Rethinking copyright misuse

Stanford Law Review

Volumn 57, Issue 3, 2004, Pages 901-952

  Judge, Kathryn ^a  

^a NONE

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EID: 33646029407     PISSN: 00389765     EISSN: None     Source Type: Journal    
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References (198)

1. See infra notes 17-25 and accompanying text.
2. See infra note 25 and accompanying text.
3. See infra notes 56-62 and accompanying text.
4. 911 F.2d 970 (4th Cir. 1990).
5. See, e.g., Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772 (5th Cir. 1999).
6. See, e.g., Practice Mgmt. Info. Corp. v. Am. Med. Ass'n, 121 F.3d 516 (9th Cir. 1997).
7. E.g., Assessment Techs. of Wis., L.L.C. v. WIREdata, Inc., 350 F.3d 640, 647 (7th Cir. 2003) (Posner, J.) (acknowledging the doctrine of copyright misuse "cut . . . free from antitrust"). One commentator suggested that the Eleventh Circuit also recognized copyright misuse in the case of Bateman v. Mnemonics, Inc. Scott A. Sher, Case Note, In re Napster Inc. Copyright Litigation: Defining the Contours of the Copyright Misuse Doctrine, 18 SANTA CLARA COMPUTER & HIGH TECH. L.J. 325, 329 & 329 n.31 (2002) (describing Bateman v. Mnemonics, Inc., 79 F.3d 1532 (11th Cir. 1996)). In Bateman, the Eleventh Circuit held that the jury had not been adequately instructed on the way "external factors such as compatibility may work to deny copyright protection to certain portions of a computer program." Bateman, 79 F.3d at 1547. Presumably, Sher drew his conclusion regarding copyright misuse from the court's acknowledgment that it is unclear "[w]hether the protection is unavailable because these factors render the expression unoriginal, nonexpressive per 17 U.S.C. § 102(b), or whether these factors compel a finding of fair use, copyright estoppel, or misuse . . . ." Id. However, this seems, at best, a weak acknowledgment of the doctrine, and subsequent district court cases in the Eleventh Circuit have not interpreted Bateman to have any precedential value regarding the validity of copyright misuse. See, e.g., Microsoft Corp. v. Jesse's Computers & Repair, Inc., 211 F.R.D. 681, 684-85 (MD. Fla. 2002) (stating that the Eleventh Circuit has not recognized copyright misuse as an affirmative defense and rejecting the claim on the merits if the doctrine were to be recognized); Telecomm Technical Servs. v. Siemens Rolm Communications, Inc., 66 F. Supp. 2d 1306, 1324 (N.D. Ga. 1998) (same). Accordingly, Bateman is not addressed further in this Note.
8. 4 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT § 13.09[A] (2003); see also Video Pipeline, Inc. v. Buena Vista Home Entm't, Inc., 342 F.3d 191, 203-06 (3d Cir. 2003) (rejecting misuse as applied and noting that it had not been affirmatively recognized by the Third Circuit or the Supreme Court); Veeck v. S. Bldg. Code Cong. Int'l, Inc., 293 F.3d 791, 822 (5th Cir. 2002) (acknowledging the "equity-based defense of copyright misuse" but concluding that the defendant had "raised no genuine issue of material fact regarding any purported misuse"); Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1169 (1st Cir. 1994) (acknowledging that the "'copyright misuse' defense is not without legal support" but concluding that "this case does not require us to decide whether the federal copyright law permits a misuse defense"); Atari Games Corp. v. Nintendo of Am. Inc., 975 F.2d 832, 846 (Fed. Cir. 1992) (concluding that "[i]n the absence of any statutory entitlement to a copyright misuse defense . . . the defense is solely an equitable doctrine" and hence could not be invoked by the defendant because of his own "unclean hands"); United Tel. Co. of Mo. v. Johnson Publ'g Co., 855 F.2d 604, 611 (8th Cir. 1988) (recognizing that although the defendant "has cited no case in which the misuse of a copyright has been held to constitute a successful defense to copyright infringement," there are "several cases in which courts have noted that the misuse of a copyright, in violation of the antitrust laws, may bar a plaintiff from recovering damages for copyright infringement"); Microsoft Corp. v. Compusource Distribs., Inc., 115 F. Supp. 2d 800, 810 (E.D. Mich. 2000) (rejecting a copyright misuse defense and noting that the "Sixth Circuit has neither accepted nor rejected the copyright misuse defense"); Basic Books, Inc. v. Kinko's Graphics Corp., 758 F. Supp. 1522, 1538 (S.D.N.Y. 1991) (rejecting a copyright misuse defense and noting that "[i]t has proven difficult to convince courts of the misuse defense").
9. E.g., In re Napster, Inc. Copyright Litig., 191 F. Supp. 2d 1087, 1103 (N.D. Cal. 2002) (noting that in finding misuse, courts have "employ[ed] two different, though interrelated approaches"). In re Napster, Inc. Copyright Litigation, a decision by Judge Marilyn Patel, Chief Judge of the Northern District of California, provides one of the most thorough summaries available of the doctrine's history and current status.
10. E.g., id. (stating that the first approach to copyright misuse "requires a finding that plaintiff engaged in antitrust violations"). Throughout this Note, the term "competition policy" is used to denote the policy rationale underlying antitrust law.
11. E.g., id. (stating that the second approach to misuse "focuses on public policy and has been applied to a greater range of conduct than the antitrust approach").
