Monday, February 15, 2016

Justice Scalia's IP Legacy

One of the things I love about teaching and writing in intellectual property is that disputes often don't fall along traditional party lines. As I've written, while many conservatives prefer stronger IP rights, others view IP as unnecessary government interference in the market. I don't know whether Justice Scalia had a unified theory of IP; he called intellectual property one of the "blind sides" that he "always regretted," said that his hardest decision "would probably be a patent case," and noted in a symposium dedicated to his friend Howard Markey (the first Chief Judge of the Federal Circuit), "I don't know much about patent law." He also threw up his hands at the science in the Myriad case on gene patents in 2013. But he certainly wrote a lot of smart opinions that have made it to the IP casebooks, and liberals who favor a minimalist approach to IP grounded in free competition and consumer rights have lost a jurist who was often on their side.

By my count, Justice Scalia wrote nine patent-related opinions. His majority decision in MedImmune v. Genentech (2007) made it easier to challenge patents by holding that a patent licensee need not breach the license in order to file a declaratory judgment that the underlying patent is invalid or not infringed. He also wrote for the Court in Eli Lilly v. Medtronic (1990) and Merck v. Integra (2005), both of which provided a broad interpretation of the § 271(e)(1) safe harbor from infringement for generic drug companies engaged in pre-market activities.

To be sure, Scalia was not always on the side of patent minimalism. He joined Chief Justice Robert's eBay concurrence emphasizing the long tradition of injunctive relief in patent cases, and he joined the Chief's Actavis dissent, which would have given pharmaceutical patentees broad immunity from antitrust law for "reverse payment" settlements. He also may have switched his vote in Bilski to prevent a broader ruling against the patentability of business method.

But even if he favored treating valid patents as property, he seemed consistent in wanting to make sure that asserted patents were in fact valid rights. His most recent patent opinion was a dissent in Commil v. Cisco (2015), in which he argued that a defendant's good-faith belief that a patent is invalid should be a defense to induced infringement. Ronald Mann described the dissent as follows:
[The majority] spurs Justice Scalia to quips that are pointed even by the elevated standards of his stylistic panache. He starts with the basic point: "Infringing a patent means invading a patentee's exclusive right to practice his claimed invention. Only valid patents confer exclusivity—invalid patents do not. It follows, as night the day, that only valid patents can be infringed. To talk of infringing an invalid patent is to talk nonsense." To the Court's suggestion that he was conflating the distinct issues of validity and infringement, he retorts: "Saying that infringement cannot exist without a valid patent does not 'conflate the issues of infringement and validity' any more than saying that water cannot exist without oxygen 'conflates' water and oxygen."
Scalia also reached outcomes that favor IP users in other areas of intellectual property. In Wal-Mart v. Samara (2000), he wrote for a unanimous Court that product design (in that case, the design of children's clothes) is protectible trade dress only upon a showing of secondary meaning (i.e., that consumers associate the design with a particular source). Scalia memorably explained:
In the case of product design, as in the case of color, we think consumer predisposition to equate the feature with the source does not exist. Consumers are aware of the reality that, almost invariably, even the most unusual of product designs—such as a cocktail shaker shaped like a penguin—is intended not to identify the source, but to render the product itself more useful or more appealing. The fact that product design almost invariably serves purposes other than source identification not only renders inherent distinctiveness problematic; it also renders application of an inherent-distinctiveness principle more harmful to other consumer interests. Consumers should not be deprived of the benefits of competition with regard to the utilitarian and esthetic purposes that product design ordinarily serves by a rule of law that facilitates plausible threats of suit against new entrants based upon alleged inherent distinctiveness.
My introductory IP students (and many IP scholars) would have preferred if Scalia were clearer about the doctrinal status of the Mexican restaurant decor that the Court said was inherently distinctive trade dress in Two Pesos v. Taco Cabana, but others think he did a decent job of reining in the anti-competitive aspects of Two Pesos without the difficult step of explicitly overruling it.

In Dastar v. Twentieth Century Fox (2003), another IP classic, Scalia explained for the Court that federal unfair competition law cannot be used to prevent plagiarism of a work that has passed into the public domain. Section 43(a) of the Lanham Act prohibits false representation that "is likely to cause confusion . . . as to the origin," but Scalia wrote that use of a public domain TV series related to WWII could not be the basis for such a claim:
[A]s used in the Lanham Act, the phrase "origin of goods" is in our view incapable of connoting the person or entity that originated the ideas or communications that "goods" embody or contain. . . . It could be argued, perhaps, that the reality of purchaser concern is different for what might be called a communicative product—one that is valued not primarily for its physical qualities, such as a hammer, but for the intellectual content that it conveys, such as a book or, as here, a video. . . . The problem with this argument according special treatment to communicative products is that it causes the Lanham Act to conflict with the law of copyright, which addresses that subject specifically. The right to copy, and to copy without attribution, once a copyright has expired . . . passes to the public.
In the area of copyright law, Justice Scalia joined the majority opinions in Eldred v. Ashcroft and Golan v. Holder to allow copyright extensions and restorations. He rarely bothered to write separately and admitted that his judgment in IP cases was "often guided considerably by Ruth [Bader Ginsburg]," who tends to favor strong copyright protections. But he had a vigorous dissent in the 2014 case ABC v. Aereo (2014), in which the majority held Aereo's TV stream service to be infringing. Scalia criticized the majority for seeming to base its decision on the imprecise fact that "Aereo looks a lot like a cable system":
Making matters worse, the Court provides no criteria for determining when its cable-TV-lookalike rule applies. . . . That leaves as the criterion of cable-TV-resemblance nothing but th'ol' totality-of-the-circumstances test (which is not a test at all but merely assertion of an intent to perform test-free, ad hoc, case-by-case evaluation). It will take years, perhaps decades, to [sort this out] . . . . The Court vows that its ruling will not affect cloud-storage providers and cable-television systems, but it cannot deliver on that promise given the imprecision of its result-driven rule.
It is not the role of this Court to identify and plug loopholes. It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes. Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude "looks-like-cable-TV" solution the Court invents today.
We came within one vote of declaring the VCR contraband 30 years ago in Sony. The dissent in that case was driven in part by the plaintiffs' prediction that VCR technology would wreak all manner of havoc in the television and movie industries. The Networks make similarly dire predictions about Aereo. We are told that nothing less than "the very existence of broadcast television as we know it" is at stake. . . . We are in no position to judge the validity of those self-interested claims or to foresee the path of future technological development.
I am not going to claim that Justice Scalia had a coherent theory of IP; each of the opinions described above could be attributed more to a strong dislike of bad logic than to a first-principles skepticism of IP rights as government interference in the marketplace. But these opinions also suggest that at some level, Justice Scalia did believe that allowing IP rights to be recognized too easily or asserted too broadly could harm competition, consumers, and innovation.

The public focus on 5–4 cases in which the Supreme Court has split along party lines can make it easy to forget that Justices don't vote on cases the way we vote in elections. Many legal issues can make strange bedfellows. And liberals who vehemently disagreed with Justice Scalia on social issues should remember that his legacy includes many cases whose outcomes they might agree with, including cases involving civil rights for criminal defendants, free speech, and maybe even IP.

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