Brooks goes on to speculate about the basis for that distrust: “Why don’t Americans trust their government? It’s not because they dislike individual programs like Medicare. It’s more likely because they think the whole system is rigged. Or to put it in the economists’ language, they believe the government has been captured by rent-seekers.”

This all sounds very familiar. It’s essentially the basis of the current critique of copyright law: that Congress has become beholden to a few stakeholders, and as a result modern copyright law has become unmoored from any legitimate purpose and now simply apportions rents to favored dinosaur industries.

But even that description of the situation is not dark enough. The pessimism, in copyright as well as politics generally, extends to the judicial branch as well. The Supreme Court, along with conservatives generally, have essentially given up on the courts and lawsuits as an instrument for civil justice. I think this is what explains the sharp turn in recent years away from discovery as the fire in which the truth proves its mettle, away from class actions, toward summary judgement, away from jury control over punitive damages, away from lawsuits generally and toward arbitration at every opportunity. Think of the rhetoric in favor of “tort reform” — limiting tort lawsuits and especially placing damage caps on actions for, e.g., grievous injuries caused by negligence. The very idea of letting negligence determinations go to the jury — once the core function of juries — strikes many as intolerable. Tort lawsuits are said to be out of control, with liability highly unpredictable, and unreasonable, eye-popping damage awards that create a chilling effect that acts as a drag on innovation, supported only by a highly influential lobby that controls the relevant legislatures. Only the lawyers win. There’s considerable skepticism in the tort reform rhetoric about the plaintiffs, too — who are these complainers? Why can’t they just suck up the trivial misfortunes that come their way?

Concerns about copyright lawsuits are similar, which is a bit surprising, since most copyright critics are probably politically liberal. The law is said to be hopelessly nebulous, plaintiffs are out of control, the potential damages are huge, and even the faintest threat of a suit chills innovation and drags down individuals and businesses. There is no longer faith that judges and juries will sort the good cases from the bad at a reasonable price. And even if they could, the plaintiffs are looked at askance, as not really suffering an injury worth remedying at any non-trivial investment of time and resources.

Part of the common theme here is, I think, part of the long-term trend away from the common law in American jurisprudence. Once, a hundred years ago, nearly all of the law in its everyday application was non-statutory — entirely accreted from judicial opinions over the centuries, without any basis in statutes. Even where there were statutes, judges felt free to add to them with doctrines of their own making — fair use and secondary liability in copyright law are well-known examples. Indeed, much of the doctrine we have in copyright law was built during this era — substantial similarity, the idea/expression distinction, merger and scenes a faire — which explains copyright’s different feel from patent law, which was statutorily codified in 1952 in a way that did not simply preserve the judicially developed doctrines that came before.

Copyright, like tort, is to a large extent a common law subject, and the zeitgeist is moving steadily away from courts as the locus of law’s development — or, really, any legitimate decision-making control over the law at all, beyond mere application. This trend is exemplified by the Supreme Court confirmation hearings in which nominees from both parties describe the enterprise of judging as more or less a routine application of existing law to facts. For whatever reason, nebulousness and uncertainty — in tort law, in litigation costs, in copyright — is becoming less tolerable, and the practice of legislatures of kicking key legal determinations to judges or juries is getting viewed with more and more suspicion and anger. I think that’s a long-term problem, however, as the idea of being able to regulate conduct through the operation of some sort of fully specified, easy-to-apply set of rules identified in advance is just as unachievable now as it was when H.L.A. Hart made fun of it in The Concept of Law in 1961.

[Cross-posted at Madisonian.net.]

This is a good opportunity to recap where I came out at the end of my last post: SOPA in its then-current form was very troubling. The most troubling part was Section 103, which seemed to have been drafted with two inconsistent goals in mind, as if the co-authors were Dr. Jekyll working alongside Mr. Hyde: on the one hand Section 103 appeared to offer limited supplemental remedies in suits brought under existing copyright and trademark law, and on the other it appeared to significantly modify existing law by creating a free-form cause of action and a notice-and-takedown regime that went far beyond what the DMCA enacted thirteen years ago. For the reasons I stated in the post, I believe that the former reading — the Jekyll version if you will — had to be the correct one, because both the alleged new cause of action and the apparent notice-and-takedown regime were radically under-specified. I’m still concerned that critics of the bill are cementing an overly broad reading of it — the Hyde version — by not even acknowledging the Jekyll reading as a possibility. (This is akin to a concern that copyright scholar Jessica Litman has recently expressed as well, that copyright critics may ironically worsen the doctrines they are concerned about by asserting the most damaging interpretation.)

In addition to all that, SOPA as introduced had an overly broad scope for (what I argue are) the supplemental remedies — they appeared not just to apply to sites infringing in the U.S. but as a practical matter immune to traditional means of enforcement — the so-called foreign “rogue sites” — but to any website, anywhere, even one that a U.S. court would have no problem directly enforcing a preliminary injunction against with contempt sanctions. That is, even if Section 103 were amended to make clear, as I believe it should be, that the remedies involving domain names and ad networks are supplemental means of enforcement, it did not expressly limit itself to situations where there is a need for such extraordinary remedies. I would hope that courts would nevertheless apply such limits anyway, but that might be asking a lot from a court unfamiliar with the policy debates.

In advance of today’s hearing, SOPA’s main sponsor, Rep. Lamar Smith, offered a “manager’s amendment” to the bill making several changes. Does Smith’s amendment fix the above problems? Yes and no. The amendment makes two significant changes to Section 103 that address some of the concerns I had. The scope problem has been partially addressed. Section 103, like Section 102, applies to “U.S.-directed sites,” which previously was not geographically restricted in any way. But the amendment changes the definition of “U.S.-directed site” to include only “foreign Internet sites,” meaning sites for which the domain name is registered with a foreign entity, or if there is no domain name, the IP address is assigned by a foreign ISP. This definition still is not as narrow as it should be. It would be preferable to restrict the special remedies of Sections 102 and 103 to situations of last resort — where the ordinary contempt powers of a court would not achieve the goal of stopping infringement. If a site is actually hosted on a U.S. server (i.e., has an IP addressed assigned by a U.S. entity), then even if it has a foreign-registered domain name, it would seem to be within the practical reach of U.S. courts. (This is an issue of practical authority, not jurisdiction; the court has to have subject-matter and personal jurisdiction or there’s no case.) But overall it’s a step in the right direction.

In addition, the purported notice-and-takedown regime has been completely eliminated, perhaps because it did, as I argued, seem to be a prerequisite to special remedies as opposed to an alternative route to compliance. That is, it actually seemed to impose a waiting period of five days before an action could be filed, during which (despite the use of “shalls” and “musts”) payment providers and advertising networks were only given a opportunity to take voluntary action. The way I was reading the statute, its elimination is probably not an improvement for SOPA critics; I would have simply eliminated the “shalls” and “musts” to make clear it was a prerequisite, not a notice-and-takedown regime.

Rep. Smith’s amendment largely leaves untouched the procedures for getting court orders; it thus continues to contain the confusing language I originally objected to appearing to create a new cause of action. Let me first explain that argument in somewhat more detail than I did in Part II of this series, because I’m not sure it came through clearly (or perhaps people just flat-out reject it). I argue that under the best reading of Section 103, there is no new cause of action for being an “Internet site dedicated to theft of U.S. property.” There are orders that can be entered against such sites, but those orders have to be entered in an action initiated under existing copyright or trademark law.

On first blush, SOPA Section 103 appears to create a new cause of action; it refers several times to “an action under this subsection,” meaning subsection 103(b) as amended. That subsection begins by stating,

IN PERSONAM.—A qualifying plaintiff may commence an in personam action against—
 (A) a registrant of a domain name used by an Internet site dedicated to theft of U.S. property; or
 (B) an owner or operator of that Internet site.

Section 103(b)(5) provides for relief:

On application of a qualifying plaintiff following the commencement of an action under this section with respect to an Internet site dedicated to theft of U.S. property, the court may issue a temporary restraining order, a preliminary injunction, or an injunction, in accordance with rule 65 of the Federal Rules of Civil Procedure, against a registrant of a domain name used by the Internet site, or against an owner or operator of the Internet site, or, in an action brought in rem under paragraph (2), against the Internet site, or against the domain name used by the Internet site, to cease and desist from undertaking any further activity as an Internet site dedicated to theft of U.S. property.

That’s who the defendants are, and that’s what the court can order as relief in a preliminary or permanent injunction; but what is the cause of action? That is, what is the claim that forms the basis of filing suit, that has to be pleaded in the complaint? There still is not anything in SOPA that states that it is a violation of federal law or someone’s rights to operate an “Internet site dedicated to theft of U.S. property,” as bad as that sounds — it’s just a defined term. Call it “Rutabaga” to avoid confusion. Is there a provision that says if you operate a Rutabaga, you’ve committed a violation? There’s the definition of “qualified plaintiffs,” who are the entities entitled to seek the orders in Section 103(b)(5):

The term “qualifying plaintiff” means, with respect to a particular Internet site, a person with standing to bring a civil action for a violation described in paragraph (1)(C).

OK, what civil actions for violations are described in paragraph 103(a)(1)(C)?

An Internet site is an “Internet site dedicated to theft of U.S. property” if— . . .
 (C) either—
  (i) the site is primarily designed or operated for the purpose of, has only limited purpose or use other than, or is marketed by its operator or another acting in concert with that operator primarily for use in, offering goods or services in violation of—
   (I) section 501 of title 17, United States Code, for purposes of commercial advantage or private financial gain, and with respect to infringement of complete or substantially complete works;
   (II) section 1201 of title 17, United States Code; or
   (III) provisions of the Lanham Act that prohibit the sale, distribution, or promotion of goods, services, or materials bearing a counterfeit mark, as that term is defined in section 34(d) of the Lanham Act (15 U.S.C. 1116(d)) or section 2320 of title 18, United States Code; or
  (ii) the operator of the site operates the site with the object of promoting, or has promoted, its use to carry out acts that constitute a violation of section 501 or 1201 of title 17, United States Code, as shown by clear expression or other affirmative steps taken to foster such violation.

The “violations” mentioned in paragraph 103(a)(1)(C) are violations of copyright and trademark law. There’s nothing in 103(a)(1)(C) that makes being an “Internet site dedicated to theft of U.S. property” itself a violation. So a “qualifying plaintiff” is a plaintiff who can sue the defendants under existing copyright and trademark law. Which means that the “action” referred to in Section 103(b)(1) has to be an action for copyright or trademark infringement, and the remedies provided under 103(b)(5) should be interpreted as applying to a subset of parties liable for copyright or trademark infringement, not defendants in some new freeform action for being “Internet sites dedicated to theft of U.S. property.”

Even if I’m right, all of this is incredibly confusing the way it’s worded, and it would be much better simply to rewrite this section as providing special remedies in a limited number of copyright and trademark actions. But that is what I believe it does right now, confusingly or not.

One final note. The concerns I’ve expressed above are in part concerns that about the breadth of the language and its impact on targeted sites and third parties, such as advertising networks, that will bear compliance costs under SOPA. But I’m also concerned that copyright owners are getting more than they bargained for with this legislation. (I realize it’s quaint, at best, to be concerned about copyright owners.) Legislation that is as unclear as Section 103 has unpredictable outcomes. And the primary industry proponents of this bill will not likely be the ones setting the judicial agenda. Sweeping new powers seem like a good idea if you imagine yourself wielding the power. But the history of copyright legislation indicates that large industry repeat players are not likely the ones who will be bringing most of the high-profile cases. Righthaven does not represent Hollywood businesses; Lexmark is not a member of the DVD CCA; Westbound Records (Bridgeport Music‘s co-plaintiff) made its argument that sound recordings lack a de minimis exception to copyright infringement against a record label and a movie studio. Decisions like those tend to become a rallying cry against the law’s ridiculousness, doing long-term P.R. harm to respect for copyrights and trademarks generally. Section 103, even as amended, still applies where it’s not needed, and still confusingly seems to create a cause of action, or at least a remedy, that goes beyond the bounds of traditional copyright and trademark law. Both these aspects need to be reformed before final passage.

[Cross-posted at Madisonian.net.]

Trademark law grants trademark owners the right to prevent third parties from using identical or similar signs to identify confusingly similar products in the market. Nevertheless, once a trademark owner has introduced into the market a product, or a batch of products, these rights are considered exhausted with respect to those products, and the trademark owner can no longer rely on trademark rights to control the products‘ future circulation. . . . [F]ierce disputes have characterized the application of this principle in the context of international trade with respect to the parallel imports of gray market goods—i.e., genuine (originally manufactured) products, which are imported into a country from unauthorized third party importers after their first authorized sale by trademark owners in another part of the world.

In the article, Irene considers how the “first sale” issue has been addressed in North American and European trade law.  The abstract to her paper appears after the jump.

