Wednesday, July 20, 2011

Patent Part 1: The Basics

To wrap up this tutorial series on intellectual property, I will need to spend a few installments talking about patents. In short, patents are to inventions what copyright is to creative media. Nevertheless, patent has its own hornet's nest of issues, and ethical concerns, to discuss. This installment will cover the basics, providing a general look at patent law. The following installments will detail some of the thornier problems with biological patents, pharmaceutical patents, software patents, design patents, and business method patents.

Like copyright, a patent is a limited monopoly granted to an inventor for the purposes of controlling and securing a living from her intellectual labor. The invention must be something new, non-obvious, and useful, and the monopoly lasts twenty years. The holder of the patent can control the duplication, distribution, or implementation of the invention, so she can sell licenses to firms, granting access to the invention in exchange for some monetary compensation. US patent law originates in the same clause of the Constitution as copyright, and it set out to serve the same purpose: “to promote the Progress of Society and useful Arts.” As such, patents are supposed to serve as an incentive; in exchange for releasing an invention to the public, the inventor is granted a limited monopoly on the invention. The similarity to copyright, stops about there.

While copyright does not require any review, patents are granted on the basis of a lengthy application disclosing the details of the invention or innovation, and any “prior art” that may affect the judgment of originality. Once granted, these applications are public record, fulfilling the disclose requirement. As such, while a patent is technically protected against reverse-engineering, reverse-engineering is not really an issue since the details of the invention are public record. Of course, should an unlicensed firm use those details to put the invention into production, the patent-holder can sue them for patent infringement. Nevertheless, a patent infringement suit can be won by showing that the patent is invalid for some reason. For instance, the defendant might show that the patented invention is not substantially different from some older invention, now in the public domain, or he might argue that the patented article is obvious for some reason, and therefore not truly innovative.

There is no fair use for patent. Any use of the invention, including cases of independent discovery, constitute infringement of the patent. Remember that discussion of transformative use as part of a fair use defense? Such a defense in unavailable for patents. If a second inventor improves a patented invention, even to the degree that the improvement could be patented in its own right, the second inventor must still license the original invention. Combine the possibility of accidental infringement and the necessity of licenses for new inventions that might build on old ones, and you have the jungle of cross-license agreements in which many firms find themselves today. In the corporate world, and the American judicial system, it pays to be cautious. If a firm can avoid future litigation by entering into cross-license agreements with firms in the same industry, then it makes sense to enter into such deals. Even if one suspects that the other firm could not win a patent infringement suit, the cost of such suits is better avoided.

Some patent law includes “working provisions” that require the patent be put to use within the patent-granting jurisdiction. For those jurisdictions, the US not among them, there are penalties, including loss of the patent in some cases, for failing to put the invention to sufficient use, according to some criteria defined by law. Without such requirements, a patent can be held by a firm until it finds another firm releasing some product that may infringe the held-patent. At that time, the holding firm can sue for patent infringement. On the Internet, such holding firms are known as “patent trolls.” Despite not making use of their monopoly to benefit the public in any way, such firms seek to profit from other firms' success. Clearly this is region where patent law fails to maximize the public good. Supporters of patent troll practices (I really do not know a non-prejudicial term; that should tell you something, right?) argue that holding patents makes them liquid, they become valuable commodities that can be traded. I still do not see how holding back an innovation so that you can suppress the next firm that wants to release the innovation is good for the market.

Certainly, patent troll practices seem to undermine the stated purpose of patent law, to promote technological progress. Instead, such practices threaten progress by discouraging the release of new technologies without elaborate cross-license protection or costly (and sometimes futile) research into prior innovations and patents granted. Patent trolls are a sort of intellectual property landlord, seeking rents on technology that they did not develop and do not currently use. As such, they do form a potential obstacle to innovations coming to market.

To discuss any more substantial issues, I think I would have to get into specifics. Return to this site next time for an in-depth discussion of biological and pharmaceutical patents.

Monday, July 18, 2011

Trade Secrets

Now, we come to an even more obscure for of intellectual property: trade secrets. Trade secrets can be any innovation, a process or technique of manufacture, that a firm uses in its business. The most famous example is likely the formula for Coca-Cola. To be a trade secret, a firm must simply treat it as secret, limiting the number of people who know, requiring those who must be privy to the secret to sign non-disclosure or non-compete agreements. Trade secrets require no registration, and trade secret protection never expires. On the other hand, trade secrets also receive no substantial protection from the government, except in cases of corporate espionage. If a trade secret is obtained through illegal means, the victim firm can seek compensation and can get injunctions against the offender using the stolen information. Nevertheless, a firm has no such recourse in cases of reverse engineering.