12. See, e.g., Aaron Xavier Fellmeth, Copyright Misuse and the Limits of the Intellectual Property Monopoly, 6 J. INTELL. PROP. L. 1, 39 (1998) (noting that "[c]ourts have been unable to agree exactly how the defense differs from an antitrust claim" and thus "[i]t is not surprising that courts encounter difficulty in applying the copyright misuse defense").
13. This Note assumes that the values ascribed to the First Amendment have positive as well as negative force; it takes no position on whether this is an appropriate interpretation of the First Amendment itself.
14. 537 U.S. 186 (2003).
15. See, e.g., Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 492 (1942) ("It is a principle of general application that courts, and especially courts of equity, may appropriately withhold their aid where the plaintiff is using the right asserted contrary to the public interest.") (emphasis added); see also BLACK'S LAW DICTIONARY 29 (7th ed. 1999) (defining "action in equity," under "action," as "[a]n action that seeks equitable relief, such as an injunction or specific performance, as opposed to damages").
16. The enforcement options available to a copyright holder are similar to but not synonymous with his rights under contract law, as federal courts would still have original jurisdiction over the claim and a copyright holder could still assert rights against parties not in privity with the copyright holder. The copyright holder would also retain any rights he would otherwise have under contract law, including the right to injunctive relief, if he can meet the burdens contract law sets for such relief to be granted.
17. Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541 (codified as amended in scattered sections of 17 U.S.C.). The attempt to protect the interests of an author embodied in the renewal right survived in the form of a termination right. However, under the previous renewal regime, if the author (or copyright holder) failed to renew, the work fell into the public domain, whereas an author's failure to terminate under the current regime results in the rights remaining vested in the transferee.
18. Berne Convention Implementation Act of 1988, Pub. L. No. 100-568, 102 Stat. 2853 (codified as amended in scattered sections of 17 U.S.C.).
19. Pub. L. No. 101-650, tit. VI, 104 Stat. 5089, 5128-33 (codified as amended in scattered sections of 17 U.S.C.).
20. Pub. L. No. 101-650, tit. VII, 104 Stat. 5089, 5133-5134 (1990) (codified as amended in scattered sections of 17 U.S.C.).
21. Uruguay Round Agreements Act, Pub. L. No. 103-465, § 514(a), 108 Stat. 4809, 4976-81 (1994) (codified as amended in scattered sections of 17 U.S.C.). Section 104A of the Copyright Act was first enacted in 1993 to comply with the North American Free Trade Agreement and then expanded the following year to comply with the WTO Agreement.
22. Pub. L. No. 105-298, 112 Stat. 2827 (1998) (codified as amended in scattered sections of 17 U.S.C.).
23. Pub. L. No. 105-304, 112 Stat. 2860 (1998) (codified as amended in scattered sections of 17 & 28 U.S.C.). Note that this summary highlights some of the most significant changes made during this period, but it is by no means exhaustive.
24. See, e.g., 17 U.S.C. § 109(b)(1) (2000); Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240 (3d Cir. 1983). For a discussion of the problems associated with extending copyright to software and the effectiveness of various approaches, including copyright misuse, to dealing with those problems, see Dennis S. Karjala, Copyright Protection of Operating Software, Copyright Misuse, and Antitrust, 9 CORNELL J.L. & PUB. POL'Y 161, 163 (1999) (noting that "[t]he extension of copyright protection to computer programs is probably the most dramatic, and least justifiable, expansion of copyright in its 200-plus years of existence in the United States, but it represents simply another step in the ever broader, stronger, and longer copyright rights that Congress has been recognizing from copyright's inception"). Another significant expansion in the type of works that could be copyrighted was the extension of copyright protection to architectural works. See Architectural Works Copyright Protection Act.
25. Michael J. Madison, Reconstructing the Software License, 35 LOY. U. CHI. L.J. 275, 276 (2003) ("For all intents and purposes . . . copies of computer programs are never sold outright.
26. They are always licensed."). For a summary of common copyright license provisions that potentially conflict with copyright policy, see Mark A. Lemley, Beyond Preemption: The Law and Policy of Intellectual Property Licensing, 87 CAL. L. REV. 111, 128-33 (1999). One could make a strong argument that the rise in such contracting practices does not constitute an expansion of copyright itself. However, as long as copyright holders are able to sue under copyright law and not just contract law when such agreements are breached, their effects are properly considered in conjunction with copyright law.
27. 17 U.S.C. § 117 (2000).
28. See, e.g., Jane C. Ginsburg, Essay, How Copyright Got a Bad Name for Itself, 26 COLUM. J.L. & ARTS 61, 61 (2002) ("Many of the developments over the last years designed to protect copyright have drawn academic scorn.").
29. For example, groups of law professors often submit amicus briefs in major copyright cases on behalf of parties seeking to narrow copyright's scope. E.g., Brief Amici Curiae of 40 Intellectual Property and Technology Law Professors Supporting Affirmance, MGM Studios, Inc. v. Grokster, Ltd., 380 F.3d 1154 (9th Cir. 2003) (Nos. 03-55894, 03-55901), http://www.eff.org/IP/P2P/MGM_v_Grokster/20030930_lawyers_amicus.pdf.
30. Eldred v. Ashcroft, 537 U.S. 186 (2003). Lessig has also empowered the movement by helping the public understand the myriad problems posed by copyright's expansion. His books, including his most recent, Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Creativity, provide great background for understanding the problems this Note suggests copyright misuse should address.
31. See LAWRENCE LESSIG, FREE CULTURE: How BIG MEDIA USES TECHNOLOGY AND THE LAW TO LOCK DOWN CULTURE AND CREATIVITY (2004).
