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Abstract:
The orthodox justification for intellectual property is utilitarian. Advocates for strong IP rights argue that absent such rights copyists will free-ride on the efforts of creators and stifle innovation. This orthodox justification is logically straightforward and well reflected in the law. Yet a significant empirical anomaly exists: the global fashion industry, which produces a huge variety of creative goods without strong IP protection. Copying is rampant as the orthodox account would predict. Yet innovation and investment remain vibrant. Few commentators have considered the status of fashion design in IP law. Those who have almost uniformly criticize the current legal regime for failing to protect apparel designs. But the fashion industry itself is surprisingly quiescent about copying. Firms take steps to protect the value of trademarks, but appear to accept appropriation of designs as a fact of life. This diffidence about copying stands in striking contrast to the heated condemnation of piracy and associated legislative and litigation campaigns in other creative industries.

Why, when other major content industries have obtained increasingly powerful IP protections for their products, does fashion design remain mostly unprotected - and economically successful? The fashion industry is a puzzle for the orthodox justification for IP rights. This paper explores this puzzle. We argue that the fashion industry counter-intuitively operates within a low-IP equilibrium in which copying does not deter innovation and may actually promote it. We call this the piracy paradox. This paper offers a model explaining how the fashion industry's piracy paradox works, and how copying functions as an important element of and perhaps even a necessary predicate to the industry's swift cycle of innovation. In so doing, we aim to shed light on the creative dynamics of the apparel industry. But we also hope to spark further exploration of a fundamental question of IP policy: to what degree are IP rights necessary to induce innovation? Are stable low-IP equilibria imaginable in other industries as well? Part I describes the fashion industry and its dynamics and illustrates the prevalence of copying in the industry. Part II advances an explanation for the piracy paradox that rests on two features: induced obsolescence and anchoring. Both phenomena reflect the status-conferring power of fashion, and both suggest that copying, rather than impeding innovation and investment, promotes them. Part II also considers, and rejects, alternative explanations of the endurance of the low-IP status quo. Part III considers extensions of our arguments to other fields. By examining copyright's negative space - those creative endeavors that copyright does not address - we argue can we can better understand the relationship between copyright and innovation.

Intellectual property law, fashion design, fashion industry

Abstract:
Reform(aliz)ing Copyright looks at the effect of the removal from the U.S. copyright laws of copyright formalities like registration, notice, and renewal. Beginning in 1976, the U.S. moved from a conditional copyright system that premised the existence and continuation of copyright on compliance with formalities, to an unconditional system, where copyright arises automatically when a work is fixed. Richard Epstein has aptly characterized these changes as copyright law . . . flipping over from a system that protected only rights that were claimed to one that vests all rights, whether claimed or not. That is a fundamental shift in any property rights regime, and one that, in the copyright context, represented a break with almost two centuries of practice.

The advent of unconditional copyright has generated little comment in the academic literature - perhaps because the very term formalities signals that the former requirements were trifling, ministerial, or more bothersome than helpful. This paper argues that the disappearance of formalities was an important shift, and a harmful one. The paper recommends the re-introduction of formalities - albeit in a new form that accounts for changes in technology and complies with our international obligations under the Berne Convention, the principal international treaty governing copyright. This paper explores the important role that formalities played in our traditional copyright regime, particularly with respect to maintaining a balance between private incentives to produce creative works, and public access to those works. The paper then lays out a few possible approaches to re-introducing new-style formalities that comply with Berne.

Abstract:
In this paper, we analyze how stand-up comedians protect their jokes using a system of social norms. Intellectual property law has never protected comedians effectively against theft. Initially, jokes were virtually in the public domain, and comedians invested little in creating new ones. In the last half century, however, comedians have developed a system of IP norms. This system serves as a stand-in for formal law. It regulates issues such as authorship, ownership, transfer of rights, exceptions to informal ownership claims and the imposition of sanctions on norms violators. Under the norms system, the level of investment in original material has increased substantially. We detail these norms, which often diverge from copyright law's defaults. Our description is based on interviews with comedians, snippets of which we include throughout the paper.

Our study has implications for intellectual property theory and policy. First, its suggests that the lack of legal protection for intellectual labor does not entail a market failure by necessity, as social norms may induce creativity. Second, it suggests that the rules governing a particular creative practice affect not only how much material is created, but also its kind. Third, we suggest that comedians' IP norms system emerged over the past half century as technological change increased the benefit of having property rights in jokes and concomitantly reduced the costs of enforcing those rights. Fourth, we note that stand-up's norms system recognizes only a limited set of forms of ownership and transfer. We suggest that the system's crude rights structure is driven by the fact that effective enforcement requires that ownership be clear to the community. Lastly, social norms offer a way to regulate creative practices that do not sit well within IP law's one-size-fits-all mold. They do so, moreover, without imposing on society the costs of disuniformity in the formal law, including legal complexity and industry-driven lobbying.