Some scholars have claimed that trade secrets serve as a counterexample to Utilitarian or incentives-based justifications for intellectual property. For all other forms of intellectual property, some public good is at stake. Trade secrets serve only the firms that keep them, since there is no disclosure requirement or expiration date. While I agree that trade secret is kind of an odd man out in the intellectual property scene, I like to think about it as a recognized alternative to patents. If a firm does not want to disclose its innovations and lose control over them after a fixed term, the firm has the option of holding their innovations as trade secrets. Trade secrets can still be protected by contract law and privacy rights, but since they do not benefit the public as directly as patents, the firm cannot benefit from the patent system. Firms are then free to decide what is the best way to capitalize on their innovations.

This kind of thinking actually underlies much of my thinking about intellectual property. The government provides a carrot to get something the public wants. If intellectual property rights are too strong, the public cannot realize the benefits it hoped to get from a proliferation of creative and technological innovation. Therefore, it is important to understand how we relate to media, as consumers, creators, and potential creators, in order to understand the scope of intellectual property rights. We have to know what we need so that we know how to limit intellectual property rights. There must be a necessary balance between intellectual property rights sufficiently strong to motivate creation, but sufficiently weak to preserve desired public benefits.

Friday, July 15, 2011

The Paradox of Trademark

Much of this tutorial has concerned intellectual property issues as they relate to copyright. Copyright is, in many ways, the form of intellectual property that we discuss the most. After all, we live in a very connected media culture, so creative media is really part of our environment. Nevertheless, no discussion of intellectual property, and certainly no tutorial series on intellectual property, would be complete without at least some detailed discussion of the other major forms, namely patent, trademark, and trade secret. As such, I'll finish this series with at least one installment on each of these, beginning with trademark.

Again, we discuss copyright perhaps more often than any other form of intellectual property, but trademark may well saturate our environment even more thoroughly than copyright. We just don't seem to discuss it quite as often, and in some ways trademark isn't as fascinating as debates about file-sharing, fair use, or derivative works. Nevertheless, thanks to the 20th century arising of sophisticated marketing strategies, we are very much assaulted by brands. Trademark, of course, is the means by which those brand names, logos, mascots, and slogans are protected by law.

Trademark can be understood to serve two functions. On the one hand, trademark is a form of consumer protection against fraud. By registering its trademark, a firm gains assurance that it is the only firm legally able to use its registered mark for business purposes. Consumers are then assured that a given brand name or logo always denotes a product from a particular firm. If another firm attempts to use the registered mark in hopes of confusing consumers and capitalizing on the success of another firm, the trademark holder can sue for trademark infringement. On the other hand, trademarks also provide an incentive for firms to maintain consistency and quality of their products. Since a given mark is always associated with the same firm, it is in the firm's interest to ensure that consumers have a positive association with the mark. If the quality of the firms products is inconsistent or unacceptable, consumers know that they can avoid the firm by avoiding the firm's mark. Therefore, it is in the firm's interest to release high quality products and convince consumers that their mark is an indicator of good quality, ideal price, usw.

I suppose it then goes without saying that trademark is intimately connected with advertising. To cultivate positive associations between mark and product, firms invest heavily in marketing their brand. At base, advertising makes consumers aware of a brand and its associated product or products, but advertising is also the front line for creating positive associations with the mark. Firms need to do more than simply promote their brand. They also need to make sure that their brand is closely associated with their product, potentially so much so that consumers cannot think about the product without thinking about the brand. Of course, the strategies for realizing that goal also undermine trademark itself. If a firm is successful at making its mark “a household name,” the trademark risks entering the language as a generic description of the product. Bayer provides the most famous historical example in its loss of the trademark for aspirin.

When Bayer came on the scene, there was no way of patenting the extract of willowbark. It was a chemical found in nature, and most chemists sold willowbark extract as a pain reliever. Bayer did not have an innovative process for extraction, so it could not patent any process associated with the product. Nevertheless, it trademarked “aspirin” and began to sell its willowbark extract under that name. Once consumers got used to associating “aspirin” with willowbark extract, “aspirin” became a generic. Consumers did not ask for “willowbark extract, aspirin-brand.” Instead, they simply wanted aspirin. The term became a generic description, and as a result, Bayer lost their trademark.

