It's Hard Out There for a Commons

I just finished reading a fascinating draft article about the Eco-Patent Commons, a commons where about 13 companies put in a little fewer than 100 patents that could be used by any third party. A commons differs from cross-licensing or other pools in a couple of important ways. First, the owner must still maintain the patent (OK, that's common to licensing, but different from the public domain). Second, anyone, not just members of the commons, can use the patents (which is common to the public domain, but different from licensing).

The hope for the commons was that it would aid in diffusion of green patents, but it was not to be. The draft by Jorge Contreras (Utah Law), Bronwyn Hall (Berkeley Econ), and Christian Helmers (Santa Clara Econ) is called Green Technology Diffusion: A Post-Mortem Analysis of the Eco-Patent Commons. A draft is on SSRN. Here is the abstract:

We revisit the effect of the “Eco-Patent Commons” (EcoPC) on the diffusion of patented environmentally friendly technologies following its discontinuation in 2016, using both participant survey and data analytic evidence. Established in January 2008 by several large multinational companies, the not-for-profit initiative provided royalty-free access to 248 patents covering 94 “green” inventions. Hall and Helmers (2013) suggested that the patents pledged to the commons had the potential to encourage the diffusion of valuable environmentally friendly technologies. Our updated results now show that the commons did not increase the diffusion of pledged inventions, and that the EcoPC suffered from several structural and organizational issues. Our findings have implications for the effectiveness of patent commons in enabling the diffusion of patented technologies more broadly.

The findings were pretty bleak. In short, the patents were cited less than a set of matching patents, and many of them were allowed to lapse (which implies lack of value). Their survey-type data also showed a lack of importance/diffusion.

What I really love about this paper, though, is that there's an interpretation for everybody in it. For the "we need strong rights" group, this failure is evidence of the tragedy of the commons. If nobody has the right to fully profit on the inventions, then nobody will do so, and the commons will go fallow.

But for the "we don't need strong rights" group, this failure is evidence that the supposedly important patents were weak, and that it was better to essentially make these public domain than to have after the fact lawsuits.

For the "patents are useless" group, this failure shows that nobody reads patents anyway, and so they fail in their essential purpose: providing information as a quid pro quo for exclusivity.

And for the middle ground folks, you have the conclusions in the study. Maybe some commons can work, but you have to be careful about how you set them up, and this one had procedural and substantive failings that doomed the patents to go unused.

I don't know the answer, but I think cases studies like this are helpful for better understanding how patents do and do not disseminate information, as well as learning how to better structure patent pools.

The Name's the Thing

Much to my chagrin, my kids like to waste their time not just playing video games, but also watching videos of others playing video games. This is a big business. Apparently the top Fortnite streamer made some $10 million last year. Whaaaaat? But these services aren't interchangeable. The person doing the streaming is important to the viewer.

But what if two streamers have the same name, say Fred, or Joan, or...Kardashian. Should we allow someone to lock others with the same name out? Under what circumstances? And what if the service is simply being famous-for endorsements, etc.

Bill McGeveran (Minnesota) has posted an article that discusses these issues called Selfmarks, now published in the Houston Law Review. It is on SSRN, and the abstract is here:

“Selfmarks” are branded personal identifiers that can be protected as trademarks. From Kim Kardashian West to Beyoncé’s daughter, attempts to propertize persona through trademark protection are on the rise. But should they be? The holder of a selfmark may use it to send a signal about products, just like the routine types of brand extension, cross-branding, and merchandising arrangements fully embraced under modern trademark law. Yet traditional trademark doctrine has adjusted to selfmarks slowly and unevenly. Instead, the law has evolved to protect selfmarks through mechanisms other than trademarks. In an age where brands have personalities and people nurture their individual brands, it is time to ask what principled reasons we have not to protect the individual persona as a trademark.

I liked this article a lot--especially its straightforward approach. It looks at these marks through the lens of trademark law (as it should), considering use (that is what goods and services) and distinctiveness. In doing so, it provides several useful hypotheticals that illustrate the problems of using names as trademarks. The paper also considers Lanham Act sections that specifically deal with names.

Finally, the paper discusses a couple of concerns. First is endorsement confusion. As the "service" of a celebrity becomes endorsement, then everything the celebrity does is potentially an endorsement, even though that may not be the intention. McGeveran discusses this concern. Second is the ever-present speech concern. If names are protected as marks, then it is harder to use that name in speech.

