37 Pages Posted: 30 Mar 2005
Date Written: March 2005
The emergence of distributed storage, machine intelligence and cheap communications has given rise to the networked product. These are products that can evolve even after versions of the product have been put into the hands of consumers. The most interesting consumer products of the day are networked products. This includes the natural successor to the VCR - whether the plain digital video recorder or the TiVo favored by the digerati - and the ubiquitous iPod and its less chic cousin MP3 players. This category also includes peer-to-peer software in its various forms, whether as Napster, Aimster or Grokster.
More than twenty years have passed since the Supreme Court confronted the VCR in the Sony case. The substantial noninfringing use test has both virtues and vices. It has provided a safe harbor for product innovation. It makes it possible for a creator to toss a product onto the waters to see what happens, having only a vague sense of what will happen next. But Sony also provides no reason for a creator to design products to eliminate infringing uses.
The core fight over Sony turns precisely on the uncertainty of what happens next: what is the next use of the product not seen today? But Sony is framed in the context of episodic design with an installed-base constraint and no real possibility of feedback between actual use of the product and design. We are at a very different point now. Networked products evolve and we are now going to frame what ongoing design obligations should exist with regard to these networked products.
Once we combine software with communication to create networked products we then have products that can evolve in real-time (and do). Smart products phone home and update themselves. Phoning home - and the control that results from that - is a choice and one that designers of networked products make every day. Design ceases to be a one-time event and instead becomes a continuous process. And that is true not only for the next product sold, but also for the entire installed base. The dead hand of the past and the constraints of backwards compatibility are lifted.
We need to update the Sony test to reflect these possibilities. If the producer chooses to let go of a networked product so that the producer cannot exercise control going forward and therefore cannot evolve the product in response to actual use, the producer should face a hard use test, perhaps one tied to whether the primary use of the product is noninfringing. If instead the producer ensures that the product can phone home so that updates can be promulgated throughout the system for the networked product, the producer should face a substantial non-infringing use test, coupled with the duty to evolve the product to eliminate infringing uses.
Keywords: Napster, Aimster, Grokster, Supreme Court, Current Supreme Court cases,
Suggested Citation: Suggested Citation
Picker, Randal C., Rewinding Sony: The Evolving Product, Phoning Home and the Duty of Ongoing Design (March 2005). U Chicago Law & Economics, Olin Working Paper No. 241. Available at SSRN: https://ssrn.com/abstract=692746 or http://dx.doi.org/10.2139/ssrn.692746