Stand-up's norms system has both benefits and costs, which we detail in the paper. However, norms-based IP systems offer an alternative (or supplementary) cost/benefit bundle which in some cases may be superior to that of formal law alone. In stand-up's case, norms economize on enforcement costs and appear to maintain a healthy level of incentives to create alongside a greater diversity in the kinds of humor produced. A final assessment of stand-up's social norms system awaits further work. With what we currently know, we are cautiously optimistic.

copyright, social norms, intellectual property, law and economics, emergence of property rights, stand-up comedy

Abstract:
Take a tour through the most heavily trafficked music download services and you will quickly notice a pattern. The price for most songs is the same - typically 99 cents. The most popular songs are 99 cents - take, for example, "Control Myself", from LL CoolJ's 2006 album "Todd Smith", which recorded the highest total sales on the particular day of this writing (April 15, 2006), on the most popular download site, Apple's iTunes. And so are a huge number of songs that might not have sold a single copy on iTunes (or on any other download service) that same day - for example, "A Spoonful Weighs a Ton", from a 1999 album, "The Soft Bulletin", released by the Oklahoma City band The Flaming Lips. That song is also 99 cents on iTunes, despite the fact that it might sell many more copies, and yield more revenue (and profit, since the marginal cost of providing a download is near zero), at a lower price.

This is a puzzle. Why would we see a hit song priced the same as one that is unpopular? Typically, we expect pricing of goods and services to vary according to demand, and demand for songs varies widely. Yet prices for songs - more specifically, for song downloads - don't vary much at all. And failure to price according to demand likely means that both the download services and the major record labels are leaving money on the table.

In addition to price, we see a number of other non-price characteristics of the download product - audio fidelity, for example, which can change along with the bitrate at which the digital file is encoded - that could vary but do not. We might expect download services to offer downloads of varying fidelity, with more expensive high-fidelity versions for audiophiles willing to pay for quality, and cheaper standard versions for the iPod-wearing masses. Yet we see little product differentiation of this kind. Is there some explanation for this puzzling price and non-price uniformity? That is the 99-cent question that this paper attempts to answer.

Part II of this paper briefly examines the price and non-price uniformity that characterizes the selling of music on the download services. Part III then considers several possible explanations for the high degree of product uniformity we observe currently in the market for music downloads. I review a number of explanations related to consumer behavior in the market for music downloads, but find that none of the behavioral explanations sufficiently account for current uniform pricing or elements of product quality such as audio fidelity. Part IV considers industry structure - in particular, the existence of substantial bilateral market power (exercised by the "big 4" (as I will refer to them throughout this paper) record companies, acting jointly, on one side, and Apple, with its dominant iTunes download service, on the other) - as a possible explanation for uniform download pricing and product characteristics. This final part provides an account, at this early point necessarily tentative, of how the competitive interaction of the big 4 record labels and the dominant download service, Apple's iTunes, leads to an inefficient regime of uniform pricing and product quality.

intellectual property law, cyberlaw, music, downloads, drm

Abstract:
The orthodox argument for IP proceeds in three steps. First, creative works are often difficult and expensive to create - think of the poet in pursuit of the right verse, or pizza-fueled late nights spent programming a new video game. Second, once the author or inventor produces the first version of a work, others will find it quick and cheap to copy the work. Third, unless the law equips the creator with enforceable exclusive rights, the copyist, having invested nothing in the creation of the work, will outcompete the originator and deny her a return on her investment. The practices of the fashion industry are hard to square with the traditional justification. The global fashion industry produces a huge variety of creative goods without strong IP protection in one of its biggest markets (the United States), and without apparent utilization of nominally strong IP rights in another large market (the countries of the European Union). Copying and derivative re-working of fashion designs are rampant in both the U.S. and E.U., as the traditional account would predict. Yet innovation and investment remain vibrant.

Why, when other major content industries have obtained increasingly powerful IP protections for their products, does fashion design remain mostly unprotected - and economically successful? We argue that the fashion industry counter-intuitively operates within a low-IP equilibrium in which copying does not deter innovation and may actually promote it. We call this the piracy paradox. Our article offers a model explaining how the fashion industry's piracy paradox works, and how copying functions as an important element of, and perhaps even a necessary predicate to, the industry's swift cycle of innovation. In so doing, we aim to shed light on the creative dynamics of the apparel industry. But we also hope to spark further exploration of a fundamental question of IP policy: to what degree are IP rights necessary to induce innovation in particular industries? Are stable low-IP equilibria imaginable outside of the fashion industry?

global fashion industry, intellectual property protection, copyright on creative goods

Abstract:
Copyright law seeks a balance between private incentives to create new works, and public access to the works created. To achieve this balance, copyright law must be based on a theory of harm - i.e., we must understand the kinds of uses that cause significant harm to authors’ incentives, and those that do not, so that we might focus on regulating the former and not the latter. And here is where the problem arises: although we understand copyright’s concept of harm at an abstract level - i.e., copyright “harm” arises from any use that threatens to suppress author incentives significantly below the optimal level - the theory is exceedingly difficult to apply in many cases.

