Thursday, February 26, 2015

GW Law Review Symposium on Patentable Subject Matter

The George Washington Law Review has published its symposium on "Cracking the Code: Ongoing § 101 Patentability Concerns in Biotechnology and Computer Software." Here are the five contributions:

Paul R. Michel, The Supreme Court Saps Patent Certainty. Former Federal Circuit Chief Judge Michel argues that courts "have only made things worse." The Supreme Court doesn't understand patent law or science, but the biggest problem is that the courts "don't focus enough on the systemic effect." Justice Breyer's assertion that § 103 is insufficient is "just stated as an oracular truth." The "only way forward that is feasible . . . is the Federal Circuit," which can "limit and clarify some of the broader statements" in recent Supreme Court cases. The § 101 exceptions were created "out of the air" and "they're not very good categories" because "it's not clear what's in and what's out," they overlap, and they are "subjective" and "indeterminate." Some might not trust the Federal Circuit after the "train wreck" of CLS Bank, "but it's the least worst alternative." "[T]he most important people of all that the patent system is designed to motivate . . . are the people who make investment decisions" like venture capitalists, and what they want is certainty, which we don't have now with § 101. The Federal Circuit has "had to fix Supreme Court problems" at least twice before, after eBay and KSR, and it can do it again.

Tuesday, February 24, 2015

The Eternal Battle of Copyright Fair Use v. Licensing

In All of This Has Happened Before and All of This Will Happen Again: Innovation in Copyright Licensing, Rebecca Tushnet considers whether easier, cheaper (even free) licensing of copyrighted works should supplant fair use doctrine. (Spoiler alert: no!). The abstract:
Claims that copyright licensing can substitute for fair use have a long history. This article focuses on a new cycle of the copyright licensing debate, which has brought revised arguments in favor of universal copyright licensing. First, the new arrangements offered by large copyright owners often purport to sanction the large-scale creation of derivative works, rather than mere reproductions, which were the focus of earlier blanket licensing efforts. Second, the new licenses are often free. Rather than demanding royalties as in the past, copyright owners just want a piece of the action — along with the right to claim that unlicensed uses are infringing. In a world where licenses are readily and cheaply available, the argument will go, it is unfair not to get one. This development, copyright owners hope, will combat increasingly fair use — favorable case law.
This article describes three key examples of recent innovations in licensing-like arrangements in the noncommercial or formerly noncommercial spheres — Getty Images’ new free embedding of millions of its photos, YouTube’s Content ID, and Amazon’s Kindle Worlds — and discusses how uses of works under these arrangements differ from their unlicensed alternatives in ways both subtle and profound. These differences change the nature of the communications and communities at issue, illustrating why licensing can never substitute for transformative fair use even when licenses are routinely available. Ultimately, as courts have already recognized, the mere desire of copyright owners to extract value from a market — especially when they desire to extract it from third parties rather than licensees — should not affect the scope of fair use.
I have a couple comments after the jump.

Saturday, February 21, 2015

Jessica Silbey's The Eureka Myth

Jessica Silbey (Suffolk Law) has posted an excerpt from the introduction of her new book, The Eureka Myth: Creators, Innovators, and Everyday Intellectual Property (Stanford University Press). Everything I have heard about this project has sounded incredibly interesting, and the introduction has further whetted my appetite to read the book.

She conducted "fifty face-to-face interviews . . . with a wide range of scientists, engineers, musicians and artists, their business associates, and intellectual property lawyers over the course of four years . . . . to learn more about the intersection of intellectual property law on the one hand, and creative and innovative work on the other." "Contrary to the dominant stories of monetary incentives and wealth maximiation, the interviews in this book elaborate intellectual property's diverse functions and sporadic manifestations in the lives and work of artists, scientists, and their business partners and managers."

Silbey has also posted a separate chapter (from the SAGE Handbook of Intellectual Property) based on the same set of qualitative interviews: Promoting Progress: A Qualitative Analysis of Creative and Innovative Production. The chapter "investigates the notion of 'progress' in terms of the motives the interviewees provide for engaging in creative and innovative behavior that is (or could be) protected as intellectual property. Across the interviews, there are common themes that tie together specific notions of progress as related to personal desires as well as public benefits."

Friday, February 20, 2015

Cloned, Cloned Horses, We’ll Ride Them Today (With Profuse Apologies to the Rolling Stones)

The American Quarter Horse is a breed that excels at sprinting over short distances—Quarter Horse races may range from 220 to 870 yards. It is the most popular breed in the United States, and the American Quarter Horse Association (AQHA), headquartered in Amarillo, TX, is the largest horse breed registry in the world. Because of the interest in this breed, Quarter Horses have become the subject of commercial efforts at reproductive cloning. One company, Viagen, has produced over 150 cloned foals. The cloning is achieved via somatic cell nuclear transfer (SCNT), the technique that famously created Dolly the Sheep. As some readers may be aware, Dolly was the focus of In re Roslin Institute (Edinburgh), 750 F.3d 1333 (2014), an important patentable subject matter eligibility case decided by the Federal Circuit last May.

