relationship with the previous employer before any issues arise. Second, it gives you the opportunity to go on the record about your company policy regarding trade secrecy and the EEA. You should specifically mention the EEA in your conversation, and, depending on your level of concern, even suggest that they instruct their former employee, if they have not already done so, what information that was within that employee’s purview they regard as a protected trade secret.
d. Construct “Ethical Walls”[109]
Where a specific concern exists that an employee possesses actionable proprietary information from a previous employer relevant to his or her new position with your company, you may wish to construct an “ethical wall” around the employee to prevent disclosure. Effective restraints include hiring the employee into a position where trade secret disclosure is unlikely, telling your other employees not to discuss troubling topics with the new employee, and, if necessary, completely separating the new employee from employees engaged in the area of concern.[110]

B. For Employees

While a system that enhances employee mobility benefits employees and employers equally, individual employees have a stronger incentive to retain mobility.[111] To succeed in this endeavor, employees must be aware of the issues trade secrecy laws present so they can take action to gain marketable skills, retain job mobility, and protect themselves from the threat of future litigation. Negotiating this complex landscape is not easy, and there is significant variability regarding a given employee’s ability to bargain with his or her employer. Regardless, there are several actions most employees can take to help effectuate a positive outcome in their employment relationships regarding the use and retention of information.
1. When Hired At a New Company
a. Conduct Your Own Brain Dump[112]
The absolute worst-case scenario for you as an employee is to have your employer lay claim to knowledge, skill, or intellectual property that you rightfully owned before beginning employment.[113] If you are starting a job where you will be working with trade secrets, in an area where you believe you already possess intellectual property, it is imperative that you create a record of that property before beginning employment.[114] The most efficient way to do this is to write down all of the aforementioned information, and send a copy, certified mail, to a professional such as your attorney or accountant.[115] This way, if you ever face trade secrecy litigation, you will have a record of what property was rightfully yours prior to employment, backed up by a quality witness.[116]
b. Encourage Specificity in Your Contract
If your employer asks you to assign your rights regarding trade secrets, or demands that you sign an NDA or NCA, you should request that your employer specify what information you are being asked to renounce your claim to. Specificity in the contract provides you, as an employee, with two important benefits. First, it is important to know your employer’s expectations. Your employer’s expectations are especially important if you are going to be working directly with information that you believe may create negative information.[117] You should stress that this is for your employer’s benefit as much as your own – you want to be sure you do not accidentally misappropriate information your employer believes to be a trade secret because you thought it was general knowledge or skill. Second, to the extent that you do have any leverage when it comes to negotiating your contract, you increase that leverage by requesting specifics – it is easier to demand a higher salary when you are asked to give up all future rights to x, y, and z than it is when you are, for example, asked to sign a simple, standard NDA form. Tell your employer that the work you will do for them is worth more than their initial offer, since you are not simply agreeing to do work in exchange for a salary, but also being asked to give up rights to a higher salary in the future. This tactic will have varying degrees of success based on your negotiating leverage as a potential employee, but it is worth the chance to get either a higher salary or be allowed to keep rights you otherwise would have to give up.
c. Be Prepared to Walk Away
Job prospects can be few and far between, even for highly educated employees. However, it is imperative that you remember what is at stake when a potential employer demands that you give up intellectual property rights in return for employment. When you agree to forego those rights, you decrease your future employment mobility, impair your ability to gain knowledge and skill while on the job, and face the prospect of civil and criminal liability in the future if you do not live up to your end of the bargain. If an employer demands that you give up rights above and beyond what the employer is willing to compensate you for, you must be prepared to turn down the job.
2. When Terminated and/or Resigning
a. Keep the Moral High Ground
When your relationship with your employer ends, voluntarily or not, it is vital that you maintain a “white heart and an empty head.”[118] This means you should comply with all agreements executed between you and your now former employer and not take any company data or property with you.[119] In addition, you should refrain from conveying any memorized data to your next employer. This will require you to determine where your previous employer’s trade secrets stop and where your general knowledge and skills begin. You may wish to be conservative in this regard until you have an opportunity to talk to your previous employer about what information he or she considers proprietary. If you are leaving voluntarily, you should be open and honest with your ex-employer about your new employment and what it entails.
b. Request an Exit Interview
Few employees ever think of requesting an exit interview if their employer does not plan on conducting one, but there are several ways an exit interview can be beneficial. For example, while an exit interview does give your employer the opportunity to define what he or she considers protected intellectual property, it can also apprise you of your employer’s expectations regarding that property, provide you an opportunity to protest if you think your employer is being unreasonable, and give you some idea of how aggressively your employer may pursue alleged trade secret misappropriation.[120] Second, and more important, the exit interview enables you to maintain your relationship with your ex-employer. It will surprise many employees to hear, but employers can feel genuinely hurt when a trusted employee decides to leave. Taking a few minutes to make sure you leave on good terms is well worth the investment.
3. When Leaving to Start Your Own Company
Employees leaving to start their own company or join an emerging company face a more difficult situation than those moving to an established company. The clout of an established company will deter litigation over intellectual property, because established companies are more likely to have the resources to defend against such litigation, as well as intellectual property of their own they can use as a shield.[121] Furthermore, the chance that an ex-employer will detect a small or inadvertent misappropriation by an ex-employee working for a large, well-financed organization is relatively small. Individuals starting or joining an emerging company will not have the benefit of money or an organization to stand behind them, and the cost of litigation against startups is much lower than against established companies.[122] Potential misappropriation is also more easily detected, especially where the startup’s business model revolves around the information at issue. Finally, startup investors are easily scared away by the threat of litigation, making the new company extremely vulnerable.[123] For all of these reasons, employees looking to leave an existing employer and start a new company must be extremely careful regarding the potential disclosure of that employer’s trade secrets.
a. Request an Exit Interview
If you are planning to leave your current position to start a new company, it is essential that you request, and obtain, an exit interview. In the exit interview, you should be clear that you are leaving to start or join a new company. If your employer intends to assert ownership claims to any information required for your business, you want to know that as soon as possible. This is your opportunity to try to settle any potential issues without litigation – take full advantage of this meeting. In certain circumstances, you may wish to disclose your basic business model to your employer in the exit interview for the purpose of determining if your employer believes that your business plan infringes on their intellectual property. For example, if your business plan does touch on your employer’s intellectual property, then you are likely leaving because you have perceived an opening in the market that your employer is not currently exploiting. If it is not possible for you to discuss your business model without surrendering this knowledge to your employer, and you believe your employer might wish to expand into the market and compete with you if they become aware of the market opportunity, you will likely not wish to discuss it. On the other hand, if you can discuss your business plan generally without betraying your core competitive advantage, or if you do not believe your employer intends to expand into that market and compete with you, then it can be helpful to get your employer’s tacit “approval” before you even walk out the door.
b. Construct Ethical Walls
If you are concerned that you are in danger of disclosing information you know to be your ex-employer’s trade secret, you should place a wall between yourself, as an entrepreneur building and running a new company, and any position within the new company that works with the information in question.[124] Even where you do not think you are in danger of disclosure, when hiring someone to do work you performed for your previous employer, it makes sense to put up an ethical wall to protect yourself from even the appearance of impropriety.