This article is a really good primer on names as marks. I think a good extension for the next one would be a topic that a student of mine wrote about last year: joint marks. That is, when multiple people have the same name - together even - then the mark can cease being distinctive of their individual goods. My student did a great case study of the Kardashian marks, showing that several of them may well be invalid, but I think this could be extended to a longer theoretical piece if it hasn't been done already.

The Copyright Law of Interfaces

Winter break has ended and so, too, has my brief blogging break. I've blogged before (many times) about the ongoing Oracle v. Google case. My opinion has been and continues to be that nobody is getting the law exactly right here, to the point where I may draft my own amicus brief supporting grant of certiorari. But to the extent I do agree with one of the sides, it is the side that says API (Application Programming Interfaces) developers must be allowed to reuse the command and parameter structure of the original API without infringing copyright. My disagreement is merely with the way you get there. Some believe that API's are not copyrightable at all. I've blogged before that I'm not so sure about this. Some believe that this should be fair use. I think this is probably true but the factors don't cleanly line up. My view is that this should be handled on the infringement side: that API's, even if copyrightable, are not infringing when used in a particular way (that is, they are filtered out of an infringement analysis). It's the same result, but (for me, at least) much cleaner theoretically and doctrinally.

But make no mistake, this sort of reuse is critically important, as Charles Duan (R Street Institute) points out in his latest draft: Internet of Infringing Things: The Effect of Computer Interface Copyrights on Technology Standards (forthcoming in Rutgers Computer and Technology Law Journal). The draft is on SSRN and an abstract is here:

This article aims to explain how copyright in computer interfaces implicates the operation of common technologies. An interface, as used in industry and in this article, is a means by which a computer system communicates with other entities, either human programmers or other computers, to transmit information and receive instructions. Accordingly, if it is copyright infringement to implement an interface (a technical term referring to using the interface in its expected manner), then common technologies such as Wi-Fi, web pages, email, USB, and digital TV all infringe copyright.

By reviewing the intellectual property practices of the standard-setting organizations that devise and promulgate standards for these and other communications technologies, the article demonstrates that, at least in the eyes of standard-setting organizations and by extension in the eyes of technology industry members, implementation of computer interfaces is not an infringement of copyright. It concludes that courts should act consistent with these industry expectations rather than upending those expectations and leaving the copyright infringement status of all sorts of modern technologies in limbo.

 As noted, I agree with the end result, so any critique here should be taken as one of the paper, and not of the final position. I think Duan does a very nice job of explaining what an interface is: namely, the set of commands that third-party programmers send to a server/system to make it operate. There is value in standardization of these interfaces - it allows people to write one program that will work with multiple systems. Duan uses two good examples. The first is HTML/CSS programming, which allows people to write a single web document and have it run in any browser and/or server that supports the same language. The second is SMTP, which allows email clients to communicate with any email server. The internet was built on these sorts of interfaces, called RFCs.

Duan then does a nice job of showing the creativity that goes into selecting the commands - as with Java, there were choices (though limited) to make about each command. Because the set of functions is limited, number of ways to describe the function is limited, but there are some choices to be made. The article then shows how those commands are grouped together in functional ways.

Finally, Duan nicely shows how many important standards are out there that follow this same pattern, and shows how standards organizations handle any copyright--they don't. In short, allowing contributors to claim copyright ownership would destroy systems, because there is no requirement that contributors allow others to use the interface. Duan's concern is that if individual authors owned the IP in their interface contributions to standards (a potential extension of Oracle v. Google) then holdup might occur that harms adoption. This, of course, is hotly debated, as it is in the patent area.

I think it's a really interesting and well-written paper. Before I get to a couple critiques, I should note that Duan is focused more on how the current legal8 rulings might affect standards than critiquing the rulings themselves (as I have done here). Thus, my comments here may simply not have been on his radar.

My primary thought reading this is that the paper doesn't deal with the declaring code. That is, in order to implement the Java commands, Google created short code blocks that defined the functions, the parameters, etc.  Here is an example from the original district court opinion:

package java.lang;
java.lang public
class Math {
class Math public static int max (int x, int y) {

This code is what the jury found to be copied (though presumably Google wrote it in some other language). But the standards interfaces don't provide any code, per se. They only provide explanations. Here is an example definition from the RFC for the SMTP protocol discussed in the paper:

mail = "MAIL FROM:" Reverse-path

In other words, standards will define the commands that must be sent, but there's not a language based implementation (e.g. public, static, integer, etc.). As with the sample line above. Most say: send x command to do y. And people writing software are on their own to figure out how to do that. And you can bet the implementing code looks very similar, but there's something different about how it is specified at the outset (a full header declaration v. a looser description). So, the questions this raises are a) does this make standards less likely to infringe, even under the Federal Circuit's rules (I think yes), and b) does this change how we think about declaring code? (I think no, because the code is still minimal and functional, but Oracle presumably disagrees).

