A Radical Restructuring? A Response to Bell and Parchomovsky

In Restructuring Copyright Infringement, Abraham Bell and Gideon Parchomovsky call for a “radical reform in the way copyright law assigns liability.” The authors propose to split copyright infringement into three distinct categories—inadvertent, standard, and willful—and to tailor the remedies offered to the copyright holder in each case. Under this system, the inadvertent infringer would be subject to less severe penalties than the standard and willful infringer. This response considers the strengths and weaknesses of the proposal

Bargaining for Takings Compensation

Efficiency and fairness require paying full compensation to property owners when their property is taken by eminent domain. Yet, to date, the evidentiary challenge of proving subjective value has proved insurmountable, and current law requires condemnees to settle for fair market value. This Article proposes a self-assessment mechanism that can make full compensation at subjective value practical. Under our proposal, property owners must be given the opportunity to state the value of the property designated for condemnation. Once property owners name their price, the government can take the property only at that price. However, if the government chooses not to take and pay, the property will become subject to two restrictions. First, for seventy years, the property cannot be sold for less than the self-assessed price; if the property is transferred for less, the owner will have to pay the difference to the government. Second, the self-assessed price - discounted to take account of the peculiarities of property tax assessments - will become the benchmark for the owner\u27s property tax liability. These dual burdens of partial inalienability and enhanced tax liability will induce honest reporting by owners, while reducing the transaction costs created by the compensation process. The Article sketches several refinements of and limitations on this mechanism in order to improve its accuracy and prevent both the government and property owners from abusing it. We demonstrate that, properly used, our self-assessment mechanism can dramatically enhance the efficiency and fairness of eminent domain proceedings, and may even be extended to regulatory takings

Propertizing Fair Use

In its current form, fair use doctrine provides a personal defense that applies narrowly to the specific use by the specific user. The landmark case of Google v. Oracle, currently pending before the Supreme Court, illustrates why this is problematic. Even if the Court were to rule that Google’s use of Oracle’s Java API’s was fair, the ruling would not protect the numerous parties that developed Java applications for the Android operating system; it would only shelter Google and Google’s particular use. This is not an isolated problem; the per use/per user rule cuts across fair uses of copyrighted works, and it always leaves follow-on users in the cold. Authors, musicians, documentary filmmakers and media outlets who win fair use cases cannot freely market their works that incorporate fair use content since their victories do not carry over to other users. Fair use under extant law is a very limited privilege. This Article proposes a far-reaching reform not only of copyright law as applied to software, but of the fair use doctrine itself. Our proposal consists of three interlocking elements. First, we call for the introduction of a new in rem conception of fair use, under which a fair use ruling would serve as a property remedy that shelters all subsequent users of works that fairly incorporate preexisting materials. Under this new conception, a finding of fair use would run with that new work like an easement to all other distributors, broadcasters, publishers, performers and others who use it. The introduction of this new type of in rem fair use would result in the division of fair use into two conceptions—one in rem and one in personam—that would co-exist alongside one another. Second, we would grant judges discretion to decide which fair use conception, if any, should be granted in any particular case. Judges would be able to employ the traditional in personam rule that the fair use avails only the specific defendant before it, or they could adopt an in rem fair use ruling, creating a property entitlement that runs with the work embodying the fairly incorporated content. Third, we propose two default rules to assist judges in making their decisions. Specifically, we propose that the default setting of fair use would depend on the type of use being examined. Where the claimed fair use consists of incorporating the protected copyrighted material in a new copyrighted work—such as the Android operating system—the default fair use would be of the in rem variety. However, in all other cases of claimed fair use, the traditional, familiar in personam conception would be the default setting. This approach would create clarity about the status of follow-on fair uses, but permit judges to tailor their rulings case by case. Implementation of our proposal would yield several significant improvements to the current fair use doctrine. It would permit judges to take account of the potential for future uses of the fair use work, without handcuffing them to a single approach. Moreover, it would increase certainty with respect to the use of copyrighted work by lowering transaction and litigation costs for creators of new works. Finally, the version of fair use we advocate would enhance the use of copyrighted content

Property\u27s Morale

A foundational argument long invoked to justify stable property rights is that property law must protect settled expectations. Respect for expectations unites otherwise disparate strands of property theory focused on ex ante incentives, individual identity, and community. It also privileges resistance to legal transitions that transgress reliance interests. When changes in law unsettle expectations, such changes are thought to generate disincentives that Frank Michelman famously labeled demoralization costs. Although rarely approached in these terms, arguments for legal certainty reflect underlying psychological assumptions about how people contemplate property rights when choosing whether and how to work, invest, create, bolster identity, join a community, and make other decisions at property’s core. More precisely, demoralization is predicated on a kind of paralysis flowing from anxieties about instability, unfair singling out, and majoritarian expropriation that can be sparked in legal transitions. This prevailing psychological portrait of expectations has considerable intuitive appeal and is widely influential. It is, however, distinctly incomplete. This Article offers an alternative picture of the expectations with which people approach property and the corresponding anxieties that might cause people to hesitate. From this perspective, stability is less important than assurances that the legal system will respond when external forces threaten to overwhelm the value owners create, that it will provide a fair process of adjustment over time, and that it will ensure inclusion. In short, property law can offer morale benefits that are every bit as critical as demoralization costs. Property theory and doctrine often juxtapose ex ante certainty against ex post flexibility; however, a morale lens underscores that legal transitions can signal responsiveness as easily as instability. Doctrinally, this understanding recalibrates property law’s approach to expectation. Normatively, property’s largely ignored, but absolutely vital, morale function provides a framework for understanding how the legal system can buoy confidence in greater balance, fostering all of the work with which property is so rightly associated

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