32. Carbice Corp. of Am. v. Am. Patents Dev. Corp., 283 U.S. 27, 33 (1931) (recognizing that "[c]ontrol over the supply of such unpatented material is beyond the scope of the patentee's monopoly" and refusing to grant relief to a patent holder who engages in such a practice). But see Henry v. A.B. Dick Co., 224 U.S. 1 (1912) (allowing tying of ink to use of patented mimeograph machine).
33. 314 U.S. 488 (1942).
34. Id. at 492 (quoting U.S. CONST, art. I, § 8, cl. 8). This clause also gives rise to Congress's power to regulate copyright and provided the basis for one of Eldred's claims that the CTEA was unconstitutional.
35. 6 DONALD S. CHISUM, CHISUM ON PATENTS § 19.04 (2003).
36. See Note, Is the Patent Misuse Doctrine Obsolete?, 110 HARV. L. REV. 1922, 1925 (1997) (summarizing the "[n]umerous authorities [that] contend that the misuse doctrine should be abolished").
37. Act of Nov. 19, 1988, Pub. L. No. 100-703, § 201, 102 Stat. 4674, 4676 (codified as amended at 35 U.S.C. § 271(d) (2000)).
38. For example, one problem that has plagued patent misuse is that "decisions considering analogous practices are not always consistent." CHISUM, supra note 33, § 19.04. According to Chisum, this is partly "attributable to the absence of a clear and general theory for resolving the problem of what practices should be viewed as appropriate exercises of the patent owner's statutory patent rights." Id. Thus, in evaluating copyright misuse, this Note will consider how the doctrine can be fashioned to avoid such inconsistency in application and the potential role of a "general theory" of copyright misuse in this project.
39. See, e.g., Ralph D. Clifford, Simultaneous Copyright and Trade Secret Claims: Can the Copyright Misuse Defense Prevent Constitutional Doublethink?, 104 DICK. L. REV. 247, 287 (2000) (arguing "the scope of the copyright misuse defense must be expanded from the patent defense" to compensate for the lack of a disclosure requirement in copyright comparable to that in patent).
40. Compare 35 U.S.C. pt. II, chs. 10-12 (2000), with 17 U.S.C. § 102 (2000).
41. Compare 35 U.S.C. § 154 (2000), with 17 U.S.C. § 106 (2000).
42. Compare 35 U.S.C. § 154(a)(2), with 17 U.S.C. § 302 (2000). For a summary of the major differences between copyright and patent, see Fellmeth, supra note 12, at 4-9.
43. DSC Communications Corp. v. DGI Techs., Inc., 81 F.3d 597, 601 (5th Cir. 1996).
44. See, e.g., Atari Games Corp. v. Nintendo of Am. Inc., 975 F.2d 832, 846 (Fed. Cir. 1992) (citing United States v. Loew's, Inc., 371 U.S. 38 (1962), to support the assertion that "the United States Supreme Court has given at least tacit approval of the defense"); Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970, 976 n.16 (4th Cir. 1990) (summarizing United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948), and noting that based upon Paramount, "the Fifth Circuit has opined in dicta that '[i]t is . . . likely that the public monopoly extension rationale of Morton Salt . . . is applicable to copyright'") (citing Mitchell Bros. Film Group v. Cinema Adult Theater, 604 F.2d 852, 865 n.27 (1979)); Brett Frischmann & Dan Moylan, The Evolving Common Law Doctrine of Copyright Misuse: A Unified Theory and Its Application to Software, 15 BERKELEY TECH. L.J. 865, 884 (2000) (asserting that the "citation to Morton Salt [in Paramount Pictures] acknowledges (or suggests) that the misuse doctrine also plays a role in cabining the scope of an intellectual property right").
45. 371 U.S. 38.
46. 334 U.S. 131. Paramount was different from Loew's in that it involved the licensing of films to movie theaters rather than for television.
47. Loew's, 371 U.S. at 42.
48. 4 NIMMER & NIMMER, supra note 8, § 13.09[A].
49. Id.
50. 441 U.S. 1 (1979). This case remains unique among copyright misuse cases in that the party allegedly engaged in misuse was not a copyright holder, but rather a nonexclusive licensee of multiple copyright holders.
51. Id. at 6.
52. Id.
53. See PAUL GOLDSTEIN, COPYRIGHT'S HIGHWAY: FROM GUTENBERG TO THE CELESTIAL JUKEBOX 108 (rev. ed. 2003) ("Congress put off the library photocopying issue until Williams & Wilkins, and similarly deferred consideration of a bill on home videotaping until the Supreme Court could decide the question.").
54. E.g., Ty, Inc. v. Publ'ns Int'l Ltd., 292 F.3d 512, 517 (7th Cir. 2002) ("The defense of fair use, originally judge-made, now codified, plays an essential role in copyright law.").
55. In the words of Goldstein, "As the pace of technological change quickens, Congress seems less and less able to adjust copyright laws to the changes. In the two centuries since it passed the first American copyright act, it has been playing catch-up . . . ." GOLDSTEIN, supra note 51, at 25.
56. For an analysis of the tensions between copyright and the First Amendment and how the magnitude of the potential conflict between the two has increased since 1970, see Neil Weinstock Netanel, Locating Copyright Within the First Amendment Skein, 54 STAN. L. REV. 1 (2001).
57. Karjala, supra note 24, at 163.
58. 101 U.S. 99 (1879).
59. Id.
60. 464 U.S. 417 (1984). But see A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1021-22 (9th Cir. 2001) (stating that substantial noninfringing uses are sufficient only to negate constructive knowledge of infringement). Interestingly, Sony is also a case where the Court turned to patent law.