Secondarily, I don't think the article considers the differences between Oracle's position (now - it changed, which is one of the problems) and that of a contribution to standards. Contribution to a standard is made so that others will adopt it, presumably because it gives you a competitive advantage of some sort. By not being part of the standard, you risk having a fragmented (smaller) set of users. But if Oracle doesn't want others adopting Java language and would rather be limited, then that makes the analogy inapt. If Google had known this was not allowed and gone another way, it may well be that Java is dead today (figure that in to damages calculations). But a fear of companies submitting to standards and then taking it back is to me different in kind from companies that never want to be part of the standard. (Of course, as noted above, there is some dispute about this, as Sun apparently did act as if they wanted this language to be an open standard).

A final point: two sentences in the article caught my eye, because they support my view of the world (confirmation bias, of course). When speaking of standard setting organization policies, Duan writes: "To the extent that a copyright license is sought from contributors to standards, the license is solely directed to distributing the text of the standard. This suggests that copyright is simply not an issue with regard to implementing interfaces." Roughly interpreted, this means that these organizations think that maybe you can copyright your API, but that copyright only applies to slavish copying of the entire textual document. But when it comes to reuse of the technical requirements of the standard, we filter out the functionality and allow the reuse. This has always been my position, but nobody has argued it in this case.

Bruno Latour, Mario Biagioli, and the Rhetoric of "Balance" in IP Law (and Climate Change)

I just read Jennifer Szalai's fascinating review in the New York Times of the French anthropologist and philosopher Bruno Latour's new book on politics and the debate over climate change.  As I recall from my history of science days, the whole point of Latour's body of work was that "facts," in science, are not really facts. They are the social constructions of scientists who are real people with childhoods, values, and careers, whose conclusions cannot be divorced from the environment in which they were produced. "[T]he essential point," Latour wrote,

is that the facts, contrary to the old adage, obviously do not 'speak for themselves’: to claim that they do would be to overlook scientists, their controversies, their laboratories, their instruments, their articles, and their hesitant, interrupted, and occasionally deictic speech...

Thus, we might think Latour would be sympathetic to so-called climate change deniers, who greet with skepticism the science community's conclusions about humans' impact on global warming. As Szalai puts it in her review, Latour "has spent a career studying how knowledge is socially constructed." So, surely, "[the] kind of postmodernism" that lies behind the "conservative tradition" of "performing a skepticism so extreme that it makes the ancient Greek skeptics look like babes in the woods[]" would appeal to him.

But it's not so, Szalai writes. To the contrary, Latour sees "[s]uch pretensions to reality-creating grandeur" as "amount[ing] to little more than a vulgar, self-defeating cynicism." Perhaps even Bruno Latour, in the end, was a "realist" — at least when it comes to some things.

Revisiting Latour's skepticism of facts, I can't help but wonder (although I think I know) what Latour would say about patents. This brings me to a gem that I was lucky to get ahold of over break: an article by esteemed historian of science and expert on the Scientific Revolution, and now a law professor at the University of California Davis School of Law, Mario Biagioli. Adding another layer of irony, everything in this post will be colored by fact that Mairo is a long-time mentor and supervised my undergraduate thesis in the Department of History of Science at Harvard. His paper, Patent Republic, tracing the development of the patent system from the Venetian Republic to early America, inspired me to study IP.

We might initially assume Biagioli's article, entitled Weighing intellectual property: can we balance the costs and benefits of patenting?, is another article addressing the costs and benefits of IP, and bemoaning the deficits in the empirical evidence. Biagioli's conclusion that "we are unable to measure the benefits that IP has for inventors or the costs it has for the public" might remind readers, for example, of Mark Lemley's now-famous critique of what Lemley calls "faith-based IP." Lemley argued provocatively that despite, or because of, inconclusive evidence on the utilitarian benefits of IP, such as promoting innovation and disclosure of technical information, "more and more scholars have begun to retreat from evidence ... justifying IP as a moral end in itself rather than on the basis of how it affects the world."

Many people disputed Lemley's conclusions and characterizations of other IP scholars' work. Yet the term "faith-based IP" may still strike home to many, because the reality remains that the empirical evidence leaves plenty of uncertainty on both sides. (Incidentally, one of the most concise summaries I've ever read of the inconclusive empirical evidence regarding the costs and benefits of patents appears on pages 75-87 of Lisa Larrimore Ouellete's article, Patent Experimentalism.)

