In the past few posts, I have discussed various aspects of
IP3.0, the current focus within intellectual property law on transactional
practice and uses of IP, the recognition of IP as a business asset. Today, I examine the implications of IP 3.0
for IP policy.
My
appreciation of IP 3.0 arose from the need for IP reform. Like other law professors and practitioners,
I have watched the ongoing debates over the past fifteen years or so (roughly
when I formally entered into the area of IP with coursework in law school) and
the debate over ownership and access and the role of each in promoting
innovation. I have watched as these
issues were worked out at the statutory and constitutional levels. My continuing concern, however, has been with
IP practice in its many ways, in other
words, how do the policies of IP become reflected in practice. Of course, practice means different things
to different constituencies. For the IP
bar, it often means how to ensure that one's patent is granted and not
challenged (even seemingly at the expense of whether the patent covers a
valuable invention or at the expense of future inventors or users). The IP bar, for obvious reasons, is concerned
with strong IP protection even if such protection is not conducive from a
broader perspective for innovation. Users and follow-on inventors, creative and inventive people of many
stripes, are often ignored in the balance. One needs to recognize IP practice pretty broadly, especially the way in
which it is used by and affects wide sets of constituencies, not just ones
represented within the IP bar.
The
response in these IP debates has been one of balance, which often means find
some utilitarian, highly principled way to define legal rights to reach the
correct policy result. I have actually
become skeptical of this notion of balance, not just in the area of IP, but
perhaps more broadly. Focusing on IP
policy here, I want to suggest that reaching the right result is not a matter of balance in the abstract, but in
recognizing the practices affected by a legal rule and coming up with an
approach that attempts to be the least disruptive to the broad set of practices
that arguably tend to promote innovation. I want to suggest that recent Supreme Court decisions in the field of
intellectual property pursue this goal by implicitly recognizing what I have
called IP 3.0 and has been largely successful, especially when compared to
reforms pursued by Congress and the USPTO. I want to emphasize this last point: my argument is about relative
institutional success as opposed to absolute success. The latter is rarely possible in a world with
a large set of often irreconcilable interests. From the perspective of
incremental change and relative competence, Supreme Court patent reform has
done a good job.
I will
touch on three cases in which the Court has implicitly recognized IP
3.0, the
role of IP as a business asset, and make the point for the success of
the
decision. In eBay v. MercExchange, a
2006 decision, the Court ruled that patent injunctions were
discretionary. The Court split three ways on how this
discretion was to be exercised, with one group of three supporting
traditional
equitable principles, another group of three supporting principles
based upon
patent policies, and a third group supporting principles based on the
business
effects of the injunction on the defendant. In KSR v. Teleflex, a 2007
decision, the Court attempted to raise the standard
for nonobviousness in patent law, in response to concerns over
low-quality
patents issued by the USPTO that potentially affected the integrity and
reputation of the patent system. Finally, in Quanta v LG Electronics, a
2008 decision, the Supreme Court applied the principle of
patent exhaustion, specifically the first sale doctrine, to strike down
certain
licensing practices that allowed the patent owner to control use and
distribution by downstream users of the patented technology. Each of
these decisions, as well as others I
could have mentioned, were shaped by the business use of patent law and
potentially its disruptive effect on markets and competition. These
cases are examples of IP 3.0 in action.
As I have
stated before, these cases are not examples of perfection. Members of the IP bar and business
practitioners are often up in arms about these decisions. But these cases illustrate how to pursue
patent reform narrowly, and IP reform more broadly, by giving attention to the
use of IP as a business asset. I would
suggest that these are examples of practical reforms, ones that attempt to
align IP law more effectively with its goals of promoting innovation and
shaping markets.
At a recent
conference, a speaker described the Court's treatment of IP as an example of
neoconservative appeal to markets and resulting skepticism of IP. I am not sure if this is completely the
case. Perhaps there are Justices who are
influenced by neoconservative ideology. I am not sure if that is the case for the more liberal justices on the
Court. Perhaps, IP 3.0 reflects a neoconservative consensus
in the political arena that in turn affects the legal system. I am not convinced of that either; one can
identify support for IP from both conservative and liberal camps. A better explanation is that the Court is
engaged in common law decision making to resolve what is viewed as the
anti-competitive effects of intellectual property law. The eBay decision, with its defense of
judicial discretion, is a good example of common law reasoning in action. In their interpretations of the Patent Act,
so are the KSR and Quanta decisions.
Skeptics of
my interpretation of the Supreme Court decisions, particularly the appeal of IP
3.0, may point to two decisions in which the Court perhaps supported business
interests too readily. In Eldred v
Ashcroft, the Court upheld Congress' extension of the copyright term for
already created works by 20 years. In
Grokster, the Court found a P2P network potentially liable under a novel theory
of secondary liability. Arguably, each
of these cases reflect how the Court bends too readily to business
interests. I have two responses to this
argument. First, the cases can be
understood under other terms than business ones. In Eldred, the Court was deferring to
Congress' legislative judgments, which is admittedly a selective decision by
the Court, but one that is ostensibly based on deeply-rooted institutional
grounds. In Grokster, the Court was
following the logic of its 1984 Sony decision, which was correctly decided (within the terms of IP 3.0) for upholding
disruptive technologies, but was fundamentally misguided in reading a broad
secondary liability taken from the Patent Act into copyright law. Second, and more importantly, these two
cases illustrate the need for what I have called IP 3.0 because in each of
these two cases the Court ignored the business implications of the rule at
issue and, as a result, decided cases
that were antithetical to the principles of competition and innovation that is
at the heart of IP 3.0.
I may
already have crossed the line from blog post to (god forbid!) law review
article. So, let me end my writing at this point. For those who read all this, thanks for the
attention and I welcome any response. Most importantly, thanks to Gordon Smith and the other members of Conglomerate
blog for sharing this virtual real estate this week.
In the past few posts, I have discussed various aspects of
IP3.0, the current focus within intellectual property law on transactional
practice and uses of IP, the recognition of IP as a business asset. Today, I examine the implications of IP 3.0
for IP policy.
