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Page 95 12 Legal Pressures in Intellectual Property Law Justin Hughes 1 I wondered whether this audience should be addressed as a political constituency or as a science community. I think that is important to think about because it is a dilemma implicit in this symposium and a lot of the scientific community's study of intellectual property (IP) issues: do you look at intellectual property policy as a subject of study or do you address IP policy as a battleground in which the science community will, whether you like it or not, either be warriors or cannon fodder. The proof of a major change in policy should either be a good empirical case or a very good theoretical case. The reason I adopt that position is because whether you are a law professor, who is supposed to be committed to the truth, or you are a scientist, who is supposed to be committed to the truth, it is a position that you can take into the activist battlefield and you can do it with principles. You can discuss these policy issues and be a policy activist on what the law will be, my position is that you should not do a major change in IP law, unless you can show me a good empirical case to make the change or a very good theoretical case. I wrote a paper entitled “Political Economies of Harmonization, Database Protection and Information Patents” 1 for a conference this summer in Paris, cosponsored by the University of Maryland, and Professor Brian Kahin was one of the organizers. I talk about that position in relationship to the fight we have been having in the United States for years over extra copyright protection of databases and also in relationship to software patents. The name of that paper really should be “Everything You Wanted to Know about Database Politics, But You Didn't Know Who to Ask Who Would be Stupid Enough to be Honest With You.” I have often wondered if I should edit a lot of the things I report on. I wrote this paper not only at the behest of Professor Kahin, who was a great influence, but also Professor Reichman, who does a great job about writing about database politics and database issues, but he always seems to write something like “there was intense lobbying.” I decided I would say a little more than there was intense lobbying. I wanted to briefly talk about three IP areas and, with each of these IP areas, I want to return to two themes. The first theme, which we have heard in this symposium, is it is not just about what the law is, it is about the tools of law and how they are used, misused, or not used by private players. This is very important in the scientific community's assessment of what kind of IP laws are supportable or acceptable to the community. Second, I wanted to talk about science's interest versus broader public-domain arguments. We were invited to 1See J. Hughes. 2002. “Political Economics and Harmonization: Database Protection and Information Patents,” Conference on Frontiers of Ownership in the Digital Economy, June 10-11, Paris. See http://cip.umd.edu/hughesifri.doc.
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Page 96 say controversial things. On that topic, I am going to go against Jamie Boyle's support of what I call the togetherness principles. Let me talk about the three IP areas: patents, copyrights, and database protection. In the area of patents, probably unquestionably in the past few years, the most cataclysmic development has been the policy following State Street Bank of allowing patents over business methods. The business method patent issue is not something the scientific community should dwell on at great length because it is not likely to affect it a great deal. Business method patents are probably not a place where the scientific community could have a great deal of influence in turning the tide. IBM, which is consistently the number one patenting entity in the United States, is against business method patents. Of course, the reason is because IBM has been patenting everything else, and they did not think to patent business methods. They suddenly found themselves outflanked by Dell Computer, who forced them to take several patents on Dell business methods. In the patent area, the important issues that the scientific community has rightfully focused on are patenting of research tools and of express sequence tags. The scientific community needs to approach these issues and ask whether there is a problem because there has been a lot of good legal scholarship that identifies problems in the area of research tools and express sequence tags, an anticommons problem of too much propertization, too much overlapping of property rights. Recently, there was a study done by Wes Cohen of Carnegie Mellon and others that, admittedly with a small sample, concluded that there was not yet any breakdown, any anticommons problem because of IP. There are undoubtedly some increased transaction costs and there are clearly financial transfers going on, but there is not yet the kind of breakdown that Professor Reichman talked about. Why not? One reason is there is not much enforcement, which is very important because law professors tend to focus on what the law is; whereas as activists you need to be concerned about how the law is enforced. It appears to be the case that the holders of research tool patents to date do not seem to go after universities or nonprofit research. Another issue is to what degree this patenting of research tools has benefited the university community. When you look at the statistics, it is interesting because when you take the U.S. patent pool as a whole, fairly consistently year in and year out, universities—both private and public institutions—command about 2 percent of the patents. However, in certain biomedical categories of patenting, the university numbers are much higher. In the mid-1970s in three of those categories, universities had about 8 percent of the patents. In those same categories by the mid-1990s, universities had 25 percent of the patents. So, if patent fees and licensing fees are being paid, an increasing percentage of them are being paid to universities. That does not necessarily mean more money for research. We have to be honest about that. That could just be transaction costs and that could just mean that universities are hiring more technical management officers and more patent lawyers. There is a real issue of studying and looking at what is happening in these areas. I said that the standard that you have to take into the battlefield, if you want to do this in