V. Conclusion

As the modern world continues to shift to an information-based economy, more companies of all stripes are relying on intellectual property laws to protect their valuable information assets. To the extent that companies rely on trade secrecy to protect these assets, they create tension in the employment relationship. The EEA increases this tension by making public money available to prosecute trade secret misappropriation and establishing criminal liability for those convicted. Fortunately, there remain ways for employers and employees to protect themselves and continue innovating in a global marketplace. Just look at Homaro Cantu: he is working to protect his intellectual property in the kitchen while also training the next generation of molecular gastronomists, several of whom have already gone on to start successful operations of their own.[125] Trade secrecy may be increasing, but as long as employers and employees alike are knowledgeable about the issues trade secrets create, there is no reason why it should arrest innovation.
* Adam Waks is a 2014 J.D. candidate at the New York University School of Law. He received a B.A. in Psychology and in English and Creative Writing from the George Washington University in 2007. He would like to thank Professors Rochelle Dreyfuss and Harry First for their comments and editing during the Innovation Policy Colloquium, for which this note was originally written. He would also like to thank Molly Ryan, Leah Rosenbaum, and the rest of the JIPEL editorial team for their thoughtful assistance.
[1] The laser, normally used for surgery, is used at Moto for food preparation. See Jennifer Reingold, Weird Science, Fast Company, May 2006, at 40, 42.
[2] See id. at 47.
[3] The dessert is a flat sheet resembling a leaf of paper, embossed with an image of a stick of cotton candy, and which tastes like the fairground treat when dissolved on the tongue.
[4] See Pete Wells, New Era of the Recipe Burglar, Food & Wine (Nov. 2006), http://www.foodandwine.com/articles/new-era-of-the-recipe-burglar.
[5] See Reingold, supra note 1, at 48; Wells, supra note 4. [6] See Reingold, supra note 1, at 48.
[7] See Thomas J. Rechen & Peter L. Costas, Trade Secrets Law – Principles, Pitfalls and Pronouncements, 71 Conn. B.J. 360, 362 (1997) (tracing the evolution of trade secrecy laws from the common law to state and then federal statutes).
[8] Because of its common law roots, trade secrecy doctrines developed differently in the different states across the United States. See id.; see also Unif. Trade Secrets Act, Prefatory Note (with 1985 amendments) (“Notwithstanding the commercial importance of state trade secret law to interstate business, this law has not developed satisfactorily. In the first place, its development is uneven. Although there typically are a substantial number of reported decisions in states that are commercial centers, this is not the case in less populous and more agricultural jurisdictions. Secondly, even in states in which there has been significant litigation, there is undue uncertainty concerning the parameters of trade secret protection, and the appropriate remedies for misappropriation of a trade secret.”).
[9] In 1979, the Uniform Trade Secrets Act was published in an attempt to codify a national standard for trade secrecy law by offering states a comprehensive package of trade secrecy legislation ready for adoption. See Unif. Trade Secrets Act, Prefatory Note (amended 1985). States quickly obliged, and as of March 2013, 46 states have adopted the broad principles of the Act, and legislation to formally adopt the UTSA has been introduced in a 47th state. See The Nat’l Conference of Comm’rs on Unif. State Laws, Legislative Fact Sheet Trade Secrets Act, Uniform L. Commission (2014), http://www.uniformlaws.org/LegislativeFactSheet.aspx?title=Trade%20Secrets%20Act.
[10] See infra note 23 on inevitable disclosure and the related discussion.
[11] The laws of states that have not adopted the UTSA are still primarily governed by state common law, even in instances where those states have enacted their own trade secrecy statutes.
[12] Differences include statutes of limitations, the availability of attorneys’ fees, and the requirements for preliminary injunctions. One merits based difference is the “continuous use requirement,” which exists in some jurisdictions but not others, and which dictates that trade secret holders must continue to use a trade secret in a commercial manner for it to continue to be subject to trade secrecy protection. The UTSA does not include this requirement. See Michael H. Bunis & Anita Spieth, Common Law v. UTSA: The Last States Standing, Law360 (Apr. 02, 2012, 12:22 PM ET), available at http://www.choate.com/uploads/113/doc/bunis-spieth-law360-common-law-v-utsa-the-last-states-standing.pdf.
[13] See Unif. Trade Secrets Act § 1 (1985); Restatement (Third) of Unfair Competition §39 (1993).
[14] See Unif. Trade Secrets Act § 1 (1985); Restatement (Third) of Unfair Competition § 39 (1993).
[15] Compare Tex. Penal Code Ann. § 31.05(a)(4) (West 2013) (“‘Trade secret’ means the whole or any part of any scientific or technical information, design, process, procedure, formula, or improvement that has value and that the owner has taken measures to prevent from becoming available to persons other than those selected by the owner to have access for limited purposes.”), and H.B. 1225, 2013 Mass. 188th Gen. Ct. (Mass. 2013) (proposing a value requirement), with Mass. Gen. Laws Ann. ch. 93, § 42 (West 2014) (not requiring any value for the existence of a trade secret); see also C. Rachal Pugh, Bernier v. Merrill Air Engineers, 17 Berkeley Tech. L.J. 231, 235 (2002) (noting that the UTSA and the First Restatement definition of trade secret differ in that the UTSA omits any requirement that the information be “used in one’s business,” signaling support for a broader definition placing less emphasis on the actual value of the secret).
[16] Unif. Trade Secrets Act § 1(2) (1985) (“(i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (ii) disclosure or use of a trade secret of another without express or implied consent by a person who (A) used improper means to acquire knowledge of the trade secret; or (B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was (I) derived from or through a person who had utilized improper means to acquire it; (II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) before a material change of his [or her] position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.”).
[17] Unif. Trade Secrets Act § 3 (1985).
[18] Unif. Trade Secrets Act § 2 (1985).
[19] Unif. Trade Secrets Act § 3(a) (1985).
[20] Id. at § 3(b).
[21] Id. at § 4.
[22] Id. at § 2 cmt. (“The general principle of Section 2(a) and (b) is that an injunction should last for as long as is necessary, but no longer than is necessary, to eliminate the commercial advantage or ‘lead time’ with respect to good faith competitors that a person has obtained through misappropriation. Subject to any additional period of restraint necessary to negate lead time, an injunction accordingly should terminate when a former trade secret becomes either generally known to good faith competitors or generally knowable to them because of the lawful availability of products that can be reverse engineered to reveal a trade secret.”).
[23] The judicially created doctrine of “inevitable disclosure” holds that where an employee in possession of trade secrets wishes to take a new position with a different company, and where the new position is of such a nature that it is inevitable that the employee will disclose the trade secrets in the course and scope of his or her new employment, the court may enjoin the employee from taking the new position. Although a potent tool for employers, the doctrine is inconsistently applied by courts, and has been rejected entirely in some circuits. See Barry L. Cohen, The Current Status of the Inevitable Disclosure Doctrine A Unique Trade Secret Litigation Tool, 3 Landslide 40, 41 (2010); see also Adam Waks, Keeping the Cat in the Bag: Inevitable Disclosure Doctrine and Its Inevitable Evolution, Jipel Blog (Feb. 6, 2014, 4:58 PM), https://jipel.law.nyu.edu/2014/02/keeping-the-cat-in-the-bag-inevitable-disclosure-doctrine-and-its-inevitable-evolution/.
[24] Economic Espionage Act of 1996, Pub. L. No. 104–294, 110 Stat 3488.
[25] See Presidential Statement on Signing the Economic Espionage Act, 2 Pub. Papers 1814 (Oct. 11, 1996). (“This Act establishes a comprehensive and systemic approach to trade secret theft and economic espionage, facilitating investigations and prosecutions.”). While the EEA does not preempt state criminal law, it can provide guidance to trade secret holders and their employees in a globalized world where job opportunities often extend beyond state lines. See 18 U.S.C. § 1838 (2012).
[26] H.R. Rep. No. 104-788, at 12 (1996), reprinted in 1996 U.S.C.C.A.N. 4021, 4031 (“The definition of the term ‘trade secret’ is based largely on the definition of that term in the Uniform Trade Secrets Act.”).
[27] 18 U.S.C. § 1839(3) (2012).
[28] Id. § 1832(a).
[29] Id.
[30] See Theft of Trade Secret Clarification Act of 2012, Pub. L. No. 112-236, 126 Stat. 1627 (2102). The statute used to require that the trade secret be “included in a product that is produced for or placed in interstate or foreign commerce,” but the definition was broadened as a result of a congressional amendment passed in the wake the acquittal of Sergey Aleynikov, a computer programmer accused of stealing information relating to his employer’s high frequency trading system. See United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012).
[31] 18 U.S.C. § 1832(a) (2012).
[32] Id. § 1832(b).
[33] See United States v. Howley, 707 F. 3d 575, 582 (6th Cir. 2013) (“Determining the value of a trade secret, we acknowledge, is no easy task. But district courts need not reach an exact figure for the loss a victim suffered or the amount of harm a defendant caused or intended to cause; a “reasonable estimate” will do. U.S.S.G. § 2B1.1, cmt. n. 3(C).”).
[34] 18 U.S.C. § 1831 (2012).
[35] Economic Espionage Act 18 U.S.C. § 1831 (2013) amended by the Foreign and Economic Espionage Penalty Enhancement Act (Pub. L. 112-269, January 14, 2013, 126 Stat. 2442) (increasing the available fine for individuals from $500,000).
[36] Economic Espionage Act 18 U.S.C. § 1831(b) (2013) (increasing the available fine for organizations from $10 million).
[37] For example, the EEA expressly defines several technologies not mentioned in the UTSA as trade secrets, ostensibly for the purpose of updating the definition to keep pace with fast changing technologies. The EEA also defines “value” more broadly than the UTSA to include any information that has value from not being known by the public, whether or not the trade secret owner is actually capable of capturing any of that value. See Gerald J. Mossinghoff et. al., The Economic Espionage Act: A New Federal Regime of Trade Secret Protection, 79 J. Pat. & Trademark Off. Soc’y 191, 197 (1997).
[38] See Rockwell Graphic Sys., Inc. v. DEV Indus., Inc., 925 F.2d 174, 178 (7th Cir. 1991) (describing the dual purpose of trade secrecy law as protecting personal property and regulating interpersonal relationships, and noting that each rationale serves a different purpose: the first encourages inventive activity, and the second prevents the undeserved redistribution of wealth).
[39] See e.g. Peter C. Quittmeyer, Trade Secrets and Confidential Information Under Georgia Law, 19 Ga. L. Rev. 623, 656 (1985) (“The distinction between trade secrets and general trade information reflects the principle that an individual should not be precluded from practicing his chosen trade or profession merely because he has become more skillful, sophisticated, and proficient as a result of prior experience and business associations.”).