To some degree, Biagioli's article has a lot in common with these prior articles, expressing skepticism about whether patents and IP, generally, bring benefits that are greater than the costs, and about how society justifies the institution in light of existing measurements. But whereas Lemley confronted the topic as a veteran IP insider with nearly two hundred articles and countless staked-out positions relating to a huge diversity of IP topics, as well as a consistent prescription (weaker IP rights; more competition), Biagioli views the debate from a distance. His article is likely written for non-lawyers. It was published in History of Science in a Special Issue entitled "Technologies of the Law/Law as a Technology." To riff on Szalai's description of Latour's book, Biagioli's is "a wilder, more playful [article]" than Faith-Based Intellectual Property.

For sure, like Lemley, Biagioli reviews certain empirical studies on the uncertain benefits of patents, and includes all the usual suspects:

• Fritz Machlup’s observation that “[i]f we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one. ..."; 
• Edwin Mansfield's conclusion that “[the patent system's] effects [on the rate of innovation] are very small in most of the industry we studied"; 
• Adam Jaffe's assessment that that "it would be surprising if major changes in the patent system did not affect the innovation process[,]" and Jaffe's recognition of the potential viability of the "alternative view" that "patents are not central to appropriating the returns to R&D in most industries[]"; and
• the Berkeley Patent Survey's finding, based on 1,332 responding high-tech entrepreneurs, that "on average patents offer just above a 'slight incentive' to engage in invention, R&D, and commercialization, and between 'slight' and 'no incentive at all' to create internal tools and processes." 

(Biagioli, 7-11) (quoting the results of these studies).

On the flip side, Biagioli also has some critical things to say about work (presumably including some of Lemley's) measuring the costs of patents. In short, Biagioli writes, there are not very many studies measuring the costs of patents. The studies that do exist tend to have short time-horizons. And they tend to focus only on costs like hold-ups and foregone innovation opportunities (and, I'd add, costs of administration and enforcement of patents). (13). Meanwhile, the studies ignore, presumably because they cannot realistically measure, indirect costs like "loss of health (or life) that may have resulted from" "the higher financial costs to patients" of life-saving drugs and diagnostic tests, such as Myriad Genetics' breast and ovarian cancer tests. (12-14).

In the end, Biagioli appears, like Fritz Machlup, to be unimpressed. (14) ("Returning to the key question of what these studies tell us, the short answer is: not much. Their results have been as inconclusive as those of the studies of the social benefits of patents, despite a few outliers.").

But the ultimate point of Biagioli's article, I think, is not to review the empirics and confirm that, yes, they are often pretty inconclusive. Nor is it to condemn IP professors—who, after all, are hired to teach IP law to tuition-paying law students and IP lawyers—for ignoring the inconsistencies underlying the justifications for their field. Rather, it is to highlight the irony of the discourse in IP scholarship around "balance."

"The discourse of balance," Biagioli begins, "is a common denominator shared by both supporters and critics of intellectual property. The former see balance as a way to justify IP protection and differentiate it from monopoly, and the latter see it as a door through which issues of social justice and public responsibility (especially responsibility toward future users and producers) can be brought into patent law." (5).

I am reminded of how IP proponents and IP opponents use the Lockean proviso. Does Locke's maxim that people develop "natural rights" in the fruits of their labor, but only so long as there is "enough, and as good, left in common for others,” provide a reason to weaken intellectual property rights, or counterintuitively help to justify them? While some might think only the former, Robert Merges would likely suggest the proviso is representative of a "midlevel principle" in favor of "proportionality" in calibrating IP rights—i.e., the requirement that "the grant or reward be proportional to effort or contribution." Professor Merges' Proportionality Principle can help to justify continued protection of intellectual property rights so long as the commitment to proportionality is upheld.

To give another classic example, Biagioli points to William Nordhaus' article on how to calculate the optimal patent term. (Biagioli, 4). In Invention, Growth and Welfare (1969), Nordhaus conceptualized patents as a "trade-off" between the goal of more innovation, and the goal of free competition and avoiding monopolies. What Nordhaus sought, literally, was the proper balance between longer patents, on the one hand, and higher prices and more deadweight loss, on the other.
     
The ostensible message of such works is that, if we can just calibrate IP rights so as to optimize costs and benefits, all will be well, or at least "well enough" to justify the field. This is the refrain of much IP scholarship, including, I am sure, much of my own and likely many readers'. (I just finished a trade secrets article with a section called "A Difficult Balancing Act" or something like that.)