Here, we have the essential paradox of trademark. A successful trademark is inevitably associated with the product, and that associated is built and sustained by advertising. Nevertheless, if the mark becomes so associated with the product that they really are one and the same to the consumer, the trademark is no longer valid. To avoid following Bayer's example, firms take a litigious approach. If a firm attempts to control its mark by actively pursuing infringement cases, it can protect its mark while at the same time undermining it through aggressive advertising. The result is our current circumstance, where one might struggle to recall that a Kleenex is actually a Kleenex-brand facial tissue, or that only Johnson and Johnson makes Band-Aid adhesive bandages.

Trademark also invites some problems with censorship. Since the mark is supposed to be associated with one and only firm, so any other use of the trademark may be an infringement. As such, if an artist depicts a ghetto cityscape with a certain recognizable fast food logo towering majestically amids the slum, the owner of the logo might decide that the depiction hurts or dilutes the brand and sue for infringement. For these reasons, as much as Disney has worked to keep Mickey Mouse in copyright, Mickey's place as Disney's mascot, and his face on so much merchandise, ensures that using the image of Mickey for the purpose of criticism of Disney will be problematic even if Steamboat Willie finally lapses into the public domain. Disney can claim that any depiction of their signature rodent dilutes the brand because Mickey is such a readily recognizable symbol of the media giant. One should note that such arguments are readily available to Disney, especially in the wake of non-conventional trademarks, such as UPS's trademark on their signature shade of brown. The firm was able to demonstrate that consumers can distinguish “UPS brown” from other shades of brown, thereby establishing that their shade of brown is associated with their business. Disney clearly has an easier argument to make with respect to the mouse.

In such arguments, we once again run into the paradox of trademark (or perhaps the paradox of advertising). A successful trademark is one that becomes a “household name,” something that everyone recognizes and knows, something that becomes part of the informational environment. No firm can do this effectively without making itself a part of the cultural environment, and as such, the firm's symbols also become part of the cultural environment. At the same time, the firm must worry about diluting its trademark, and protecting it (and itself) from criticism. The best thing that can happen to a firm is to have its trademark replace any other description of its products. The worst thing that can happen to a firm is to have its trademark become a common synonym for something undesirable, useless, disgusting, or evil. Unfortunately, to accomplish the one, a firm must risk the other.

Wednesday, July 13, 2011

Justifications for Intellectual Property Part 3: Self-Expression Justifications

The third dominant justifying theory for intellectual property rights is often called the Self-Expression justification. Most scholars attribute it to Hegel, but it ultimately has roots in Kant. While few philosophers even addressed intellectual property, Immanuel Kant discusses the sale of pirated books in Metaphysics of Morals. Kant argues that reprinting a book after first publication is a violation of the author's right to entrust his communication to a particular publisher. Viewing books as importantly communicative, not material, in nature, Kant claims that a publisher is essentially a spokesperson, someone designated by an author to communicate his ideas to others. Reprinters interrupt this process by taking it on themselves to communicate the author's idea, without his consent. Reprinting is then akin to removing the author's control over the communication of his ideas. While Kant's argument does not get you an entire system of intellectual property, he does draw an association between books, and we can broaden it to include all media, and expressive acts. A book is not simply an object; it is a vessel for ideas. It is the contents of the book, the ideas rather than the material object, that make reprinting a moral issue.

Now, the Self-Expression justification proper comes from a later German Idealist thinker, G.W. F. Hegel. Hegel viewed private property as necessary for the actualization of the will. A rational agent needs a domain in which it can exercise its will so that it can come to understand itself, its autonomy, it's place in the dialectical progression of history. Private property is this domain, so one must understand property not in terms of things owned, but in terms of what those mean to the owner. Intellectual property is an especially interesting case because creative works and inventions are specifically products of rational agency. Creative works serve as expressions of the author's will and reason, so any violation of the work must be understand as a harm to the integrity of the author.