61. 499 U.S. 340 (1991). The sweat of the brow theory - the notion that copyright protection arises from the effort invested in the creation of a work rather than the originality of work created - that was rejected by the Court in Feist had gained currency in a number of lower courts and had a long history behind it. Accordingly, the Court's ruling in Feist is far more remarkable ruling than the unanimous nature of the decision might suggest. See, e.g., Victoria Smith Ekstrand, Drawing Swords After Feist: Efforts to Legislate the Database Pirate, 7 COMM. L. & POL'Y 317, 320 (2002) (noting that "Feist sent shockwaves through the database and intellectual property communities" and that "[s]cholarly response to Feist was voluminous");
62. Alfred C. Yen, The Legacy of Feist: Consequences of the Weak Connection Between Copyright and the Economics of Public Goods, 52 OHIO ST. L.J. 1343 (1991) (describing the pre-Feist circuit split and the impact of the decision).
63. 510 U.S. 569 (1994).
64. 982 F.2d 693 (2d Cir. 1992); see Liberty Am. Ins. Group, Inc. v. Westpoint Underwriters, L.L.C., 199 F. Supp. 2d 1271, 1289 (M.D. Fla. 2002) (noting that "[t]he Eleventh Circuit has adopted the abstraction-filtration-comparison test set forth in the Second Circuit Court of Appeals decision, Computer Associates International, Incorporated v. Altai, Incorporated"); 4 NIMMER & NIMMER, supra note 8, § 13.03[A][1][e] ("The dominant test for determining substantial similarity between computer programs [for purposes of determining whether there is infringement] has now become the Second Circuit's approach in Computer Associates International, Inc. v. Altai, Inc.").
65. 977 F.2d 1510 (9th Cir. 1992); see Pamela Samuelson & Suzanne Scotchmer, The Law and Economics of Reverse Engineering, 111 YALE L.J. 1575, 1608-13 (2002) (identifying Sega as the "principal decision" on whether decompilation and disassembly of a computer program constitutes copyright infringement and noting that the decision "has been followed in virtually all subsequent cases").
66. See Ramsey Hanna, Note, Misusing Antitrust: The Search for Functional Copyright Misuse Standards, 46 STAN. L. REV. 401, 409 (1994) (summarizing the arguments of several commentators that the "unique characteristics [of software] lend more credence to claims of market power . . . and make claims of misuse more intuitively appealing").
67. See Karjala, supra note 24, at 185 (recognizing that copyright misuse is not suited to deal with the problems arising from software copyrights because "copyright misuse does not directly deal with the structural problems that arise from the combination of strong network effects and the copyright itself").
68. This is one area where my approach to copyright misuse diverges from that of other commentators. See, e.g., Frischmann & Moylan, supra note 42, at 872 (stating that copyright misuse serves three separate functions: (1) "it gives courts the flexibility to 'fill in gaps' left in statutory law," (2) it "allows courts to coordinate related and interdependent bodies of law," and (3) "it allows courts to safeguard the public interest generally").
69. This does not mean that the nature of the copyrighted work is irrelevant to the copyright misuse inquiry. Technological considerations can be pivotal in determining whether a particular licensing provision crosses one of the bounds identified in this Note as central to copyright policy. Likewise, to the extent one accepts that an antitrust violation involving copyrighted material constitutes copyright misuse, the functional nature of software can be highly relevant to the copyright misuse inquiry.
70. 911 F.2d 970 (4th Cir. 1990). In at least one earlier district court case, the judge, after declaring a copyright to be invalid, announced that even if it were not invalid, he would have held it unenforceable because of the copyright holder's "unclean hands." Vogue Ring Creations, Inc. v. Hardman, 410 F. Supp. 609 (D.R.I. 1976). The "inequitable conduct" that "constitute[d] misuse of the copyright" was a combination of lying to the copyright office and a "copyright warning" placed on the allegedly copyrighted good, which the court found "false and misleading in that it implie[d] that the statutory penalty [was] mandatory" and made a number of other misrepresentations about copyright penalties and limits thereon. Id. at 616.
71. In discussion of this case, references to "Reynolds" refer to Reynolds and Holiday Steel collectively.
72. Lasercomb, 911 F.2d at 971.
73. The provision prevented the licensee from creating a competing product for one year after the end of the agreement and the agreement had a term of ninety-nine years, resulting in a one-hundred-year ban. Id. at 973.
74. Id. at 973.
75. Id. at 978.
76. Id.
77. Id.
78. Id. at 979 n.22.
79. 166 F.3d 772 (5th Cir. 1999).
80. Id. at 777 ("The licensing agreement provides that (1) the operating system software remains the property of DSC; (2) the customer has the right to use the software only to operate its switch; (3) the customer is prohibited from copying the software or disclosing it to third parties; and (4) the customers are authorized to use the software only in conjunction with DSC-manufactured equipment.").
81. The switch itself was owned by the third party; the switch's operating system was licensed to the third party by Alcatel.
82. Id. at 793.
83. Id.
84. Id. at 793-94.
85. Id. at 783.
86. 17 U.S.C. § 106(1) (2000 & Supp. II 2002).
87. See, e.g., 17 U.S.C. § 106 (2000 & Supp. II 2002) (identifying the exclusive rights granted to a copyright owner in § 106 as "[s]ubject to sections 107 through 122").
88. See Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992).
89. See Sony Computer Entm't, Inc. v. Connectix Corp., 203 F.3d 596 (9th Cir. 2000); Sega Enters. Ltd. v. Accolade, Inc., 977 F.2d 1510 (9th Cir. 1992).