Biagioli asserts that, in light of the empirical uncertainty about both the benefits and the costs of patents, these allusions to finding the proper "balance" may be performing a different function than is asserted. "[I]f the figure of the balance is invoked so widely and so often," Biagioli writes, "it is not because of its ability to actually balance what it is supposed to balance, but rather due to the fact that it conveys the impression that it is possible to perform the kind of accounting of social costs and benefits necessary to justify the existence of IP." (6) (emphases in original).

Biagioli's insights about IP professors' debating the virtues and vices of IP rights brings us back to Latour and his insights on debates over climate change.* After reading the aforementioned review of Latour's new book, which in turn prompted me to write this blog post, I couldn't help myself, and checked ExxonMobile's statement on "[m]anaging the risks on climate change."  It reads:

ExxonMobil believes the long-term objective of effective policy should be to reduce the risks of climate change at minimum societal cost, in balance with other priorities such as economic growth, education, poverty reduction, health, security and affordable energy.

Biagioli's work, like Latour's, leaves one to ponder. Is Exxon referring to the need for "balance" because of its ability to actually balance what it is supposed to balance, or because it conveys the impression that it is possible to perform the kind of accounting of social costs and benefits necessary to perform this balancing? (Biagioli, 6).

 *Incidentally, Lisa Ouellette has also written about science literacy and the public's views on climate change, as well as an IP Theory essay linking cultural cognition to intellectual property.

Erin McGuire: Can Equity Crowdfunding Close the Gender Gap in Startup Finance?

As I have previously explained, there is growing interest in gender and racial gaps in patenting from both scholars and Congress—which charged the USPTO with studying these gaps. But I don't think it makes sense to study these inequalities in isolation: patent law is embedded in a larger innovation ecosystem, and patents' benefit at providing a strong ex post reward for success comes at the cost of needing to attract funding to cover R&D expenses until patent profits become available. It may be difficult to address the patenting gap without also addressing inequalities in capital markets.

In particular, there is a large and well-documented gender gap in the market for early-stage capital. For example, this Harvard Business Review article notes that women receive 2% of venture funding despite owning 38% of U.S. businesses, and that even as the percentage of female venture capitalists has crept up from 3% in 2014 to 7% in 2017, the funding gap only widened. Part of the explanation—explored in the fascinating study summarized in the HRB piece—may be that both male and female VCs ask different kinds of questions to male and female entrepreneurs: in actual Q&A sessions, VCs tended to ask men questions about the potential for gains and women about the potential for loses, with significant impacts on funding decisions.

Economist Erin McGuire, currently an NBER postdoc, has an interesting working paper on one partial solution to this problem: Can Equity Crowdfunding Close the Gender Gap in Startup Finance? Non-equity crowdfunding through sites like KickStarter and Indiegogo have grown in popularity in the past two decades; equity crowdfunding differs in that funders receive shares in the company in exchange for their investments. The average equity crowdfunding investment is $810—over ten times the average investment on Kickstarter. Equity crowdfunding was illegal in the United States before the JOBS Act of 2012, which allowed equity crowdfunding by accredited investors in September 2013. McGuire hypothesized that the introduction of this financing channel—with a more gender-diverse pool of potential investors—as an alternative to professional network connections would have a greater benefit for female entrepreneurs.

McGuire used Crunchbase to obtain financing information for U.S. startups operating during each month between September 2011 and September 2015, and she used Genderize.io determine the founders' likely gender (restricting to names over 80% likely to be either male or female). She dropped firms with a funding round over $10 million, which are unlikely to be in the early growth stage. Using a difference-in-differences model, she concluded that firms founded by women raise about 36% less external capital than those founded by men, and that the legalization of equity crowdfunding decreased this gap by 20 percentage points. The estimated gaps did not vary substantially when different probability thresholds were used to identify founder names as female.

As potential mechanisms to explain this effect, McGuire points to the higher proportion of women among equity crowdfunding angel investors than VCs (which benefits female entrepreneurs if women are more likely to invest in other women), angel investors' lower expected returns and thus perhaps greater willingness to invest in industries like clothing and apparel with a higher proportion of female founders, and the ability of female entrepreneurs to access investors outside their professional networks (which tend to be smaller for women). McGuire also shows that the JOBS Act does not seem to have increased the entry rate of female firms relative to male firms; rather, the main effect was to make it easier for female entrepreneurs to access external capital.

It's an intriguing result, and I look forward to more work on disentangling these different mechanisms. And perhaps identifying and correcting some imperfections in capital markets will also help address inequalities in the patent system.