This Article explores the intricate relationship between the exercise of trademark rights and the free movement of goods in the marketplace, and considers the effectiveness and the limitations of the principle of trademark first sale (also known as trademark exhaustion) in promoting the free movement of goods across international borders, notably across members of free trade areas. In particular, this Article examines the application of the principle of trademark first sale and the resulting process of market integration that has characterized to date the members of NAFTA and the European Union. Based upon this comparison, this Article argues that the creation of an effective system of free movement of goods in free trade areas requires, at a minimum, the adoption of uniform national rules providing for the exhaustion of national trademark rights with respect to products lawfully distributed worldwide or, at least, in the territory of all members of those areas. This Article highlights, however, that effective market integration across free trade areas may be jeopardized when corporations can use material differences in product quality to control product distribution and prevent the free movement of goods even when members of these areas nominally permit the importation of products lawfully distributed internationally or, at least, in the territory of other members. Following the analysis of the approaches adopted by NAFTA and the European Union, this Article stresses that the convergence of national standards, the mutual recognition of product characteristics, or the acceptance into national markets of materially different products from other members carrying appropriate labels disclosing these differences can nonetheless overcome these barriers. Ultimately, this Article concludes that invoking trademark protection to segment the market against the parallel trade of genuine goods not only undermines the purpose of free trade areas; it also goes against the general scope of trademark protection, which protects consumers against confusion and trademark owners against illegitimate acts that could take unfair advantage of, or damage the reputation of, the marks, and does not include the prohibition of the resale of genuine goods that trademark owners themselves have introduced into the market, even if in the territory of another member of a free trade area.

Then there’s Section 103. The idea behind Section 103 appears to be to provide copyright owners in a civil case with similar provisional remedies as in Section 102, following some sort of notice-and-takedown scheme reminiscent of Section 512 of the DMCA. And if all Section 103 targeted was foreign “rogue sites” as well, then there would be much less cause for concern. But Section 103 appears to go well beyond that. In contrast to Section 102, there’s nothing in the definition of the sites targeted under Section 103 — sites “dedicated to theft of U.S. property” — that limits those sites to sites outside the jurisdiction of United States courts. In fact, Section 103 seems weirdly out of place next to the more limited Section 102, and is out of sync with how defenders of the bill are describing it, which is as a narrow provision designed to combat foreign “rogue sites.” Section 103 is weird in a number of ways that suggest that it is the result of a sort of pastiche compromise between a narrow provision targeting rogue sites in civil suits and an all-out amendment of Section 512 of the Copyright Act. There’s two aspects of Section 103 in particular that I find little short of bizarre: (1) it sets up a notice-and-takedown regime that, as far as I can determine, is completely voluntary, but it uses the word “shall” in describing what recipients must do; and (2) it refers to “a cause of action under this section” without ever describing what that cause of action is.

These are the two aspects of the bill that have opponents most alarmed, but I think critics have been too quick in their reading of the bill’s language. The provisions are troubling, but in my view that’s because Section 103 is opaque, counter-intuitive, and prone to misinterpretation. My guess is that there is some sort of interesting lobbying backstory that explains Section 103′s current form. A quick aside: Copyright legislation is often portrayed as though it was drafted by a unified group of Snidely Whiplashes sitting around a table, twirling their mustaches and agreeing on everything. But the politics on each “side” of copyright debates are actually pretty fractious. It’s worse than just looking at something drafted by committee; the text of copyright legislation is drafted by committees of committees, in an iterative process. Not only are the legislators obviously organized into various committees, but the interest groups appearing before them are for the most part committees rather than single entities: for example, trade groups. Each member of a committee may have their own particular interest in getting the bill to say or do something in a particular way. Even large companies like Google can be committee-like, with various interests within the company that need to be satisfied. Legislation drafted under such circumstances tends to be ugly. My prediction for SOPA: no matter what changes are made to it, the result will be that it will get even uglier, and harder to interpret, than it is now.

But on to the show. First, there’s the notice-and-takedown regime that Section 103 appears to set up. For example, Section 103(b)(1) provides that:

a payment network provider shall take technically feasible and reasonable measures, as expeditiously as possible, but in any case within 5 days after delivery of a notification under paragraph (4), that are designed to prevent, prohibit, or suspend its service from completing payment transactions involving customers located within the United States and the Internet site, or portion thereof, that is specified in the notification under paragraph (4).

This has the appearance of a mandatory obligation: the payment network provider (e.g., Visa) “shall” take certain measures in response to a notification in the proper form.

One thing that I do when reading such language is ask, “shall — or else what? What’s the penalty for noncompliance?” And that’s the first of our mysteries concerning Section 103. The answer SOPA gives is essentially, “or else nothing.” There does not seem to be any enforcement hook to actually require the recipients of such letters comply with them. Contrast that with the existing notice-and-takedown regime, Section 512. Under Section 512(c) and (d), an ISP receiving a takedown notice in the proper form must comply with it. Or else what? Or else they lose immunity from whatever copyright infringement liability they would have had in the absence of Section 512. So an ISP that wants to keep that immunity needs to “expeditiously remove or disable access to” the identified material. Note that that’s the only sanction; an ISP can’t be fined or otherwise punished for failing to comply with a takedown notice, except for whatever copyright infringement liability it might have, because Section 512 does not provide for such additional penalties.

You’ll look in vain for a provision in SOPA that says what happens if a payment network provider or advertising service fails to comply with or respond to one of those takedown notices. They don’t lose any immunity or gain any copyright infringement liability — Section 2(a)(2) of the bill expressly states that “[n]othing in [Section 103] shall be construed to enlarge or diminish liability, including vicarious or contributory liability, for any cause of action available under title 17 . . . , including any limitations on liability under such title.” And there’s no other provision stating that any private party can sue for or any court can sanction a failure to respond. The closest the bill comes is Section 103(c)(1):

if a payment network provider fails to comply with subsection (b)(1), or an Internet advertising service fails to comply with subsection (b)(2), pursuant to a notification under subsection (b)(4) in the absence of such a counter notification, a qualifying plaintiff may commence an in personam action against—

(A) a registrant of a domain name used by the Internet site, or portion thereof, that is subject to the notification under subsection (b)(4); or

B) an owner or operator of the Internet site or portion thereof.

So if a payment network provider fails to respond, then the copyright owner can sue the owner of the allegedly infringing website! (That’s a bit odd; the copyright owner could sue the website even without sending one of those notices. I’ll take this bit up below.) There’s no provision for suit against the payment network provider.

And, in fact, it looks like this is not simply some sort of oversight. Section 104 provides for immunity for payment network providers and advertising services

for taking any action described in . . . section 103(b) with respect to an Internet site, or otherwise voluntarily blocking access to or ending financial affiliation with an Internet site, in the reasonable belief that—

(1) the Internet site is a foreign infringing site or is an Internet site dedicated to theft of U.S. property; and

(2) the action is consistent with the entity’s terms of service or other contractual rights.

(Emphasis added.) This makes it clear: compliance with Section 103(b) is voluntary (if it wasn’t, similar actions would not be “otherwise voluntar[y]). It’s great that Section 104 makes this clear, but it would be better, in order to avoid confusion, if Section 102(b) eliminated the word “shall” and the associated deadlines for response everywhere they appear.

What would be the point of a notice-and-takedown regime that’s completely voluntary? I think the problem is in viewing Section 103(b) as a notice-and-takedown regime. It’s not. The way it’s written now, the notices in Section 103(b)(4) do not give the copyright owner any additional rights or enforcement ability; they are a prerequisite for a plaintiff to obtain the supplemental remedies provided in Section 103(c). That is, in order to get those remedies, the copyright owner must serve prior notice on the intermediaries and wait at least five days. Everything else in Section 103 — the words “shall,” the requirement for a response to the court within five days, etc. — is surplusage, not backed by any legal obligation.

This leads to the second strange aspect of Section 103. I’ve been describing the opportunity to seek a preliminary injunction, which can then be served on designated intermediaries, as a supplemental form of provisional relief, since that’s what it appears to me to be. A TRO or preliminary injunction is only intended to preserve the status quo until a final decision on the merits can be rendered; it is not intended to afford final relief between the parties on its own (that’s a permanent injunction). So the remedies provided in Section 103(c), and also those in Section 102(b), must be provisional remedies in aid of some other cause of action. What’s the cause of action in which you can seek these remedies?

One natural guess might be a copyright infringement action under 17 U.S.C. § 501, or a trademark infringement action under 15 U.S.C. § 1114, or some other existing IP cause of action. But Section 103 repeatedly refers to “an action under this section” as the one in which the provisional remedies are available. What cause of action is that? Here’s the thing: the SOPA bill doesn’t say. There is no cause of action defined under Section 103. Sure, there’s a definition of “Internet site dedicated to theft of U.S. property.” One thing that has IP scholars particularly upset is that the definition of “Internet site dedicated to theft of U.S. property” does not track the existing standards for copyright or trademark infringement liability; and if copyright and trademark owners can sue “Internet sites dedicated to theft of U.S. property,” then that effectively expands who can be held liable for infringement. But nothing in SOPA actually says that “Internet sites dedicated to theft of U.S. property” can be sued; although the phrase sounds pretty bad, nothing in SOPA says that it is illegal, or gives rise to any liability, to operate such a site. Contrast that with 17 U.S.C. § 501, which establishes an action for copyright infringement. First, § 501(a) defines infringement. Then, § 501(b) provides that “[t]he legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it.” (Emphasis added.)

SOPA § 103 is missing that second bit. Let’s look again at how Section 103(c)(1) refers to the various actions:

a qualifying plaintiff may commence an in personam action against—

(A) a registrant of a domain name used by the Internet site, or portion thereof, that is subject to the notification under subsection (b)(4); or

B) an owner or operator of the Internet site or portion thereof.

There’s nothing in this stating what the basis for the in personam action is. A “qualifying plaintiff” is simply a plaintiff whose IP rights have been harmed by the activities occurring on the site — but being harmed by activities is not the same as having a cause of action with respect to such activities. And the notification in (b)(4) is a notification that “the Internet site, or portion thereof, is dedicated to theft of U.S. property.” That just brings us back to the definition of “Internet site dedicated to theft of U.S. property,” which does not itself establish any cause of action either, it just defines a term. Section 103(c)(2) provides for an in rem action in cases where the persons behind the site or its domain name cannot be found, but still does not state the basis for the action.

I suspect what explains all this is that someone is viewing the procedure spelled out in Section 103 as not preliminary, but final. That is, the whole point of Section 103 is to give copyright and trademark owners the provisional relief detailed in subsections (b) and (c) — the notices for voluntary takedowns, followed by court orders to intermediaries such as credit card providers and third-party advertisers — in the apparent expectation that those preliminary orders will solve the problem (whatever the problem is, since the provision seems to go beyond foreign rogue sites) and there won’t really be a need for further proceedings. Therefore, there’s no need to identify any particular cause of action that those remedies would be in support of. But that’s just goofy. You can’t have preliminary remedies that are preliminary to nothing. And the plaintiff has to plead something in the complaint, and request some sort of final relief. Which is what? Section 103 never states what the final relief in the cause of actions it appears to be creating is. The likely way this bill will get misread, I suspect, if it becomes law is the same way critics have been reading it: that it contains a hidden provision making the owners or operators of “Internet sites dedicated to theft of U.S. property” liable to “qualifying plaintiffs” for the harm caused thereby. I think it’s significant that the bill does not in fact say that that is what it is doing, however.

A better way to read SOPA, in my opinion, is that the actions referred to are actions for copyright or trademark infringement as defined by existing law. In authorizing certain plaintiffs to bring an action “under this section,” SOPA authorizes those plaintiffs to bring a copyright or trademark infringement action in which they can seek special provisional remedies. Section 103 would therefore apply only to a subset of copyright or trademark infringement actions, actions where the defendants own or operate something that falls into the category of “Internet sites dedicated to theft of U.S. property.” Sites in that bucket would be subject to the extraordinary provisional remedies provided in Section 103(c) (after first providing the required notice in Section 103(b) and waiting the required five days).

That still leaves the problem that all of this seems mistargeted, given that “Internet sites dedicated to theft of U.S. property” could easily include U.S. sites within a U.S. court’s jurisdiction, which eliminates the policy rationale for such remedies in the first place. Why would you need to target a site’s advertisers or credit card providers if you could get an enforceable order from a U.S. court, backed by contempt sanctions, to stop the alleged infringement? It’s not clear that there is any need for such remedies; the definition of “Internet site dedicated to theft of U.S. property” should be narrowed to track the definition of “foreign infringing site” in Section 102. To that extent, I agree with those who are calling Section 103 in its current form dangerously overbroad.

[Cross-posted at Madisonian.net.]

Does the bill really do all that? No. Copyright-related debates have been going on long enough, and at such a fever pitch, that such predictions are pretty much the price of admission now to rally the troops. There’s a pretty good inductive argument that predictions of the imminent death of the Internet or of the content industry are actually a reliable indicator that neither the Internet nor the content industry will die. But that doesn’t mean SOPA’s a good idea. So step one is figuring out what it does.

I’ve sat down and read the bill and there’s some aspects to it I think are misunderstood — perhaps by almost everyone. One of its provisions is much more narrowly targeted, and I think reasonable, than is generally being described. I’m going to break this discussion up into a few posts, and I’ll tackle that one first. A second provision is … deeply odd, in ways I haven’t seen mentioned, and I have serious reservations about it, but it is probably not the Vishnu-like destroyer of worlds it is being portrayed as. Finally, I’ll wrap up with some thoughts on what drives copyright rhetoric and politics generally.

