Law and Economics

Code V.2

Lawrence Lessig has a terrific weblog, well worth visiting regularly (available here), and on today's post he announces something really interesting: he is going to update his five-year old Code and Other Laws of Cyberspace, but he is going to do so in a novel manner.  There will be a Wiki -- all right, I'm not really hip enough to have known what a "wiki" is; you can find out the same way I did at this site -- at which (or is it "on which"?) anyone can write comments or whole new sections of the book.  Professor Lessig will then take all those contributions during the Summer and work them up into the second edition of Code, which Basic Books will then publish in the Fall.  "The Wiki will stay live forever (under a Creative Commons license)."  Professor Lessig has also donated his advance from Basic and any royalties that he might realize from sales of Code V.2 to Creative Commons. 

I had a fascinating discussion this morning with my friend and former student Charlie Petit about Creative Commons and what it means.  (You can find the Creative Commons website here, and Charlie's website here, with lots of nice material on copyright and IP generally.  Charlie specializes in legal representation for authors.)  My admittedly limited understanding of Creative Commons was that it was a means of placing all or parts of one's copyright interests into the public domain.  Alternatively, perhaps, it is a means of renouncing one's copyright interests or of declaring one's intention not to enforce one's copyright interests.  (I notice that the Becker-Posner Blog, which I have recommended before, has a Creative Commons license in the sidebar.)  Charlie tells me that it is not quite as easy to renounce one's copyright interest as the Creative Commons license would seem to indicate.  I want to learn more about this; my instinct is to renounce, if I can and as if anyone might care, any copyright interest in these musings, but I would, nonetheless, be mildly upset -- and I stress "mildly" -- if I were to discover that someone had copied something here and posted it without attribution.  I'll continue to investigate this and will report back on what I've discovered. 

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Indian Patent Law

One of the little known but important aspects of the TRIPs (Trade-Related Aspects of Intellectual Property) Agreement that was part of the World Trade Organization treaty that went into effect on January 1, 1995, was that many developing countries would create and enforce modern intellectual property laws by January 1, 2005.  So, an important milestone in IP is coming up within the week. 

For the past 10 years some developing countries have been living in an interesting limbo before their duty to impose IP regimes arrived.  For instance, India, which has been a vibrant economy for at least the last 13 or so years -- and possibly for the past 20, has seen the growth of a very profitable pharmaceutical industry over the last 10 years that has been routinely copying pharmaceuticals patented in other countries but not India (which has no product patent laws).  These pharmaceuticals have then been sold to other developing countries in competition with the patented pharmaceuticals of companies in the developed countries and (not having incurred the average $800 million development costs of those pharmaceuticals) at far lower prices.  A prominent example is that of antiretrovirals produced in India and sold at low price in sub-Saharan Africa to the many there who are HIV-positive but cannot possibly afford the same products at Northern hemisphere prices. 

Today's New York Times reports that "[t]he Indian government issued a decree [on December 26] to bring its patent laws into compliance with the requirements of the World Trade Organization.  ...  Although details of the decree were not available, the change signaled a breakthrough in patent reform, which had been stalled by political concerns that an overhaul would result in higher drug prices."

The report says that India has process patents but not product patents.  The article concludes, "The change in India's patent laws is aimed at spurring innovative drug companies to switch from making copycat generic drugs.  New options include making generic drugs for booming export markets, contract research and manufacturing, and new drug research." 

India's old patent law (1970) is available here.  The 2003 emendations are here.   An overview of Indian patent law is available here.  And a story in the India Daily about the new decree is available here.  When the details are published, they will probably be available on the website of the India Daily. 

TSU

Supreme Court to Hear Grokster Case

The US Supreme Court has agreed to hear Metro-Goldwyn-Mayer Studios v. Grokster Ltd. later this term.  At issue is whether Grokster and StreamCast Networks can be held liable for helping consumers infringe copyright interests in recordings and movies.  The US Court of Appeals for the Ninth Circuit had distinguished Grokster's role in file copying (and found them not liable) from that of Napster in a 2000 case.  Linda Greenhouse's article in today's New York Times (available here) has a nice summary of the issues and how the facts in this case might be different from those in the earlier Napster case. 

