The upside of intellectual property's downside

UCLA Law Review

Volumn 57, Issue 4, 2010, Pages 921-982

  Cotropia, Christopher A ^a   Gibson, James ^a  

^a UNIVERSITY OF RICHMOND   (United States)

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EID: 77953342533     PISSN: 00415650     EISSN: None     Source Type: Journal    
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References (502)

1. E.g., Wendy J. Gordon, A Property Right in Self-Expression: Equality and Individualism in the Natural Law of Intellectual Property, 102 Y ALE L. J. 1533 ( 1993) (Lockean approach);.
2. Adam Mossoff, Rethinking the Development of Patents: An Intellectual History, 1550-1800, 52 HASTINGS L. J. 1255 (2001) (natural rights perspective);. (Pubitemid 33636482)
3. Neil Netanel, Copyright Alienability Restrictions and the Enhancement of Author Autonomy: A Normative Evaluation, 24 RUTGERS L.J. 347 (1993) (personhood theory).
4. See, e.g., U.S. CONST. art. I, § 8 (giving the United States Congress the power to grant patents and copyrights in order to "promote the Progress of Science and useful Arts");.
5. Mazer v. Stein, 347 U.S. 201, 219 (1954) ("The economic philosophy behind the clause empowering Congress to grant patents and copyrights is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare-");.
6. WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY LAW 4-5 (2003) (reviewing rationales for intellectual property and finding the economic rationale most compelling). We focus here on intellectual property's "big two," patent and copyright, because the other fields of intellectual property (trademark, trade secret, publicity rights, etc.) are not as single-minded in their devotion to the incentive model. We do, however, briefly discuss the implications of our theory for trademark law in Part II.C infra.
7. See infra Part I.
8. See, e.g., Margo A. Bagley, Patent First, Ask Questions Later: Morality and Biotechnology in Patent Law, 45 WM. &. MARY L. REv. 469 (2003);.
9. Ann Bartow, Pornography, Coercion, and Copyright Law 2.0, 10 VAND. J. ENT. &. TECH. l. 799 (2008);.
10. Brant J. Hellwig, Questioning the Wisdom of Patent Protection for Tax Planning, 26 VA. TAX REv. 1005, 1008 (2007).
11. See, e.g., Christopher J. Buccafusco, On the Legal Consequences of Sauces: Should Thomas Keller's Recipes Be Per Se Copyrightable?, 24 CARDOZO ARTS &. ENT. L. J. 1121 (2007);.
12. Emmanuelle Fauchart & Eric von Hippel, Norms-Based Intellectual Property Systems: The Case of French Chefs, 19 ORG. SCI. 187 (2008);.
13. Jacob Loshin, Secrets Revealed: How Magicians Protect Intellectual Property Without Law, in LAW AND MAGIC: A COLLECTION OF ESSAYS (Christine A. Corcos ed., 2009);.
14. Dotan Oliar & Christopher Sprigman, There's No Free Laugh (Anymore): The Emergence of Intellectual Property Norms and die Transformation of Stand-Up Comedy, 94 VA. L. REv. 1787 (2008);.
15. Kal Raustiala & Christopher Sprigman, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, 92 VA. L. REv. 1687, 1699 (2006).
16. See, e.g., John R. Allison &. Starling D. Hunter, On the Feasibility of Improving Patent Quality One Technology at a Time: The Case of Business Methods, 21 BERKELEY TECH. L.J. 729, 736 (2006) (arguing that a subject matter restriction in patent law would be futile at best and counterproductive at worst);.
17. Michael W. Carroll, One for All: The Problem of Uniformity Cost in Intellectual Property Law, 55 AM. U. L. REv. 845 (2006) (detailing the costs of a one-size-fits-all approach to protected subject matter).
18. See infra notes 264-272 and accompanying text.
19. See LANDES & POSNER, supra note 2, at 16-21;.
20. Mark A. Lemley, Property, Intellectual Property, and Free Riding, 83 TEX. L. REV. 1031, 1058-59 (2005).
21. Roy J. Ruffin &. Paul R. Gregory, Principles of Microeconomics 191-92, 201-04 (5th ed. 1993) (defining perfect competition and explaining the resulting price of marginal cost). Of course, the marginal cost of copying varies depending on what is being copied. Information goods in digital media are copied at essentially no cost.