The two main provisions that have gotten the most attention are Sections 102 and 103 of the bill. First, there’s Section 102, which reveals the roots of this bill as one designed to target foreign websites beyond the reach of U.S. courts but nevertheless serving U.S. audiences with infringing materials — so-called “rogue sites.” Section 102 allows the Attorney General to institute an action against “foreign infringing sites” engaged in criminal violations of copyright or trademark law, and as part of that action may seek a TRO or preliminary injunction from the court ordering the site (either the site owner, domain name registrant, or the site or domain name itself in rem) to cease and desist from the infringing activity.

But of course such an order will have little effect all by itself. That’s because Section 102 — and here’s something I have not seen emphasized in the coverage — is expressly restricted in application to “foreign Internet sites.” A “foreign Internet site” in which neither the domain name nor the IP address is assigned by any entity located in the United States. Specifically, a domain name is a domestic and not foreign domain name if it is “registered or assigned by a domain name registrar, domain name registry, or other domain name registration authority, that is located within a judicial district of the United States.” There’s an “or” in there, which I take to mean that any .com, .net, or .org domain name — which are all “registered or assigned by a . . . domain name registry” located in the United States, namely Verisign and the Public Interest Registry — would not be subject to the Section 102 special remedies. Only sites hosted on foreign servers, with foreign-registered domain names, are subject to Section 102; and the owners of such sites are not likely to be terribly compliant in the face of a U.S. court order.

Which is where the additional remedies of Section 102 come in. Section 102(c) provides that the court can authorize certain injunctive relief against the IP equivalent of what the SEC might call “relief defendants” — innocent third parties who are unknowingly assisting in the allegedly wrongful conduct. Those third parties include ISPs who help route communications from U.S. users to the site, search engines, credit card payment networks, and third-party advertising services helping to place ads on the site. The overall idea appears to be to reach criminal conduct through U.S.-based intermediaries that the court can’t reach directly.

So far this does not seem all that troubling to me. Courts have long had this sort of power with respect to civil copyright infringement — after finding a likelihood of infringement (and according to the law of most circuits, the more the balance of harms tips to the putative infringer, the higher the likelihood of success on the merits must be) a court can issue a TRO or preliminary injunction ordering the impoundment of allegedly infringing materials, or ordering the defendant to stop circulating or showing allegedly infringing materials, even if the material in question is a hit Hollywood movie that is currently playing in theaters and pulling it would be extremely disruptive to the defendant’s business. The additional remedies against the “relief defendants” seems warranted in the limited circumstance where the site owner is targeting U.S. users but is otherwise beyond the reach of U.S. courts. Plus, in order to get one of these injunctions, all three branches of government need to sign off on it: Congress will have authorized it, the Executive will have had to exercise its prosecutorial discretion in bringing a case, and the Judiciary will have had to exercise judicial discretion in actually ordering the relief.

There is one technical objection that has been raised to the third-party relief, concerning the security of the domain name system, that I have questions about that I’ll take up in a later post. But for my next post, I want to focus on where things start to go awry, albeit not in the way people have suggested: Section 103.

[Cross-posted at Madisonian.net.]

If that sounds a bit abstruse, here’s the issue put more concretely: can Congress restore the United States copyright to J.R.R. Tolkien’s Lord of the Rings trilogy? Or once a work is in the public domain, for whatever reason, is it there irretrievably? The first volume of The Lord of the Rings was published in the United States in 1954 with a paltry 1,500 copies; even though the Hobbit had done well, Tolkien’s publishers did not anticipate what a blockbuster success The Lord of the Rings would be. As a result, the copies soon sold out, and instead of running another U.S. printing, Houghton Mifflin, Tolkien’s U.S. publisher, imported more copies from the UK to fill demand. But apparently Houghton Mifflin screwed up, because they accidentally imported too many: U.S. copyright law at the time contained a protectionist “manufacturing requirement” for books, requiring books sold in the United States to be printed in the United States, with only limited exceptions. A paperback publisher discovered the error in 1965 and printed 150,000 copies of the trilogy without paying any royalties to Tolkien or his publishers.

The Lord of the Rings is just one example of foreign copyright owners getting tripped up by U.S. copyright formalities. U.S. copyright law used to require that a copyright notice in a particular form accompany the published version of any work. Copyright owners were required to register their copyrights to receive protection, and to have the authors renew those copyrights in their 28th year to extend that protection. Foreign copyright laws generally lack any of these sorts of formal requirements for receiving copyright protection, and at least some foreign authors and publishers may have been unfamiliar with them. Others may have simply made a calculated decision to, e.g., not pay for renewal of copyright in a work that had not sold well in the United States. Still others may have failed to comply with U.S. formalities, but due to mistakes that American copyright owners were equally capable of making at the time as well, such as an unintentional omission of the copyright notice on published copies.

As part of world trade negotiations in 1994, an effort was made to harmonize international copyright laws, to accord equivalent protections to copyrighted works in all countries signing on to the General Agreement on Tariffs and Trade (GATT). The United States wants other countries to beef up their protections for U.S. copyrighted works, given the number of global copyright industries centered in the United States: television and film production, record labels, the software industry, book publishing. But in return, copyright owners in other countries have demanded that the United States eliminate some of the idiosyncratic features of U.S. copyright law: formalities, our nebulous definition of fair use, the lack of protection for creators’ “moral rights.” The URAA was passed in 1994 to at least address the first issue, and, it was hoped, give the U.S. better leverage in negotiation increased protection of U.S. works abroad.

The URAA added Section 104A to the Copyright Act. Section 104A provides that “[c]opyright subsists, in accordance with this section, in restored works, and vests automatically on the date of restoration”–the “date of restoration” for most countries being January 1, 1996. A “restored work” is defined under Section 104A as a foreign work of authorship that is still within the maximum term of protection in the United States, is currently protected by copyright law in its home country, and:

(C) is in the public domain in the United States due to—

(i) noncompliance with formalities imposed at any time by United States copyright law, including failure of renewal, lack of proper notice, or failure to comply with any manufacturing requirements;

(ii) lack of subject matter protection in the case of sound recordings fixed before February 15, 1972; or

(iii) lack of national eligibility.

In other words, The Lord of the Rings, authored by a UK author, first published in the UK in May 1954, published in the US five months later, still under copyright in the UK, and in the public domain in the US due to failure to comply with the manufacturing requirements, was restored to copyright in the United States on January 1, 1996 — just in time for the movies. What about people, such as Ace Books, who had relied on the Lord of the Rings’ public domain status in the interim, before it was restored? Congress provided that the restored copyright could be enforced against so-called “reliance parties” after a notice period. Reliance parties that had created derivative works based on a restored public domain work — e.g., a film adaptation — can continue to exploit the derivative work, but only on payment of “reasonable compensation” to the copyright owner.

Even if you think all this is an acceptable policy choice, that doesn’t resolve the constitutional issue. Does Congress have the power to remove items from the public domain? I don’t have a strong view. But one reason the question is difficult is that that way of phrasing it is itself somewhat novel. Our current view of the public domain as a repository of information and ideas, crucial to innovation and creativity, has only taken hold with force in the last few decades. Only twenty years ago, when Jessica Litman published her pathbreaking article on the public domain in the Emory Law Journal, it drew a critical response from copyright scholar Ed Samuels challenging the coherence of the very notion of a public domain. The public domain, Samuels argued, is just the leftover bits after the copyrighted and patented stuff has been removed. It’s like the set of all prime numbers, which is the set of numbers after those with non-trivial divisors have been removed — there’s no internal formula that defines it. That view has been largely supplanted in IP scholarship and in legal culture generally in recent years, as seen in the last big public domain case that came before the Court, Eldred v. Ashcroft.

The novelty of concerns about the public domain can also be seen in how it was treated earlier in the nation’s history. There is evidence that Congresses in the nineteenth century did not view according intellectual property protection to items in the public domain as particularly egregious. The First Congress adopted the Copyright Act of 1790, which extended federal copyright protection to “any map, chart, book or books already printed within these United States,” although copyright scholars Tyler Ochoa and Tomas Gomez-Arostegui have noted that that precedent is murky, given that Congress was simultaneously extinguishing possible common law or state statutory copyright protection for those same works. More troubling is the behavior of later congresses in according copyright and patent protection to works and inventions that, for one reason or another, had fallen into the public domain. Patents are thought to be an even greater incursion than copyrights into the public domain — patents reserve the ability to make, use, or sell the patented invention exclusively to the patentee, even if another person should independently come up with the same idea — which is the standard explanation for why patents are so much harder to get. Nevertheless, throughout the nineteenth century, Congress by special legislation “restored” patent rights and copryights to patentees and authors whose protection had lapsed or failed for some technical reason.

It’s difficult to imagine that happening now, but that is a measure of how important intellectual property policy has become — and how politicized. That changed circumstance, as well as the overall change in thinking about private and public rights wrought by the media and information revolutions of the twentieth century — is something the Court is currently ill-disposed to consider. Most members of the current Supreme Court adhere to a more or less originalist theory of constitutional interpretation, one that makes it difficult to admit that constitutional concepts change over time. (Those theories that do admit for the possibility of dynamic interpretation, such as Jack Balkin’s, also tend to be criticized as “not really originalist.”) Most members of the Court will therefore be constrained from concluding, as a basis for a constitutional restriction on Congress’s copyright power, that the public domain simply is more important now, constitutionally, than it was in 1790. But there is no doubt that that is true — along with the fact that both copyrights and the First Amendment itself are also more significant in our current legal culture.

The document’s primary assertions are that national and international “intellectual property policy affects a broad range of interest within society, not just those of rights holders,” and that “markets alone cannot be relied upon to achieve a just allocation of information goods—that is, one that promotes the full range of human values at stake in intellectual property systems.”

The document was issued following the Global Congress on Intellectual Property and the Public Interest, held at American University in Washington, D.C. from August 25-27, 2011. As of September 9, there were 420 signatories to the document. Early signers include Marquette University Law School Professors Irene Calboli (#187) and Gordon Hylton (#243) and University of Wisconsin-Milwaukee Professors Dick Kawooya (#191) and Richard Grusin (#376).

The text of the Washington Declaration can be found at http://infojustice.org/washington-declaration.

Here are the facts of Omega v. Costco.  Omega maintains a tight grip on its authorized distribution channels.  Omega attempted to gain control of its watches’ distribution by engraving a design on the back of its watches (pictured below) and registering this design at the U.S. Copyright Office. Omega sold watches with these designs to their authorized distributors.  Somewhere along the distribution line, however, the watches ended up in the hands of distributors outside of Omega’s authorized channels abroad.  As the Ninth Circuit recognized, this is a paradigm gray market importation scheme, in which products meant to be sold in one territory are imported into another, usually for cheaper prices. One of Costco’s suppliers based in New York imported watches from these unauthorized distributors and eventually transferred the watches to Costco, which then sold these watches to its customers in California. One of those purchasing customers turned out to be a plant employed by Omega.

Omega then sued Costco for violating their exclusive right to distribute  its copyrighted works and for importing them without Omega’s authorization.  Costco asserted the first-sale defense, arguing that Omega’s right to control the distribution of its watches under both the distribution and importation statutes ends with its first transfer to its authorized distributors.  Costco v. Omega’s ending at the Supreme Court was a bit anticlimactic, with the U.S. Supreme Court evenly divided 4-4 (Justice Kagan didn’t take part in the non-decision).  This led to a summary affirmance of the Ninth Circuit’s decision below and no rule from the Supreme Court resolving the statutory tension in the Copyright Act.

In the midst of the statutory construction issues dominating the Supreme Court briefs, Costco suggested that Omega’s distribution controls might pose antitrust problems.  This issue popped up very briefly; in one sentence and in one footnote, Costco’s first merits brief surmised that Omega’s distribution controls might qualify as a vertical restraint of trade sanctionable under the antitrust laws.  The issue was mentioned only in passing, but how briefly it appeared should not downplay the importance of the issue.  As noted above, to the extent that gray market importation is still a subject of debate, other litigants may very well challenge practices meant to stamp out gray markets under the antitrust laws.

Following Costco’s argument, Omega’s authorized distributor agreements could be characterized as vertical territorial restraints.  These distributor agreements might also involve vertical pricing fixing or vertical refusals to deal, but for the sake of brevity, this post will consider Omega’s practice as a vertical territorial restraint.  Vertical territorial restraints occur when companies up and down a distribution chain enter into agreements that limit the geographic areas into which they will sell their products.