As spooky as some of this might sound, European copyright law recognizes certain “moral rights” of an author. These rights, such as the right to receive credit for authorship, never expire, and bear no exceptions. If interpreted broadly, the Self-Expression justification is perhaps the best argument for an author retaining strong control over derivative works. A fan writing using an author's character in a story takes the character out of the author's control. Something very personal to the author has been manipulated without his knowledge or consent. If some readers confuse for the fan story for the author's own work, they might develop a distorted idea about the author's style and personality. These threats are intolerable on a strong reading of the Self-Expression justification. Now, I hold that there are other concerns at stake that override any sense of threatening the author's integrity, but that's a paper I'm currently trying to publish.

The most obvious concern with the Self-Expression justification is its failure to justify a wholesale system of intellectual property. If you don't see what I mean, think about it like this: you have a lot of furniture in your house. Some pieces you might have had growing up, some you might have gotten from friends or family members, and some you just bought because you needed them. Now, imagine that one morning, you woke up and found that your ottoman, the one that you bought for the cat to sleep on, is missing, and in its place is a pile of money, enough to buy a brand new ottoman. Substitute any personal object you own and don't really care about and mutatits mutandis if the furniture example doesn't work for you. The Self-Expression justification is very plausible when talking about the dining room table you got from your grandparents' house, but much less so when considering that ottoman.

Intellectual property is no different. Some authors pour their hearts and souls into novels, poems, musical compositions, or films. Others are just interested in making money and happen to be very good at what they do. I'm sure many authors find themselves in both categories from time to time. Nevertheless, the Self-Expression justification has the most force when the work has the most personal meaning or significance. When a creative work is an economic product, it's not clear what rights an author would have. One could treat all authors as if their works were expressions of their innermost selves unless they waived their rights somehow (though the moral rights in European intellectual property law simply cannot be waived). In that case, the practice would be instituted for a reason that does not universally apply. Furthermore, it seems bizarre to imagine an intellectual property case being decided in favor of a defendant who argued that the plaintiff “did not really care” about his works. I would hope it isn't the law's place to dictate to us what is art (though they do seem to try), so the Self-Expression justification is only a partial justification for an intellectual property system. Nevertheless, it does get employed in argument about derivative works and fair use.

Saturday, July 9, 2011

Justifications for Intellectual Property Part 2: Labor-Desert Theories

I know it's been a little while, but I want to finish this tutorial series rather than abandoning it and moving on to other topics. Of course, I would have liked to have finished it by now, but various research and teaching-related obstacles have kept me nose down in the Real rather than preparing content to be released into the internet. Nevertheless, I'm returning to routine, so I'm going to release this installment today, rather than wait for my usual MWF release schedule.

At any rate, let's pick up where we left off and talk about justifications for intellectual property rights. While the utilitarian justification discussed in the last post enjoys the status of having been enshrined in law, scholars and jurists have often brought in other property-justifying theories. Perhaps the most popular of these are Labor-Desert justifications, best exemplified by John Locke (the philosopher, not the character on Lost).

In his Second Treatise on Civil Government, Locke construes property as a natural right, an outcome of an agent's (God-given) ownership of himself. The argument goes something like this: God created humankind and put them on the Earth. As embodied beings, humans have physical needs, but the Earth is rich with the resources for fulfilling those needs. In effect, God gives the Earth to humankind in common, to use its resources to sustain themselves. Of course, in order to use those resources, an agent must remove supplies from the common for his own personal use. As such, Locke concludes that there must be a natural right to property because without it, the Earth and its resources would be useless to humankind.

For Locke, the natural right to property is nothing other than the right to appropriate common resources for personal use. In order to exercise this right, and agent must put in some work; he must actually go out into the world and gather whatever resources are required. As such, Lockean accounts of property are sometimes referred to as “Labor-Desert” account because an agent deserves a property right over those things that he has gathered or created through his labor. If one wants to minimize God's role in this system, as many contemporary scholars such as Robert Nozick do, the usual strategy is to invoke self-ownership. Since an agent owns himself (how that comes about, one typically has to leave aside because the answers wax theological), the agent owns his labor, the work that his body is capable of doing. If an agent chooses to labor over gathering food, he has created something of value, and by virtue of his labor being responsible for the value, becomes owner of the food gathered.