[40] High levels of job mobility are beneficial to both employees and employers: employees want to work for employers who need them most and will compensate them accordingly, and employers want to hire the most skilled employees. See, e.g., Charles Tait Graves, Trade Secrets as Property: Theory and Consequences, 15 J. Intell. Prop. L. 39, 43–44 (2007).
[41] See generally Melvin F. Jager, Trade Secrets Law § 8.01[3] (rev. 1992); see also Trade Secrets § 5.02 (rev. 1990).
[42] See Graves, supra note 40; see also Miles J. Feldman, Toward A Clearer Standard of Protectable Information: Trade Secrets and the Employment Relationship, 9 High Tech. L.J. 151, 157 (1994).
[43] As a society, we have an interest in maximizing the productivity and satisfaction of our citizenry – having citizens trapped in jobs they cannot leave is a perversion of that interest. Moreover, many of those citizens were educated and trained using public funds, at public schools and universities. In order to get the best return on our educational investment, we need to ensure that each citizen can maximize the use of his or her skills. Additionally, we as a society benefit from the free exchange of information; we want to balance, within reason, the ability of an individual or group of individuals to work with and improve on the knowledge of others, while at the same time understanding that people want to benefit from their creations, and will likely demand some protection in order to invest in the creative process in the first place.
[44] See Rockwell Graphic Sys., Inc. v. DEV Indus., Inc., 925 F.2d 174, 180 (7th Cir. 1991) (“If trade secrets are protected only if their owners take extravagant, productivity-impairing measures to maintain their secrecy, the incentive to invest resources in discovering more efficient methods of production will be reduced, and with it the amount of invention.”).
[45] Fewer employees hired means fewer job prospects for potential employees, and fewer employees allowed to work with the secret or increased safegaurds means fewer employees are able to gain valuable knowledge and skill while on the job.
[46] See Quittmeyer, supra note 39.
[47] See Restatement (First) of Torts § 757, cmt. b (1939). (“The law of trade secrets looks to be stretched in further directions with the development of new forms of technology.”); see also Restatement (Third) of Unfair Competition § 39, cmt. d (1995) (“It is not possible to state precise criteria for determining the existence of a trade secret. The status . . . [is] ascertained through a comparative evaluation of all the relevant factors, including the value, secrecy, and definiteness of the information as well as the nature of the defendant’s conduct.”).
[48] The concept of “know-how” is so important that it is expressly included in the definition of a trade secret in the UTSA commentary. See Unif. Trade Secrets Act § 1, cmt. 5 (1985) (“The words ‘method, technique’ are intended to include the concept of ‘know-how.’”).
[49] 2 Trade Secrets Law § 8:6.
[50] ¶ 4.01 Nature of the Asset (Trade Secrets), 1998 WL 1038678, 3.
[51] Id. at 1 (quoting 1 R. Milgrim, Milgrim on Trade Secrets § 1.09[3] (Matthew Bender, 1995)).
[52] See e.g. Richard F. Dole, Jr., The Uniform Trade Secrets Act-Trends and Prospects, 33 Hamline L. Rev. 409, 420-21 (2010) (“A number of courts have found that the six factors identified by the Restatement (First) of Torts as pertinent to the existence of a trade secret remain relevant under the Uniform Act. The factors are: (1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; [and] (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.”).
[53] Unif. Trade Secrets Act § 1 (1985).
[54] See Charles Tait Graves, The Law of Negative Knowledge: A Critique, 15 Tex. Intell. Prop. L.J. 387, 391 (2007)
[55] See id. (“The perceived mistakes and errors of one’s predecessors, or of one’s own making, can be a springboard to new ideas. Indeed, it is commonplace that creative individuals sometimes use detailed knowledge about previous approaches to problems in order to reject them.”). Moreover, it can be almost impossible for an employee not to take this sort of information with them from job to job; how is an architect, hired to design an office building, supposed to ignore any failures he experienced in the past when designing similar office buildings?
[56] For example, a contractor hired to build a complicated piece of software might spend six months exploring multiple avenues that lead to dead ends before finally completing the project. If another company subsequently hires that same contractor to produce a similar product, he or she would produce it in significantly less time as a result of not having to repeat those previous mistakes. Since the contractor’s previous employer paid for this knowledge, they have an interest in ensuring that their competitors do not benefit from it down the road.
[57] A Report on Prosecutions Under the Economic Espionage Act, Peter Toren, Esq., (Trade Secret Law Summit AIPLA Annual Meeting, Washington, D.C. October 23, 2012). Most prosecutions were brought against former employees, and the sentences for those convicted range from probation to over five years in prison. See id. at 5, 11.
[58] See The Foreign and Economic Espionage Penalty Enhancement Act (Pub. L. 112-269, January 14, 2013, 126 Stat. 2442); see also Theft of Trade Secret Clarification Act of 2012 Pub. L. No. 112-236, 126 Stat. 1627 (2012).
[59] See Executive Office of the President, Administrations Strategy on Mitigting the Theft of U.S. Trade Secrets 7 (2013), available at http://www.whitehouse.gov//sites/default/files/omb/IPEC/admin_strategy_on_mitigating_the_theft_of_u.s._trade_secrets.pdf (last visited March 31, 2013).
[60] Colloquium on Innovation Policy Class Discussion with Andrea Sharrin, Deputy Chief, Computer Crime and Intellectual Property Section of the United States Dep’t. of Justice (April 2, 2013) (citing a 39% increase in prosecutions in 2012 compared to 2011 and a desire on the part of the DOJ to work with companies to bring additional prosecutions on their behalf).
[61] To date, the DOJ has been notoriously picky regarding EEA prosecutions. See Toren, supra note 57 (noting that only 124 cases have been initiated under the EEA since it was passed in 1996).
[62] With limited federal dollars to spend on prosecutions, the DOJ has in the past been more likely to take cases that were already worked up by private entities. While the DOJ claims to be interested in working with trade secret holders to prosecute alleged misappropriations, it is likely that they will continue to choose which cases to pursue based on a reasonable cost-benefit analysis. Andrea Sharrin, Deputy Chief, Computer Crime and Intellectual Property Section of the United States Dep’t. of Justice, Colloquium on Innovation Policy Class Discussion (April 2, 2013).
[63] While it is possible for a trade secret holder to both initiate a private suit and refer a criminal case to the DOJ, the DOJ is less likely to prosecute a case that is pending in civil court. Id. (citing as reasons the inability to control the actions of a private party engaged in a parallel suit coupled with a lessened need to initiate a criminal prosecution where a civil suit is already ongoing).
[64] For example, when determining fines in a criminal case, courts will often require intellectual property holders to disclose their research and development budgets so the court can place a “cost” on the misappropriation.
[65] Judges can issue protective orders to prevent the disclosure of trade secrets. See e.g. Fed. R. Civ. P. 26(c)(1)(G). In fact the EEA contains a clause specifically instructing judges to do just that. Orders to Preserve Confidentiality, 18 U.S.C. § 1835 (1996). However, the fact remains that in a criminal trial the focus is on the defendant; intellectual property holders face the possibility that their rights will not be at the forefront, and that they will not be respected to the degree they might be were the intellectual property holders an actual party to the litigation. See Federal Open Market Committee v. Merrill, 443 U.S. 340, 362 n. 24 (1979); see also Coca-Cola Bottling Co. of Shreveport, Inc. v. Coca-Cola Co., 107 F.R.D. 288, 292 (D. Del. 1985) (“It is well established that trade secrets are not absolutely privileged from discovery in litigation.”); Centurion Industries, Inc. v. Warren Steurer & Associates, 665 F.2d 323, 325 (10th Cir. 1981). But see Susan V. Metcalfe, Protecting Trade Secrets: Is the Remedy Worse Than the Wrong?, 104 Dick. L. Rev. 503, 504 (2000).
[66] See supra Section II.A Unif. Trade Secrets Act discussion; see also supra Section II.B EEA discussion.
[67] See Unif. Trade Secrets Act § 1 (1985), and Restatement (Third) of Unfair Competition §39 (1993); See also Tex. Penal Code Ann. § 31.05(a)(4) (West 2013) and Mass. Gen. Laws Ann. ch. 93, § 42 (West 2014).
[68] Generally speaking, it is unlikely that any piece of intellectual property will not meet the legal definition of “value” if you as a trade secret holder believe it is valuable. As previously noted, some states require that a trade secret be used in the trade secret holder’s business in order to have “value.” See Bunis & Spieth, supra note 12. Generally speaking, if your secret has so little value to your business that you are not currently using it, it is likely not worth your time to find a way to use just to retain the right to protect it from misappropriation.
[69] See supra Section II.A Unif. Trade Secrets Act discussion; see also supra Section II.B EEA discussion.
[70] In most cases this is not a hard question to answer: a machine you designed with unpatented components or an unpatented mixture you invented is clearly a trade secret. Furthermore, no one expects a property owner to spend all of his or her time categorizing every component in an invention for intellectual property purposes. On the other hand, a property owner who simply declares that everything in his or her factory is a trade secret is likely to face a higher level of scrutiny if a lawsuit for misappropriation becomes neccessary at a later date.
[71] See e.g. Laurence H. Reece, III, Developing a Program for the Protection of Trade Secrets, Mass. Continuing Legal Education, April 1998; see also Diane Siegel Danoff, New U.S. Laws Criminalize Theft of Trade Secrets, Including Quantitative Trading and Investment Models, Dechert LLP (February 2013), http://sites.edechert.com/10/926/february-2013/2013-02-06—ip—new-u.s.-laws-criminalize-theft-of-trade-secrets–including-quantitative-trading-and-investment-models.asp.
[72] See id.
[73] See id.
[74] See Alois Valerian Gross, What is “Trade Secret” So As to Render Actionalable Under State Law Its Use or Disclosure by Former Employee, 59 A.L.R. 4th 641 (1988).
[75] See L.S. Tellier, Implied Obligation of Employee Not to Use Trade Secrets or Confidential Information for His Own Benefit or That of Third Persons After Leaving the Employment, 165 A.L.R. 1453 (1946); see also Unif. Trade Secrets Act, § 2 (ii)(B) (1985).
[76] Regardless of the common law duty, employees may use as a defense to infringement the claim that they were not put on notice that the information was protected. A good way to put an employee on notice is to make them sign a contract specifically stating that they are working with trade secrets, and listing (with some generality) the trade secrets involved.
[77] NDAs limit an employee’s ability to disclose certain information from their job for a certain period of time. NCAs require that the employee not do certain work within a defined set of parameters (usually a time-frame or geographical location, although geographic limitations are not as useful in the modern age).
