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Monday, March 5, 2012

Joe Miller on Creation Without Restraint

Posted by Joe Miller

Bohannon & Hovenkamp’s “Creation Without Restraint” is as informative as it is provocative. It comes at an interesting time for me: I am, for the first time, teaching the basic antitrust law course. The decade I’ve been teaching i.p. courses (the survey, patent law, and seminars about i.p. norms and the law & economics of i.p.) now opens out on new vistas, as I refamiliarize myself with core antitrust questions I encountered both in private practice and as a line attorney at the USDOJ’s Antitrust Division. B&H’s “Creation” comprises a symphony of i.p. and antitrust law and policy, in which the core insights of each to highlight shortcomings in the other. The range of issues they illuminate is, frankly, amazing. If you are interested in antitrust treatment of innovation, or in i.p. law’s role within a larger competition-structuring framework, you should explore this book.

The book’s signal contribution to the literature is its extended argument that both patent and copyright law should take a page from antitrust law’s antitrust-injury requirement, exemplified in the Supreme Court’s 1977 decision in Brunswick Corp. v. Pueblo Bowl-o-Mat Inc., 429 U.S. 427. The argument is the focus of Chapters 3 (general), 4 (patent), and 7 (copyright), and is in many respects quite compelling. In the case of patent law, the argument also leads to recommendations that depart dramatically from current practice, especially with respect to what patent lawyers call “continuation practice” – the addition of new, or differently worded, claims to a patent application well after (sometimes years after) the original filing date of the application. (See, e.g., the top of p. 53.) B&H acknowledge that, as to what they call “late claims,” the Patent Act already has a mechanism in place to prevent the worst disconnects between the inventor’s claims on the first filing date and any later-submitted claims (p. 70). And B&H candidly urge that Congress amend the Patent Act to more sharply constrain an applicant’s ability to submit claims after that initial filing date (p.73). It would be a revolution in patent practice, especially for big pharma. But the gap between current practice and B&H’s preferred approach is not what interests me most about the injury rule they advocate. Instead, it’s the gap their recommendation straddles, between the robustness of antitrust’s economic theory of itself and i.p.’s less robust theory.

Antitrust has, for a few decades now, embodied near-universal agreement about its proper ends and the principal means for reaching them (i.e., enhancing social welfare by protecting market competition from collusive and exclusionary practices that inhibit competition, viewed through the lens of microeconomics). Disagreements are relegated to the finer points. (Or, so it seems to me.) This agreement enables antitrust’s strong-form injury rule. But i.p. doesn’t embody such widespread agreement about ends or the proper means for reaching them. In i.p. law and policy, utilitarianism has a vibrant competitor in moral rights theory, albeit less so here in the U.S. than abroad. I am skeptical that i.p. can have a strong injury rule if it doesn’t have a unitary theory of itself. B&H acknowledge that i.p.’s animating theory is more contested than is antitrust’s. (See, e.g., p. 243.) They also discuss, quite briefly, noneconomic theories of i.p., on pp. 41-42. But rather than launch a full-scale rebuttal to noneconomic theories (which there’s reason to think would be quite difficult (see Robert Merges, Justifying Intellectual Property (2011)), or show that a noneconomic theory of i.p. leads to an injury rule consonant with the injury rule that the economic theory of i.p. provides, they simply dismiss the noneconomic approach as unhelpful. I found myself unsatisfied with B&H’s strategy here, if only because the moral rights perspective grounds many i.p. laws and policies in jurisdictions with which we have increasingly sought to harmonize our own.