The formulation of a complete and administrable theory of harm is a holy grail for copyright scholars. But there are other, more modest, ways to nudge copyright law back toward its utilitarian justification. We can rely on a set of indirect strategies to push the incentives of rightsholders in a direction that will helpfully separate unauthorized uses that reduce author incentives from those that do not. I want to briefly suggest and defend two related strategies.

First, we should distinguish between conduct we know will harm author incentives over the run of cases, and conduct with more ambiguous effects. So creation and distribution of exact copies of a work should be treated differently than creation of a derivative work. The first we know will almost always be harmful; whether the second is depends on the facts of a particular case.

Second, we should re-structure copyright’s burdens of proof to better filter harmful from harmless uses. This second strategy grows out of and is aimed at implementing the first. For cases involving infringing conduct that is very likely to cause harm, we should preserve copyright’s current strict liability rule. Indeed, perhaps we should strengthen it by limiting the availability of the fair use defense in these cases of “per se” copyright liability. But for cases involving infringing conduct in our second category - i.e., where the effect of the infringing conduct is ambiguous - we should require plaintiffs to prove that they have been harmed in some substantial way.

There are two principal benefits of such a change. First, by requiring that plaintiffs show substantial actual or likely harm in these “rule of reason” copyright infringement cases, we will encourage plaintiffs who have suffered substantial harm to come forward, while discouraging suits by rightsholders who suffer no harm, or only speculative harm. Second - and perhaps most importantly - altering the plaintiff’s prima facie case in this way will produce information about harms and benefits of different uses of copyrighted works. To do this effectively, the law needs to place the burden on the party most likely to have information about the harm - in virtually all cases, that is likely to be the plaintiff. The law as structured now does not reliably produce this information, with the result that copyright litigation does not help us to know more about how incentives to create are or are not harmed. If we hope to improve our understanding over time, we should re-structure the law so that litigation produces the information about harm that we currently lack.

copyright, intellectual property, antitrust, law and economics

Abstract:
This paper offers a model for the indirect judicial enforcement of the Intellectual Property Clause. What do I mean by indirect enforcement?

Courts directly enforce the Intellectual Property Clause when they interpret some text in that provision, determine how it limits Congress's lawmaking power and then apply that limitation to judge the validity of one of Congress's intellectual property enactments. This is what the Court did in Eldred v. Ashcroft, albeit with very little constraining effect.

In contrast, courts indirectly enforce the Intellectual Property Clause when they use constitutional text - or perhaps more accurately their purposive understanding of constitutional text - as a guidepost in interpreting an IP statute, preferring interpretations that respect the court's understanding of the limitations imposed by the Constitution on legislation in this field over those that do not. Rulings made in the context of indirect enforcement need not be adhered to as constitutional rulings that bind the legislature. Rather, they are ordinary rulings on the interpretation of statutes, subject to reversal or modification by Congress's ordinary lawmaking.

Unlike in the case of direct enforcement, in which courts make binding statements about the scope of congressional power under the Intellectual Property Clause, indirect enforcement allows courts to make, in effect, constitutional proffers. Congress may, in its future lawmaking, accept such a proffer, accept it in part or reject it.

Indirect application respects Congress's lawmaking primacy and its lead role in elucidating the boundaries of its power under the Intellectual Property Clause. But it preserves an important - albeit ultimately not decisive - role for courts in determining what those boundaries are. And most importantly, it allows both courts and Congress to do what they do well. Courts to read and interpret constitutional text, and then announce (or, more precisely, to proffer) those interpretations in judicial decisions. Congress to legislate, based on its own understanding of its constitutional power, but reinforced by courts' contributions.

We have grounds to hope that the outcome of this dialogue may, as a consequence of the differences between the legislative and adjudicatory process and the cultures of legislatures and courts, produce outcomes that are more fully theorized relative to what we would likely obtain from a one-way model of deference in which legislatures act and courts submit.