Academic IP Conferences

Aspiring IP scholars sometimes ask me what conferences they should attend, so here is a quick overview of some of the many options. Obviously, no one can (or should) go to all of these—young scholars often face significant budget constraints in addition to needing to reserve lots of time to write. But sharing your writing with the broader community is an essential part of the life of a scholar, and most IP scholars I've met are welcoming and generous (as well as a lot of fun). So pick some conferences that work in terms of location, timing, and topic, and definitely don't overlook the smaller ones, which often lead to the best interactions. Some great websites for general conference updates include MadisonianLegal Scholarship Blog, and UGA's Calling All Papers.

Tuesday, February 17, 2015

Labor Mobility and Patenting Propensity

Late last year, I moderated a conference panel in which Thomas Rønde (Copenhagen Business School) presented Does the Mobility of R&D Labor Increase Innovation? I'm glad to see that he and his co-authors, Ulrich Kaiser (Univ. of Zurich) and Hans Christian Kongsted (Copenhagen Business School) have now posted it to SSRN. Here is the abstract:
We investigate the effect of mobility of R&D workers on the total patenting activity of their employers. Our study documents how mobile workers affect the patenting activity of the firm they join and the firm they leave. The effect of labor mobility is strongest if workers join from patent-active firms. We also find evidence of a positive feedback effect on the former employer's patenting from workers who have left for another patent-active firm. Summing up the effects of joining and leaving workers, we show that labor mobility increases the total innovative activity of the new and the old employer. Our study which is based on the population of R&D active Danish firms observed between 1999 and 2004 thus provides firm-level support for the notion that labor mobility stimulates overall innovation of a country or region due to knowledge transfer.
The abstract doesn't really do the paper justice. My comments are after the jump.

Tuesday, February 10, 2015

Patenting Incentives in Universities

 Dirk Czarnitzki and four coauthors from a variety of institutions have posted Individual Versus Institutional Ownership of University-Discovered Inventions to SSRN. The abstract is short and to the point:

We examine how the ownership of intellectual property rights influences patenting of university-discovered inventions. In 2002, Germany transferred patent rights from faculty members to their universities. To identify the effect on the volume of patenting, we exploit the researcher-level exogeneity of the 2002 policy change using a novel researcher-level panel database that includes a control group not affected by the law change. For professors who had existing industry connections, the policy decreased patenting, but for those without prior industry connections, it increased patenting. Overall, fewer university inventions were patented following the shift from inventor to institutional ownership.
In other words, the authors have used a quasi-experimental event - a change in the law - to see what happens under different legal regimes. They have good data and use it to their benefit: actual patenting by individual researchers, a decent control group that did not experience a change in the law, and information about career and publications to correct for general productivity. I'll discuss the results a bit more after the jump.

Monday, February 9, 2015

Craswell on Shifting Control over Team Nicknames

Due to conference travel, I missed the Stanford Law Review's Festschrift for my wonderful colleague Dick Craswell: Who Knows?: Law in an Information Society. But on the plane I read his latest work, a fun essay titled When Nicknames Were Crowd-Sourced, or, How to Change a Team's Nickname. I recommend it not only for fans of sports history, but also for IP scholars interested in the expansion of what falls under the umbrella of trademark law and publicity rights.

To today's lawyers, it may seem obvious that the owner of a team like the Chicago Cubs has control over and a property interest in the team's nickname. But as Craswell documents, this idea was completely foreign a century ago. In the late 19th and early 20th centuries, teams often had multiple, competing nicknames, typically invented by sportswriters to add color to their stories. Sportswriters used nicknames interchangeably, sometimes in the same headline or sentence. The success of a nickname depended on its popularity with the crowds, not on the team's preference—indeed, many nicknames began as insults. Since that era, however, property rights over nicknames have expanded to include not only exclusive control, but also merchandising rights.

Sunday, February 8, 2015

Selections From WIPIP: Remedies Post-Ebay, Public Enforcement of Patent Law, and a Constitutional Basis for the Subject Matter Bar

I spent the last two days enjoying my first visit to the Patent Office in Alexandria, VA and listening to a diverse array of presentations for the 2015 Works in Progress Intellectual Property Colloquium (WIPIP), hosted by the George Washington University Law School and the United States Patent and Trademark Office. Below are recaps and comments on a few talks that I found particularly important, interesting, or provocative. (These are all patent projects for no reason other than that, despite my best efforts, I did not manage to get to a single copyright session.)

Thursday, February 5, 2015

What is the Value of the Public Domain?