B&H don’t address the harmonization trend either. And the harmonization question has become even more important since B&H completed their book, given the harmonization hook in the Supreme Court’s most recent expansionary copyright decision, Golan v. Holder (S. Ct. Jan. 18, 2012). In Golan, the Court concludes that the U.S. interest in harmonizing our copyright law with that of the rest of the world – a world which neither hews as closely as we do to a utilitarian theory of i.p. law, nor has a constitutionally guaranteed free expression right – underwrites the removal of foreign-authored works from public-domain status. (B&H repeatedly, and rightly, stress the vital importance of a vibrant public domain to the innovation ecosystem. In Golan, the Court holds the “Work Ahead” sign as Congress paves more space for the copyright parking lot.) Rejecting both the Progress Clause and First Amendment challenges to the pertinent Copyright Act provision, the Court concludes: “Congress determined that U. S. interests were best served by our full participation in the dominant system of international copyright protection. Those interests include ensuring exemplary compliance with our international obligations, securing greater protection for U. S. authors abroad, and remedying unequal treatment of foreign authors.” Majority opinion, section IV. Moreover, Golan’s full-throated endorsement of the incentive to disseminate as on a par with the incentive to create (majority opinion, section II.C) further complicates the i.p. injury story that B&H tell. I hope, as they continue their work in this area, B&H turn their considerable talent to noneconomic bases for i.p. law and the injury rule(s) those bases suggest. If they do, I know I’ll learn a great deal from what they have to say.

And now, an omission from the book that simply strikes me as curious: As the title of this review suggests, the book doesn’t discuss trademark law. At all! That’s odd to me. Trademark law is a core part of i.p. law, even if it doesn’t directly encourage investment in innovative expression or invention. “Interbrand competition is,” as they say, “the primary concern of antitrust law,” Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 51 (1977), and trademark law is the branch of i.p. law that is a key part of interbrand competition’s legal infrastructure. Moreover, from the perspective of B&H’s focus on using an injury rule to discipline the reach of legal doctrine, it may be a more interesting case study than patent or copyright – although not, perhaps, a reassuring one. Trademark law wears its injury rule on its sleeve, defining the wrong it proscribes directly in terms of harm to competition. Trademark law prohibits others from using a trade symbol that causes a likelihood of consumer confusion as to the source of a good or service, when compared to the mark owner’s trade symbol. The trademark law and policy literature suggests, moreover, that trademark-law expansionism may be every bit as aggressive as the copyright expansionism that B&H decry. But if courts do as badly as they do with trademark, when the injury rule is the very core of liability doctrine, how much better can we expect them to do when they have to work to bring the injury rule to the fore? I’m curious to know what B&H would make of the comparison.

B&H also skimp a bit on another facet of the antitrust success story of the last forty years—namely, much more open judicial consideration of error costs when choosing doctrinal rules and standards. They mention it in passing (see, e.g., pages 58, 271), but I think i.p. law needs an injection of error-cost reasoning every bit as much as it needs a far more resolute injury rule. Thinking about error costs quickly surfaces an allied point B&H make about public choice and political economy: when a statute presents an ambiguity, one should err in favor of providing more modest i.p. rights, confident that those who stand to gain from broader rights will have no trouble getting the attention of Congress if the courts truly have erred. By comparison, the improvident creation of property rights is far harder to correct, from both the legal and political perspectives. (See, e.g., pages 47, 401.) I have seen little mention of this in tough i.p. cases; Justice Stevens’ concurrence in Bilski is the only one that comes to mind. 130 S. Ct. 3218, 3250 (2010) (“And to the extent that there is ambiguity, we should be mindful of our judicial role. ‘[W]e must proceed cautiously when we are asked to extend patent rights’ into an area that the Patent Act likely was not ‘enacted to protect,’ Flook, 437 U.S., at 596, 593, lest we create a legal regime that Congress never would have endorsed, and that can be repaired only by disturbing settled property rights.”). The judiciary could surely use B&H’s help in porting to i.p. law the error-cost insights of antitrust (including a tilt against property-creating errors).

Finally, I’ll end with a friendly addition to the already piquant list of reform suggestions with which the book closes: When deciding whom to appoint, or to confirm, to judgeships on the U.S. Court of Appeals for the Federal Circuit (the nation’s appeals court for patent law), the judge-pickers should look for people with a solid grounding in antitrust law and policy. B&H have amply demonstrated the great benefits to patent law that such a solid grounding in antitrust can provide.

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