90. Whether intermediate copying of copyrighted software is fair use has been a matter of much debate, and at least one commentator has suggested that DGI's copying might not qualify as fair use under the current standard. Eric Douma, Fair Use and Misuse: Two Guards at the Intersection of Copyrights and Trade Secret Rights Held in Software and Firmware, 42 IDEA 37, 65 (2002).
91. In Vault Corp. v. Quaid Software Ltd., the Fifth Circuit had held that a no-decompilation provision in a software license was constitutionally preempted. 847 F.2d 255, 269-70 (5th Cir. 1988).
92. See, e.g., Maureen A. O'Rourke, Drawing the Boundary Between Copyright and Contract: Copyright Preemption of Software License Terms, 45 DUKE L.J. 479, 535-38 (1995) (concluding that Vault Corp.'s analysis "is of limited precedential value").
93. 121 F.3d 516 (9th Cir. 1997). The progression of copyright misuse in the Ninth Circuit started out similar to other circuits where the doctrine has yet to be adopted, in that the first panel to consider misuse recognized that such a doctrine existed but concluded it was not present in the facts of that case. Supermarket of Homes, Inc. v. San Fernando Valley Bd. of Realtors, 786 F.2d 1400, 1408 (9th Cir. 1986) (stating that the "action will be dismissed under the theory of unclean hands if defendant establishes that plaintiff's evidence was false and that plaintiff was involved in a scheme to defraud the public," but concluding "[t]here was no evidence of fraud or misconduct here").
94. Practice Mgmt., 121 F.3d at 520.
95. Id. at 518 n.2.
96. Id. at 521.
97. Frischmann & Moylan, supra note 42, at 890-92.
98. Basing the decision on misuse rather than antitrust has the additional effect of allowing the court to avoid consideration of the Noerr-Pennington doctrine.
99. 350 F.3d 640 (7th Cir. 2003). The case is almost as significant for the assumptions it belies as for the statement it makes, as prior to this decision commentators regularly asserted that the Seventh Circuit recognizes misuse only when there is an antitrust violation. E.g., Frischmann & Moylan, supra note 42, at 894 (citing Rumbleseat to support their proposition that the "Seventh Circuit has been adamant in its antitrust approach to misuse analysis"). Writing for the court, Judge Posner firmly rejects that contention.
100. WIREdata, 350 F.3d at 641-42.
101. Id. at 646-47.
102. Id. at 647.
103. 50 F. Supp. 2d 318 (D.N.J. 1999).
104. Frischmann & Moylan, supra note 42, at 893-94 (emphasis added).
105. 816 F.2d 1191 (7th Cir. 1987).
106. Id. at 1200 (quoting USM Corp. v. SPS Techs., Inc., 694 F.2d 505, 512 (7th Cir. 1982)). It was this decision upon which commentators rested their conclusion that Judge Posner felt misuse should never be found independent of an antitrust violation.
107. See RICHARD H. FALLON, JR. ET AL., HART & WECHSLER'S THE FEDERAL COURTS AND THE FEDERAL SYSTEM 695 (5th ed. 2003) (noting that "[t]he broad language of section 1 of the Sherman Act, 15 U.S.C. § 1, is often viewed as inviting the courts to fashion a common law of anti-competitive practices").
108. See generally Robin Cooper Feldman, Defensive Leveraging in Antitrust, 87 GEO. L.J. 2079, 2080 (1999) (describing the way "[t]he Chicago school blasted the assumptions implicit in the traditional analysis of leverage behavior" while introducing the concept of defensive leveraging to illustrate why such behavior may still pose threats to competition).
109. See generally WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY LAW 372-82 (2003).
110. Cf. Eric A. Posner, A Theory of Contract Law Under Conditions of Radical Judicial Error, 94 Nw. U. L. REV. 749 (2000).
111. Raymond T. Nimmer, The Uniform Computer Information Transactions Act and Electronic Commerce: Licensing in the Contemporary Information Economy, 8 WASH. U. J.L. & POL'Y 99, 127 (2002).
112. Id. at 150 (asserting that "legal support for personal choices about how to distribute information will encourage the distribution of information").
113. Id. at 102.
114. BLACK'S LAW DICTIONARY, supra note 15, at 15.
115. RESTATEMENT (SECOND) OF TORTS § 682 cmt. a (1977).
116. Interpreted too broadly, this approach could become synonymous with the approach just discussed. For example, in their IP and Antitrust treatise, Herbert Hovenkamp, Mark Janis, and Mark Lemley identify a class of misuse cases that they dub "abuse-of-process" cases; but in their view, "[t]he basis for copyright misuse in this set of cases seems to be that courts should not assist the expansion of a copyright beyond its statutory bounds, as they would do were they to enforce improperly broadened copyright." HERBERT HOVENKAMP ET AL., 1 IP AND ANTITRUST: AN ANALYSIS OF ANTITRUST PRINCIPLES APPLIED TO INTELLECTUAL PROPERTY LAW § 3.4 (2002 & 2004 Supp.). Depending upon one's interpretation of "improperly," this statement could articulate an approach very similar to that I label as formalistic.
117. William F. Patry & Richard A. Posner, Fair Use and Statutory Reform in the Wake of Eldred, 30 CAL. L. REV. (forthcoming 2004). Further citations to this piece will be to a manuscript copy on file with the author.
118. Id. at 16.
119. Id.
120. Id. at 19-20.
121. Id. at 21.
122. Id. at 20-21 (stating that "[e]xaggerating the substantive rights of a copyright owner by denying in effect the fair use privilege, the sort of abuse illustrated by the Little Rascals and New York Review examples, seems an equally serious form of copyright overclaiming" as an earlier case that had found misuse).