Intellectual Property, Copyright, Constitutional Law

Abstract:
Fashion design presents a significant challenge to the current enthusiasm for expansive intellectual property rights. Despite an absence of protection under American copyright law, creativity and innovation in fashion design remain vibrant. Nonetheless there is substantial sentiment in favor of some form of copyright for fashion design, and a “Design Piracy Protection Act” was recently re-introduced in Congress. This brief essay, part of a forthcoming colloquy in the Stanford Law Review, analyzes and critiques a defense of limited copyright protection for fashion design advanced by Scott Hemphill and Jeannie Suk. We argue that even limited design protection is unnecessary and unwise, and may well undermine those designers it is intended to help. We nonetheless agree with Hemphill and Suk on many other points of analysis, including the importance of understanding competing impulses - dubbed “differentiation” and “flocking” - that spur apparel purchases, and on the more general point that fashion design cannot easily be subsumed under conventional copyright analysis.

copyright law, fashion design, copyright protection

Abstract:
In There’s No Free Laugh (Anymore): The Emergence of Intellectual Property Norms and the Transformation of Stand-Up Comedy, 94 Virginia L. Rev. 1787 (2008), we explored how, why, and what stand-up comedians have created at different points in the history of stand-up comedy. From this study, we offered insights into how intellectual property (“IP”) law affects human motivation to create, how legal and non-legal motivations interact, and how the emergence of IP entitlements (in comedians’ case, norm-based entitlements) may change creative practices. We offered a static analysis of how stand-up comedians use social norms as a substitute for formal IP law in order to protect their jokes and comedic routines, and a dynamic analysis of how these norms came into being over the last half century.

In this short piece for the Virginia Law Review's In Brief, we reply to a group of thoughtful responses to our article by Professors Michael Madison, Jennifer Rothman, Henry Smith, and Katherine Strandburg.

copyright, intellectual property, social norms, law and economics, Demsetz

Abstract:
The American antitrust laws do not regulate the competitive conditions of other nations' economies. But they do regulate conduct, even when it occurs abroad, that harms domestic competition. It is well established that the Sherman Act reaches foreign conduct that was meant to produce and did in fact produce some substantial effect in the United States.

This jurisdictional "effects" test is theoretically simple, but difficult to apply. One recurring problem is determining whether foreign victims injured abroad by cartels may bring damages claims in U.S. courts. Skirmishes over jurisdiction have featured prominently in many of the private suits that have followed the mid-1990s upsurge in government anticartel enforcement, and circuit courts have split over the proper interpretation of the Foreign Trade Antitrust Improvements Act (FTAIA), a statute that was meant to provide, but has failed to deliver, clarity respecting the Sherman Act's extraterritorial reach. With the issue ripe for resolution, the Supreme Court in December 2003 granted certiorari in F. Hoffmann-LaRoche, Ltd v Empagran S.A., a case involving claims pressed by foreign victims of the global vitamins cartel.

Resolution is, unfortunately, not what we got. The Court issued an opinion reversing the D.C. Circuit, but what the Court actually did cannot, on any fair reading, be understood as a reversal. Rather, the Court constructed a hypothetical--whether jurisdiction extends to claims of foreigners who suffer foreign harm "independent" from the domestic harm caused by a cartel--and refused to extend jurisdiction in such a situation.

This Essay attempts, briefly, to sketch the opinion that the Court might have written in Empagran had it addressed the real jurisdictional issue, rather than a hypothetical orthogonal to the case.

If we think more broadly about the purpose of our antitrust laws and our long-term interest in deterring cartels, it's clear that the effects test has been asked to bear too much weight. We need jurisdictional rules that encourage the spread of antitrust enforcement responsibility. Unfortunately, however, throughout the recent litigation over the meaning of the FTAIA, courts have focused on (and often botched) the narrow statutory interpretation questions while neglecting the broader enterprise of developing jurisdictional doctrines appropriate to a globalized economy that induces globalized cartels.

The Empagran Court has gotten the jurisdiction question wrong--it has misapplied the effects test as codified in the FTAIA--but that the right answer does not have to mean what the Court fears it does. Rather, by reintroducing comity considerations into a "jurisdictional rule of reason," courts will no longer be obliged to distort the test for subject matter jurisdiction in order to conserve U.S. judicial resources, respect the autonomy of other nations, and promote the long-term development and convergence of antitrust regimes around the world.

To that end this Essay proceeds in two parts. Part I examines how courts and Congress have approached extraterritorial application of antitrust law, and traces how subject matter jurisdiction has come to dominate the analysis and supplant other doctrines that should play a role, including and most importantly, comity.

I argue that the Empagran decision, had it addressed the issues squarely, would have found jurisdiction under the effects test. However, a finding of jurisdiction, even when permitted by the effects test, does not always serve the policy interests of the United States. In Part II, I suggest that rather than do violence to the effects test, courts should reintroduce an expanded analysis that incorporates comity considerations as a second filter supplementing the effects test.

antitrust, jurisdiction, FTAIA, cartels, international, comity, subject-matter jurisdiction