These restraints used to be treated as per se illegal under the antitrust laws, but they are categorically unlawful no longer.  Taking the per se position on vertical territorial restraints was United States v. Arnold, Schwinn & Co., 388 U.S. 365 (1967).   Justice Fortas, writing for the majority, believed that limiting to whom distributors may transfer a manufacturer’s products is “so obviously destructive of competition that their mere existence is enough.”  Drawing upon other vertical restraint cases, the Supreme Court in Schwinn expressed concern that allowing manufacturers to dictate how their products move down the distribution chain “would violate the ancient rule against restraints on alienation and open the door to exclusivity of outlets and limitation of territory further than prudence permits.”  The Supreme Court in Schwinn skirted a number of lingering questions.  One question was explicitly left off the table: how the principle of protecting the free alienation of property would apply to patents.  Other matters left out were robust analyses of the economic efficiencies hampered or harnessed by vertical territorial restraints.  A majority of the Supreme Court concluded as much ten years after Schwinn in Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 54 (1977).  GTE Sylvania overruled Schwinn, noting how untethered the nature of a manufacture-to-distributor transaction is to the economic efficiencies and effects on different markets. The GTE Sylvania Court also flagged and examined the economic literature regarding how vertical restraints reduce intrabrand competition among retailers but allows manufacturers to enjoy new efficiencies in their interbrand competition with other manufacturers.  In other words, while there is a possibility that harm to intrabrand competition might be serious enough to warrant antitrust scrutiny, not all vertical territorial restraints are per se illegal.

The Supreme Court’s decision in GTE Sylvania to step away from per se illegality is not limited to vertical territorial restraints.  In like sense, the U.S. Supreme Court once treated resale price maintenance — whereby a manufacturer commands that distributors not set retail prices at, above, or below set figures — as per se illegal.  Albrecht v. Herald Co., 390 U.S. 145 (1968) (maximum resale price maintenance); Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911) (minimum resale price maintenance).  Both of these cases have since been overruled.  State Oil v. Khan, 522 U.S. 3 (1997); Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S. Ct. 2705 (2007).  As GTE Sylvania, Khan, and Leegin indicate, there are pro-competitive reasons for manufacturers to agree with distributors to limit the scope of distribution, whether through prices or geographic regions. And these reasons carry enough weight that the Supreme Court believes it imprudent to penalize every single one of these agreements.  Moreover, these cases signal that hostility toward vertical restraints as potential antitrust problems is subsiding.  In fact, the IP and Antitrust treatise authors argue that “the rule of reason for purely vertical nonprice restraints has resulted in something approaching automatic legality for such arrangements.”  Herbert Hovenkamp et al., IP and Antitrust, § 24.3b1.

The antitrust analysis does not end with the Supreme Court’s treatment of vertical restraints in themselves. Adding another wrinkle is that the territorial restraint here was enforced using a copyrighted design, calling forth the ongoing confusion around how intellectual property and antitrust law should coexist.  For decades, courts and academics have been confounded by the tense intersection between intellectual property and antitrust law.  In fact, they cannot even agree on how to name it: In a lecture before the Antitrust Committee of the New York City Bar Association, Professor Mark Lemley listed several of these names: the relationship, conflict, tension, interaction, interface, or collision between intellectual property and antitrust policy.

That the antitrust laws and intellectual property rights are hopelessly mired in irreconcilable doctrinal conflict is far from being a necessary or inevitable conclusion.  Hovenkamp et al., supra, § 1.3.  In fact, Ward Bowman, Jr. argued that both intellectual property and antitrust promote wealth maximization and prevent restrictions on output.  Ward Bowman, Jr., Patent and Antitrust Law: A Legal and Economic Appraisal (1973), reprinted in part in Hovenkamp et al., supra, § 1.3; Mark A. Lemley, Milton Handler Lecture: The Intersection Between Antitrust and Intellectual Property Part 1-3.  They both have their own roles in accomplishing these ends: antitrust law protects the overall free market environment while intellectual property rights create incentives to innovate.  Hovenkamp et al., supra, § 1.3; Lemley, supra.  Without intellectual property, the argument goes, the market will stagnate.  Hovenkamp et al., supra, § 1.3; Lawrence A. Sullivan & Warren S. Grimes, The Law of Antitrust: An Integrated Handbook § 15.1 (2d ed. 2000); Lemley, supra.

That being said, intellectual property’s economic justifications do not give intellectual property owners carte blanche to enforce their intellectual property rights abusively nor in bad faith.  To be sure, some courts treat certain intellectual property enforcement practices, such as tying agreements and possibly others, as pernicious enough to the competitive process that they should not be tolerated under the antitrust laws, even if the intellectual property laws alone would allow them.  Image Technical Servs. v. Eastman Kodak Co., 125 F.3d 1195, 1216, 1218 (9th Cir. 1996); Data General v. Grumman Systems Support, 36 F.3d 1147, 1182 (1st Cir. 1994); but see In Re Independent Service Organization Antitrust Litigation, 203 F.3d 1322, 1327, 1327-28 (Fed. Cir. 2000) (“[A] patent owner may not take the property right granted by a patent and use it to extend his power in the marketplace improperly, i.e. beyond the limits of what Congress intended to give in the patent laws.” (quoting Atari Games Corp. v. Nintendo of America, Inc., ); SCM Corp. v. Xerox Corp., 645 F.2d 1195, 1206 (2d Cir. 1981) (“[C]onduct permissible under the patent laws cannot trigger any liability under the antitrust laws.”).  After all, the point of intellectual property in the United States is the economic quid pro quo of granting a property right in exchange for enriching society with new artistic and utilitarian creations; intellectual property does not, however, exist only to shower creators and innovators with pecuniary benefits or to further the Lockean notion that labor makes property.  Feist Publications v. Rural Telephone Services, 499 U.S. 340, 352-60 (1991); Mazer v. Stein, 347 U.S. 201, 219 (1954).  In the final analysis, innovation and antitrust policy coexist best when they are balanced: bad faith and baldly anticompetitive intellectual property enforcement should be sanctioned, while the antitrust laws simultaneously allow intellectual property owners to reap the fruits of their patents, copyrights, and trademarks, among other rights.  Herbert Hovenkamp, Federal Antitrust Policy § 5.5a (3d ed. 2005).

Applying this complicated and sometimes conflicting set of legal rules, one can plausibly find pro-competitive reasons for allowing Omega to control its distribution channels this tightly.  In terms of interbrand competition — such as may be the case with other luxury watch designers, like Tag Heuer, Breitling, Movado, and Rolex — constraining distribution channels can protect a company’s brand reputation.  In economic terms, limited distribution to authorized sellers prevents free riding by low-end discount stores that can sell goods for cheaper prices while shirking the customer service and presentation of higher end shops.  Cf. Leegin, 127 S. Ct. at 2715.  This is especially true for a luxury designer like Omega.  With the risk of free-riding by discount stores, a niche market for luxurious goods and the luxe shopping experience could become endangered.  Cf. id. at 2715-16.  If Omega’s fine watches can be had at lower prices than Omega would prefer at stores like Costco, then its brand may very well lose some of its exclusivity and cachet, a key asset to Omega’s ability to compete with other luxury designers.

Furthermore, the circuit decisions cited above demonstrate that the courts have been reluctant to extend antitrust liability to intellectual property enforcement when the underlying intellectual property right is legitimately and duly granted. For its part, the Federal Circuit has limited antitrust liability for patent infringement to the serious cases of fraud before the USPTO, objectively baseless sham litigation, and other situations in which a patent is extended beyond its statutorily granted property right, such as tying agreements. In Re Independent Serv. Org. Antitrust Litigation, 203 F.3d 1322, 1326-28 (Fed. Cir. 2000).  The Federal Circuit thus imposed a high burden on patent infringement defendants to show that intellectual property is being used in such an unduly exclusionary fashion as to warrant antitrust liability.  Id. at 1327.  In the copyright arena, the U.S. Supreme Court has demonstrated support for copyright owners realizing the value of their intellectual property.  Broadcast Music, Inc. v. Columbia Broadcasting System, 441 U.S. 1, 19 (1979) (“Although the copyright laws confer no rights on copyright owners to fix prices among themselves or otherwise to violate the antitrust laws, we would not expect that any market arrangements reasonably necessary to effectuate the rights that are granted would be deemed a per se violation of the Sherman Act.”).  In the First and Ninth Circuits, there is still a doctrinal presumption that intellectual property rights are being used legitimately.  Furthermore, there is close to explicit authorization in the Copyright Act for copyright owners to control their protected products’ distribution.  Hovenkamp et al., supra,  § 24.3b1.  Each of these doctrines heavily weigh against the already hard antitrust case to win.

Challenging Omega’s use of its copyrights as an antitrust violation thus would likely prove to be a daunting uphill battle.

• Mark Lemley’s Nies Lecture, “Can the Patent Office Be Fixed?”
• Ysolde Gendreau’s lecture on copyright reform in Canada, “Canada and the Three-Step Test: A Step in Which Direction?”
• Dalila Hoover’s article, “Coercion Will Not Protect Trademark Owners in China, but an Understanding of China’s Culture Will: A Lesson the United States Has to Learn”
• Benedetta Ubertazzi’s article, “Intellectual Property Rights and Exclusive (Subject Matter) Jurisdiction: Between Private and Public International Law”
• Brian Jacobs’ comment on intellectual property as security for financing
• Colin Shanahan’s comment on the Anti-Counterfeiting Trade Agreement
• Syvil Shelbourne’s comment on rule of reason patent misuse analysis
• Nicholas Smith’s comment on Medimmune v. Genentech

Abstracts and links for full-text downloads are here.  Congratulations to the editors for bringing Volume 15 to a successful conclusion!

There’s lots of interesting issues there, but one that caught my eye is one that has been bugging me more and more every time I teach the fair use section of Copyright Law: the seemingly infinite manipulability of the transformativeness inquiry of the first fair use factor. The fair use exception to copyright infringement liability, as defined in the Copyright Act, requires the court to weigh four factors: the purpose and character of the defendant’s use; the nature of the plaintiff’s work; the amount and substantiality of the portion used; and the effect of the use on the potential market for the plaintiff’s work. The first factor—the purpose and character of the use—is typically determined by looking at whether the defendant’s use of the plaintiff’s work was “transformative”—that is, whether the defendant used the plaintiff’s work for some new and different purpose, or whether the defendant’s use merely supplanted the plaintiff’s work.

In resolving the transformativeness issue, much seems to depend on how broadly or narrowly the purposes of the two works are defined, but that categorization is almost never accompanied by any discussion of the proper level of generality. Here’s how Judge Pregerson in Friedman defined the purpose of each work:

Here, Defendant has not offered a transformative alternative use of the Photograph image. Both Plaintiff and Defendant are artists, and the image was used by both in works of visual art for public display. Although the statements made by those respective artworks and the mediums by which those respective statements were made differ, the use itself is not so distinct as to render Defendant’s use a transformation of Plaintiff’s copyright.

“Works of visual art for public display” is a pretty broad category; almost every photograph for any purpose will fit that description. Surely that can’t be the proper level of generality. What was the more specific purpose for which Friedman’s photo was shot? To document the rise of a rap group? For an album cover? And what was Guerra’s purpose in making his alterations? The opinion doesn’t say.

Compare Friedman to the Second Circuit’s opinion in Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 609 (2d Cir. 2006), a case involving a coffee table book about the Grateful Dead that included images of copyrighted concert posters owned by the plaintiff:

In the instant case, DK’s purpose in using the copyrighted images at issue in its biography of the Grateful Dead is plainly different from the original purpose for which they were created. Originally, each of BGA’s images fulfilled the dual purposes of artistic expression and promotion. The posters were apparently widely distributed to generate public interest in the Grateful Dead and to convey information to a large number people about the band’s forthcoming concerts. In contrast, DK used each of BGA’s images as historical artifacts to document and represent the actual occurrence of Grateful Dead concert events featured on Illustrated Trip’s timeline.

Certainly the posters were being used in each instance as “works of visual art for public display.” But the Bill Graham Archives court conducted a more searching inquiry than that. To similar effect is Blanch v. Koons, 467 F.3d 244, 252 (2d Cir. 2006), in which “appropriation artist” Jeffrey Koons used fashion magazine advertisements to create a million-dollar collage:

Koons does not argue that his use was transformative solely because Blanch’s work is a photograph and his a painting, or because Blanch’s photograph is in a fashion magazine and his painting is displayed in museums. He would have been ill-advised to do otherwise. We have declined to find a transformative use when the defendant has done no more than find a new way to exploit the creative virtues of the original work. . . . But Koons asserts — and Blanch does not deny — that his purposes in using Blanch’s image are sharply different from Blanch’s goals in creating it. Compare Koons Aff. at ¶4 (“I want the viewer to think about his/her personal experience with these objects, products, and images and at the same time gain new insight into how these affect our lives.”) with Blanch Dep. at 112-113 (“I wanted to show some sort of erotic sense[;] . . . to get . . . more of a sexuality to the photographs.”). The sharply different objectives that Koons had in using, and Blanch had in creating, “Silk Sandals” confirms the transformative nature of the use.

This is not a Ninth Circuit vs. Second Circuit issue. Other Second Circuit courts, ultimately finding no fair use, have defined the defendants’ purpose more broadly. In Castle Rock Entertainment, Inc. v. Carol Publishing Group, Inc., 150 F.3d 132, 142 (2d Cir. 1998), the court defined the purpose of both works—the Seinfeld television series and a Seinfeld quiz book—as to “entertain Seinfeld viewers.” Only in Ringgold v. Black Entertainment Television, Inc., 126 F.3d 70, 79 (2d Cir. 1997), a case involving the use of a poster of the plaintiff’s quilt for set decoration on a television show, did the court reflect on the issue at any length, if only in a footnote:

The defendants have used Ringgold’s work for precisely a central purpose for which it was created — to be decorative.n10 Even if the thematic significance of the poster and its relevance to the ROC episode are not discernible, the decorative effect is plainly evident. Indeed, the poster is the only decorative artwork visible in the church hall scene. Nothing that the defendants have done with the poster “supplants” the original or “adds something new.” The defendants have used the poster to decorate their set to make it more attractive to television viewers precisely as a poster purchaser would use it to decorate a home.

n10 Of course, the creation of visual works serves other, often more important, purposes such as illuminating human understanding, providing inspiration, or provoking thought. Ringgold’s work, in telling and illustrating an informative story, might well serve these purposes, but it also significantly serves a decorative purpose.