[78] See Restatement (Second) of Contracts § 71 (1981). Any agreement between parties must be made in return for consideration (meaning essentially that each party gets something out of the deal). At the start of a business relationship, the law will view any trade secrecy restrictions placed on the employee as being exchanged in consideration for the job.
[79] See Maura Irene Strassberg, An Ethical Rabbit Hole: Model Rule 4.4, Intentional Interference with Former Employee Non-Disclosure Agreements and the Threat of Disqualification, Part II, 90 Neb. L. Rev. 141, 145–46 (2011).
[80] See Michael J. Garrison & John T. Wendt, The Evolving Law of Employee Noncompete Agreements: Recent Trends and an Alternative Policy Approach, 45 Am. Bus. L.J. 107, 130 (2008) (“Although some states continue to reject partial enforcement of any kind or limit the courts’ power to rewrite the terms of a restrictive covenant based on common law contract principles, there has been a clear shift from the blue pencil doctrine to reformation.”).
[81] There is some disagreement regarding the benefits of specificity in an employment contract, handbook and/or NDA. On the one hand, telling employees exactly what information they can and cannot take with them following their employment can help prevent misunderstandings, and will decrease after-the-fact litigation in scenarios where employees misappropriate your intellectual property because they honestly did not know that it was your protected intellectual property. On the other hand, it can be problematic to draw employees’ attention to specific information you consider valuable, and may result in more after-the-fact litigation involving employees who purposefully misappropriate your most valuable trade secrets. You need to decide for yourself which of these situations is more relevent to you and your business.
[82] See id. regarding specificity.
[83] Assignment will only cover information that is traded for consideration and that is not general knowledge and skill. See e.g. 2 Trade Secrets L. § 8:6.
[84] NCAs generally do not influence trade secrecy litigation: an employee agreeing not to work in a certain field for a certain time will not necessarily be on notice that any trade secrets exist, just that the employee is not allowed to do certain work for contractual reasons.
[85] See a full list of such states at Carmen Nobel, Non-competes Push Talent Away, HBS Working Knowledge (July 11, 2011), http://hbswk.hbs.edu/item/6759.html (last visited March 30, 2013).
[86] See e.g., Picker Intl, Inc. v. Parten, 935 F.2d 257 (11th Cir. 1991) (giving examples of “rule of reason” cases and their outcomes); see also Pugh, supra note 15, at 246.
[87] Examples of good limitations include lists of the specific protectable interests (a trade secret is generally a reasonable protectable interest), the type of protectable interest, the length of time before competition can resume, the geographical area where competition is disallowed, and the specific type of competition that is disallowed (e.g. a court is more likely to find enforceable an NCA that prohibits building a specific type of high frequency trading system than one which prohibits building high frequency trading systems in general). As previously stated, the value of a geographical limitation will greatly depend on the type of information at issue, as such limitations no longer serve a purpose in many types of businesses.
[88] Telephone Interview with Charles Valauskas, Senior Partner, Valauskas Corder LLC (March 20, 2013) (using “brain dump” as a term of art, meaning the transfer of all of the employee’s knowledge on a given subject from one person to another or to a document).
[89] Id.
[90] At this point, it is imperative to let the employee know that you do not want them to divulge any trade secrets from their previous employer. In order to protect yourself from liability under the EEA, you should give the employee the disclaimer discussed in Section IV.A.2 below.
[91] See the limits on capturing value brought into the relationship by the employee, supra note 83.
[92] To the extent that they exist, you should remind the employee of any NDAs, NCAs, or contractual agreements entered into with you or your organization.
[93] See Tellier, supra note 75.
[94] See supra text accompanying note 81.
[95] See supra text accompanying note 23.
[96] This will help fulfill the “on notice” requirement in the EEA regarding the new employer. Specifically mentioning the EEA is not a requirement, but it is a good idea.
[97] In a theoretical world, employers would not engage in this sort of anti-competative behavior because any agreement that limits the ability of competitors to poach talent from each other limits the competitor’s ability to hire talented employees. Unfortunately, these sorts of arrangements do happen in the real world. See, e.g., US v. Adobe Systems, Inc., No. 10-CV-01629, settlement announced (D.D.C. Sept. 24, 2010) (several high technology companies, including Adobe, Apple, Intel, and Google, agreed not to actively contact each other’s employees with job opportunities). Whether or not such conversations between employers make sense from a public policy standpoint, they certainly make sense from the standpoint of an individual employer looking to protect his or her intellectual property, so long as the employer takes care to make sure that no anti-competitive discussions take place.
[98] See supra discussion at III.C.1. The DOJ is less likely to take a case that has not been worked up for them already.
[99] You can also try and have your state government prosecute your ex-employee under state criminal law, where it exists. This option however is outside the scope of this Note.
[100] Telephone Interview with Charles Valauskas, Senior Partner, Valauskas Corder LLC (March 20, 2013) (using the phrase as a term of art, meaning the individual in question should behave in a way that avoids even the appearance of impropriety while actively avoiding information that could subject the individual to liability).
[101] Id. (stating a general principle of law as practiced in the real world that the circumstances surrounding a case, and how those circumstances reflect on the parties involved, will often determine the outcome of the litigation, regardless of the legal principles implicated).
[102] See supra text accompanying note 23.
[103] See Strassberg, supra note 79.
[104] See Unif. Trade Secrets Act § 3 (1985).
[105] See Economic Espionage Act of 1996, Pub. L. No. 104–294, October 11, 1996, 110 Stat 3488 and related discussion, supra Section II.B.
[106] See Unif. Trade Secrets Act § 2 (1985) (“‘Misappropriation’ means: (i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means”) (emphasis added).
[107] See 18 U.S.C. 1832(a) (2012) and related discussion, supra Section II.B.
[108] See supra text accompanying note 97.
[109] “A process for avoiding conflicts of interest by limiting disclosure of information to certain attorneys or individuals within a firm or corporation, thereby building a metaphorical wall between the holders of information and colleagues who represent interests or hold opinions which conflict. Also known as a Chinese wall.” Ethical Wall – Legal Definition, Your Dictionary, http://law.yourdictionary.com/ethical-wall (last visited March 31, 2013).
[110] Telephone Interview with Charles Valauskas, Senior Partner, Valauskas Corder LLC (March 20, 2013).
[111] See supra Section III.A. Employees have the strongest incentive in a given relationship because, economically speaking, the most efficient outcome for an individual employer is a system in which everyone else’s employees have maximum job mobility, but that employer’s employees do not.
[112] See supra note 88.
[113] See Trade Secrets Law § 8:6, supra note 83.
[114] The information you write down can include general knowledge and skill in addition to any protectable ideas. It is better to be over-inclusive then under-inclusive when conducting a brain dump.
[115] Telephone Interview with Charles Valauskas, Senior Partner, Valauskas Corder LLC (March 20, 2013).
[116] Attorneys and accountants you utilize in a professional capacity are good people to send this information to; they have a professional responsibility to be truthful regarding their interactions with you, which makes them particularly believable and reliable witnesses. Telephone Interview with Charles Valauskas, Senior Partner, Valauskas Corder LLC (March 20, 2013).
[117] See supra Section III.B and notes 5356.
[118] Telephone Interview with Charles Valauskas, Senior Partner, Valauskas Corder LLC (March 20, 2013).
[119] Telephone Interview with Professor Daniel DeWolf, Adjunct Professor of Law at the New York University School of Law, and Member, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (June 25, 2013) (noting that in many cases it is not the act itself, but the cover up of an act, that leads to legal action).
[120] On the other hand, most employees should already have some idea of what their employer considers intellectual property, and should have a feel for the company culture and how aggressively the employer might pursue perceived trade secret misappropriation. Moreover, employees have very little leverage at this stage in the process, so it is unlikely that they will change the employer’s mind regarding the classification of information the employer considers protected. Telephone Interview with Professor Daniel DeWolf, Adjunct Professor of Law at the New York University School of Law, and Member, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (June 25, 2013).
[121] See e.g. § 21:8. Intellectual property strategy: Defensive protection, mutually assured destruction (MAD), 2 Internet Law and Practice § 21:8 (noting that intellectual property can be equally valuable as a shield as it can as a sword, by functioning as a defense against lawsuits from companies worried about potential cross-suits).
[122] Since startups have fewer resources and often possess no intellectual property with which to threaten a cross-suit.
[123] While actual or threatened litigation will scare away potential investors, the mere possibility of future lawsuits is unlikely to have a dramatic effect. For early stage investors especially, such a possibility is simply one of many potential outcomes of an already high risk venture, and will likely not effect their decision regarding investment. Telephone Interview with Professor Daniel DeWolf, Adjunct Professor of Law at the New York University School of Law, and Member, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (June 25, 2013).
[124] This strategy is not universally embraced. Professor DeWolf disagrees with the assertion that it makes sense to hire an otherwise unnecessary individual and put up an ethical wall when dealing with potential trade secrets, reasoning that an ex-employer who believes an ex-employee’s new company is infringing on a trade secret is likely to litigate regardless of any ethical walls the ex-employee claims to have put in place. Meanwhile, hiring an additional employee in the early stages of a company means giving up valuable equity. Telephone Interview with Professor Daniel DeWolf, Adjunct Professor of Law at the New York University School of Law, and Member, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (June 25, 2013).
[125] See, e.g., D’Andre Cater, the creative force behind pop-up restaurant Feast & Imbibe (http://chicago.eater.com/archives/2013/01/08/feast-on-new-popups-from-former-moto-chef.php) and Mike Ryan, the mixologist at Sable Kitchen and Bar (http://www.starchefs.com/cook/chefs/bio/mike-ryan-0). Both studied under Homaro Cantu (Chef Carter as an intern and then as a sous chef, and Mike Ryan as a sous-chef and then as a mixologist). Both continue to utilize molecular gastronomy in their current positions.

