The Disaggregation of Intellectual Property, continued

Disaggregation

As the three fields of intellectual property have expanded, they have begun to fragment. Sometimes, this disaggregation has been deliberate. Congress has, from time to time, identified a particular industry or a particular type of intellectual product, concluded that it warranted special treatment and created a customized set of rules to fit it. The first example was the design patent statute, which created an entirely new patent regime for ornamental inventions. Similarly, Congress, in an effort to comply with the Berne Convention, deliberately differentiated architecture from other types of copyrightable materials.

Sometimes this disaggregation has been deliberate in a narrower sense. Confronted with a problem or plea peculiar to one industry, Congress or the courts have adopted rules limited to that industry. For example, copyright law now permits performers to make "covers" of musical compositions, provided they pay a governmentally determined fee. Another example is the judge-developed requirement of conceptual separability, which applies only to three-dimensional useful objects. Applications for business-method patents, unlike most other patent applications, must be reviewed by two examiners. The requirement, first developed by the courts, that descriptive marks, colors and, most recently, product configurations must have acquired secondary meaning before being shielded by trademark law is yet another example.

Sometimes, by contrast, disaggregation has been a largely inadvertent by-product of judicial decisions attempting to respond to the distinctive features of certain industries. For example, as Professors Dan Burk and Mark Lemley have shown, the Federal Circuit has recently semiconsciously differentiated the software and biotechnology fields while applying the requirements for patentability. In the former, the nonobviousness doctrine has been applied strictly, while disclosure requirements have been applied leniently. In the latter, the reverse bias has been applied. Why? In the court's view, software is a mature field. Persons having "ordinary skill" in programming are thought to be especially knowledgeable. Thus, you need a big "inventive step" to reach higher than they could reach, and you don't need to disclose much, because they can fill in the gaps in a skimpy patent application. By contrast, the court (oddly) persists in treating biotechnology as an immature and unpredictable field. Thus, a smaller inventive step will suffice to render an invention nonobvious. But to obtain a patent, the inventor must reveal more about it to enable others to replicate it.

In sum, the field of intellectual property has already become, to a significant degree, fragmented. Is this trend good or bad? Should we celebrate and generalize it? Or should we resist it?

Two substantial factors create a strong initial justification for disaggregation. But some other, institutional factors suggest that disaggregation is risky. On balance, my suggestion is that lawmakers should disaggregate more often and certainly more consciously but should be watchful for and seek to avoid certain hazards.

Merits

The first benefit of self-conscious disaggregation is that it would help to offset the dangerous rhetorical force of the term "intellectual property." If lawmakers could be persuaded to ask not: "What is necessary adequately to protect creators' intellectual property?" but instead: "What should be the scope of rights to colors--or genes--or advertisements?" they would be less likely constantly to expand the zone of protection. Lawmakers might then concentrate on the economic and social benefits and costs associated with different types and amounts of legal control over ideas.

The second, more complex factor favoring disaggregation is that industries differ--and differ in ways that cannot be accommodated by the general doctrines of copyright, patent and trademark law. They vary most obviously and perhaps importantly in terms of the amount of legal incentives necessary to spur innovation. In some fields, the lure of a copyright or a patent is crucial to induce people to invent; in others, it's not. A few examples: Poets are less price-sensitive than screenwriters. Studies have shown that biochemists are primarily driven not by thirst for high incomes, but by a cluster of motivations we might call a commitment to science.

But to warrant reducing levels of intellectual property protection in a given field, it is insufficient to observe that inventors in that area would continue to invent for nonpecuniary reasons. Firms must also be willing to invest in and market their inventions, despite the absence of intellectual property rights. It turns out that investment patterns also vary by industry. In some fields, custom or first-mover advantages enable firms to reap adequate returns without the need for additional incentives, as Justice Stephen Breyer '64 long ago suggested in his study of the trade-book industry. In other fields, intellectual property protection is more important in attracting funding.

A second source of interindustry variation involves the manner in which technological advances characteristically occur. Some fields, such as the development of drugs from plants, conform reasonably well to a model of discrete innovation, rendering discoveries relatively autonomous. In other fields, such as telecommunications, an initial, pioneering invention commonly triggers successive waves of secondary inventions. In still other fields, like software, the typical member of each generation of innovators draws on many forerunners and then spawns many more. A patent regime optimal for one type of industry is likely to be ill-suited to the others.

There are several other sources of industry variation that argue in favor of disaggregation. Within trademark law, for instance, the strength of the public interests served by protecting names and insignia varies sharply by subfield. Within copyright law, some kinds of works are primarily informational in character, while some are primarily creative or expressive in character. Rules appropriate to the latter are not necessarily appropriate to the former.

Industries also vary, increasingly, as to whether intellectual property protection is adequate to stimulate innovation and to reward participants properly. The clearest examples of outliers are music and film. Traditional copyright protections are no longer capable of preventing massive, nonpermissive reproduction and distribution of digital audio and video recordings over the Internet. Partly as a result, the revenues of the music industry are dropping fast, and the fortunes of the film industry are in peril. The search is currently on for a new, better system. My own view--presented in a forthcoming book--is that the most promising candidate would be an alternative compensation system, under which creators would be compensated (in proportion to the relative popularity of their creations) with funds raised by the government through taxes. Many benefits--cost savings, convenience, cultural diversity and semiotic democracy--would be reaped if, with respect to online distribution of recordings, we replaced the crumbling copyright regime with such an alternative source of funding. But that's a subject for another day. The point for the purposes of the present subject is that some system sensitive to the special features of the entertainment industries would be better than continued reliance upon the generic rules of copyright.

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