The issue here reminds me a bit of one criticism of Justice White’s infamous opinion in Bowers v. Hardwick, which framed the legal issue as “whether the Federal Constitution confers a fundamental right upon homosexuals to engage in sodomy,” as opposed to how the 11th Circuit framed it, whether “private sexual conduct between consenting adults is constitutionally insulated from state proscription.” But the solution is not as simple as always looking for a more specific purpose. At some level, every defendant’s purpose will be somewhat different than the plaintiff’s; if nothing else, a defendant will always wish to use the plaintiff’s work in a specific way that the plaintiff did not authorize. But that can’t be the optimal categorization of purpose either.

This is not an issue that copyright law, or constitutional law for that matter, struggle with alone. Just today I came across this relevant passage while reading a draft article by Jonathan Cardi, The Hidden Legacy of Palsgraf: Modern Duty Law in Microcosm:

The inherent instability of categorical formulations of plaintiff-foreseeability stems in part from the lack of any principle by which courts define the scope of the foreseeable class. Take, for example, the police chase case cited in the previous paragraph. Although the Montana court defined the class quite broadly—”people using the streets and highways where the chase occurred”—the class would have excluded a plaintiff injured by the careening police chase while watching it from the front porch of his house. A broader definition—for example, “people present in the area of the chase”—would allow recovery by such a victim. In the alternative, a court might deny liability by defining the class more narrowly—”people asleep in their car on the side of the road,” “people interfering with the chase,” or “drunk drivers.” I discern no guidelines according to which courts determine how narrowly or broadly to define the class of plaintiffs into which a particular plaintiff must fit. In fact, courts rarely even disclose the reasoning by which they have derived the class.

Cardi then notes in a footnote that “[t]his is a common ‘scope problem’ in the common law, documented famously by Herman Oliphant. See Herman Oliphant, A Return to Stare Decisis, 14 A.B.A.J. 71 (1928).”

So it’s a problem that affects all common-law decisionmaking, which might fairly be said to include copyright, and certainly the fair use doctrine. And while I don’t have an immediate solution, I’ll settle for now for courts at least expressly recognizing the difficulty.

[Cross-posted at Madisonian.net.]

Andy’s paper, “The Continuing Vitality of the Presumption of Irreparable Harm in Copyright Cases,” is available here on SSRN.

No. Not any of those. There is a service that, judging by its password requirements, contains either information far more sensitive or capabilities far more powerful than any of these. It’s…

the Electronic Copyright Office, or eCO. eCO allows you to, get this, register copyright claims. So naturally, a power that awesome must be adequately protected from dopplegangers posing as registered users, through the use of rigorous password restrictions:

Each person using the Electronic Copyright Office System, eCO, must comply with the following:

• Minimum password length must be 8 characters and consist of at least 2 alpha characters, 1 number and 1 special character (but not an ampersand – &).
• A password must have no consecutive repeated characters.
• A password must not include your user name or any part thereof.
• A password must not include the names of a spouse, children, pets or one’s own name.
• A password must not include any regional sports teams or players.
• A password must not include any office symbols.
• A password must not include your social security number or any subset of your social security number that is more than a single number.
• A password must not include words that can be found in any dictionary, whether English or any language.
• A password must not be any of the 11 most recently used passwords for the account.
• Every user with an account on a Library of Congress system including eCO is responsible for safeguarding access to that account.
• A password must not ever be shared with anyone.
• An account owner can change his or her password at any time, but at a maximum of once per day.
• An account owner must change his or her password when prompted by the system.

I’ve highlighted a few of the requirements that make registering with eCO particularly challenging. Think of the passwords you use the most often. How many of them meet all of these requirements? Are you sure there are no repeated characters? If you guess wrong, you must wait for the system to think about it, and then fill out the entire registration form again. And again. And again. I think it took me at least five minutes to register an account.

Oh yeah, and once you’ve got one good password, you only need eleven more to make it through the forced rotation.

(And yes, in case you’re wondering, the reason why I’ve recently stumbled upon this is that I’ve registered my most recent articles. Practice what you preach, and all that.)

Cross-posted at Madisonian.net.

In the Conference Center of Marquette’s Eckstein Hall, which was filled with students, alumni, faculty, and local practitioners, Professor Lemley stressed that the United States Patent and Trademark Office (USPTO) faces primarily two problems in promoting innovation policy.  On the one hand, the USPTO must contend with a backlog of around 700,000 patent applications that have not yet even been examined, let alone granted or denied.  This may result in three- and five-year waits before the USPTO renders a decision on an application, which may prove detrimental for certain sectors in which technology develops at a more rapid pace, such as the software  industry.  On the other hand, the USPTO has granted a not insignificant number of patents of questionable validity and quality.

Professor Lemley listed a number of proposals aimed at addressing both of these problems, noting the pros and cons of each proposal. First, spending more money on patent examination may not be cost-justified. Other responses, like prevent fee diversion and retain more experienced patent examiners, may be somewhat beneficial, but the empirical research regarding examiner habits at the USPTO suggests these proposals would be of little consequence. Instead, Professor Lemley argued, the incentives that drive these habits need to be recalibrated.  Additionally, the best options are those that allow patent applicants and their competitors to determine which patent applications should be given priority, such as tiered review and adversarial challenges to granted patents.  In the end, concluded Professor Lemley, no single proposal can solve the USPTO’s problems by itself. But each proposal, especially those in which private parties can signal the USPTO that some patents deserve more attention than others, can at least make a difference in the USPTO’s backlog and the bad patents it issues.

The Marquette Intellectual Property & Technology Program is deeply grateful to Professor Lemley for visiting our school, our students, and our legal community.  After several years of teaching, I can truly say that Mark Lemley embodies the best qualities of the greatest academic and lawyer, and is an extraordinary mentor and an example for an entire generation of intellectual property academics and practitioners.  Thank you, Mark, so very much for making the first Nies Lecture in Marquette University Law School’s magnificent new building a truly unique and memorable day!

The upside of this is that rules can get transmitted from case to case much more efficiently. The downside is that errors can spread just as easily. Take the idea from copyright law that contributory infringement liability is derived from the tort law concept of enterprise liability. This explanation is widespread in the case law. See, e.g., Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 794-95 (9th Cir. 2007); Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996); Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc., 75 F. Supp. 2d 1290, 1293 (D. Utah 1999); Polygram Int’l Pub., Inc. v. Nevada/TIG, Inc., 855 F. Supp. 1314, 1320 (D. Mass. 1994). It’s also featured in the influential Nimmer treatise: “A separate avenue for third-party liability in the copyright sphere is contributory infringement, which forms an outgrowth of the tort concept of enterprise liability,” Nimmer § 12.04[A][3]. And, it’s taught in law schools. The textbook I used to teach copyrights from 2007 through last year used to have only a one-paragraph introduction to secondary liability, followed by cases such as Fonovisa, which included the “enterprise liability” explanation. So, I dutifully repeated it to my students in both copyright and Internet Law, even though I was not really sure what “enterprise liability” was.

It turns out that it is flat wrong. Contributory infringement liability has nothing whatsoever to do with enterprise liability.

The earliest citation for the enterprise liability suggestion, and its apparent origin, is Demetriades v. Kaufmann, 690 F. Supp. 289 (S.D.N.Y. 1988). Demetriades was a case involving copyrighted architectural plans; the plaintiff claimed that the real estate agent and realty firm that had sold an empty lot were contributorily liable for the house built using infringing plans on that lot. The court had to determine whether those two defendants were indirectly liable for the infringement.

The Demetriades court began by correctly noting that “[i]n delineating the contours of this third-party liability, and because copyright is analogous to a species of tort, ‘common law concepts of tort liability are relevant in fixing the scope of the statutory copyright remedy . . . .’” But then the court moved from that premise to a surprising conclusion: “Guided, therefore, by well-established precepts of tort liability, it appears that two avenues of third-party liability in copyright have grown up in the law—’vicarious liability’ (grounded in the tort concept of respondeat superior) and ‘contributory infringement’ (founded on the tort concept of enterprise liability).”

Contributory infringement as defined in copyright law is liability for knowingly providing encouragement or assistance to an infringer; it’s thus the analog of contributory tortfeasor liability for knowingly aiding a tortfeasor. See Rest. 2d Torts §§ 876, 877. It’s not a form of strict liability. Enterprise liability is something completely different. Enterprise liability is a theory of tort liability that emerged in order to hold an entire industry responsible for harm caused by an industry-wide standard when identifying the particular tortfeasor in a given case is impossible. See Black’s Law Dictionary, 9th ed. The classic case involves injuries caused by blasting caps to children. It can be impossible to determine after the fact who made a blasting cap that exploded. If the entire industry manufactures blasting caps that are unreasonably dangerous, enterprise liability permits a suit against everyone for their share in the harm. See Hall v. E. I. Du Pont De Nemours & Co., Inc., 345 F. Supp. 353, 376 (E.D.N.Y. 1972).

Bill Patry, in his recent copyright treatise, spends an entire section refuting the “enterprise liability” connection. See 6 Patry on Copyright § 21:44. He goes out of his way to point out that the Demetriades decision was issued by a court that, although within the confines of the Southern District of New York, was in fact located in White Plains. I take it the suggestion is that once you leave the sophistication of Manhattan, knowledge of copyright law decreases proportionately. But in fact the Demetriades court seems to have made its mistake out of an excess of caution. Not simply satisfied to repeat earlier claims about contributory liability’s origins in tort law, it attempted to ground that claim. The problem is that it did just enough research to be dangerous.

The court didn’t provide any direct support for the problematic sentence, but a sentence later it dropped a footnote that indicates what may have happened. First, the court complained that the relevant authorities were unhelpful in distinguishing between contributory and vicarious infringement. As to the canonical decision in Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159 (2d Cir. 1971), this criticism seems unfair, but it is certainly accurate as to the Supreme Court’s then-recent decision in Sony v. Universal, the “Betamax” case, and may have been accurate as to the Nimmer treatise as it existed at the time. The Demetriades court next noted “the plain distinctions between vicarious and enterprise liability in tort” and cited the 4th edition of William Prosser’s Handbook on the Law of Torts §§ 69 & 72, published in 1971, even though an updated 5th edition was released in 1984. It was probably what the judge had available.

Prosser’s 4th edition does not mention enterprise liability at all. For theories of imputed liability, it covers, in § 69, vicarious liability, and in § 72, liability among members of a “joint enterprise.” That is, if two people or two businesses engage in a joint enterprise, one member might be held liable for the tortious acts of the other. This is just close enough to the rules of liability for contributory tortfeasors to be confusing. Somehow the word “joint” dropped out, and the Demetriades court referred only to “enterprise liability.”

For whatever reason—probably because most federal judges, like me, didn’t know what enterprise liability was either—the Demetriades court’s suggestion was picked up and repeated. Indeed, the popularity of the Demetriades court’s suggestion shows that subsequent courts not only didn’t know what enterprise liability was, but they also didn’t know where contributory infringement liability originated. First, the enterprise liability suggestion was picked up by the influential district court decision in Polygram International v. Nevada/TIG. At some point, it also made its way into the Nimmer treatise, which cited Demetriades. Both Demetriades and Nimmer were cited by the Ninth Circuit in its even more influential decision in Fonovisa v. Cherry Auction in 1997. From there the enterprise liability suggestion has continued to spread, including in the Ninth Circuit’s recent Perfect 10 v. Amazon decision.

Fortunately, in none of these cases did the reference to “enterprise liability” actually matter. In Demetriades itself, the court later went on to cite Section 876 of the Second Restatement of Torts—which provides for contributory tortfeasor liability. No court has held that contributory liability in copyright law is a form of strict liability that requires apportioning damages among defendants according to market share. But the repeated citation of contributory liability as originating in enterprise liability poses the danger of such a result, and in the meantime obscures contributory infringement’s actual origins. Despite its wrongness, and despite the efforts of people such as Bill Patry to remove it, it’s got a lot of case law inertia behind it now. I expect “contributory liability as enterprise liability” to have a long life to come.

[Cross-posted on Prawfsblawg.]

Why Zimmerman chose the name Dylan has long puzzled his biographers.  Welsh poet Dylan Thomas, Marshall Matt Dillon of TV’s iconic western Gunsmoke, and Dillon Road in Hibbing have all been suggested as possible sources.  Dylan himself has been characteristically vague and enigmatic on the name issue.