22. See Niva Elkin-Koren & Eli Salzberger, Law and Economics in Cyberspace, 19 INT L. REV. L & EOON. 553, 560 (1999). In contrast, copying other information goods, such as a detailed nuclear refining process, would be incredibly costly. Regardless of the cost of copying, however, the copier does not have to engage in the same research and development as the initial innovator. This ability to avoid research and development gives the copier a cost advantage in most cases.
23. See RUFFIN & GREGORY, supra note 9, at 203-04.
24. See, e.g., MERLE CRAWFORD &. ANTHONY Dl BENEDETTO, NEW PRODUCT MANAGEMENT 26-33 (8th ed. 2006) (describing the "phases" of new product development);.
25. Gideon Parchomovsky & Peter Siegelman, Towards an Integrated Theory of Intellectual Property, 88 VA. L. REV. 1455, 1466-67 (2002) (stating that "absent legal protection, competitors would copy [information goods] without incurring the initial costs of producing them" and that "[u]nauthorized reproduction would drive down the market price to the cost of copying, original authors and inventors would not be able to recover their expenditures on authorship and R&D, and, as a result, too few inventions and expressive works would be created");.
26. Kevin Zhu, Internet-Based Distribution of Digital Videos: The Economic Impacts of Digitization on tie Motion Picture Industry, 11 ELECTRONIC MARKETS 273, 277 (2001) (noting that the "high costs" of producing motion pictures "create barriers for new movie producers to enter the industry").
27. The intellectual property right does not automatically give the rightsholder market power over price. See Walker Process Equip., Inc. v. Food Mach. &. Chem. Corp., 382 U.s. 172, 178 (1965) (noting that "[t]here may be effective substitutes for the [patented] device which do not infringe the patent"); William A. Drennan, Changing Invention Economics by Encouraging Corporate Inventors to Sell.
28. Patents, 58 U. MIAMI L. REV. 1045, 1158 (2004). However, the right gives the holder the power to exclude others from selling products falling within its scope. Thus, necessarily, there will be at least some "substitute" products that the rightsholder can exclude.
29. See suzanne sootchmer, innovation and incentives 36 (2004) ("Intellectual property rights make the proprietor a monopolist").
30. See RUFFIN & GREGORY, supra note 9, at 216-23 (explaining how a monopolist can behave as a price searcher).
31. See F.M. scherer & david ross, industrial market structure and economic performance 450-51 (3d ed. 1990) (noting that patentees price in excess of cost);.
32. Einer Elhauge, Defining Better Monopolization Standards, 56 stan. L. REV. 253, 296 (2003) ("[F|rom an ex post perspective, excluding rivals from any property rights valuable and unique enough to enjoy monopoly power will generally constrain consumer choice, lower output, and raise prices, thus producing allocative inefficiency.").
33. This graphical representation of the impact of intellectual property rights has appeared in numerous articles before. See, e.g., Ian Ayres & Paul Klemperer, Limiting Patentees' Market Power Without Reducing Innovation Incentives: The Perverse Benefits of Uncertainty and Non-Injunctive Remedies, 97 MICH. L. REv. 985, 989-90 (1999);.
34. James Gibson, Re-Reifying Data, 80 NOTRE DAME L. REV. 163, 207 (2004);.
35. Michael J. Meurer, Price Discrimination, Personal Use and Piracy: Copyright Protection of Digital Works, 45 BUFF. L. REV. 845, 878 (1997). We omit from Figure 2 the mechanism by which the higher price is actually determined-the intersection of the marginal revenue curve and the marginal cost curve.
36. See RUFFIN & gregory, supra note 9, at 221-23.
37. See RUFFIN &. gregory, supra note 9, at 221-23.
38. See SCOTCHMER, supra note 12, at 37 ("Deadweight loss is the main defect of intellectual property as an incentive mechanism").
39. Like any monopolist, the intellectual property owner can attempt to price discriminate to avoid the deadweight loss. See Harold Demsetz, The Private Production of Public Goods, 13 J.L & ECON. 293 (1970).
40. But effective price discrimination is very difficult, if not impossible, to implement. See SCOTCHMER, supra note 12, at 37;.
