Super-Statutory Contracting

The conventional wisdom is that property rules induce more—and more efficient—contracting, and that when faced with rigid property rules, intellectual property owners will contract into more flexible liability rules. A series of recent, private copyright deals show some intellectual property owners doing just the opposite: faced with statutory liability rules, they are contracting for more protection than that dictated by law, something this Article calls “super-statutory contracting”—either by opting for a stronger, more tailored liability rule, or by contracting into property rule protection. Through a series of deal analyses, this Article explores this counterintuitive phenomenon, and updates seminal thinking on property entitlements and private ordering in the intellectual property context. While law and economics scholars have long grappled with the question of whether and when property rules or liability rules are preferable, they have traditionally ignored a key lever: “perceived control,” or a rights holder’s impression of their ability to grant or withhold permission to use their work, and/or to name their price for such use. In addition to proposing a recalibration of the relative importance of consolidation, transaction costs, defaults, and damages, this Article identifies and describes perceived control as an essential factor in the licensing enterprise. This has significant implications for legislators and policymakers seeking to better align incentives between licensors and licensees, and for administrators tasked with term and rate setting

Contractual practices between the consultant and employer in Chinese BIM-enabled construction projects

The management of building information modeling (BIM)-enabled construction projects is challenging and unstructured in nature, particularly in terms of contract administration. Even though previous studies have revealed various legal issues related to BIM, little is known regarding the contractual practices of BIM. Hence, this study was carried out to explore the contractual practices between the BIM consultant and employer in detail. An explanatory case study was carried out on four large BIM-enabled construction projects in China. The contractual practices differed from one project to another in terms of ownership and intellectual property rights of the BIM model, roles of the BIM consultant, liability of the BIM consultant in the event of errors and delays of the BIM model, and BIM-related costs and payments. Some of the interesting findings are as follows: (a) the employer shall retain the ownership and intellectual property rights of the BIM model, (b) the BIM consultant shall provide a warranty to ensure usability of the BIM model after project handover, (c) the BIM consultant shall pay for damages or losses if the BIM model fails to deliver, and (d) the costs of BIM implementation shall be borne by both contracting parties. This study provides a fresh, realistic insight on the development of plausible contractual practices between the BIM consultant and employer and the findings can be used to improve BIM contract protocols in future projects

Introduction, in CRITICAL CONCEPTS IN INTELLECTUAL PROPERTY LAW: COPYRIGHT

The two-volume set entitled Critical Concepts in Intellectual Property Law: Copyright brings together a thought-provoking collection of landmark and recent scholarship on copyright. Section 1 of Volume I focuses on the history of copyright, with Tyler Ochoa and Mark Rose providing an example of the prevailing interpretation of the history and articles by Thomas Nachbar and by William Treanor and Paul Schwartz offering fresh takes on the early English and American experiences. Section 2 focuses on copyright’s philosophical foundations, framed by the work of Justin Hughes and followed by revisionist perspectives on Lockean and Hegelian theory offered by Seana Shiffrin and Jeanne Schroeder. Section 3 focuses on democratic theories, presented through the work of Neil Netanel and a critique of Netanel authored by Shyamkrishna Balganesh. Volume II examines the economics of copyright. Section 1 of Volume 2 covers public goods economics, monopoly theory, and price discrimination, introducing the concepts through the work of Terry Fisher before turning to Michael Meurer’s and Christopher Yoo’s critiques and extensions of the conventional wisdom. Section 2 focuses on transaction cost economics, beginning with Wendy Gordon’s classic article on fair use, followed by Robert Merges’s celebrated study of how holders of intellectual property rights can contract into liability rules, Abraham Bell and Gideon Parchomovsky’s analysis of the forces that can drive a legal regime from open access property to private property and vice versa, and Clarisa Long’s discussion of the way that intellectual property can minimize information costs. Section 3 explores the political economy of copyright, including Jessica Litman’s analysis of the political dynamics surrounding the Copyright Act of 1976, Thomas Nachbar’s review of Noah Webster’s campaign to establish copyright in the colonies and the early United States, and Robert Merges’s survey considering theories of political economy that go beyond simple rent seeking

Some Reflections on Copyright Management Systems and Laws Designed to Protect Them