From 1952 (the year that Dylan was in the seventh grade) to 1959 (the year he enrolled as a freshman at the University of Minnesota), the Green Bay Packer defensive backfield was anchored by Bobby Dan Dillon, a 6’1”, 180 lb. native of Temple, Texas who played college football at the University of Texas.  Drafted by the Packers in the 3^rd round of the 1952 NFL draft, Dillon (called Bob or Bobby) quickly moved into the starting lineup and for the next eight years was one of the few bright spots on a fairly dismal Packer team.  Dillon was a first-team all-pro on four occasions, played in four Pro Bowl games, and was named first or second team All-NFL every year after his rookie season.

There is no evidence that Bobby Zimmerman was especially interested in football or any other sports while growing up in Hibbing.  He did not play sports in high school, and while there are sports references in his later songs, they are principally to boxing and to a lesser extent, baseball.  On the other hand, there is no reason to believe that he wasn’t familiar with the sports figures of his era, at least in a general way.

I am not suggesting that Zimmerman chose the name Dylan to honor his football hero; it is more likely that he was familiar with the name (for reasons explained below) and simply liked the way it sounded.  (Of course, it could also be that the name Bobby Dan Dillon and the football player’s rural, southwestern roots appealed to the young Jewish Midwesterner who was soon to go to great lengths to project himself as a wandering troubadour from the heartland of America.)

Before the creation of the Minnesota Vikings in 1961, most northern Minnesota NFL fans followed the Green Bay Packers.  This is confirmed by former Marquette Law professor Ken Port who grew up in the area around Hibbing in the 1960’s and 70’s and who is an acquaintance of many of Dylan’s Zimmerman relatives.  According to Port, most of the older people he knew growing up had been Packer fans before 1961, and that many of them remained Packer fans after the arrival of the Vikings. 

Packer games were broadcast into Minnesota on the radio each season, and from time to time on television as well.  For example, television sets in Hibbing on Thanksgiving Day, November 25, 1954, could be used to watch the Detroit Lions-Green Bay Packer game on the Dumont Network. (In that game, the Packers almost upset the first place Lions, before falling 28-24.)  It seems safe to say that any Packer fan is the 1950’s would have immediately recognized the name Bob Dillon

However, there was one even more direct Hibbing-Packers connection.  In the early 1950’s, the Packer held their summer training camp in Grand Rapids, Minnesota, which was not terribly far from Hibbing.  Moreover, on August 13, 1953, the Packers actually played an exhibition game in Hibbing against the New York Giants.  Given that Bobby Zimmerman was 12 years old at the time, it is hard to imagine that he would not have known about the game, and he likely would have heard the names of the top Packer players discussed.

As for the legal question in the title of this article, it is hard to believe that the football Bob Dillon would have had any legal recourse against the folk-rock legend even if Dylan did “steal” his name.  First of all, there is a general principle in property law that no one can own exclusive rights to a name.  Moreover, as I noted several years ago in an article on the landmark right of publicity case of Uhleander v. Ericksen (1970), the Minnesota law regarding the right of publicity was almost completely undeveloped prior to 1970.

However, the tort of appropriation of identity was widely recognized in 1959, and presumably existed in Minnesota.  The elements of that tort were (and are): (1) taking, (2) identification, (3) benefit to the appropriator, and (4) lack of consent.  Elements (3) and (4) would appear to have been satisfied, but elements (1) (a taking) and (2) (identification) demand that third parties recognize the identity that has been ostensibly taken and act in a manner that tangibly benefits the taker.  At a minimum, a person whose image is tortuously appropriated must be objectively identifiable; a benefit to the appropriator must accrue before a legal claim arises; and the use must be nonconsensual.  In this particular case, it seems unlikely that anyone listening to Bob Dylan sing or contemplating purchasing one of his albums was ever under the misimpression that the singer-songwriter was the Packer defensive back branching out into a new career.

On a different front, in contemporary intellectual property law, Dillon could conceivably have maintained a trademark action against Dylan.  Fans of sports law probably remember that in 1998, former basketball superstar Kareem Abdul-Jabbar sued NFL running back Karim Abdul-Jabbar for trademark infringement.  The football playing Jabbar, originally known as Sharmon Shah, changed his name for religious reasons in 1995 while still a student at UCLA.  Although the name was spelled slightly differently and the basketball playing Jabbar had been retired since 1989, there were a number of parallels between the two men that suggested some sort of linkage.  Both had attended UCLA and both wore uniform number 33, albeit in different sports in different eras. 

Nevertheless, the basketball Jabbar filed a trademark infringement action against his football counterpart, once the latter became established as a rising star in the National Football League.  The case never went to trial, but the football Jabbar conceded the issue and agreed that for commercial purposes, he would play in the NFL under a different name.  After initially playing under the name Abdul, he eventually changed his name to Abdul-Karim al-Jabbar, which was apparently acceptable to Kareem.

The earlier Dillon situation was different for a number of reasons, the first of which was the “undeveloped” state of trademark law in the late 1950’s and early 1960’s.  In that pre-dilution era, the primary focus of a successful trademark infringement claim was the proof of likelihood of confusion in the marketplace. 

Again, it is hard to believe that anyone in 1959 or 1960 confused the two Dillons/Dylans, particularly given the dissimilar spelling of the names.  Moreover, while it is hard to believe that any knowledgeable sports fan really believed in 1996 that the 7’4” basketball legend Had actually embarked on a new, and apparently successful, career as an NFL running back at age 49 (his age during the football Jabber’s rookie year), it was true that many sports fans at the time assumed that the football Karim (who shared the same uniform number and alma mater with his basketball counterpart) was the son of Kareem Abdul Jabber (which he was not). 

In contrast, no one ever suggested that they thought that Bob Dylan was Bob Dillon’s son (especially since the football Dillon was only eleven years older than the singer).

Unless Bob Dylan someday reveals where he got the idea for his name, we will be left to speculate on the matter.  For the reasons stated above, however, I think it highly likely that Robert Zimmerman of Hibbing, Minnesota went through adolescence already familiar with name that he would eventually adopt as his own, albeit with an altered spelling.

Professor Adam Kurland of Howard University Law School can attest to the fact that I have been making this “Bob Dylan got his name from the Packers’ Bobby Dillon” argument since the late 1980’s when we were both colleagues at Chicago-Kent, and I first learned that there had been a Bob Dillon who played for the Packers.

Meanwhile, Marvin Bynum’s Golden Quill-winning comment addresses the feasibility of establishing offshore wind farms in Lakes Michigan and Superior. 

Bynum begins his analysis by describing Europe’s commitment to renewable energy and the highs and lows of the offshore windpower industry abroad.  He then explores the federal and state regulatory regimes that govern such projects in Wisconsin and observes that there are significant obstacles facing developers.  Bynum argues that we should learn from the European experience and concludes by offering several proposals, such as providing federal loan guarantees and creating a new state office of “offshore wind coordinator,” to promote the development of offshore wind projects in Wisconsin.

Donald Stroud’s comment, which garnered the Silver Quill Award last spring, focuses on the use of Wisconsin’s Deceptive Trade Practices Act (DTPA) to adjudicate simple breach of contract claims in commercial transactions.  He describes the Wisconsin Supreme Court’s decision in K & S Tool & Die Corporation v. Perfection Machinery Sales, Inc. (2007), which created a way for a contracting party to avoid legitimate but unfavorable terms (in K&S, a restrictive forum selection clause) in the contract by asserting a DTPA claim.  Stroud observes that indiscriminate applications of the DTPA may (1) disrupt expectations and risk allocations that are fairly negotiated into contracts, (2) conflict with UCC provisions, and (3) go beyond the intent behind DTPA.  He recommends the adoption of a “public interest standard” to distinguish between cases that fall within the ambit of the DTPA and those that should be governed by ordinary contract law.  He also suggests that the UCC should trump the DTPA whenever the two are in conflict.

Jessica Farley’s comment undertakes an examination of the conflict between Wisconsin’s open records law and the intellectual property interests of private companies that keep public records on behalf of municipalities in a copyrighted format.  Farley criticizes the state supreme court decision in WIREdata, Inc. v. Village of Sussex (2008), which held that a municipality complied with the state’s open records law when it provided the plaintiff with PDF versions of requested records, even though the data contained in such files were not manipulable and, therefore, useless to the plaintiff.  She observes that the court dodged the central issue in the case – whether the open records law requires a municipality to provide records in a more usable format when so requested – and argues that the statutory language and purpose of the open records law demand meaningful access to information.  Farley concludes that in light of this important public interest copyright must yield, and proposes an amendment to the law that would include usability as a factor for determining compliance with the open records law.

Last but not least, Rachel Helmers has written a comment critiquing federal courts’ treatment of negative equity that is rolled into a new car loan as a purchase money security interest (PMSI).  PMSI status not only grants super-priority on the collateral (here, the car) to the lender under the UCC, but it also protects the lender from cramdown under the 2005 amendments to the Bankruptcy Code.  Helmers argues that shielding the negative equity portion of a car loan from cramdown in a Chapter 13 bankruptcy does not effectuate congressional intent in the 2005 amendments and fails to treat similarly-situated creditors alike.  She urges courts to follow the “dual status” rule, which would separate the negative equity from the remaining amount of the loan used to purchase the car and treat only the latter as a PMSI.

There have been several important copyright cases before the Supreme Court since the first, Wheaton v. Peters, in 1834 (over, appropriately enough, the copyright in the Supreme Court’s reports). But the most important to me personally is Sony v. Universal, also known as “the Betamax case.” The Sony case, as is widely known, held that recording a program at home in order to watch it later—”time-shifting”—is a fair use. It also devised a very influential test for determining the liability of manufacturers and service providers for infringement committed by users, one that asked only whether the product or service was “capable of substantial noninfringing uses.” Undeniably Sony is an important case, but then so are Bleistein v. Donaldson Lithographing, Baker v. Selden, CCNV v. Reid, Burrow-Giles v. Sarony, Campbell v. Acuff-Rose and countless others. What pushes Sony over the top is the fact that the Sony case marks the boundary between two copyright worlds: a world where copyright is solely a regulation of a particular industry sector—publishing—and a world where it regulates everyone.

In 1975 Sony began marketing its video tape recorder, the Sony Betamax, using ads that extolled the ability to watch one channel and record another. “Build a Library” advised one ad. Two movie studios—Universal and Disney—objected to the new device. Those studios were not the multimedia conglomerates they are now. Universal and Disney were primarily movie studios that also produced some television content. Their primary concern was in protecting the ability to re-release movies in theaters after they had been broadcast on television. Our collective memory of Sony is now that content owners rose up as one to oppose the VCR. But the reaction was considerably more muted, at least at first. None of the television networks, and no television production companies who were not affiliated with a movie studio, joined the suit. As is often the case in copyright law, Sony was largely the product of a single, aggressive copyright owner: Universal, whose president later threatened Nintendo by observing that Universal’s “litigation department even turned a profit.”

Despite the tepid response from content owners, Sony was an extremely close case. The Supreme Court decision was 5-4, and it split the 13 judges to consider it 7-6 the other way. That is, copyright law came very close to declaring that time-shifting was not fair use and that VCR manufacturers needed to get a license from any content owners whose programs might be recorded. It’s difficult even at this relatively short remove to imagine why the law might have taken that path. That’s because, even though the Sony decision is only 26 years old, the legal and social context in which it arose have undergone a sea-change.

We are surrounded now by copying technologies, by copyright issues, and by the constant distribution and reproduction of copyrightable material. But it was not so in 1975. Copying was by and large the domain of publishers. Nascent copying technologies were emerging that enabled individuals to make their own copies—photocopiers, cassette tape recorders, VCRs, and soon, home computers—but in the mid-1970s they were still novelties.

Thus in 1975 it was a subject of considerable dispute whether copying an entire work could ever be deemed a fair use. Certainly, it was assumed, the circumstances in which that would be true would be exceedingly rare. And fair use doctrine tended to distinguish between uses that were “productive,” i.e., that produced something new—something transformative, in today’s jargon—and uses that were merely consumptive. Consumptive uses, again, were not likely to be fair.

Those two rules made a considerable amount of sense in dealing with professional publishers and distributors. The circumstances under which a rival publisher could duplicate an entire work and call it fair use were probably nil. Same for consumptive versus productive uses—in the pre-1975 copyright world, fair use was designed to allow rival publishers to incorporate small portions of works under copyright in producing something new.

Put those two concepts together, and it looked awfully hard to justify what consumers were doing with VCRs. They were recording entire programs, and they were not producing anything new as a result: just verbatim copies of the original broadcasts. But the Sony case introduced a new element. Previous indirect infringement cases involved dance halls, hotels, and independent contractors under the defendants’ supervision—in other words, interactions between humans. But Sony involved a machine. Sony was the first case in which the courts confronted a claim that a machine manufacturer should be held liable under copyright law for the way it was used.

This explains the Sony court’s well-known turn to patent law for a solution. Unlike copyright law, patent law had long contemplated the potential liability of manufacturers for their role in contributing to infringements by others. Section 271(c) of the Patent Act subjects the manufacturers of components of a patented invention that are “not a staple article or commodity of commerce suitable for substantial noninfringing use” to liability as infringers. The Sony court famously adapted this standard to become the Sony test for contributory infringement of copyrights by a machine: manufacturers would only be liable if their product was “capable of substantial noninfringing uses.”