Using Copyright to Combat Revenge Porn

Using Copyright to Combat Revenge Porn
By Amanda Levendowski* A pdf version of this article may be downloaded here.  
“Revenge is a kind of wild justice, which the more a man’s nature runs to, the more ought law to weed it out.” – Sir Francis Bacon, from Essays Civil and Moral

Introduction

At twenty-five, Hunter Moore started the website IsAnyoneUp, where Moore posted sexually explicit photographs of the young women he met at parties.[1] But after a few months, Moore dramatically changed his business model: he began allowing anyone to submit sexually explicit images to the website.[2] Soon after, IsAnyoneUp hit more than 500 million page views and Moore netted more than $13,000 a month in advertising revenue and hired a lawyer, public relations consultant, server administrator, and two security specialists.[3] By twenty-seven, Moore—the “most hated person on the Internet”[4] —was indicted for identity theft and conspiring to hack into e-mail accounts to obtain nude photographs to feature on his website.[5] IsAnyoneUp featured more than nude images: Moore often included information about the individuals whose images were posted on the site, including full names, social media accounts, and other personal, identifying information.[6] Any person who shares intimate images with a partner is Schrdinger’s victim: according to one survey, one in ten former partners threaten to post sexually explicit images of their exes online and an estimated sixty percent of those follow through.[7] The victims featured on revenge porn websites frequently receive solicitations over social media, lose their jobs, or live in fear that friends, lovers or employers will discover the images.[8] The images hosted by websites like IsAnyoneUp are often referred to as “revenge porn.” Defining revenge porn, however, is difficult – journalists and activists, lawyers and pundits have used the term revenge porn to refer to all manner of non-consensual pornography, including images captured without a victim’s knowledge,[9] images of a victim’s face transposed on a sexually explicit body,[10] hacked images,[11] and images uploaded by jaded ex-lovers.[12] This paper defines revenge porn in terms of its content, not distribution: Revenge porn refers to sexually explicit images that are publicly shared online without the consent of the pictured individual.[13] Victims’ attempts to use harassment, stalking and privacy laws to punish uploaders and remove images are often met with apathy from local police.[14] Additionally, tort law is ill equipped to address the problem of revenge porn. Because websites are afforded a great deal of legal protection under Section 230 of the Communications Decency Act, which protects interactive service providers (“ISPs”) from liability for user-generated content, tort actions against the websites that traffic in revenge porn are unlikely to succeed.[15] To further complicate matters, victims are not looking solely for injunctive relief, civil penalties, or monetary damages, which are the remedies available under tort law. Instead, victims’ primary goal is to have the images removed as quickly as possible, with the tort remedies coming into play as threats for non-compliance with an order to remove the images in question. Of the states with legislation expressly applicable to revenge porn, none provide such a radical remedy.[16] Some activists argue that there are only two possible solutions: amend Section 230 to create liability for ISPs or pass new laws with hefty penalties for revenge porn uploaders and traffickers.[17] However, there is already a federal law that provides all of these remedies: copyright law. Copyright establishes a uniform method for revenge porn victims to remove their images, target websites that refuse to comply with takedown notices and, in some cases, receive monetary damages. A survey of 864 revenge porn victims revealed that more than eighty percent of revenge porn images are “selfies,” meaning that the author and the subject are the same.[18] For this portion of victims, copyright law can be used to combat revenge porn. While not a perfect solution, copyright requires no amendments to Section 230, no reinterpretation of settled doctrine, no abridgment of free speech rights and no new criminal laws.[19] Thus, it is the most efficient and predictable means of protecting victims of revenge porn. In Part I, I examine how Section 230 protects revenge porn traffickers, like IsAnyoneUp, from liability. Part II discusses why harassment, stalking and privacy laws are often inadequate means of fighting revenge porn. In Part III, I explain why existing and proposed legislation presents problems for both victims and free speech. Finally, Part IV outlines why copyright functions as a solution to the revenge porn problem.

