Thursday, February 28, 2013

Feldman on IP Wrongs

Do we need a new doctrine of "inappropriate uses of intellectual property"? This is the proposal Robin Feldman (UC Hastings Law) makes in her working paper Inappropriate Uses of Intellectual Property—Intellectual Property Wrongs. Her broad new doctrine would (1) allow courts to dismiss suits when the plaintiff has behaved inappropriately; (2) allow courts to craft remedies that account for improper behavior; and (3) create an affirmative cause of action that allows for both damages and equitable relief.

Feldman gives many examples of "troubling behaviors that are emerging in intellectual property markets" that could be addressed with this doctrine:
  • Microsoft asked Barnes & Noble to sign a non-disclosure agreement before explaining which claims the Nook allegedly infringed. Microsoft demanded high license fees for peripheral patents and then settled the suit in exchange for a 17.6% stake in Nook.
  • Intellectual Ventures requires everyone who interacts with it to sign non-disclosure agreements, which may also include "non-disparagement clauses" (preventing criticism of IV).
  • Patent transfers are used to insulate companies from counter-attacks (by transferring to non-practicing entities), to insulate documentation from discovery (by transferring to foreign parents), and to "launder" FRAND commitments to standard-setting organizations.
  • RPX was accused of extortion, and Yahoo may have engaged in "unsavory pressure tactics" involving stock market timing (such as suing Facebook shortly before it planned to go public).
  • Trade secret claims are used to intimidate whistle-blowers and prevent former employees from competing.
  • Prenda Law has acquired copyright in pornographic movies and demands that illegal downloaders pay $1000 or get sued.
  • Righthaven sued bloggers who quoted newspaper content, and scientific publishers sued patent attorneys for copyright infringement based on their submission of copyrighted articles along with patent applications.
  • Project Paperless asked small companies with scanners to pay per-person license fees for its scan-to-PDF patents, and Innovatio IP Ventures asked for license fees from users of Cisco WiFi equipment.
  • Broadly worded telephone switchboard patents have been asserted over Internet faxing against many small companies by j2 Global.
  • The authors of the widely used Mini-Mental State Examination asserted copyright against hospitals, causing the exam to disappear from medical books.
I'm sure some commentators would say that these stories are not "troubling" because there is more to the story or because they are not representative, and Feldman agrees that it is difficult to get good empirical data (in part due to the prevalence of non-disclosure agreements). But assuming that her descriptions are accurate, they seem to raise two distinct issues: (1) using IP for frivolous and harassing lawsuits (a problem that is not limited to IP, and which thus calls for broader solutions), and (2) asserting completely legitimate claims under our current IP system in ways that lead to what some people view as normatively bad outcomes (which suggests that the appropriate change is to the law itself).

Feldman's collection of examples is interesting, and it is worth thinking through what (if anything) is wrong with each of these examples, and how to address each of those problems. I'm not sure, however, that a broad new equitable doctrine of "inappropriate uses of intellectual property" makes sense, in large part because there are widely varying views of what is appropriate. Feldman admits that defining "inappropriate" behavior is difficult, but argues that such behavior "clearly" includes "providing the means for a third party to attack a competitor's customers in order to raise the cost of a competing product, using intellectual property to buy silence, or transferring rights to avoid obligations." But I'm not optimistic that asking judges to decide which non-disclosure agreements and patent transfers are "inappropriate" will not simply lead to the famous problem of the Chancellor's foot (link has PDF with relevant quote, describing the problem with equity in the 17th century, where outcomes depended on the whims of the Chancellor's conscience).

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