Paul Heald (Illinois), Martin Kretschmer, and Kris Erickson (both Univ. of Glasgow) have posted The Valuation of Unprotected Works: A Case Study of Public Domain Photographs on Wikipedia. The article is an attempt to value a small slice of the public domain. Here is the abstract:
What is the value of works in the public domain? We study the biographical Wikipedia pages of a large data set of authors, composers, and lyricists to determine whether the public domain status of available images leads to a higher rate of inclusion of illustrated supplementary material and whether such inclusion increases visitorship to individual pages. We attempt to objectively place a value on the body of public domain photographs and illustrations which are used in this global resource. We find that the most historically remote subjects are more likely to have images on their web pages because their biographical life-spans pre-date the existence of in-copyright imagery. We find that the large majority of photos and illustrations used on subject pages were obtained from the public domain, and we estimate their value in terms of costs saved to Wikipedia page builders and in terms of increased traffic corresponding to the inclusion of an image. Then, extrapolating from the characteristics of a random sample of a further 300 Wikipedia pages, we estimate a total value of public domain photographs on Wikipedia of between $246 to $270 million dollars per year.
I think this is a fantastic study. My thoughts follow the jump.

Monday, February 2, 2015

Nguyen on IP as Collateral and the Fed. Cir.'s Overreach into Commercial Law

Xuan-Thao Nguyen (Indiana McKinney) has posted two just-published articles on the role of IP in secured transactions. The first is Financing Innovation: Legal Development of Intellectual Property as Security in Financing, 1845-2014, which describes the development of the use of IP in chattel mortgages, including recent Federal Circuit decisions on whether a secured party of IP collateral becomes the owner after default. She argues that despite new financing mechanisms, small businesses have been struggling to access financing for innovation, and that more attention to this issue is necessary to help the United States maintain its innovative edge. (As Daniel Hemel and I point out in Beyond the Patents-Prizes Debate, one of the main downsides of ex post rewards like patents and prizes over ex ante rewards like grants and R&D tax credits is that ex post rewards require innovators to obtain financing to cover early R&D costs.) In her conclusion, Nguyen notes that "China has embraced a competitive strategy to increase innovation by providing financing based on the intellectual property assets of the business," though she notes that the details of Chinese IP financing is beyond the scope of her current project.

Nguyen's second new article is In the Name of Patent Stewardship: The Federal Circuit's Overreach into Commercial Law, which has harsh words for the Federal Circuit's recent cases on secured transactions and other commercial law issues affecting IP. Here is the abstract:
While the U.S. Court of Appeals for the Federal Circuit has admirably commandeered its stewardship of patent law—Congress bestowed the Federal Circuit with exclusive jurisdiction over patent appeals since 1982—the court has unabashedly extended its reach, unwelcomed, into commercial law. Camouflaged in the name of patent stewardship, the Federal Circuit’s foray into commercial law has yielded unexpected and unjustifiable results. This Article argues that, paradoxically, to maintain its stewardship of patent law, the Federal Circuit should not invoke patent law to rationalize its decisions concerning commercial law, which have dramatically altered established commercial law. This encroachment into commercial law, which is within the provenance of state law, destabilizes federalism causing uncertainty in state law. The Federal Circuit must refrain from encroaching into commercial law as it has no authority to inject itself into state law making.
I haven't delved into these cases in any depth, but I'd be curious to hear the thoughts of other commercial law scholars on these issues.

Friday, January 30, 2015

What is the Probability of Receiving a US Patent?

Following my post last week, I confidently proclaimed at a conference yesterday that the true abandonment rate was about 9%. I was--kindly, thankfully--corrected by the target of the comment, who just so happens to be a co-author of a working paper called What is the Probability of Receiving a US Patent?, by Michael Carley, Deepak Hegde, and Alan Marco at the US PTO. Marco is chief economist, and Hegde is at NYU Stern Business School, but also an Edison fellow at the PTO. I had read the paper before, but hadn't focused on the abandonment rate aspect.

They use data that's generally unavailable to the rest of us (some for good reasons, some for not - this should really be made public) to trace the outcomes of each initial patent application.  This differs from the methodology of Cotropia, Quillen & Webster, who cannot trace each application, but can merely count them up from reports for a given year.

The differences between the studies are not that important for the key measure of that study - how many patent applications are there? Cotropia, et al., want to adjust a report of applications each year so they subtract out continuations to get the real count of new applications.

But it turns out that that this matters for abandonments, because today's abandonments are yesterday's (or four years ago's) applications. And so you have to trace all the way through to get the real number. Indeed, we won't know the real abandoment rate for applications this year for many years - the Carley, Hegde, Marco study only looks at applications between 1996 and 2005, to ensure that most of the cases have resolved. It turns out the real abandonment rate is in the 30% range, depending on technology.