I. Legal Protection For Revenge Porn: The Communications Decency Act Section 230

The damage caused by revenge porn is inextricably tied to the nature of the Internet. Once a single, sexually explicit image is posted, the uploader loses control of the image. Victims are often able to identify the original uploader based on whom the original image was shared with,[20] but hiring a lawyer and obtaining an injunction against the uploader does not protect the victim from posted, cached or linked versions of the image on websites.[21] Although uploaders may be subject to tort law for posting the images, Section 230 of the Communications Decency Act (“CDA”) makes it nearly impossible for victims to go after traffickers of revenge porn using the same laws. In the early 1990s, lawyers and young companies were still questioning how to classify online services like message boards and forums, chat rooms and listservs. Were ISPs like digital stores that sold newspapers or like the media companies that published them?[22] If ISPs were more analogous to one than the other, what would that mean for liability? In 1995, the New York Supreme Court answered both questions: ISP Prodigy was more like a publisher because Prodigy exercised some “editorial control” over user-generated content and thus could be held liable for the defamatory statements made by one of its users.[23] To combat the perverse incentive of rewarding ISPs that did not monitor content – and to protect the “vibrant and competitive free market” of the Internet – Congress enacted Section 230,[24] which immunizes ISPs from being held liable for content generated by third parties.[25] ISPs may even engage in some amount of reviewing, editing, withdrawing, postponing or altering content – like Prodigy did, before Section 230 was passed – without sacrificing immunity.[26] The solution to revenge porn is not upsetting the broad protection afforded by Section 230, but rather understanding the limitations that Section 230 places on revenge porn victims’ remedies.

A. Section 230 Shields Revenge Porn Sites From Tort Liability

Although Section 230 broadly protects websites from liability, it does not give ISPs carte blanche to allow any and all content without concern for liability. ISPs are not required to monitor or proactively remove user-generated content, but Section 230 immunity does not extend to violations of child pornography, obscenity,[27] or copyright laws.[28] Similarly, Section 230 immunity does not apply if the ISP is also an “information content provider.”[29] Immunity does not extend to original information or content that an ISP creates or develops. Websites that traffic in revenge porn do not create the content they post – victims or uploaders create the images.[30] When revenge porn websites post user-submitted images, that content is, in the language of Section 230, “information provided by another information content provider.”[31] Because revenge porn websites are not taking on the role of information content providers, Section 230 protection will apply and render nearly any lawsuit against the ISPs for stalking, harassment, defamation, or invasion of privacy dead on arrival. Revenge porn websites may even exercise some discretion over posted images without losing Section 230 protection.[32] In 1997, the Fourth Circuit set the tone for courts’ broad approach to interpreting Section 230.[33] Kenneth Zeran sued America Online (“AOL”) for statements posted by third parties to an AOL bulletin that stated he was selling shirts with tasteless slogans about the Oklahoma City bombings and included his personal telephone number.[34] The court refused to hold AOL held liable as an information service provider, echoing Congress’ findings:
[the] specter of tort liability in an area of such prolific speech would have an obvious chilling effect … Faced with potential liability for each message republished by their services, interactive computer service providers might choose to severely restrict the number and type of messages posted. Congress considered the weight of the speech interests implicated and chose to immunize service providers to avoid any such restrictive effect.[35]
Courts continue to interpret Section 230 to comport with Congress’ policy decision not to chill harmful online speech by immunizing interactive service providers that “serve as intermediaries for other parties’ potentially injurious messages” from tort liability.”[36]

B. Recent Court Decisions Narrowing the Scope of Section 230 Are Anomalous

In Sarah Jones v. Dirty World Entertainment, a Kentucky district court held that Section 230 immunity “may be forfeited if the site owner invites the posting of illegal materials or makes actionable postings itself.”[37] The defendant managed TheDirty.com, a website which invites users to submit images – many of which are sexually explicit – and share gossip about individuals featured on the website. Even though TheDirty.com did not create the images, the court determined that the website could not use Section 230 as a shield against liability because it “invited and accepted postings” that were alleged to be either libelous per se or invasions of the individuals’ right of privacy.”[38] The court ignored the plain text and history of Section 230 when it later asserted that ISPs lost immunity if they “invite invidious postings, elaborate on them with comments of their own, and call upon others to respond in kind.”[39] In nearly identical pending tort claims against TheDirty.com, district courts in Arizona and Missouri declined to hold TheDirty.com and its corporate parent liable for comments on the site.[40] Sarah Jones and the en banc Ninth Circuit decision it relied upon, (Fair Housing Council of San Fernando Valley v. Roomates.com) remain outliers among Section 230 cases.[41] Some advocates have suggested that Section 230 ought to be amended to better protect victims of revenge porn,[42] whereas others have heralded the interpretation adopted by Sarah Jones as a much-needed limitation on Section 230 protection.[43] But as the Ninth Circuit recognized in perhaps the earliest digital revenge porn case, “the language of the statute that defines and enacts the concerns and aims of Congress; a particular concern does not rewrite the language.”[44] Relying on courts to misinterpret Section 230 to create liability for revenge porn websites is a dangerous way to empower victims. By narrowing the protection of Section 230 to target revenge porn websites, courts and advocates are necessarily narrowing the protection afforded to websites that depend on user-generated content, like Wikipedia, Yelp, and WordPress.[45]

II. Existing Tort Law Is Ill Equipped To Handle Revenge Porn

The experiences of victims of revenge porn – living in fear that their identities will be discovered, concerned with repercussions in both their professional and personal lives, and worrying that the images will reappear – are similar to those of victims of harassment, stalking, and invasion of privacy.[46] Despite this similarity, the remedies that accompany the torts of harassment, stalking, and invasion of privacy are unlikely to provide a meaningful remedy for revenge porn victims. Even if victims are successful in bringing a civil lawsuit against the uploader, Section 230 prevents them from going after the websites that continue to distribute their images.

A. Harassment and Stalking

Harassment laws typically require the aggressor to communicate (or cause communication) with the victim in a way that is likely to cause annoyance or alarm.[47] A single communication can constitute harassment.[48] Although revenge porn websites often frame victims’ images with uploaders’ demeaning or humiliating commentary, those comments are not direct communication with victims any more than a Letter to the Editor about Hillary Clinton is conversing with Ms. Clinton herself. To be found guilty of stalking, an aggressor must intentionally engage in a “course of conduct” that is likely to cause fear of some material harm.[49] Nearly all states interpret “course of conduct” to mean that the behavior is repetitive or ongoing.[50] The harm caused by revenge porn, however, is accomplished through the one-off act of uploading a sexually explicit image.[51] An image’s viral spread only mirrors an ongoing act or repetitive actions –any harm that results (such as the fear of losing one’s job or destroying personal relationships) is caused by the Internet’s magnification of a single act, rather than a course of conduct by the website.[52] More than one third of states’ stalking statutes also require the aggressor to make a “credible threat,”[53] which can almost never be shown without direct contact between the aggressor and the victim.[54] The federal cyberstalking statute takes the “credible threat” requirement one step further, criminalizing only communications that contain a “threat to injure the person of another.”[55] Revenge porn websites often employ aggressive, hyper-sexualized language, including frequent references to rape and assault, to discuss featured individuals.[56] However, courts have interpreted what constitutes a “threat to injure” quite narrowly so as not to encroach on the free speech protections afforded by the First Amendment.[57] In United States v. Baker, a federal district court judge dismissed the government’s claim against a man who corresponded via e-mail with an unidentified Internet acquaintance about brutally raping a female classmate because his conversations were shared fantasies that could not “possibly amount to a true threat.”[58]

B. Privacy Torts

The right to privacy is not rigidly defined, and thus may be more capable of responding to changing technology than codified harassment and stalking laws. The “right to privacy” is covered by four privacy torts, which often overlap: false light, misappropriation, invasion of privacy, and public disclosure of private fact.[59] Frequently, one or more of these privacy torts are alleged in the complaints of lawsuits against revenge porn uploaders and websites.[60]
1. False Light
False light requires that the “publicized matter” is false, in the sense that the publicity attributes false beliefs, characteristics, or conduct to the victim.[61] Non-consensual pornography created through digitally manipulated images of victims is entirely false because the victim never posed for the image. Non-consensual pornography obtained through hacking, may be similarly false if the victim never shared the images with anyone else. False light claims present an interesting riddle for victims of revenge porn who both posed for and consented to sharing the images with at least one other person: is revenge porn “false?” The earliest non-consensual pornography lawsuit[62] involved a Hustler Magazine spread featuring sexual photographs that had been stolen and submitted to the magazine.[63] The Fifth Circuit determined that Hustler falsely represented that the subject of the photographs “consented to the submission and publication [of her photographs] in a coarse and sex-centered magazine.”[64] When presented with a nearly identical case two years later, the Sixth Circuit granted summary judgment in favor of Hustler because the victim was unable to show that the magazine acted with actual malice by deciding to publish the images.[65] It is easy to analogize between the “false light” of indicating that a woman consented to pose for Hustler and the “false light” that she consented to appear on a pornographic website. Because revenge porn derives its appeal from being non-consensual and “false,” victims may be able to convince a court that any website trafficking in revenge porn is per se acting with reckless disregard for the images’ truth. Yet, few courts have grappled with how false light operates in the context of non-consensual pornography and each state’s statutes and governing case law regarding revenge porn differ; thus, facts that may protect a victim in California may fail completely in New York. For victims of revenge porn, false light is a capable fix for the few, not the many.
2. Misappropriation
Misappropriation is the appropriation of a person’s name or likeness by another.[66] Despite the exploitative character of revenge porn, misappropriation only applies when the name or likeness has been used to benefit the appropriator, reputationally, socially, or commercially.[67] Revenge porn serves as a way to humiliate victims, rather than to benefit uploaders, which pushes most victims beyond the bounds of misappropriation protection.[68]
3. Invasion of Privacy and Public Disclosure of Private Fact
To prevail under either an invasion of privacy or public disclosure of private fact theory, victims must show a “reasonable expectation of privacy” in the images.[69] Social norms determine whether the same sexually explicit image is perceived as a courtship ritual or as revenge porn. Despite identical content, the context in which the image is shared differs,[70] a phenomenon that privacy theorist Helen Nissenbaum has termed “contextual integrity.” Nissenbaum has written extensively about contextual integrity, which explains why an employee may feel comfortable sharing details about her personal life with Facebook friends, but outraged if those details were shared with her co-workers;[71] why that same person may readily share her age with her doctor, but feel uneasy if her prospective employer were to ask the same question; and why she may share a sexually explicit selfie with a lover, but feel as if her privacy has been violated if that image were shared with thousands of strangers on the Internet.[72] Contextual integrity emphasizes howinformation is shared, rather than what it reveals. No courts have yet addressed the issue of whether revenge porn victims have a reasonable expectation of privacy in the images they have shared. As the District of Puerto Rico stated, “[a] reasonable person does not protect his private pictures by placing them on an Internet site,” even if those images are unavailable to the general public or protected by passwords.[73] Other courts have followed suit.[74] Victims of revenge porn may find themselves subject to a similarly flawed analysis: a reasonable person does not protect private pictures by sharing them with others via text message, e-mail or other means. Courts may not be prepared to rejigger the privacy torts to reflect that context determines the extent to which an expectation of privacy is reasonable.