41. Julie E Cohen, Copyright and the Perfect Curve, 53 VAND. L. REV. 1799 (2000);.
42. Michael J. Meurer, Copyright Law and Price Discrimination, 23 CARDOZO L. REv. 55 (2001).
43. See, e.g., James Thuo Gathii, Rights, Patents, Markets and the Global AIDS Pandemic, 14 FLA. J. int'l L 261, 263-64 (2002) (discussing patent's role in denying "low-end consumers-access to AIDS medications). The monopolistic pricing also denies the patentee the ability to profit from those lower-income consumers (a fact that generates equal welfare loss, if not equal sympathy).
44. See ruffin & GREGORY, supra note 9, at 240-44 (noting that deadweight loss includes contrived scarcity on the part of the monopolist).
45. See, e.g., LANDES & POSNER, supra note 2, at 20-21. There are other responses as well. The first we have already addressed-the rightsholder can avoid the deadweight loss through price discrimination. See supra note 18. Another response is that "if the patented invention lowers costs sufficiently, then output will expand beyond the preinvention level, thereby rendering the conclusion that patents restrict production at odds with observed fact.".
46. Kenneth W. Dam, The Economic Underpinnings of Patent Law, 23 J. LEGAL STUD. 247, 251 (1994). This second response assumes a very narrow form of intellectual property rights-one that protects the process for making an information good, not the information good itself. The argument also assumes the inventiveness of the process reduces production costs.
47. Note also that as long as the intellectual property entitlement has a limited duration, its price will eventually descend to marginal cost, and the entire population of consumers can have access to it. See, e.g., John F. Duffy, Rethinking the Prospect Theory of Patents, 71 U. CHI. L. REV. 439 (2004).
48. SCHERER & ROSS, supra note 14.
49. See Dan L. Burk &. Mark A. Lemley, Policy Levers in Patent Law, 89 VA. L. REv. 1575, 1604-05 (2003). For example, there is empirical evidence that it is competition, not intellectual property protection, that leads to innovation in the telecommunications field.
50. See Howard A. Shelanski, Competition and Deployment of New Technology in U.S. telecommunications, 2000 U. CHI. LEGAL F. 85, 85.
51. See Rajshree Agarwal & Michael Gort, First-Mover Advantage and the Speed of Competitive Entry, 1887-1986, 44 J.L &. ECON. 161, 173 (2001) (noting that a first mover enjoys an effective monopoly that declines over time);.
52. Robert P. Merges & Richard R. Nelson, Market Structure and Technical Advance: The Role of Patent Scope Decisions, in antitrust, innovation, and competitiveness 185, 217 (Thomas M. Jorde & David J. Teece eds., 1992) (describing one of the advantages of a head start as the early "establishment of production and distribution facilities").
53. Roger A. Kerin et al., First-Mover Advantage: A Synthesis, Conceptual Framework, and Research Propositions, 56 J. MARKETING 33, 34-39 (1992);.
54. Marvin B. Lieberman & David B. Montgomery, First-Mover Advantages, 9 STRATEGIC MGMT. J. 41, 46 (1988) (citing consumer loyalty to brand as part of the first mover's advantage).
55. See generally Richard C. Levin et al., Appropriating the Returns from Industrial Research and Development, 3 BROOKINGS PAPERS ON ECON. ACTIVITY 783 (1987).
56. See Gibson, supra note 15, at 207.
57. See generally Michael Abramowicz, Perfecting Patent Prizes, 56 VAND. L. REv. 115 (2003);.
58. Steven Shavell & Tanguy van Ypersele, Rewards Versus Intellectual Property Ridus, 44 J.L & ECON. 525 (2001).
59. This downside to intellectual property protection is different from the deadweight loss discussed above. Deadweight loss represents a reduction in the total units made available to a public willing to pay more than marginal cost for the specific innovation. In contrast, the loss in follow-on innovation manifests in decreased production in the industry as a whole.
60. See, e.g., William M. Landes & Richard A. Posner, An Economic Analysis of Copyright Law, 18 J. LEGAL STUD. 325, 332-33 (1989);.