123. Id. at 17 (quoting Jeffrey Rosen, Mouse Trap: Disney's Copyright Conquest, NEW REPUBLIC, Oct. 28, 2002, at 12).
124. Id. (quoting Virginia Woolf, At Lady Ottoline's, N. Y. REV. BOOKS, July 17, 2003, at 17).
125. In this sense, it overcomes not only the problems in the anticompetitive approach to copyright misuse, but also one of the central problems plaguing patent misuse. See supra note 36.
126. Eldred v. Ashcroft, 537 U.S. 186, 219 (2003). To be clear, I am not arguing that the First Amendment mandates that copyright misuse be extended in this fashion. First Amendment challenges to copyright laws have rarely succeeded, largely because Congress and the courts have incorporated First Amendment protections into copyright policy and law. The existence of such protections helped enable the Court to reject Eldred's claim that the CTEA violated the First Amendment.
127. Id. at 190.
128. Id. at 219.
129. Id.
130. Id. at 221 n.24.
131. I am not the first to suggest that copyright misuse should be used to protect the values of the First Amendment. See Note, Clarifying the Copyright Misuse Defense: The Role of Antitrust Standards and First Amendment Values, 104 HARV. L. REV. 1289, 1290 (1991) ("[T]he copyright misuse defense is best conceived as a tool both for preventing anticompetitive harm to consumers and for vindicating the copyright/first amendment policy favoring the dissemination of ideas.").
132. John Schwartz, File Sharing Pits Copyright Against Free Speech, N.Y. TIMES, Nov. 3, 2003, at C1.
133. The Diebold situation has subsequently made it onto the Op-Ed page, the cover of the Sunday New York Times "Money & Business" section, and a feature article in the New York Times Magazine. See Robert S. Boynton, The Tyranny of Copyright?, N.Y. TIMES MAG., Jan. 25, 2004, at 40;
134. Paul Krugman, Op-Ed, Hack the Vote, N.Y. TIMES, Dec. 2, 2003, at A31;
135. Melanie Warner, Machine Politics in the Digital Age, N.Y. TIMES, Nov. 9, 2003, at C1. The magazine article is a particularly powerful illustration of the significant level of media attention currently being devoted to copyright and potential problems with the current copyright regime. Boynton, supra, at 42 ("Once a dry and seemingly mechanical area of the American legal system, intellectual property law can now be found at the center of major disputes in the arts, sciences and - as in the Diebold case - politics.").
136. Schwartz, supra note 129.
137. Id. (quoting, in part, Nelson Pavlosky).
138. Id. (quoting Zac Elliott, a student at Indiana University).
139. Patry & Posner, supra note 114, at 21.
140. 1996 U.S. Dist. LEXIS 15454 (E.D. Va. 1996).
141. Id. at *34-35 (quoting Nat'l Cable Television v. Broad. Music, Inc., 772 F. Supp. 614, 652 (D.D.C. 1991)).
142. Id. at *34.
143. The only way the case should potentially have been decided differently is if, in their attempt to suppress dissenting speech, the plaintiffs had attempted to place restrictions on the use of their copyrighted material that would have deterred fair use. For example, if the church released the text only subject to an agreement that the licensee not criticize the work or make it available to third parties, the outcome would change under the proposed regime.
144. Clifford, supra note 37, at 256 (suggesting that the Ninth Circuit panel that decided Practice Management "seemed to confuse the misuse of copyright defense with the general defense of unclean hands").
145. Eldred v. Ashcroft, 537 U.S. 186, 219 (2003).
146. Id.
147. For an examination of how fair use and copyright misuse could operate together, see Douma, supra note 87, at 63-67, which provides a thorough analysis of why "a copyright misuse defense cannot replace the application of the fair use doctrine."
148. Paul Goldstein, Lecture to Copyright Class at Stanford Law School (Oct. 28, 2003).
149. Williams & Wilkins Co. v. United States, 420 U.S. 376 (1975); CBS, Inc. v. Loew's Inc., 356 U.S. 934 (1958).
150. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994); Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539 (1985); Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984).
151. Stewart v. Abend, 495 U.S. 207 (1990).
152. Theodore Dorenkamp, Note, Copyright Misuse or a Right to Compete?: A Critique of Alcatel USA v. DGI Technologies, 9 TEX. INTELL. PROP. L.J. 269, 270 (2001).
153. The idea/expression distinction is codified in section 102(b) of the Copyright Act, which states: "In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work." 17 U.S.C. § 102(b) (2000). Fair use is codified in section 107 of the Act. 17 U.S.C. § 109 (2000).
154. Presumably, the opportunity to choose a competing product without the restrictive terms would also ensure that when licensees choose a product with the restrictive terms, they are compensated for the rights they are forgoing.
155. See generally Madison, supra note 25.
156. E.g., Assessment Techs, of Wis., L.L.C. v. WIREdata, Inc., 350 F.3d 640, 647 (7th Cir. 2003) (stating "that patents tend to confer greater market power on their owners than copyrights do, since patents protect ideas and copyrights, as we have noted, do not"); Dorenkamp, supra note 146, at 280 (noting that "[t]here is general agreement among courts and scholars alike . . . that copyright does not presumptively confer market power"); Hanna, supra note 63, at 415-16 (challenging the presumption that patent grants the holder market power and suggesting that such a presumption is even more misplaced as applied to copyright).