That test has long been criticized by copyright lawyers and scholars active at the time as an inappropriate borrowing from patent law. And indeed the test seems a bit mismatched for the problem. Section 271(c) looks at the way a component is sold—as a staple article of commerce or as something else—to determine whether it is particularly adapted at infringing on one particular patent. A component that targets one particular invention should be relatively easy to identify. The Sony test looks at a product in its infancy and asks whether it infringes copyrights generally. That’s a much harder test to apply; any copying machine at all can infringe copyrights generally, and whether it is typically used for infringement may vary significantly over time (not to mention the definition of fair uses tends to shift with new media). The Sony court made the test easier to apply by limiting the showing a defendant must make to the mere “capability” of substantial noninfringing uses. As Justice Blackmun noted, “[o]nly the most unimaginative manufacturer” would be unable to meet such a standard.

Whatever the limits of the Sony test, however, the Sony majority recognized that a new dawn was breaking in copyright law, one that required a departure from the standard publisher, distributor, and venue cases that made up copyright law’s core. Sony attempted to bridge the old copyright world and the new by carving out a chunk of the new world from copyright’s scope entirely: basically, the court said, copyright has little to say about the responsibility of device manufacturers to design their devices to prevent infringement. Copying devices weren’t liable before 1979, and they shouldn’t be liable afterwards either. In that, the Supreme Court is not alone; the history of congressional legislation dealing with the collapse of the publisher/consumer divide is one of shoring up old bulwarks, of increasing penalties and adding enforcement options while deferring any fundamental reconception of how copyright is supposed to work. Sony marked the moment copyright law entered this morass; it was copyright’s Battle of the Marne.

This week’s review of blog postings and news stories of note focuses on subjects that might seem trivial, but that interest me nonetheless.

1. Comic Books

My brother and I had an extensive collection of comic books when we were growing up.  We even owned two (two!) mint editions of Conan the Barbarian number 1.  If I still owned that collection today, it would easily pay for the first year of my daughter’s college tuition.

After reaching the age of puberty, I consigned my childhood love of comic books to the “trivial” category of youthful pursuits.  Perhaps that is why I was so delighted to read about the current exhibit at the Lillian Goldman Law Library at Yale University, entitled Superheroes in Court! Lawyers, Law and Comic Books.  As described by John Schwartz in the New York Times, this exhibit includes comic books with a legal setting, contracts and correspondence relating to legal disputes over the ownership of comic book characters, and reports submitted to Congress during the 1950s seeking federal legislation to address the alleged connection between comic books and juvenile delinquency.

Maybe I should start up my comic book collection again.  After all, the curator of the exhibit at the Yale Law Library claims that “[t]ons of lawyers are collectors.”  And it has been reported that President Obama is a big Conan the Barbarian fan. (Hat tip to Jaime and Mara)

2. Professional Football

I am well known among first year law students for my advice to maximize their study time by giving up trivial pursuits such as televised sports.  Professional football games, in particular, can eat up a lot of time that might be better devoted to the study of law.  For those students who refuse to give up their football, but who would like to pretend that watching the game advances their studies, Aurelia Schultz at The 1709 Blog has a good post on the copyright infringement case arising out of the original logo used on the Baltimore Ravens helmet.

It seems that Frederick Bouchat designed the logo for the expansion team-Ravens back in 1995, which originally consisted of the letter “B” with two flying wings attached.  The Ravens used the logo but paid Bouchat nothing.  After a first round of litigation resulted in a finding of copyright infringement by the Ravens, but concluded that Bouchart was not entitled to any damages, Bouchart and his lawyers embarked on a series of increasingly creative lawsuits filed against anyone and everyone who ever licensed or used the logo.  Meanwhile, the Ravens abandoned the original logo in favor of today’s depiction of a raven’s head with the letter “B” inside.

Finally, ten years after the original suit, Boachat’s serial litigation may be about to pay off.  It seems that the Ravens and the NFL assembled and offered for sale a highlight reel of Ravens football games that included footage of games where the team was wearing helmets with the old logo.  Bouchat sued for copyright infringement, and the United States Court of Appeals for the Fourth Circuit recently ruled in Bouchat’s favor.  The court rejected the Ravens’ argument that the highlight reel fell within the “fair use” exception to the copyright law, primarily because the sale of the  highlight reel had a commercial purpose and because the game footage used in the film depicted the entire copyrighted work in the context of its original purpose (identifying which players were on which team).  The court noted that the fair use doctrine might have applied if there had been an attempt to transform the copyrighted work for a different purpose (i.e., using the footage for a documentary on the topic of the legal dispute over the original logo).

Law students now have my permission to watch Baltimore Ravens games all season long in order to observe the practical application of the laws governing intellectual property.

3. Video Games

What could be more trivial than playing video games?  The news that a man sued the software manufacturer NCsoft over the game Lineage II, claiming that he became addicted to role playing video games, was met with derision by many observers.  Addiction of any kind is a serious matter, and should not be laughed off.  A thoughtful and sympathetic response to the lawsuit can be found on the blog In Third Person.  While doubting the legal merits of the plaintiff’s claim, the author of the post (a self-proclaimed ”20 year gamer”) points out the important distinction between substance addiction and behavioral addiction.  This distinction is not trivial, and it may ultimately limit the legal liability of the software company.

A more significant aspect of the case may be its relevance to the interpretation of software licensing agreements.  The trial judge denied NCsoft’s motion to dismiss, where the defendant argued that the standard licensing agreement that game manufacturers make gamers sign should be interpreted to absolve the manufacturer from this type of liability.  Steve Roosa at the blog Freedom to Tinker argues that the trial judge was correct to rule that the contractual limitation of liability does not preclude tort lawsuits.  He puts the pretrial skirmishing in this case into a larger context:

 The case law governing software license agreements has evolved dramatically over the past 20 years as cataloged by Doug Phillips in his book The Software License Unveiled. One of the recent trends in this evolution, as correctly noted by Phillips, is that courts will often honor contractual limitations of liability which appear in these agreements, which seek to insulate the software company from various claims and categories of damages, notwithstanding the lack of bargaining power on the part of the user. The case law has been animated, in large part, by the normative economics of Judges associated with the University of Chicago. Certain courts, as a result, could be fairly criticized as being institutionally hostile to the user public at large. Phillips notes that a New York appellate court, in Moore v. Microsoft Corp., 741 N.Y.S.2d 91 (N.Y. App. Div. 2002), went so far as to hold that a contractual limitation of liability barred pursuit of claims for deceptive trade practices. Although the general rule is that deceit-based claims, as well as intentional torts, cannot be contractually waived in advance, there are various doctrines, exceptions, and findings that a court might use (or misuse) to sidestep the general rule. Such rulings are unsurprising at this point, because the user, as chronicled by Phillips, has been dying a slow death under the decisional law, with software license agreements routinely interpreted in favor of software companies on any number of issues.    

It seems that there is a broader game going on, over the proper way to interpret contracts.

4. “Name That Tort”

Besides video games, there is another type of trivial pursuit common among first year law students.  At some point in their legal studies, they begin to notice all of the torts, both real and potential, that are taking place all around them every day.  At this stage, every law student who is cut off by another driver in traffic or else jostled in a crowded bus seems compelled to share their observations about the various breaches of duties and intentional torts that have just occured with all of their non-law student friends and family who happen to be in the vicinity.  It is actually quite annoying.  Medical students do the same thing, and anyone who has known a doctor in training has been on the receiving end of multiple unsolicited diagnoses and treatment options.

The explosion of YouTube and cell phone video recorders makes it easier to play this game than ever before.  No longer are you limited to postulating the legal consequences of the various torts that you observe first hand.  Now everyone can cruise the internet and debate the theories of liability that flow from conduct captured for posterity on the internet.  For example, over at Sports Law Blog, Michael McCann of the Vermont Law School has posted the video of a brawl that erupted in the stands at the U.S. Open.  What follows is a discussion of the possible legal aftermath of what is depicted on the video.  It’s a fun way to waste a few minutes and work your brain cells at the same time.

5. Trivial Pursuit: The Game

Finally, a belated recognition of the passing this past June of Chris Haney, one of the co-creators of the game Trivial Pursuit.  As you can see from this obituary, the success of the game had the predictable result of leading to litigation over who came up with the idea.  One such lawsuit even gave rise to its own trivia question: “Which Trivial Pursuit question has an intentionally incorrect answer?”

In fact, I would argue that Beyonce and Gaga can be seen as “baroque” versions of the authentic Janet and the constructed Madonna. Beyonce heightens the authentic tradition in her videos. For example, in the video “Crazy in Love” she sings, standing next to the man who would become her husband, Jay-Z, about how much she loves him. Like Janet, Beyonce uses her given name. Lady Gaga, very obviously, extends the constructed tradition. In the video for “Bad Romance,” Lady Gaga changes personas fourteen times in one video. Lady Gaga makes us call her Lady Gaga.

Lately, however, Beyonce and Lady Gaga themselves have sought to confuse these boundaries, between the authentic and constructed, through their two videos “Videophone” and “Telephone.” 

“Videophone” is very much within the tradition of the “authentic” video persona (the video is shot in black and white, Lady Gaga is in white the entire time, and even the choreography re-visits previous Beyonce’s videos). By contrast, “Telephone” (which clocks in at 9:30 minutes) is an extended play on constructed personas where both Lady Gaga and Beyonce play with any number of personas, and indeed in the penultimate scene, use the trope of a traditional authentic video (lunch with boyfriend in diner) to poison all of the participants.

Thus, these videos attempt to bridge the authentic and constructed identity, and then question it even more by asking, is there a difference? Are our authentic selves “constructed”? Our “constructed selves” authentic?

All of this is interesting to me because it raises the question of whether we should be protecting this right of publicity in the first place. What are the markers of identity? How can we judge what is the best protection for identity if we cannot decide what is that constitutes those “indicia” of identity?

And I have not begun to delve into Minor Threat, OK GO, Nirvana, Sleator-Kinney, and the authentic DIY Alternative Music Video!

The video, though, at its greatest heights, was used by its more skilled practitioners to build and shape the individual artist’s persona beyond the popularity of any particular song. This often had the effect of strengthening the long-term commercial value of an artist’s work. I think, often, of the careers of Cyndi Lauper and Madonna as demonstrating the importance of this particular principle. Cyndi had the singing and writing chops (“Time After Time,” anyone?), but Madonna used the video art form to its maximum extent, making relevant her persona for over twenty-five years (yes, people, twenty-five years).

Thus, the video also invokes a more neglected sister of copyright, the right of publicity, which broadly protects the commercial value of a person’s identity. 

A typical right of publicity statute, the Illinois Right of Publicity Act, grants the “right to control and to choose whether and how to use an individual’s identity for commercial purposes.” 765 Ill. Comp. Stat. 1075/10. While the right of publicity began as a narrow right to protect one’s name and likeness, it has often been interpreted by courts to protect other indicia of identity (most famously in Vanna White v. Samsung Electronics). Although the existence of the right of publicity often prompts questions about why we want to protect a person’s commercial identity (Paris Hilton, shudder), the video also prompts the question of exactly what identity does the right of publicity seek to protect?

The video era featured two great female video stars, Madonna and Janet Jackson, both of whom used the art form of the video to construct identity in different ways. Janet Jackson used the video to construct an “authentic” person in that she referenced a persona that did not shift from video to video (for example, go to You-Tube, take a look her “crowd” videos, “When I Think of You,” “Alright,” “Escapade,” and “That’s The Way Love Goes”). In each, Janet’s persona is much the same. She is an approachable individual, seeking love and enjoying friendship, amidst a series of different dancers (and if you were a Janet fan, you knew the names of Tish, Paula, and yes, J.Lo!). Janet even used her given name (“Ms. Jackson, if you are nasty!”). There were limits, however, to the authentic persona. In Janet’s case, Janet had to manage those details of her life that did not match the “authentic” Janet of the videos, and it appears that somewhere in the mid-90s, Janet tired of managing her “authentic” persona. Indeed, Janet often used her (less) successful music in the 2000s to question the validity of that “authentic” persona.

Madonna, by contrast, famously changed her persona often. Unlike Janet, she took another name, Madonna, rather than be Madonna Louise Veronica Ciccone from Michigan. Madonna then changed personas so frequently that any Madonna fan has their favorite Madonna persona (my favorite is Boho New York Early Eighties Borderline Madonna and Ray of Light Madonna). By my lights, one of the most effective scenes of Glee’s first season — of course, I am a Gleek! — was in its famous Madonna episode. The two leads dance to a mash-up of Open Your Heart/Borderline, as they walk through a high school of various Madonna personas – Like a Virgin Madonna, Vogue Madonna, Open Your Heart Madonna – to remind viewers of how many times she had changed. In a way, Madonna changed so much we knew she had become constant in, at least, the ability to change.

So, as these videos demonstrate, when we talk about identity as to the right of publicity, there is an open question. What is identity? As we define the right, should we only protect a person’s authentic identity (name, likeness, voice, etc.), or do we protect that constructed identity? Are Madonna’s many personas as valid as Janet’s one?