The property rights one generates through labor are not unlimited. Since God gave the Earth to all humankind, all agents have an equal right to appropriate. On that basic, Locke claims that the right to appropriate is limited by two conditions that scholars have come to call Locke's Proviso. The first condition is the “spoilage” or “waste” condition. Put simply, an agent is not justified in taking more than he or she can use before it spoils, rots, or is otherwise ruined. As such, agents have greater latitude in hoarding less perishable goods, with money being the least perishable. Secondly, an agent's appropriation must be such that “enough and as good” is left for others to do the same. The first part of the Proviso is often considered a very weak condition, something easy to satisfy and therefore not the subject of extensive consideration or discussion. The second part, of course, can be construed in a number of different ways. One can, at least in theory, read Locke as something of an egalitarian, or perhaps an egalitarian about opportunities. Many right-libertarian scholars follow Nozick's somewhat weaker rendering: an appropriation is only justified when it does not worsen the situation of any other agent.

To put all of that in a more condensed form: Labor-Desert justifications for property (in general) claim that property rights are justified by an agent's labor. If an agent works to create something of value, the agent deserves to own that thing in virtue of his work. Lockeans (and Neo-Lockeans like Nozick) construe some simple limits on this right, not letting the property go to waste and not worsening the status of others by the appropriation.

Labor-Desert justifications are, of course, justifications for property in general. The theory applies equally to tangible property and intellectual property. Scholars who apply these justification to intellectual property rights tend to emphasize the strong sense of ownership bestowed by a natural rights account. If I own the novel I have written because I have worked on it, then someone else infringing my copyright is an attack on myself. One would think that the strong sense of ownership would be somehow balanced by concerns about the commons, leaving enough and as good or not worsening the situation of others, but that's not often so.

The Nozickean reading, not worsening the situation of others, turns out to be a fairly weak reading of the Proviso. Nozick's reading construes the Proviso as calling for a Pareto-optimal situation. “Pareto-optimal” just means a situation that cannot be improved for any agent without worsening the situation of another. When one actually cashes out what it means to worsen an agent's situation, one finds a very different Proviso from the one that requires “leaving enough and as good.” For starters, an agent's situation is not necessarily made worse by losing the ability to appropriate a parcel of land, as long as the new owner intends to turn his land in a large farming operation by hiring hands to work the land. While the agent is no longer able to appropriate that land to make a living, he still has the opportunity to make a living by working for the other agent. It may sound like a raw deal, but Nozick and those who follow his reading claim that the agent is in the same position as before, and has essentially equivalent opportunities to secure a living.

When the Pareto-optimal reading is applied to intellectual property, one often finds a very diminished concern about the information commons. An author's copyright concerns his novel, not something already in the commons, so all other agents are still free to write their own novels. They simply have to rights to that particular novel, but they did not (and could not) have such rights before the novel was written, so the situation has not really changed. Likewise, fair use is often diminished in Neo-Lockean readings because fair use constitute exceptions to the natural property rights of the creator. Some Neo-Lockeans construe fair use and the expiration of intellectual property as extreme interference with personal property (see Adam Moore's Intellectual Property and Information Control for my favorite example).

In short, Labor-Desert justifications frame intellectual property rights as no different from rights to any other form of property. An author labors to create some product, a novel, an invention, etc, and by that labor, the author earns the right to own what he has created. Substitute “novel” for “hammer” and nothing changes. While this kind of simplicity seems desirable from the perspective of wanting a parsimonious theoretical framework, one can also justifiably ask whether treating intellectual property and tangible property the same way really makes sense. For starters, tangible goods are rivalrous; one person's use excludes another's use. Intellectual property is not the same way at all; reading one copy of a novel does not prevent anyone else from doing the same. By extension, my writing a sequel to your novel does not prevent you from doing the same, leaving the market with both an “author's sequel” and a “fan sequel.” Labor-Desert theorists treat the fan sequel as a form of free-riding, something Locke himself considers a strong violation. On the other hand, the fan has still put in a great amount of effort in writing the sequel, even if the groundwork is the product of another's labor. Why does the original author get a de facto monopoly on derivative works? One could instead say that the fan's labor entitles him to his contribution, not the original groundwork but at least the new material.

Of course, one might answer that concern from various perspectives, but to do that, we really should have all justifying theories on the table. Next time, I'll pick up with the last of the big three: the Self-Expression justification.

Friday, July 8, 2011


I have to extend apologies for my absence. I've returned to teaching, so I have been inundated with work. Rest assured that i will complete the tutorial series soon, and then move on to other topics. Hang in there for new content in just another day or so.