Tuesday, January 27, 2015

Weighing Treatises v. Restatements - Copyright Edition

In A Restatement of Copyright Law as More Independent and Stable Treatise, 79 Brooklyn L. Rev. 457 (2014), Ann Bartow considers the pitfalls of treatises as overarching guides to complex laws. These pitfalls include conflicts of interest, "pole positions" by a sole author, and lack of transparency. They also include overreliance on treatises and underreliance on other sources of analysis (such as academia). Some of these reflect arguments made in a prior paper. Ann Bartow, The Hegemony of the Copyright Treatise, 73 U. Cin. L. Rev. 581 (2004). She notes in several places that her concerns transcend content; she criticizes even places where she agrees with the underlying treatment of the law. Here is the abstract:
This article maps the problematic consequences of over reliance by judges, lawyers and policy makers on copyright law treatises, with a particular focus on the negative effects Nimmer on Copyright has had on the evolution of various copyright law doctrines. It proposes that an ALI Restatement of Copyright Law is needed to create a reference tool that is transparently authored and edited.

Monday, January 26, 2015

Haber & Werfel on Trolls

Stephen Haber and Seth Werfel (Stanford Political Science) have posted Why Do Inventors Sell to Patent Trolls? Experimental Evidence for the Asymmetry Hypothesis. Here is the abstract:
Why do individual patent holders assign their patents to "trolls" rather than license their technologies directly to manufacturers or assert them through litigation? We explore the hypothesis that an asymmetry in financial resources between individual patent holders and manufacturers prevents individuals from making a credible threat to litigate against infringement. First, individuals may not be able to cover the upfront costs associated with litigation. Second, unsuccessful litigation can result in legal fees so large as to bankrupt the individual. Therefore, a primary reason why individual patent holders sell to PAEs is that they offer insurance and liquidity. We test this hypothesis by experimentally manipulating these financial constraints on a representative sample of inventors and entrepreneurs affiliated with Stanford University and UC Berkeley. We find that in the absence of these constraints, subjects were significantly less likely to sell their patent to a PAE in a hypothetical scenario. Furthermore, treatment effects were significant only for subjects who were hypothesized to be most sensitive to these constraints.
For readers who, like me, are most curious about the experiment, here are the details: They invited 1200 inventors or entrepreneurs to fill out an email survey and ended up with 103 useful responses. (This seems like a reasonable response rate given the nature of the survey, though it is worth thinking about whether the type of people who respond are likely to influence the results.) Subjects wrote about an improvement for a product they use regularly, and then were told to imagine they had been awarded a patent for the idea that was worth $1 million, and also that a large corporation saw the idea and decided to infringe the patent without paying for it. Subjects in the control condition were given the option of selling to a patent assertion entity (PAE) for $100,000 or hiring a lawyer to assert the patent for $1,000 per hour; subjects in the treatment condition were told the lawyer worked on a contingent fee basis for one-third the total award. They also tested the subjects' risk preferences and loss aversion, and they asked subjects to self-identify as inventors or entrepreneurs.

Haber and Werfel found that the contingent fee treatment reduced the proportion of subjects who chose to sell to PAEs, and that the effect was only significant for subjects who either self-identified as inventors rather than entrepreneurs, or subjects who exhibited loss aversion. These results seem somewhat intuitive given their setup, though I think the implications for patent policy are less clear.

Friday, January 23, 2015

Carol Rose on Surprising Commons

Carol Rose (Univ. of Arizona, and emeritus at Yale Law) has posted a BYU symposium article, Surprising Commons. Here is the abstract:
“Tragedies of the commons” due to overuse and underinvestment have long been known to affect open access resources. Yet decimation of open access commons often catches everyone by surprise. Why the surprise? Among other reasons, overuse may occur in very small increments, or may be an accidental byproduct of seemingly unrelated technology; more generally, a resource’s common status undermines investment in learning about it. Open access to intellectual achievements does not destroy physical resources, but may undermine creative effort — but, in a happy surprise, may instead enhance creativity. An interesting surprise is that the drive to privatize creative achievements has generated a counter-movement to defend open access to these achievements. Scholars following Elinor Ostrom study common resources that are not left in open access but rather limited and managed; here surprises also show a mixture of attractive and unattractive features both in physical and intellectual domains, but they also generate lessons for such modern day developments as crowdsourcing and citizen science.
Rose is the author of the classic article The Comedy of the Commons, published in 1986 in response to Garrett Hardin's 1968 The Tragedy of the Commons.

Interest in common resources has only grown since then; Elinor Ostrom won the 2009 Nobel Prize for her work on commons governance, and Brett Frischmann, Mike Madison, and Kathy Strandburg have extended this line of work with their just-published volume, Governing Knowledge Commons (intro and first chapter here), which is on my reading list.