Today’s version of the question involves streaming images of games across the Internet. Earlier this month, Wisconsin federal district court judge William Conley weighed in on this question. The ruling came in a case involving the Wisconsin Interscholastic Athletic Association and The Appleton Post-Crescent newspaper and the Wisconsin Newspaper Association.

The WIAA sued The Post-Crescent after it streamed live coverage of four high school football playoff games in 2008.

The paper was apparently lawfully on the premises from which it “broadcast” the games, and it does not appear to have violated the terms of any license acquired from the WIAA.

In 2004, the WIAA had entered into a exclusive agreement with the When We Were Young Internet broadcasting firm that granted the company the exclusive right to stream live WIAA football games across the Internet. In the lawsuit, the WIAA took the position that it “owned” the rights to the games it produced, and thus could exclude the Post Crescent from broadcasting the games in competition with the official licensed broadcaster. The newspaper defended on the grounds that the exclusive agreement ran afoul of the First Amendment and the Fourteenth Amendment’s Equal Protection Clause.

In his opinion, Judge Conley ruled on behalf of the WIAA, essentially finding that the association “owned” the rights to its games and that its granting a monopoly streaming license to one entity did not offend First Amendment values. Although John Deppert won his case back in 1886, twentieth- and twenty-first-century decisions in the United States have tended, with a few exceptions, to favor the party that puts on the athletic events, although the precise legal rationale for so finding has varied from case to case.

The issue is also not exclusively an American one, and the resolution of these disputes in the courts of other nation’s has not been uniform. An Israeli court recently reached a decision contrary to the Wisconsin decision in a case involving the streaming of English Premier League soccer matches to Israel, via the Internet. The court ruled that the league and its teams had no ownership interest in the games themselves, and thus could not prevent the dissemination of the games in Israel.

There is no question that the party who controls the grounds on which the games are played can impose restrictions on those who enter as licensees. However, whether or not there should be an additional property right in the games themselves is a question on which there appears to be no greater consensus today than there was in Deppert’s time.

The paper was published as a chapter in volume three of Intellectual Property and Information Wealth: Issues and Practices in the Digital Age, edited by Peter K. Yu.  The abstract appears after the jump. 

Traditionally, the validity of trademark licensing has been based on the acceptance that, in addition to indicating the origin of the marked products, trademarks also guarantee their quality — that is, they guarantee that all the products bearing the same mark share the same quality. As long as a product’s quality is consistent and trademark owners have control over production and distribution, licensing has been permitted. Yet, if trademark owners fail to set sufficient quality standards and to exercise adequate control over their licenses, courts have often considered licenses “naked,” that is, invalid under the presumption that lack of control could lead to differences in product quality and, accordingly, consumer deception.

Courts elaborated this doctrine of naked licenses prior to the enactment of the Lanham Act of 1946 and have continued to follow it after its implementation. Since its inception, however, this doctrine has proved somewhat flawed, and courts have often applied it inconsistently. In particular, courts neither elaborated a specific test to assess what represents “sufficient control” nor clarified when licenses ought to be declared naked. Because of such uncertainty, several courts thus started to focus directly on the quality of the licensed products rather than on the actual control that trademark owners had over their licensors in the attempt to provide a more reasonable standard for the validity of licenses. Still, other courts have continued to interpret the doctrine conservatively and declared void licenses in the absence of actual control, thus leaving trademark owners and licensees with many doubts as to what represent a valid license. This Chapter criticizes this uncertainty and the current application of the doctrine of naked licenses, and advocates for a more consistent standard for the validity of trademark licensing. In particular, building upon the recent judicial trend, this Chapter suggests that courts should focus directly on the actual quality of the marked products. Accordingly, as long as this quality remains the same or, if changed for marketing or business reasons, consumers are not deceived, trademark licenses should be declared valid.

On behalf of the staff of the Marquette Intellectual Property Law Review, I am pleased to announce the arrival of the second issue of volume fourteen, available now in print and online.

This issue highlights the work of several scholars. The issue opens with the Thirteenth Annual Helen Wilson Nies Memorial Lecture in Intellectual Property Law. The lecture was given this fall by John F. Duffy, the Oswald Symister Colclough Research Professor of Law at George Washington University Law School. Professor Duffy has updated and expanded his speech, “Innovation and Recovery,” to reflect recent developments in scholarship and patent law.

Max Stul Oppenheimer, associate professor at the University of Baltimore School of Law, recognizes the importance of protecting consumers who are among the first to adopt new technologies in “The Time and Place for ‘Technology-Shifting’ Rights.” Professor Oppenheimer argues that statutory and judicial steps must be taken to secure the rights of consumers to the use of their patented or copyrighted works when the technology they invested in becomes obsolete and new technology emerges.

Yi-Chen Su, managing partner of the Asian office for Milner Law Office, PLLC, traces the development of the “obviousness” standard for patents in “What About Know-How: Heightened Obviousness and Lowered Disclosure is not a Panacea to the American Patent System for Biotechnology Medication and Pharmaceutical Inventions in the Post-KSR Era.” In this Article, Su argues that judge-made, industry-specific standards of obviousness in biotechnology and pharmaceuticals are consistent with the Supreme Court’s ruling in Teleflex v. KSR, but that such standards should not be literally applied to all types of inventions without further consideration.

This issue also features the work of three student scholars: Jesse Dill examines the propertization of trademarks through the lens of John Locke’s labor theory and William Blackstone’s Clear-Act Principle in “Possessing Trademarks: Can Blackstone or Locke Apply to Fast Food, Grocery Stores, and Virtual Sex Toys?”; Michelle Moran contends that quilt artists should receive the same intellectual property protections as other artists in “Quilt Artists: Left Out in the Cold by the Visual Artists Rights Act of 1990”; and Laura Steele critiques courts’ treatment of the trademark licensing rights in bankruptcy in “Actual or Hypothetical: Determining the Proper Test for Trademark Licensee Rights in Bankruptcy.”

This issue also includes two transcripts. The first, “An Uncomfortable Fit?: Intellectual Property Policy and the Administrative State,” transcribes a 2009 panel discussion at the Southeastern Association of Law Schools conference. The panel was led by Kali Murray and included professors Sapna Kumar, Jason Mazzone, Hannibal Travis, and Jasmine Abdel-khalik. The panelists take an interdisciplinary look at how intellectual property is treated in the administrative law context. Finally, the issue closes with an insight into the practice of patent litigation by Marquette Law alum Rick McDermott in “Lessons Learned from Fifteen Years in the Trenches of Patent Litigation.”

As Irene Calboli explains in a new paper on SSRN, the answer has not been as clearly and satisfactorily worked out by the courts as you might think.  

It is commonly thought that trademark rights are recognized in order to prevent consumer confusion.  But the consumer confusion concerns seem much less compelling when an unlicensed producer is selling a T-shirt with the Starbucks name than a bag of coffee — consumers likely do not have the same quality expectations from a Starbucks T-shirt  that they have from a Starbucks cup of joe.  Still, as Irene describes, the trend is towards greater protection of trademark owners’ merchandising rights.

Irene’s paper thoroughly reviews the development of the law in this area, as well as the arguments for and against the protection of trademark merchandising.  She argues in favor of a clearer legal standard that would provide more explicit protection for merchandising, but that would also recognize standard defenses to enforcement actions by trademark owners.

Entitled “The Case for a ‘Limited’ Protection of Trademark Merchandising,” Irene’s paper is forthcoming in the Illinois Law Review.  Here is the abstract:

This Article provides an in-depth analysis of trademark merchandising – the use of trademarks on promotional products – and of the inconsistencies that have affected this practice since its “judicial creation” in the 1970s. Because of the departure from the traditional account of trademark protection – protecting consumers and the market – in favor of a direct protection of “trademark value,” trademark scholars have generally argued against accepting this practice stressing its dangers for consumers and the market. Still, recent judicial decisions and developments in trademark legislation have increasingly indicated a de facto acceptance of trademark merchandising. Hence, neither the courts nor the legislature have formally “legalized” this practice, but have simply stretched the interpretation of the traditional infringement standard to justify protecting trademark merchandising, thus leaving room for doctrinal opposition. As a result, the terms of protection of this practice remain unclear, and trademark owners and competitors are left wondering about the legitimacy of their actions while using trademarks in the course of trade. This Article argues against this uncertainty and advocates for a solution that would reconcile trademark theory and practice while favoring a limited protection of trademark merchandising under the general principles of trademark law. Specifically, this Article suggests recognizing trademark merchandising within the limits of trademark licensing, subject to the requirement of “use in commerce,” and the existing rules for trademark enforcement, defenses, and fair use. Contrary to common criticism, this limited protection of merchandising would not negatively affect the market or consumers. Instead, this protection would guarantee fairness in competition, prevent frivolous legal actions, and finally provide a clear guideline in this important area of the law.

A judge holding a defendant liable for trespass perhaps carries the vision of plaintiffs having their rights vindicated, but cases do not end at liability.  The judge must also determine whether further remedies beyond damages are appropriate, including whether a permanent injunction should issue.  Such is a weighty decision touches upon an extraordinary remedy: a court order that a defendant must cease and desist its illegal activity or face punishment for contempt.   That being said, in many property cases, a court order only issuing damages would effectuate a judicial licensing of the behavior.  With that result, the incentives are adjusted such that the right to exclude does not rest with the plaintiff; instead, it is determined only by the extent to which the defendant is willing and able to engage in the trespassing behavior.  As such, the courts have presumptively treated infringement of property rights as worthy of injunctive relief.

That has also been the rule in copyright infringement cases for the last few decades. 

The courts have roundly held that irreparable harm is presumed to flow from copyright infringement, and a plaintiff will normally be granted injunctive relief where there is a threat of future infringement.  As with tangible property, when a plaintiff obtains only a damage judgment, a defendant is then free to infringe that copyright owner’s exclusive rights again.  As Justice Story notes in his commentaries on equity, this would potentially “ruin[]” an intellectual property owner by miring him or her in “perpetual litigation.”  Joseph Story, 2 Commentaries on Equity Jurisprudence as Administered in England and the United States 931 (1836).

This rule, however, is slowly slipping out of the mainstream.  After the U.S. Supreme Court held in eBay v. MercExchange, 547 U.S. 388 (2006), that a patent infringement plaintiff “must demonstrate . . . that it has suffered an irreparable injury,” many lower courts are abolishing the presumption of irreparable harm in copyright cases, from the oft-cited Metro-Goldwyn-Mayers Studios v. Grokster, 518 F. Supp. 2d 1197 (C.D. Cal. 2007), to Judge Calabresi’s recent opinion in Salinger v. Colting, which Professor Boyden flagged for readers of this blog.

Though some courts continue to apply the presumption of irreparable harm, e.g., Microsoft Corp. v. McGee, 490 F. Supp. 2d 874 (S.D. Ohio 2007), the courts are trending towards eliminating the presumption, and thus, copyright plaintiffs should be prepared to prove that they will face irreparable injury in court, as the ABA has suggested.  ABA Section of Intellectual Property, American Bar Association, Annual Review of Intellectual Property Law Developments: 2006–08, at 415, 417 (George W. Jordan III et al. eds., 2009).

And therein lies the question. How does one prove irreparable harm?  Though a clear split of authority is emerging as to whether the presumption of irreparable harm survives eBay, an issue that most courts have not addressed is whether a threat of future infringement can give rise to irreparable harm.

Traditionally, the answer was a resounding “yes.”  The MGM court, however, stated that the threat of future infringement alone does not amount to irreparable harm, because “future copyright infringement can always be redressed via damages,” albeit in the multitude of suits Justice Story feared.  That is not to say that threats of future infringement are absolutely irrelevant to whether a plaintiff will suffer irreparable harm.  To the contrary, MGM left open the possibility that “future infringement plus” could satisfy the irreparable injury factor outlined in eBay.

In Designer Skin v. S & L Vitamins, 88 U.S.P.Q.2D 1679 (D. Ariz. 2008), the district court likewise treated the threat of future infringement as a factor in whether irreparable harm will result, adding that further irreparable injury was all the more possible because there was no market for licenses of the copyrights infringed in that case.  The court did state in dicta, however, that the threat of continuing infringement can by itself provide irreparable harm such that the equities could favor granting injunctive relief.  Ultimately, however, the court did not take a position supporting or opposing MGM‘s rule, instead holding that “future infringement plus” may furnish irreparable injury.

One court, however, in Apple v. Psystar, 673 F. Supp. 2d 943 (N.D. Cal. 2009), came close to holding explicitly that future infringement can be an independently adequate basis to support a finding of irreparable harm, though much is unclear from the decision.  Though the court treated the Psystar’s “brazen plans” to continue to allow third parties to infringe Apple’s copyrights as providing “compelling support” for a finding of irreparable harm, the court also found that Psystar’s actions would irreparably harm Apple’s business goodwill, brand, reputation, and market share.  And so, though the Northern District of California warmed up to the idea that future infringement can give rise to irreparable injury, one cannot be sure that a threat of continuing infringement would by itself be understood by this court to irreparably harm Apple or other copyright owners.

Thus, in light of this authority, attorneys should consider using the threat of future infringement as one piece of evidence relevant to whether irreparable harm would result, but, with the courts deviating from the traditional practice preceding eBay, future infringement alone may not carry the day.