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Marxism-Lessigism

Dan Hunter of the Wharton School has a nice article in the most recent issue of Legal Affairs on Larry Lessig and the ferment in IP. 

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IP and the Internet

Others have remarked on the problems that the easy availability of music, movies, and other forms of copyrightable works on the Internet might create for the IP system and for preservation of the incentive to create expressive works. 

But here's a problem I hadn't thought of before that arises from the lack of coordination of copyright terms across international borders and the fact that we can access websites anywhere in the world from anywhere else in the world.  (To take an example of the unimportance of national borders, consider that I'm writing this weblog from a coffeeshop in Hamburg, Germany, and accessing The New York Times archives in the US (I think) to do so.) 

Here's an example from the "New Economy" column by Victoria Shannon in The New York Times of Monday, November 6, 2004. 

Project Gutenberg, the volunteer effort to put the world's literature online, may be the latest victim of the Internet battle over copyright.  Earlier this year, the Australian affiliate of Project Gutenberg posted the 1936 novel Gone With the Wind on its Web site for downloading at no charge.  Last week, after an e-mail message was sent to the site by the law firms representing the estate of the book's author, Margaret Mitchell, the hyperlink to the text turned into a 'Page Not Found' dead end. 

At issue is the date when Gone With the Wind enters the public domain.  In the United States, under an extension of copyright law, [the book] will not enter the public domain until 2031, 95 years after its original publication. 

But in Australia, as in a handful of other places, the book was free of copyright restrictions in 1999, 50 years after Mitchell's death. ... 

[These differences in copyright protection are raising warning flags for other copyrightable media.]  Already the copyright battle is brewing in Euorpe, where the International Federation for the Phonographic Industry, a trade group in London for record companies, is urging the European Commission to extend copyright protection for performers from 50 years to 70 years, or even to the 95 years generally given to sound recordings in the United States. 

Without that extension, recordings from musical artists of the 1950s and 1960s will start entering the public domain in the 20 European Union nations this decade and next.  ...  The first prominent rocker to be affected [] is Elvis Presley, whose 1954 single, "That's All Right," is set to becomes copyright-free in the EU in January. 

More importantly, at least to EMI Records, the Beatles' catalog would begin to fall into the public domain in the EU starting wtih "Love Me Do" in 2013. 

I could also tell you stories about how to avoid the fact that because of differences between the US and the UK, the new translation of Proust's Remembrance of Things Past, which is available in the UK, won't be fully available in the US for 20 years.  But you ought to read it now.  If interested, ask. 

If you would like to know more about Project Gutenberg, which started in Champaign, Illinois, see this site. 

TSU

Database IP Rights

James Boyle, William Neal Reynolds Professor of Law at the Duke, has an interesting column, "A Natural Experiment," in the November 22 Financial Times on-line about property interests in databases.  (You can find a copy of the article -- and lots of other interesting material -- on Professor Boyle's personal webpage here.)  At issue is the very different treatment of IP rights in databases in the European Union and the US.  In Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991) (the opinion is available here), the US Supreme Court held (as had many lower federal appellate courts before 1991) that "unoriginal" compilations of facts, such as a directory of telephone numbers, are not copyrightable.  (Despite pressure from some interests, Congress has resisted pressure to create this IP interest by statute.)  In contrast, the EU issued a directive in 1996 that established copyright protection for databases, even unoriginal compilations.   

Professor Boyle says that these stark differences between the US and the EU present a wonderful natural experiment to answer this question, "Is there any discernible difference between the US and EU in the quality or quantity of databases?"  And the answer he gives is "Not much." 