III. Overbroad Revenge Porn Legislation Threatens Free Speech

Although many civil and criminal laws apply to revenge porn,[75] some scholars argue that using those laws is often hindered by disinterested law enforcement, and suggest that new criminal legislation is necessary to protect victims.[76] If police and prosecutors are reluctant to acknowledge that the activities of revenge porn uploaders and traffickers may violate the law, however, additional legislation may have no affect on victims’ remedies.[77] Yet, the arrests of Moore and another revenge porn website operator, Kevin Bollaert, indicate that law enforcement’s attitude toward investigating revenge porn using existing laws is changing.[78] Generally, the First Amendment prevents the government from restricting expression based on “its message, its ideas, its subject matter, or its content.”[79] As the Supreme Court explained in United States v. Stevens, the First Amendment has only accommodated restrictions on the content of speech in a handful of limited areas (including obscenity, defamation, fraud, incitement) and has never interpreted the First Amendment to include a “freedom to disregard these traditional limitations.”[80] The Court has held that offensive,[81] embarrassing,[82] and disgusting[83] speech warrants protection, even when it causes tangible harm.[84] Even so, nine states – Alaska, Arizona, California, Georgia, New Jersey, Idaho, Utah, Virginia, and Wisconsin – have enacted targeted revenge porn that criminalizes the distribution of intimate images of another person without that person’s consent.[85] From a First Amendment perspective, targeted revenge porn legislation occupies a tricky space: imprecisely drafted revenge porn legislation protects many victims but risks criminalizing protected expression,[86] but whittling down legislation to avoid trammeling free speech excludes many of the victims the law intended to protect.[87] Although broad legislation makes it easier to prosecute revenge porn uploaders and traffickers, it could also have unintended consequences on protected speech by criminalizing distributions made in the public interest,[88] linking to revenge porn websites for purposes of critique,[89] or disclosures made to document the harassment itself.

IV. Copyright Can Combat Revenge Porn

Even if revenge porn victims were able to successfully state claims for harassment, stalking or invasion of privacy, they may still be unable to remove their images from the Internet. An injunction could force uploaders to remove the images and pay monetary damages, but subsequent postings and re-postings would remain untouched because Section 230 protects the websites/ISPs hosting the content. Copyright is not a perfect solution but, unlike the aforementioned alternatives, victims’ invocation of copyright law does not threaten to erode the protections of free speech or Section 230, nor does it shoehorn revenge porn liability into existing tort schemes or create new criminal liability. The works protected, rights afforded, and remedies provided by copyright law empower the vast majority of victims to protect themselves.[90]

A. Authoring and Owning the Selfie

When Hunter Moore was asked whether the images he posted on IsAnyoneUp violated copyright laws, he offered this fascinatingly misguided explanation:
[B]ut when you take a picture of yourself in the mirror, it was intended for somebody else so, actually, the person you sent the picture to actually owns that picture, because it was intended as a gift. So whatever the – that person does with the picture, you don’t even own the nude picture of yourself anymore … So that’s how I’m protected.[91]
The majority of revenge porn images are “selfies,” like the ones described by Moore.[92] Copyright law protects any original work of authorship fixed in a tangible medium of expression, including photographs.[93] As the authors of their selfies, the vast majority of victims thereby own the copyright in their images.[94] Revenge porn features sexually explicit imagery, and neither Congress nor the Supreme Court have addressed the copyrightabilityof pornography. However, as the Fifth Circuit decision in Mitchell Brothers Film Group v. Cinema Adult Theater explained, “the protection of all writings, without regard to their content, is a constitutionally permissible means of promoting science and the useful arts.”[95] Subsequent decisions and treatises have recognized that the author of a sexually explicit work is afforded the full panoply of copyright protections.[96] Hence, the authors of a sexy selfie and a New York Times bestseller both retain the exclusive rights to their respective works, including the rights of reproduction and display.

B. Positive and Negative Rights of Copyright Owners

The reproduction and display of revenge porn victims’ copyrighted images without their permission constitutes copyright infringement. Section 104 of the Copyright Act grants the authors of unpublished and published works the same rights and protections.[97] Limited distribution of a copyrighted work – to a prospective publisher or a love interest –has no effect on the exclusive rights granted to an author.[98] The author of an unpublished work retains the exclusive right to decide whether to publish a work, and exercise or authorize any reproduction or display of the copyrighted work.[99] By definition, revenge porn victims did not authorize the reproduction or display of their copyrighted images, thus revenge porn uploaders and traffickers infringe upon the exclusive right to make and show copies in several ways. Uploaders reproduce victims’ copyrighted images when submitting them to a website,[100] traffickers reproduce the images when creating copies to store on webservers, and display copies of the original images when users direct their browsers to these websites.[101] Although these actions often occur simultaneously or concurrently, this doesn’t pose a problem to victims asserting their rights as the Copyright Act allows the rights protected by Section 106 to overlap.[102] The Supreme Court takes seriously the idea that the limited monopoly provided by copyright law incentivizes creativity and innovation.[103] Implicit in the positive rights enumerated in Section 106 is an equally powerful “negative right” not to exercise those exclusive rights.[104] The Supreme Court has acknowledged this negative right, explaining that
[T]he limited monopoly conferred by the Copyright Act is intended to motivate creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired. But nothing in the copyright statutes would prevent an author from hoarding all of his works during the term of the copyright.[105]
Consider the treasure trove of J.D. Salinger stories, which he chose never to publish, that are only available for limited viewing at Princeton’s Firestone Library.[106] In some way, that rareness, manufactured by Salinger’s decision not to fully exercise his exclusive rights, enhances the stories’ value.[107] Revenge porn victims are a perfect example of the ways in which negative copyrights incentivize creation: those images would never have been shared if victims did not believe they could control who saw them.

C. What Goes Up Must Come Down: The Digital Millennium Copyright Act

The same threat that drove Congress to pass Section 230, primarily crushing liability, pushed Congress to enact the Digital Millennium Copyright Act in 1998.[108] As part of its amendments and updates to the Copyright Act, Congress codified the Online Copyright Infringement Liability Limitation Act (“Section 512”).[109] In passing Section 512, Congress sought to provide “greater certainty to service providers concerning their legal exposure for infringements that may occur in the course of their activities.”[110]
1. Using DMCA Notices to Takedown Revenge Porn
Qualified ISPs[111] that comply with Section 512’s “notice and takedown” procedures are protected from liability for copyright infringement.[112] A procedure that is deemed complying is one in which the ISP creates and maintains a system for copyright owners to report infringement and allows the ISP to promptly respond to takedown requests.[113] Revenge porn victims do not need to register their copyrights or hire a lawyer to file a takedown notice.[114] Victims need only submit their name and signature; identify the image; and provide links to the infringing material, contact information and written verification that they believes the use is unauthorized.[115] Victims who discover their images re-posted to commercial porn websites, rather than revenge porn sites, are more likely to have success with takedown notification: commercial porn sites are hotbeds of pirated and infringing content and many link to DMCA notice and takedown procedures directly from their homepages and quickly comply with verified requests.[116] Victims can also issue de-indexing requests to search engines, like Google or Yahoo, to remove infringing links from search results.[117]
2. The Trouble With Takedowns
Websites that traffic exclusively in revenge porn present a problem for victims, as they may run into the problem that mainstream content creators encounter during takedown procedures[118] often called the “Whac-a-Mole” problem. The dynamic nature of the Internet means that as soon as infringing content is removed from one source, it “pops up” elsewhere, reminiscent of the whac-a-mole arcade game. In the case of revenge porn, this phenomenon is magnified. Revenge porn websites are meant to damage reputations and ruin lives.[119] By issuing a takedown notice – which requires the disclosure of personal information – victims may inadvertently draw more attention to the image as the websites might create additional posts about victims who request takedowns or encourage users to re-post victims’ images onto other websites.[120] Reposting is not the only problem that victims encounter. Identifying the location of revenge porn websites’ servers may require a subpoena. For victims who are able to afford a lawyer, filing a subpoena seeking the disclosure of servers’ locations could potentially attract attention to the images at issue.[121] Websites with servers in countries that do not have intellectual property agreements with the United States may refuse to comply with US law and ignore takedown requests entirely.[122] While additional investigation may buoy the success of revenge porn victims’ takedown notices, hiring a lawyer is not an option for most victims. Despite the shortcomings of takedown notices, revenge porn sites that choose to ignore takedown requests sacrifice the immunity afforded by Section 512, thereby risking exposure to tremendous legal liability.[123]

D. Monetary Damages and Criminal Penalties

The rare victim who is willing to register a copyright and file a lawsuit can seek up to $150,000 in statutory damages for each instance of willful infringement.[124] If a revenge porn site successfully rebuts the presumption of willfulness, victims are still entitled to have their images removed.[125] Although high criminal penalties for copyright infringement are meant to deter would-be infringers, website operators who know they are “judgment proof,” meaning they do not have the assets to sustain a judgment, may not be deterred by the threat of monetary damages.[126] In 1997, Congress enacted the No Electronic Theft (NET) Act to target infringers whose behavior could not be deterred by monetary damages alone.[127] The NET Act criminalizes willful copyright infringement when the total retail value of the infringed work exceeds $1,000.[128] Violations are punishable by up to ten years in prison.[129] The NET Act is frequently and justifiably critiqued for its harsh penalties, and it is unlikely that a revenge porn site operator could be charged with criminal infringement. Courts have expressed a willingness to use the highest dollar value possible to calculate the “retail value” of infringed works.[130] Revenge porn websites can fetch anywhere from $3,000[131] to $13,000[132] per month in advertising revenue, but it remains unclear whether advertising revenue is a satisfactory metric for “retail value.” While the arrests of Hunter Moore and Kevin Bollaert indicate that prosecutors are willing to test the waters using existing laws,[133] courts should be wary of permitting prosecutors to use criminal copyright infringement laws to prosecute revenge porn traffickers.