61. Robert P. Merges & Richard R. Nelson, On the Complex Economics of Patent Scope, 90 COLUM. L. REV. 839, 916 (1990).
62. This is not to say that there is unanimity regarding how much is too much when it comes to defining entitlements and what form these protections should take. In fact, disagreement on these matters is the source of almost all intellectual property scholarship. But almost everyone would admit that there comes a point at which further protection does more harm to downstream innovators than its benefits warrant.
63. We reiterate that the innovation curve (as we use it) is a purely conceptual device. We do not claim that the curve for any particular form of innovation ascends or descends steeply, shallowly, or anywhere in between; we claim only that the curve peaks at some point.
64. See supra notes 24-29 and accompanying text.
65. Note that the arrival of intellectual property rights may mean the departure of some of these alternative sources of incentive through such mechanisms as preemption of contracts, loss of trade secrecy when an innovation is patented, and so forth.
66. One might question the far end of the innovation curve as well: Even an infinite amount of intellectual property protection might not stamp out all production of innovation goods. So after peaking, the curve might descend towards-but never touch-the X axis.
67. The terms high-IP and low-IP originated with Kal Raustiala and Chris Sprigman. See, e.g., Raustiala & Sprigman, supra note 5, at 1718.
68. See id.
69. See Buccafusco, supra note 5;.
70. Fauchart & von Hippel, supra note 5.
71. See Oliar & Sprigman, supra note 5.
72. See Loshin, supra note 5.
73. 17 U.S.C. 5102(a) (2006).
74. E.g., TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23 (2001) (traffic sign);.
75. U.S. Patent No. 4, 736, 866, claim 12 (filed June 22, 1984) (transgenic mice).
76. See Yochai Benkler, Coase's Pengum, or, Linux and The Nature of the Firm, 112 YALE L.J. 369 (2002) (showing that "commons-based peer- production" generates software without the need for intellectual property incentive).
77. This is not to say that there are no industry-specific doctrines within the broader regimes of patent and copyright; there are. See, e.g., James Gibson, Risk Aversion and Rights Accretion m Intellectual Property Law, 116 YALE L. J. 882, 936 (2007) ("[T]he history of American copyright is essentially an evolution from a broad, industry-neutral property right to a set of detailed, industry-specific regulations."). Nevertheless, they operate within default regimes whose uniformity imposes costs on the disparate industries they cover.
78. See Carroll, supra note 6.
79. Organizations like Creative Commons, which engage in private collective efforts to reduce the level of protection, are essentially trying to move the X axis value leftward toward what they view as a more optimal point-i.e., from the suboptimal peak of the law's curve to the presumably optimal peak of the industry's curve. It is probably no coincidence that such collective efforts got their start in the software industry where strong protection may stifle innovation.
80. See Benkler, supra note 43.
81. See, e.g., Bartow, supra note 4, at 838 (answering yes);.
82. Note, Can Intellectual Property Law Regulate Behavior? A "Modest Proposal" for Weakening Unclean Hands, 113 HARv. L. REV. 1503, 1503 (2000) (same).
83. See, e.g., Bagley, supra note 4 (answering no);.
84. Ryan Hagglund, Patentability of Human-Animal Chimeras, 25 SANTA CLARA COMPUTER & HIGH TECH. L.J. 51, 74-75 (2009) (answering yes);.
85. Thomas A. Magnani, The Patentability of Human-Animal Chimeras, 14 BERKELEY TECH. L. J. 443, 510-11 (1999) (same).
86. See, e.g., Bagley, supra note 4 (biotechnology);.
87. Bartow, supra note 4 (pornography);.
88. Hellwig, supra note 4 (tax planning).
89. See, e.g., S. 2369, 110th Cong. (2007);.
90. Hearing on Issues Relating to the Patenting of Tax Advice: Hearing Before the Subcomm. on Select Revenue Measures of the H. Comm. on Ways & Means, 109th Cong. (2006) [hereinafter Tax Patent Hearing];.
91. Patented Transactions, 72 Fed. Reg. 54, 615 (Sept. 26, 2007) (to be codified at 26 C.F.R. pts. 1 and 301) (proposing adding tax-planning patents to the category of transactions that must be reported to the IRS);.