That shouldn't be all that surprising.  It is not clear that IP protection is necessary to maintain the incentive to create and maintain a database.  Some US database creators contend that there are technological means of solving the nonappropriability problem (that is, the problem that one's customers for information may pass it on to other potential customers, thus depriving the compiler of sales revenues and thereby diminishing the incentive to compile).  For example, some databases are available only to subscribers who have paid a fee and received a password.  (This, of course, is not a foolproof solution.) 

Ultimately, the question of whether IP rights or technological (or other) fixes are necessary to protect the incentive to create and maintain databases is an empirical question.  And Professor Boyle says that there are three of these empirical questions that we can ask about the US and EU to answer those questions. 

1.  "Has the European database industry's rate of growth increased since 1996, while the US industry's growth has declined?" 

No.  "In the US, the database industry has grown more than 25-fold since 1979 [even though during most of that period, even before Feist, there was no IP protection for databases]."  Professor Boyle points out that the two principal advocates for IP database protection in the US are the owners of the largest legal databases: Reed Elsevier, the owner of Lexis, and Thomson Publishing, the owner of Westlaw.  But both of those publishers made their key purchases for the purposes of putting together US legal databases after Feist.  They have cleary prospered despite IP protection.  How?  "In the old-fashioned way: competing on features, accuracy, tied services, making users pay for entry in the database, and so on."  This makes you wonder why Reed and Thomson are advocating IP rights for databases. 

And what about Europe?  Professor Boyle cites a study in Science by Hugenholtz, Maurer, and Onsrud that finds that there was a sharp increase in the number of databases in Europe in the three years after the 1996 directive but that thereafter the rate of increase fell back to the levels prevailing before 1996. 

2.  "Are the principal beneficiaries of the database right in Europe producing databases that they would not have produced otherwise?" 

Apparently not.  The evidence, again from the Science magazine article, is that most of the new databases are those that probably would be created anyway -- telephone numbers, television schedules, concert times, community events, and the like.  (There have been, Professor Boyle reports, some interesting recent cases before the European Court of Justice regarding whether cetain databases compiled by businesses in the normal course of their operation are entitled to IP protection under the directive.  The central question is whether that information would be compiled in the normal course of business or required a "substantial [additional] investment."  If so, then the database is entitled to protection. 

3.  "Is the right promoting innovation and competition rather than stifling it?"  We need a touch of background here.  Some contend that IP rights in databases might stifle compilations of information because it would be harder, under an IP rights regime, to get some information.  This would be particularly true if IP protection would be inappropriately granted to compilations that involved no "substantial investment," that were, for instance, compiled as a normal byproduct of doing business. 

There's no clear answer yet. 

Professor Boyle's conclusion is that the empirical evidence persuades him that we do not need IP rights in databases: "If the European Database Directive were a drug, the government would be pulling it from the market until its efficacy and harmfulness could be reassessed." 

Professor Boyle will return to this topic in a future column for the Financial Times.  I'll cover it in a later post. 

TSU

Plagiarism

Anyone who teaches at a college or university has had experience with plagiarism.  It's a vexing topic.  Malcolm Gladwell has a good article in the November 22, 2004, New Yorker about plagiarism entitled “Something Borrowed.”  There is some general material on the difficulty of being entirely original and the practice of “sampling,” but the most interesting aspect of the article is Gladwell’s own experience at having had his work plagiarized.  In February, 1997, Gladwell wrote a profile of the psychologist Dorothy Lewis, who is one of the foremost scholars of serial murder and the author of Guilty By Reason of Insanity (1998).  He learned that a very popular and highly regarded play on Broadway, Frozen by Bryony Lavery, a British playwright, lifted substantial material from his profile of Lewis.  The play was about the relationship between a serial killer and a psychologist who is studying the killer.  Ms. Lavery clearly "borrowed" substanitally from Gladwell's profile. 

One of the most moving parts of the article is when Ms. Lavery comes to Gladwell’s apartment to talk with him and to try to explain how it could happen that she appropriated his words without his permission.  She doesn't do a very convincing job. 

In the most recent issue of The New Yorker, Gladwell has another wonderful article -- this one about how we can easily be misled by photographs.  It's available for a time on-line here. 

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