a principled way, is there should be no major change in the law until you can show a good empirical or theoretical case. I think that is true for major changes in the law. For smaller changes in the law, it is all right to advocate reform on the basis of your intuitions and on the basis of what you believe is the right way to tinker with the system. As James Boyle said earlier, we are experimenting with a massively important entity, operation, and aspect of our society. If you propose a major change, you might sink the whole ship, but if you propose tinkering and small amendments, you have a different way of organizing opposition procedures of the U.S. Patent and Trademark Office (PTO) or you have a slightly different way of organizing exceptions for encryption or reverse engineering. That is something that I think you should go out and advocate. On that count, I think it was very good that people forced the issue with the PTO about patenting of express sequence tags, because that forced the PTO to reevaluate the issue and in a sense back down. As a result, there is substantially less patenting and stricter patenting in this area of biomedical technology. Let me turn to copyright issues. Here science has to decide, as a community, its place in the broader battlefield. I think that the togetherness principle might be the right strategy, but it might also be the wrong strategy. Paul Uhlir and Jerry Reichman presented about the possibility of an express research commons, separate from our general understanding of the public domain.
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Page 97 Let me spin out a few things here. Professor Boyle observed earlier that younger scientists may be accustomed to paying for data, just as they pay for reagents. 2 That strikes me as right. Doesn't that seem ironic to you? A younger generation of scientists is now accustomed to paying for data, just as a younger generation of college students is unaccustomed to paying for music. Professor Boyle also raised an interesting question that I want to try to answer. He said we do not know whether fair uses are part of the public domain. I think that the principled answer, and the answer that the scientific community needs to take up, is that some fair uses are part of the public domain. The fair uses that are part of the public domain are those that are needed for a robust, democratic, civil society, and there are elements of the Berne Convention, which is the multilateral treaty that establishes legal norms for a copyright, that suggest that. Fair uses that are part of the public domain are also those uses that directly advance progress in science and the useful arts. Note that I have torn the public domain apart. There are many uses that are not part of the public domain. Making the fifth copy of the Madonna music track is not necessarily part of the public domain, and it is certainly not part of the public domain that the scientific community needs to care about. The parts of fair uses that are critical to the public domain are those that are transformative uses—reuses of information, ideas, and expressions that advance the civic or scientific dialogue. I think that most intellectual property scholars are not troubled by traditional IP rights. They are troubled by the digital locks that are being deployed by private players and the laws that make it illegal to tamper with the digital locks. Professor Cohen is going to talk later about digital rights management technologies. 3 The one place where the scientific community has come together against these digital rights management technologies and the Digital Millennium Copyright Act (DMCA) is the issue of encryption technology. The argument that many computer scientists have made is that the DMCA frustrates their scientific advances by creating a dark and ominous shadow over much of what they want to do in computer security research and encryption research. I wanted to make some observations about that. The DMCA has some exceptions written into it for security testing and for encryption research. I do not know if these exceptions are adequate, but neither does the computer scientist community and neither do the most shrill voices who are saying the DMCA should be repealed. Just because someone gets a cease and desist letter from an overactive lawyer or an overstaffed corporate legal department does not mean that it is the proper interpretation of the DMCA—that they cannot engage in the particular activity they are engaging in. Brian Kahin and I were involved at different points in drafting the DMCA. When it came to encryption research, there were some people at the table who we thought knew a great deal about it. They were the spooks. If you ever have to draft legislation with the National Security Agency and the Central Intelligence Agency, good luck. Negotiating with them was kind of like a hot or colder game. I would give them wording and they would say colder, colder. I would give them different wording and they would say warmer, warmer. But this is how the encryption exceptions received a certain amount of scrutiny when they were drafted by people who presumably know what legitimate encryption researchers need. Now there have been some bad stories, such as the attempt by the recording industry to go after Professor Felten. That is one of those stories that I call “anecdata”—these horror stories over which we try to construct theories about how something is or is not working in IP law and policy. The problem of studying the effects of the DMCA on computer science is different because it has become so politicized. I am not sure how you do empirical research, how you find out from computer scientists whether the DMCA has impacted their activities. We recently held a convocation of IP professors, and one of them wanted to do empirical research. His first question was to ask the computer scientists how the DMCA has affected their lives. Given the politics, the polemics, and the rhetoric, I can tell you what that kind of survey is going to get you. What is needed is a very careful survey that, without mentioning IP, tries to determine if there has been a shift in research activities in the encryption community, a shift in the normal activity and the functioning of the computer security 2See Chapter 2 of these Proceedings, “The Genius of Intellectual Property and the Need for the Public Domain,” by James Boyle and Jennifer Jenkins. 3See Chapter 15 of these Proceedings, “The Challenge of Digital Rights Management Technologies,” by Julie Cohen.