92. Dan L Burk &. Brett H. McDonnell, Patents, Tax Shelters, and the Firm, 26 VA. TAX REv. 981, 1000-03 (2007).
93. See, e.g., David E Winickoff et al., Opening Stem Cell Research and Development, 9 YALE J. HEALTH POL'Y L. &. ETHICS 52, 75-81 (2009) (citing the current political debate over stem cells);.
94. Tia Sherringham, Comment, Mice, Men, and Monsters: Opposition to Chimera Research and the Scope of Federal Regulation, 96 CAL. L. REv. 765, 766 (2008) (identifying the cutting-edge research in interspecies chimeras and the tough policy decisions such research presents).
95. See In re Bilski, 545 F.3d 943 (Fed. Cir. 2008), cert, granted sub nom. Bilski v. Doll, 77 U.S.LW. 3442 (June 1, 2009) (No. 08-964) (argued Nov. 9, 2009) (focusing on what subject matter is eligible for patent protection).
96. See Hellwig, supra note 4, at 1008;.
97. David A. Weisbach, Ten Truths About Tax Shelters, 55 Tax L. REV. 215, 224(2002).
98. Tax planning can include mundane activities that ensure compliance with the tax system, such as properly filling out a Form 1040, see Weisbach, supra note 52, at 224-25, and actions explicitly incentivized by the tax code, .
99. see id.-, Michael L Schier, Ten More Truths About Tax Shelters: The Problem, Possible Solutions, and a Reply to Professor Weisbach, 55 TAX L. REV. 325, 385-86 (2002) (asserting that the tax planning Congress intends to incentivize is not harmful).
100. See Hellwig, supra note 4, at 1008-09;.
101. Weisbach, supra note 52, at 222.
102. See Mark P. Gergen, The Lope of Deterrence: Corporate Tax Shelters, 55 TAX L. REV. 255, 255-58 (2002);.
103. Daniel N. Shaviro, Economic Substance, Corporate Tax Shelters, and the Compaq Case, 88 TAX NOTES 221, 223-34 (2000).
104. See Gergen, supra note 55, at 274;.
105. Hellwig, supra note 4, at 1007;.
106. Daniel N. Shaviro, Evaluating the Social Costs of Corporate Tax Shelters, 55 TAX L. REV. 445, 446-47 (2002);.
107. Weisbach, supra note 52, at 222-23.
108. See Hellwig, supra note 4, at 1009-10;.
109. Weisbach, supra note 52, at 223 n.19.
110. 149 R3d 1368 (Fed. Cir. 1998) (affirming a patent claim describing software used to administer a specific type of mutual fund).
111. See, e.g., Michael J. Meurer, Business Method Patents and Patent Floods, 8 WASH. U. J.L & POL'Y 309, 312-14 (2002).
112. See Allison & Hunter, supra note 6, at 730-31 ("The decision fin State Street] was quickly followed by a dramatic increase in the number of applications for and grants of business method patents.");.
113. Kristen Osenga, Ants, Elephant Guns, and Statutory Subject Matter, 39 ARIZ. ST. L. J. 1087, 1089-90 (2007) ("Following the State Street decision, patent applications for computer software, Internet applications, and business methods flooded the Patent Office.").
114. See Andrew W. Erlewein, Protecting Key Business Methods With Patents, 86 MICH. B.J. 29, 30 (2007) ("In recent years, the number of business method patent infringement lawsuits has increased drastically, as many patent holders have come out of the woodwork to either obtain an injunction or reach a licensing agreement with their competitors.").
115. See Linda M. Beale, Tax Patents: At the Crossroads of Tax and Patent Law, 2008 U. ILL. J.L TECH. & POL'Y 107, 114-15 (describing a linkage between the State Street decision and the advent of tax patents).
116. See Tax Patent Hearing, supra note 49, at 37 [hereinafter Aprill Statement] (statement of Ellen Aprill, Assoc Dean, Loyola Law School, Los Angeles, Cal.), available at http://waysandmeans.house.gov/hearings.asp? formmode=view&id=5106;.
117. see also Beale, supra note 62, at 107 (noting that since State Street,"a number of business method patents with tax implications have been granted, and even more business method tax patent applications are pending").