157. See, e.g., Jed Rubenfeld, A Reply to Posner, 54 STAN. L. REV. 753, 753 (2002) (developing further his argument that "cost-benefit" reasoning in free speech law is unnecessary and unacceptable);
158. Jed Rubenfeld, The First Amendment's Purpose, 53 STAN. L. REV. 767, 770 (2001) (invoking the notion of purposivism - "to reclaim an old idea: that there are certain First Amendment absolutes, which stand up regardless of any balancing of interests").
159. CASS SUNSTEIN, WHY SOCIETIES NEED DISSENT 83 (2003).
160. One court seemed to assume that such an exception exists: Plaintiffs' argument would have merit if there was any evidence that Napster introduced and negotiated for the exclusivity provision. In that scenario, it would be unseemly to allow Napster to use the same provision as protection against infringement actions. Such a rule would create perverse incentives to artificially manufacture overreaching clauses as liability shields under the misuse doctrine. However, the evidence thus far shows that the relevant provisions were inserted at MusicNet's urging and not as an end-run around copyright laws by Napster. In re Napster, Inc. Copyright Litig., 191 F. Supp. 2d 1087, 1107 n.16 (2002).
161. See Madison, supra note 25, at 2 ("If there is no ability to choose an 'unlicensed' version of the copyrighted work, the licensing norm displaces the Copyright Act.").
162. See O'Rourke, supra note 89, at 537-38. Interestingly, this use of a license as a means of educating a user about his or her rights and responsibilities under the Copyright Act can characterize licenses governing open source software as well as those governing proprietary software. See Lawrence Lessig, Lecture to Advanced Contracts Class at Stanford Law School (Sept. 30, 2003) (noting that the GNU General Public License that governs most GNU/Unix software, as well as many other open source applications, serves two functions: setting the terms of use and educating the licensee about the terms already in place by virtue of copyright law). Moreover, licenses used in both contexts often do not distinguish between terms that merely reiterate terms set forth in the Copyright Act from those the licensor is imposing separate from the Copyright Act.
163. E.g., Pamela Jones, The GPL Is a License, Not a Contract, Which Is Why the Sky Isn't Falling, at http://www.groklaw.net/article.php?story=20031214210634851 (Dec. 14, 2003) (describing the difference between a license and a contract and asserting the GPL is a license but not a contract).
164. This is an area where my approach to misuse parts with the approach taken by Judge Posner, who seems prepared to make this distinction and willing to have the applicability of misuse hinge upon it. In Assessment Technologies of Wisconsin, L.L.C. v. WIREdata, Inc., Judge Posner dismisses as "irrelevant" that "a copyright owner can by contract limit copying beyond the right that a copyright confers" prior to considering the copyright misuse issue. 350 F.3d 640, 646 (7th Cir. 2003). He recognizes that contracting practices could be the basis for a finding of misuse but only if the copyright holder attempts to use contract to prevent suppliers of data from releasing that data to third parties. This suggests he views the problem with the overstatements he condemns in the article he coauthored with Patry to be their misleading nature and that he would not be similarly troubled if such statements arose instead in the context of a contract.
165. Congressionally created section 502 of the Copyright Act, which gives courts the power to grant copyright holders injunctive relief, also vests courts with discretion to determine whether such relief is warranted. See 17 U.S.C. § 502(a) (2000) (stating that courts "may . . . grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright"). The Supreme Court has also emphasized the discretionary nature of injunctive relief and the ability of courts to refrain from granting such relief when public policy so mandates. For example, in Acuff-Rose, the Court reminded lower courts that because fair use inquiries involve difficult judgment calls, "courts may also wish to bear in mind that the goals of the copyright law, 'to stimulate the creation and publication of edifying matter' are not always best served by automatically granting injunctive relief when parodists are found to have gone beyond the bounds of fair use . . . ." Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 578 n.10 (1994) (internal citations omitted).
166. 4 NIMMER & NIMMER, supra note 8, § 14.06[B] ("It is uncontroversial that a 'showing of past infringement and a substantial likelihood of future infringement' justifies issuance of a permanent injunction.").
167. 191 F. Supp. 2d 1087, 1103 (N.B. Cal. 2002).
168. Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV. 1089 (1972).
169. Abraham Bell & Gideon Parchomovsky, Pliability Rules, 101 MICH. L. REV. 1 (2002).
170. Id. at 5.
171. Id. at 27 (explaining that grue, as conceptualized by Nelson Goodman, is the color of an item that looks green to anyone who observes it prior to a given time and blue to anyone who views it after that time).
172. Id.
173. Id. at 7.
174. Id. at 26. They go on to claim that "pliability rules are so ubiquitous in our legal regime that every entitlement can be viewed, in one sense or another, as falling under the protection of pliability rules . . . ." Id. at 28.
175. Id. at 6.
176. Id. at 31; see also id. at 50-52.
177. The issue of when the misuse ends is another area where reconsideration of the dominant approach, which is modeled after patent misuse, could be appropriate, as the longer term of copyright relative to patent increases the likelihood of restoration. Under the dominant approach, misuse ends when the copyright holder ceases the misuse and the effects of the misuse have dissipated. This approach also has the advantage of seeming just, as it prevents the copyright holder from exercising a full set of rights as long as the marketplace remains affected by the copyright holder's misconduct. One problem with this approach is that it can be difficult for a court to assess when the effects of misuse have dissipated. For example, under the facts of Lasercomb, it is unclear how a judge should determine when the effects of the no-compete clause have dissipated. Is it when a sufficient number of competitors have entered the marketplace? If this is the measure and misuse renders the copyright unenforceable, the very finding of misuse may have the effect of deferring its dissipation - one would have to create a far superior product in order to compete with a software program that is free. One alternative would be that the period of misuse comes to an end when the copyright holder ceases the misuse. This approach is easier to administer, but it is potentially less just and could be easily manipulated by the copyright holder. An ideal solution may be the cessation and dissipation rule, but with a rebuttable presumption that the effects of the misuse have dissipated after a prescribed amount of time has lapsed following cessation. The greatest problem with such a rule is that it begins to look very legislative and thus is not the type of rule easily adopted by the judiciary.