Copyright management systems (CMS)—technologies that enable copyright owners to regulate reliably and charge automatically for access to digital works—are the wave of the very near future. The advent of digital networks, which make copying and distribution of digital content quick, easy, and undetectable, has provided the impetus for CMS research and development. CMS are premised on the concept of trusted systems or secure digital envelopes that protect copyrighted content and allow access and subsequent copying only to the extent authorized by the copyright owner. Software developers are testing prototype systems designed to detect, prevent, count, and levy precise charges for uses that range from downloading to excerpting to simply viewing or listening to digital works. In a few years, for example, an individual seeking online access to a collection of short fiction might be greeted with a menu of options including: Open and view short story A — $0.50, or$0.40 for students doing assigned reading (verified based on roster submitted by instructor) Open and view short story B (by a more popular author) — $0.80, or$0.70 for students Download short story A (encrypted and copy-protected) — $1.35 Download short story B —$2.25 Download entire collection — $15.00 Extract excerpt from short story A —$0.03 per 50 words Extract excerpt from short story B — $0.06 per 50 words CMS also loom large on the legislative horizon. Copyright owners have argued that technological protection alone will not deter unauthorized copying unless the law provides penalties for circumventing the technology. Although a bill to protect CMS against tampering failed to reach a vote in Congress last year, the World Intellectual Property Organization\u27s recent adoption of treaty provisions requiring protection means that Congress must revisit the question soon. Part II describes these developments. The seemingly inexorable trend toward a digital CMS regime raises two questions, which the author addresses in parts III and IV, respectively. First, broadly drawn protection for CMS has the potential to proscribe technologies that have indisputably lawful uses and also to foreclose, as a practical matter, uses of copyrighted works that copyright law expressly permits. How may protection for CMS be drafted to avoid disrupting the current copyright balance? Second, and equally fundamental, CMS may enable both pervasive monitoring of individual reading activity and comprehensive private legislation designed to augment—and possibly alter beyond recognition—the default rules that define and delimit copyright owners\u27 rights. Given the unprecedented capabilities of these technologies, is it also desirable to set limits on their reach

Limitation of Sales Warranties as an Alternative to Intellectual Property Rights: An Empirical Analysis of IPhone Warranties’ Deterrent Impact on Consumers

Apple\u27s success with the Apple iPhone has brought with it certain problems. Its success has engendered a community that has attempted to circumvent Apple\u27s exclusive service agreement with AT&T. Unfortunately for Apple (and similarly situated manufacturers), intellectual property law allows consumers to alter their products so as to circumvent relationships that manufacturers may have with others. The patent and copyright law first sale doctrine allows consumers to manipulate a product after it is purchased. As a result, manufacturers are increasingly turning to alternatives to intellectual property to secure control over the device after the sale. One such alternative is the exclusion of warranty under Article 2 of the Uniform Commercial Code. This iBrief considers whether limitation of warranties have the deterrence effect manufacturers desire. Said differently, it considers whether manufacturers can use warranty limitations to prevent consumers from using their products in an unauthorized manner. The iBrief presents a behavioral model based on the Triandis model of planned behavior and enhances the model by accounting for likely and unlikely benefits and detriments. The model suggests that participants weigh the probability and magnitude of the detriment against the probability and magnitude of the beneficial impact when making the decision to engage in technological piracy. This model, considered with other empirical evidence, suggests that Apple\u27s warranty could be a stronger deterrent for consumers than civil liability. The iBrief concludes that manufacturers can better protect their post-sale expectation of profits by raising consumer awareness of their warranty\u27s quality and by raising awareness of the consequences for using the product in a way that is outside the terms of the consumers\u27 authorized use

Fairness, Efficiency and Insider Trading: Deconstructing the Coin of the Realm in the Information Age

Whether and how the federal securities laws should restrict insider trading is one of the most hotly debated topics in the securities law literature. Paradoxically, both the theoretical analysis and the legal rules concerning insider trading remain extraordinarily vague and ill-formed. What is the special character of insider trading that leads to this apparently irresolvable puzzle? In this Article, I argue that there is, in fact, nothing special about insider trading that creates this dilemma, but rather there is something special about the nature of information itself. Accordingly, this theoretical dilemma is not limited to insider trading regulation, but rather pervades all areas of intellectual property law. In this Article, I situate insider trading regulation within the larger body of intellectual property law by discussing three potential allocations of the property right in valuable inside information. First, inside information could be treated as a public resource, meaning that a person in possession of inside information could not legally exploit that advantage for personal profit. Such a regime would forbid some or all insider trading by forcing the disclosure to the marketplace of inside information prior to trading. I argue that regulators should reject this alternative because, despite it\u27s proponents\u27 tendency to justify the rule in terms of fairness, this proposal is unlikely to foster fairness in any meaningful way. Alternatively, the property right in valuable inside information could belong to issuers, as the producers of such information. I argue that regulators should reject this alternative because, despite its proponents? tendency to frame their arguments in terms of promoting informational efficiency, a legal regime treating inside information as the property of the issuer is unlikely to further that goal. In fact, such proposals assume an affirmative answer to a question that is fiercely debated in other areas of intellectual property law: does creating a property right in information producers incentivize additional production to the extent necessary to offset the social costs of excluding others from use of the information? Finally, the property right in valuable inside information could reside with outsider traders (traders who possess inside information, but are neither insiders nor constructive insiders of the issuer). I argue that regulators should pursue this alternative because, although there is no need to encourage issuers to create valuable inside information, the need to encourage the dissemination of such information to the marketplace has been recognized for many years. Accordingly, I propose in this Article a system of federal securities regulation that would permit trading by corporate outsiders who did not receive their information in a tip from an insider or constructive insider. Such a system, I argue, provides the hope of filling in the gaps left by the current disclose or abstain system, by encouraging the reflection of material information in stock market price without disclosure of the actual inside information. At the same time, this proposal avoids the perverse incentives and negative impacts on market efficiency attendant in a system that permits insider trading by corporate employees