Conclusion

Existing tort laws, like harassment, stalking and privacy laws, are poorly equipped to handle the problem of revenge porn. Even if victims succeed in their cases against uploaders, those same claims will most likely be unable to pierce revenge porn websites’ Section 230 immunity or force operators to remove victims’ images. Working backward from the remedy victims most want – takedown procedures – copyright law stands out as the most efficient and predictable way to achieve those goals. Copyright is not a panacea for revenge porn. Victims must be willing to invest time to submit takedown notices and, if that fails, money into hiring an attorney to proceed with litigation. Copyright laws are also imperfect: the protections may well be too broad and the penalties too draconian. Still: for the vast majority of revenge porn victims, copyright presents an efficient means of self-help.
* J.D. Candidate, New York University School of Law, 2014; B.A. Publishing, Copyright & Technology, summa cum laude, New York University, 2011. Thanks for their suggestions and support are owed to the NYU Law Engelberg Center on Innovation Law and Policy, including Barton Beebe, Rochelle Dreyfuss, Jeanne Fromer, Jason Schultz, Chris Sprigman, Kathy Strandburg, and Chris Wong, the members of the Information Law Institute’s Privacy Research Group, and the participants in the Tri-State Region IP Workshop. And a special thanks to family and friends, who kept listening.
[1] Danny Gold, The Man Who Makes Money Publishing Your Nude Pics, The Awl (Nov. 10, 2011), http://www.theawl.com/2011/11/the-man-who-makes-money-publishing-your-nude-pics [hereinafter Gold].
[2] Kashmir Hill, Revenge Porn with a Facebook Twist, Forbes (Jul. 6, 2011), http://www.forbes.com/sites/kashmirhill/2011/07/06/revenge-porn-with-a-facebook-twist/
[3] Camille Dodero, Bullyville Has Taken Over Hunter Moore’s IsAnyoneUp: Open Letter from Hunter Moore, The Village Voice (Apr. 19, 2012), available at http://blogs.villagevoice.com/runninscared/2012/04/bullyville_isanyoneup.php; Gold supra note 1.
[4] See Charlotte Laws, I’ve Been Called the Erin Brockovitch of Revenge Porn, and For the First Time Ever, Here Is My Entire Uncensored Story of Death Threats, Anonymous and the FBI, JaneXO (Nov. 21, 2013), http://www.xojane.com/it-happened-to-me/charlotte-laws-hunter-moore-erin-brockovich-revenge-porn.
[5] Moore, along with alleged hacker Charles “Gary Jones” Evens, was indicted for conspiracy, identity theft, and unauthorized access of a protected computer to obtain information in violation of the Computer Fraud and Abuse Act. Indictment at 1, United States v. Moore, No. CR13-0917 (C.D. Cal. Dec. 30, 2013).
[6] Camille Dodero, Hunter Moore Makes a Living Screwing You, The Village Voice (Apr. 4, 2012), available at http://www.villagevoice.com/2012-04-04/news/revenge-porn-hunter-moore-is-anyone-up/full.
[7] The survey included 1,182 online interviews amongst American adults ages 18-54. Kim Eichorn, Lovers Beware: Scorned Exes May Share Intimate Data and Images Online, McAfee (Feb. 4 2013), http://www.mcafee.com/us/about/news/2013/q1/20130204-01.aspx.
[8] Lorelei Laird, Victims Are Taking On ‘Revenge Porn’ Websites For Posting Pictures They Didn’t Consent To, A.B.A. J.(Nov. 1, 2013, 4:30 AM CDT), http://www.abajournal.com/magazine/article/victims_are_taking_on_revenge_porn_websites_for_posting_photos_they_didnt_c. According to a Cyber Civil Rights Initiative study, the vast majority of revenge porn victims are female. Danielle K. Citron, Revenge Porn: A Pernicious Form of Cyber Gender Harassment, Balt. Sun (Dec. 15, 2013), available at http://articles.baltimoresun.com/2013-12-15/news/bs-ed-cyber-gender-harassment-20131214_1_cyber-civil-rights-initiative-nude-images-harassment.
[9] Victims who were videotaped without their knowledge represent an estimated ten percent of victims, though these victims were not expressly discussed in the non-consensual pornography statistics. Why One Mom’s Investigation Might Actually Stop Revenge Porn, On The Media (Dec. 6, 2013), http://www.onthemedia.org/story/why-one-moms-investigation-might-actually-stop-revenge-porn/transcript [hereinafter One Mom’s Investigation]. Those victims may be able to use state video voyeurism or Peeping Tom laws. See Voyeurism Statutes 2009, National Defense Attorneys Association (Mar. 2009), http://www.ndaa.org/pdf/voyeurism_statutes_mar_09.pdf.
[10] An estimated twelve percent of non-consensual pornography was Photoshopped, or otherwise edited and manipulated. One Mom’s Investigation, supra note 9.
[11] Roughly forty percent of non-consensual pornography was hacked. Id. These victims may be able to use the Computer Fraud and Abuse Act. See 18 U.S.C. § 1030(a)(2) (2012).
[12] The remaining 36 percent constitutes the subset of revenge porn analyzed by this Note.
[13] The author developed this definition of revenge porn for Wikipedia. Revenge Porn, Wikipedia (Version Oct. 8, 2013, Amphiggins) available at https://en.wikipedia.org/w/index.php?title=Revenge_porn&oldid=593224773. This definition was adopted by the Criminal Court of the City of New York. People v. Barber, 2014 NY Slip. Op. 50193(U) (Feb. 18, 2014), available at http://www.courts.state.ny.us/reporter/3dseries/2014/2014_50193.htm.
[14] See Maureen O’Connor, The Crusading Sisterhood of Revenge Porn Victims, N.Y. Mag.(Aug. 29, 2013), available at http://nymag.com/thecut/2013/08/crusading-sisterhood-of-revenge-porn-victims.html.
[15] 47 U.S.C. § 230(c) (1998).
[16] See infra Part II. Israel, France, the Phillipines, and the Australian state of Victoria also have laws applicable to revenge porn. See, e.g., Pén.226-1 (Fr.); An Act Defining and Penalizing the Crime of Photo and Video Voyeurism, Prescribing Penalties Therefor, and for Other Purposes, Rep. Act No. 9995, § 4 (2009) (Phil.); see alsoRevenge Porn’ Outlawed: Israel and Australia Ban Spurned Lovers from Posting Compromising Photos of Their Exes, Daily Mail (Jan. 8, 2014) http://www.dailymail.co.uk/femail/article-2535968/Revenge-porn-outlawed-Israel-state-Australia-ban-spurned-lovers-posting-compromising-photos-exes.html.
[17] Danielle K. Citron and Mary Anne Franks, Criminalizing Revenge Porn, 49 Wake Forest L. Rev. (forthcoming 2014). Amending existing law, or creating new criminal ones, to tackle revenge porn creates additional problems for free speech and pornography, and poses a threat to websites, aggregators, and other Internet-based businesses. See Sarah Jeong, Revenge Porn Is Bad. Criminalizing It Is Worse, (Oct. 28, 2013), http://www.wired.com/opinion/2013/10/why-criminalizing-revenge-porn-is-a-bad-idea.
[18] Proposed CA Bill Would Fail to Protect up to 80% of Revenge Porn Victims, Cyber Civil Rights Initiative (Sept. 10, 2013), http://www.cybercivilrights.org/press_releases [hereinafter CCRI Survey]. The remaining twenty percent of non-selfie revenge porn often falls into other categories of non-consensual pornography in which other federal laws are applicable.
[19] New revenge porn-specific legislation poses a threat to free speech by imprecise or overbroad drafting of new laws or amendments to old ones. For an in-depth discussion about the clash between free speech and revenge porn, see infra Part III.
[20] See, e.g., Erica Goode, Victims Push Laws to End Online Revenge Posts, N.Y. Times (Sept. 23, 2013), available at http://www.nytimes.com/2013/09/24/us/victims-push-laws-to-end-online-revenge-posts.html?_r=0.
[21] Hunter Moore encouraged users to repost the images he shared on IsAnyoneUp. One Mom’s Investigation, supra note 9.
[22] See Stratton Oakmont, Inc. v. Prodigy Servs. Co., 1995 WL 323710, at *3 (Sup. Ct., Nassau County1995) (“In short, the critical issue to be determined by this Court is whether … PRODIGY exercised sufficient editorial control over its computer bulletin boards to render it a publisher with the same responsibilities as a newspaper.”); see also Conor Clarke, How the Wolf of Wall Street Helped Write the Rules for The Internet, Slate(Jan. 7, 2014), http://www.slate.com/articles/news_and_politics/jurisprudence/2014/01/the_wolf_of_wall_street_and_the_stratton_oakmont_ruling_that_helped_write.html.
[23] Stratton Oakmont, Inc., 1995 WL 323719 at *2.
[24] See 47 U.S.C. § 230(b)(1)-(2) (1998).
[25] Id.§ 230(c)(1) (“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.”).
[26] Zeran v. Am. Online, Inc., 129 F.3d 327, 330 (4th Cir. 1997). (“[L]awsuitsseeking to hold a service provider liable for its exercise of a publisher’s traditional editorial functions-such as deciding whether to publish, withdraw, postpone or alter content-are barred.”).
[27] 47 U.S.C. § 230(e)(1) (1998). Explaining why categorizing revenge porn as “obscenity” could open a Pandora’s box of problems goes beyond the scope of this paper. For a sense of why using obscenity law might be problematic, see Amy M. Adler, Post-Modern Art and the Death of Obscenity Law, 99 Yale L.J. 1359, 1362 (1990).
[28] It also does not apply to harassing telephone calls made in Washington, D.C., among other limited carve-outs. 47 U.S.C. § 230(e)(2) (1998).
[29] Id. § 230(f)(3).
[30] CCRI Survey, supra note 18.
[31] 47 U.S.C. §230(c)(1) (1998).
[32] The content-related exceptions to Section 230 protection for posting obscenity, child pornography and copyright infringement still apply. For that reason, the two “security experts” who worked for Moore were tasked with ensuring that he did not post images of under-aged victims. Gold, supra note 1.
[33] Zeran, 129 F.3d at 330.
[34] Id. at 329.
[35] Id. at 331.
[36] Id.; see also Chicago Lawyers’ Comm. for Civil Rights Under Law, Inc. v. Craigslist, Inc., 519 F.3d 666, 669 (7th Cir. 2008) (“[Section] 230(c)(1) provides broad immunity from liability for unlawful third-party content. That view has support in other circuits.”) (internal quotations omitted) (citing Zeran v. America Online, Inc., 129 F.3d 327 (4th Cir. 1997); Ben Ezra, Weinstein & Co. v. America Online, Inc., 206 F.3d 980 (10th Cir. 2000); Green v. America Online, 318 F.3d 465 (3d Cir. 2003); Batzel v. Smith, 333 F.3d 1018 (9th Cir. 2003); Universal Commc’n Sys., Inc. v. Lycos, Inc., 478 F.3d 413 (1st Cir. 2007)).
[37] Jones v. Dirty World Entm’tRecordings, LLC, 766 F. Supp. 2d 828, 836 (E.D. Ky. 2011), aff’d, Jones v. Dirty World Entertainment Recordings, LLC, 840 F. Supp. 1008 (E.D. Ky. 2012) (citing Fair Hous. Council of San Fernando Valley v. Roommates.Com, LLC, 521 F.3d 1157 (9th Cir. 2008)).
[38] Id. at 832. The court denied defendants’ for judgment as a matter of law. Jones v. Dirty World Entm’t Recordings, LLC, 840 F. Supp. 2d 1008, 1013 (E.D. Ky. 2012). TheDirty.com is appealing to the Sixth Circuit. Kashmir Hill, Big Deal For Internet Law: Ex-Bengals Cheerleader Sarah Jones Wins Suit Against The Dirty Over ‘Reputation-Ruining’ Comments, Forbes (July 11, 2013), http://www.forbes.com/sites/kashmirhill/2013/07/11/big-deal-for-internet-law-ex-bengals-cheerleader-wins-suit-against-the-dirty-over-reputation-ruining-comments.
[39] Jones v. Dirty World Entm’tRecordings, LLC, No. 09-219-WOB, 2013 WL 4068780 (E.D. Ky. Aug. 12, 2013); Cf. Doe v. MySpace, Inc., 528 F.3d 413, 419 (5th Cir.2008) (“[S]o long as a third party willingly provides the essential published content, the interactive service provider receives full immunity [under Section 230] regardless of the specific editing or selection process.”) (citations omitted) (internal quotation marks omitted).
[40] See Dyer v. Dirty World, LLC, No. CV-11-0074-PHX-SMM, 2011 WL 2173900 (D. Ariz. June 2, 2011); S.C. v. Dirty World, LLC, No. 11-CV-00392-DW, 2012 WL 3335284 (W.D. Mo. Mar. 12, 2012) (“[M]erely encouraging defamatory posts is not sufficient to defeat CDA immunity.”). Although the Arizona district court claimed not to be addressing Section 230 liability expressly, its analysis of provider versus publisher indicates otherwise. As Eric Goldman noted, “[I]t appears that this is a 47 USC 230 case where the court denies it’s relying on 47 USC 230.” TheDirty Defeats Privacy Invasion Lawsuit–Dyer v. Dirty World, Tech. and Mktg. L. Blog (June 4, 2011), http://blog.ericgoldman.org/archives/2011/06/thedirty_defeat.htm.
[41] See Fair Hous. Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157 (9th Cir. 2008) (holding that Roommates.com, which provided dropdown menus users could select to reflect housing-mate and apartment-mate preferences, was not protected by Section 230).
[42] “By writing Section 230 into law, Congress left . . . Internet harassment victims vulnerable and helpless.” Ann Bartow, Internet Defamation As Profit Center: The Monetization of Online Harassment, 32 Harv. J. L. & Gender 383, 417-18 (2009).
[43] Mary Anne Franks, The Lawless Internet? Myths and Misconceptions About CDA Section 230, Huffington Post (Dec. 18, 2013), http://www.huffingtonpost.com/mary-anne-franks/section-230-the-lawless-internet_b_4455090.html (discussing the merits of a Sarah Jones-type interpretation of Section 230).
[44] Barnes v. Yahoo!, Inc., 570 F.3d 1096, 1097 (9th Cir. 2009) (refusing to hold Yahoo! liable for false accounts featuring Cecilia Barnes’ name and nude pictures created by her ex-boyfriend, pursuant to Section 230).
[45] See CDA 230 Success Cases Series, (2013), https://www.eff.org/issues/cda230/successes (featuring interviews with legal counsel about the importance of broad Section 230 protections).
[46] Victims’ descriptions of feeling victimized when images reappear or strangers approach them in public because of the images is eerily reminiscent of the “haunting harm” described by child pornography victims. See New York v. Ferber, 458 U.S. 747 (1982).
[47] Though many states have online-specific harassment and stalking statutes, some continue to apply existing civil laws to digital torts. See generally State Cyberstalking and Cyberharassment Laws, Nat’l Conference of State Legis. (Dec. 5, 2013), http://www.ncsl.org/research/telecommunications-and-information-technology/cyberstalking-and-cyberharassment-laws.aspx.
[48] Id.
[49] Many statutes do not define “material harm.” The specific standards vary amongst the states. Compare N.Y. Penal Law § 120.45 with Cal. Penal Code § 646.9. All 50 states and Washington, D.C. have anti-stalking laws. State and Federal Stalking Laws, BerkmanSoc’y (Nov. 6, 2013), http://cyber.law.harvard.edu/vaw00/cyberstalking_laws.html.
[50] See generally Naomi Harlin Goodno, Cyberstalking, A New Crime: Evaluating the Effectiveness of Current State and Federal Laws, 72 Mo. L. Rev. 125, 134 (2007).
[51] See Somini Sengupta, ‘Revenge Porn’ Could Be Criminalized in California, N.Y. Times (Aug. 27, 2013), http://bits.blogs.nytimes.com/2013/08/27/revenge-porn-could-be-criminal-offense-in-california.
[52] It is unclear whether uploading the same image to different sites, several images to the same site or repeatedly re-uploading images in response to removals would sufficiently establish a “course of conduct.”
[53] States’ approaches to assessing what constitutes a “credible threat” differ. For deeper analysis, see Goodno supra note 50, at 196.
[54] Id.
[55] 18 U.S.C. § 875(c) (2012).
[56] Danielle Keats Citron, Cyber Civil Rights, 89 B.U. L. Rev. 61, 64 (2009); see also Azy Barak, Sexual Harassment on the Internet, 23 Soc. Sci. Computer Rev. 77, 80 (2005) (discussing the frequency of rape-related comments and threats directed at women on the Internet).
[57] See Bonnie D. Lucks, Electronic Crime, Stalkers, and Stalking: Relentless Pursuit, Harassment and Terror in Cyberspace, in Stalking Crimes and Victim Protection: Prevention, Intervention, Threat Assessment and Case Management 179 (Joseph A. Davis ed., 2001).
[58] United States v. Baker, 890 F. Supp. 1375, 1388-90 (E.D. Mich. 1995), aff’d sub nom. United States v. Alkhabaz, 104 F.3d 1492 (6th Cir. 1997).
[59] Although many states have additional privacy laws, Dean Prosser formulated the distinctions among the privacy torts that was adopted by the Restatement of Torts. See William L. Prosser, Privacy, 48 Calif. L. Rev. 383 (1960). Revenge porn lawsuits tend to focus on one or more privacy torts.
[60] See, e.g., Compl. at 5-6, Jacobs v. Seay, No. 2013-013626-CA-01 (Fla. Miami-Dade County Ct. Apr. 18, 2013) (alleging invasion of privacy and public disclosure of private facts); Compl. at 3-4, Wells v. Avedisian, No. 112013CA0014570001XX (Fla. Collier County May 13, 2013) (alleging invasion of privacy and publication of private facts); Compl. at 4, Toups v. GoDaddy, No. D130018-C (Tex. Orange County Ct. Jan. 18, 2013) (alleging intrusion upon the right to seclusion, public disclosure of private facts, wrongful appropriation of name or likeness and false light).
[61] Restatement (Second) of Torts § 652E cmt. a (1977).
[62] Alexa Tsoulis-Reay, A Brief History of Revenge Porn, N.Y. Mag. (Jul. 21, 2013), http://nymag.com/news/features/sex/revenge-porn-2013-7.
[63] Wood v. Hustler Magazine, Inc., 736 F.2d 1084 (5th Cir. 1984), cert. denied, 469 U.S. 1107 (1985); see also Douglass v. Hustler Magazine, Inc., 769 F.2d 1128 (7th Cir. 1985) (refusing to dismiss plaintiff’s false light claim because the re-publication of her provocative photos, which appeared in another publication, falsely “insinuate[d] that she is the kind of person willing to be shown naked in Hustler.”).
[64] Judge Reavely also noted that the publication falsely attributed a “lewd fantasy” to the victim, which is mirrored in the explicit, demeaning comments that frequently accompany revenge porn. Id. at 1089.
[65] Ashby v. Hustler Magazine, Inc., 802 F.2d 856, 860 (6th Cir. 1986). The Supreme Court decision in Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 259 (1986), requiring plaintiffs in actions governed by an actual malice standard—including defamation and false light plaintiffs—to demonstrate actual malice with “convincing clarity” to survive summary judgment, was decided just before Ashby. The Liberty Lobby decision perhaps explains the Sixth Circuit dismissal, and the Fifth Circuit’s change of course shortly thereafter. See Faloona by Fredrickson v. Hustler Magazine, Inc., 799 F.2d 1000 (5th Cir. 1986).
[66] Restatement (Second) of Torts § 652C (1977); see also Digital Media Law Project, Using the Name or Likeness of Another, BerkmanSoc’y (July 30, 2008), http://www.dmlp.org/legal-guide/using-name-or-likeness-another.
[67] If no value has been appropriated, there is no tort. Restatement (Second) of Torts § 652C cmt. c (1977).