178. Bell and Parchomovksy, supra note 162, at 59.
179. This Note attempts to minimize these risks in two ways. First, as described earlier, the Note calls for a clarification of the policies protected by the doctrine and the adoption, where possible, of ex ante guidelines of what will constitute misuse. Second, the additional remedial option put forth in this Part minimizes the risk that a finding of misuse would undermine the economic incentives set up by the copyright regime. It does this by minimizing the economic harm to a copyright holder if he is deemed guilty of misuse.
180. Alex Kozinski & Christopher Newman, What's So Fair About Fair Use?, 46 J. COPYRIGHT SOC'Y U.S.A. 513 (1999) (reproducing the 1999 Donald C. Brace Memorial Lecture delivered by Judge Kozinski).
181. Id. at 525.
182. Id. at 515.
183. Id. at 521.
184. Id.
185. Given the time and expense associated with establishing actual damages and profits, if I were starting from scratch my hunch would be to retain the availability of statutory damages but ask courts to limit the amount so awarded to a value comparable to damages and profits. One of the factors that likely shaped Judge Kozinski's decision not to provide such an option is his desire, voiced elsewhere in his speech, to encourage the copyright holder to negotiate with potential infringers. Whatever his reason, I defer to his judgment regarding the best way to introduce a liability rule into the current copyright scheme. In addition, to the extent the proposed liability rule is intended to be a penal measure, the potential for the copyright holder to be slightly undercompensated as a result of being burdened with a heightened cost of recovery may be appropriate.
186. 17 U.S.C. § 504(b) (2000).
187. Kozinski & Newman, supra note 173, at 526.
188. Id. at 528.
189. Id.
190. This assumes that a finding of misuse renders the copyright unenforceable against anyone for the period of misuse. This is the rule for patent misuse, and it is the approach that has been assumed by most courts applying copyright misuse. However, at least two courts have required there to be some nexus between the alleged misuse and the defendant. See Microsoft Corp. v. Jesse's Computers & Repair, Inc., 211 F.R.D. 681, 685 (M.D. Fla. 2002); Microsoft Corp. v. Compusource Distribs., Inc., 115 F. Supp. 2d 800, 811 (E.D. Mich. 2000). Whether there should be a nexus requirement is another interesting issue that is beyond the scope of this Note.
191. In re Napster, Inc. Copyright Litig., 191 F. Supp. 2d 1087, 1108 (N.D. Cal. 2002). In one of the series of suits the record companies filed against Napster, "an Internet service that facilitates the downloading of MP3 music files," for contributory and vicarious copyright infringement, Napster put forth a misuse defense predicated upon two separate theories. Id. at 1092. First, Napster alleged misuse based upon restrictions in an agreement between Napster and MusicNet, a joint venture of the recording studios; its primary gripe related to a term that prevented Napster from entering into a licensing arrangement with any of the plaintiffs, including two who were not then parties to the joint venture, for a period of time. Second, Napster claimed that the plaintiffs engaged in a host of anticompetitive activities and that there was a sufficient nexus between these activities and the plaintiffs' enforcement of their copyrights to constitute misuse. The court concluded that because "Napster ha[d] raised serious questions with respect to possible copyright misuse, based on both the MusicNet agreement and plaintiffs' possible antitrust violations in their entry into digital music delivery," the defendant's motion for summary judgment would be stayed pending further discovery. Id. at 1109.
192. To be clear, this is mere speculation. There is nothing in the opinion that resolves the question either way.
193. This is, of course, both a simplification and probably a misrepresentation of the actual decisionmaking process potential infringers will engage in when making a decision about whether to infringe. However, it is sufficiently less wrong and more workable than alternative ways of trying to conceptualize the decisionmaking process, in that it provides some useful insight for trying to craft an effective remedial scheme.
194. At this point, one could easily argue that I am using the wrong measure of efficiency. Because IP is a public good, one person's consumption of the good does not diminish anyone else's ability to enjoy it; thus, one could claim, it is efficient for anyone who places a positive value on consumption of the good to be able to consume it. This is true - if the world is static. Our IP regime, however, is built upon the recognition that the production and consumption of IP occurs in a dynamic environment. The terms of protection the legislature provides for various types of IP are designed to strike a balance between encouraging innovation with the reward of a limited monopoly and enabling consumption. For purposes of this Note, I assume that the balance the legislature has struck in that regard is efficient.
195. Supra note 150.
196. One aspect of Judge Kozinski's proposal not mentioned earlier is that he would have "[s]ection 505 stay[] much the same, leaving intact the court's discretion to award costs and attorney's fees to a prevailing party" with one minor modification. Kozinski & Newman, supra note 173, at 526. While this approach might suffice, as I would hope that courts would be hesitant to award costs and attorney's fees to a copyright holder engaged in misuse, a rule or strong presumption against such recovery might be appropriate to promote the safe-harbor function alluded to earlier and to further dissuade copyright holders from engaging in misuse.
197. Bell & Parchomovsky, supra note 162, at 31.
198. Id. at 53.