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Page 98 community in response to fear about the DMCA. That is a situation where, as scientists or as researchers, you need to keep on your hat of neutrality and not engage in the rhetoric that the DMCA is bad. Let me talk a little bit about database protection, which is a serious issue. Paul Uhlir, Jerry Reichman, Brian Kahin, and I, along with many others in this room, have worked on it for years. I was surprised to hear Professor Reichman say that university technology managers are imposing conditions on databases built with federal funding. If that is true, we have a problem. However, the problem is not IP law. We need to galvanize the administration so that the National Science Foundation, the National Institutes of Health, the Department of Energy, and all those federal agencies that fund these databases go after their funding and say thou shalt not impose these kinds of conditions on the data that I have paid for. Let me talk about the European Union Database Directive. The good news is that it is not doing anything literally. Stephen Maurer, Bernt Hugenholtz, and Harlan Onsrud have done some work looking at whether there has been any growth in the commercial database industry in Europe following the implementation of the Database Directive. It is not working to date. Now, keep my words carefully in mind. I said to date it is not working. When you ask the European Commission if the directive is serving as an incentive for the generation of commercial databases, they say “yes.” Their evidence appears to be that they go around Barnes and Noble occasionally and look at database products or they count the number of litigations that they can find. The litigation all involves databases that existed before the directive came out. As such, it is not doing much on incentive structure. Scariest of all, the European Commission commissioned a survey on the effects of the Database Directive. They invited me to fill it out. Two important questions are not on the survey; have you introduced any new database products since the promulgation of the directive? Was the directive instrumental in influencing your decision to introduce any new database products? As far as we know, the Database Directive is not doing what they thought it would do. Having said that, keep in mind your neutral position. We should not expect it to have done anything yet. It has been promulgated only for a couple of years. We know that the business community is not the most attuned to how IP law works. All you have to do is read Rembrandts in the Attic to understand how clueless they generally are about patent and copyright law, which has been around for centuries. If the European Database Directive is going to have an incentive effect, it will not do so in just a couple years. So, although I am pleased that there are no results yet, I do not want to say that the directive is a failure. All we can say now is that the directive is not working. Now, the other piece of good news that I want to mention about the directive is that none of the cases has involved anyone in the scientific community. All of the cases appear to be corporate entities in the European Union slugging it out with each other. Now, that is important. I am not saying this is not a great concern to science, but it is interesting to look at, and it also makes it more viable for science to request an exception because clearly no one is concerned about what we have been doing. In the United States, as Professor Reichman said, there has been equipoise between political forces for several years, and we are not going to get any international movement until the United States is somewhere. Both Professor Reichman and I probably agree that we need to have some modest database protection law in the United States to serve as a counterpoise to the European Union. It is just that we do not have a convincing case, empirically or in theory, for anything nearly as strong as what they have done. That is really what the scientific community ultimately should worry about. I have preached that you can go into battle with this position—there should not be big changes in the law, unless there is a great empirical case or a great theoretical case, but I want to add that it is fine to go into battle on amending the law with your intuitions. If you are thinking about introducing something into the system that might kill off a lot of things, then you ought to hold back and take a principled position and insist that the other people who want the change, whether the change is more IP or the change is less IP, ought to prove it.
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