118. See, e.g.. Consent Final Judgment Regarding Settlement Agreement, Wealth Transfer Group v. Rowe, No. 06 Civ. 00024 (D. Conn. Mar. 9, 2007), available at http://tax.aicpa.org/NR/rdonlyres/D62E55BF-474B-4E5C-94A9-AF140F9D5604/0/ WTG-ROWE-FINALCONSENTJUDGMENT.pdf (settling a tax patent infringement dispute); Beale, supra note 62, at 108.
119. Beale, supra note 62, at 108-10 (describing the assertion of this tax patent against the industry).
120. Id. at 108;.
121. Alan S. Lederman, Tax-Related Patents: A Novel Incentive or an Obvious Mistake?, 105 J. TAX-N 325, 327 (2006) (describing the tax-patent owner's intent to aggressively assert the patent).
122. See, e.g., Lederman, supra note 66;.
123. Allistair M. Nevius, AICPA Asks Court to Nullify Tax Patents, TAX ADVISER, July 2008, at 412;.
124. Floyd Norris, You Can't Use That Tax Idea. It's Patented, N.Y. TIMES, Oct. 20, 2006, at CI;.
125. Paul Devinsky et al., Whose Tax Law Is It?, LEGAL TIMES, Oct. 16, 2006, available at http://www.mwe.com/info/pubs/legaltimesl01806.pdf;.
126. Deborah L Jacobs, Patent Pending, BLOOMBERG WEALTH MANAGER, May 2005, at 41;.
127. Letter From Kimberly S. Blanchard, Chair, N.Y. State Bar Ass'n Tax Sec., to William M. Thomas, Chairman, H. Comm. on Ways and Means, et al. (Aug. 17, 2006) [hereinafter NYSBA Letter], available at http://www.nysba.org/AM/Template. cfm?Section=Tax-Section-Reports-2006&TEMPLATE=/CM/ContentDisplay. cfm&CONTENTID=28771.
128. See, e.g., Aprill Statement, supra note 63;.
129. Tax Patent Hearing, supra note 49, at 42 [hereinafter ACTEC Statement] (testimony of Dennis I. Belcher, partner, McGuireWoods LLP, Richmond, Va., on behalf of the American College of Trust and Estate Counsel);.
130. William A. Drennan, The Patented Loophole: How Should Congress Respond to This Judicial Invention?, 59 FLA. L. REv. 229 (2007);.
131. Michael Moulton, Effecting the Impossible: An Argument Against Tax Strategy Patents, 81 S. CAL. L. REv. 631 (2008);.
132. NYSBA Letter, supra note 67.
133. See, e.g., ACTEC Statement, supra note 68;.
134. Aprill Statement, supra note 63;.
135. Drennan, supra note 68, at 329;.
136. Moulton, supra note 68, at 638-41-.
137. See ACTEC Statement, supra note 68 (arguing that the patenting of tax plans will likely expand);.
138. Aprill Statement, supra note 63, at 41 (asserting that tax strategies will "proliferate, encouraged by the marketing advantages conferred by patents' government-granted monopoly and presumption of validity");.
139. Beale, supra note 62, at 146 (indicating that tax patents "provide an incentive that is directly counterproductive to the fundamental underlying policies of the tax laws");.
140. Burk & McDonnell, supra note 49, at 1001 ("[W]e do need to face up to the likelihood that business method patents will encourage more innovation and diffusion of tax planning strategies in the long run, and that may indeed be disturbing.");.
141. Hellwig, supra note 4, at 1027 ("Conferring exclusive rights to tax strategies through the patent system thus will most likely serve to exacerbate the inefficiencies that tax planning engenders.");.
142. Moulton, supra note 68, at 658-60 (stating that the incentives created by patent protection of tax plans are socially harmful).
143. 35 U.S.C. § 103 (2006);.
144. see also KSR Int'l Co. v. Teleflex, Inc., 550 U.S. 398, 412-15 (2007) (describing the "non-obvious" requirement for patent protection).
145. See KSR, 550 U.S. at 401 ("If a person of ordinary skill in the art can implement a predictable variation, and would see the benefit of doing so, § 103 likely bars its patentability.");.
146. Burk &. McDonnell, supra note 49, at 999 (noting that tax patents, because of the patentability requirements, are likely to claim "previously unnoticed and probably unintended 'loopholes' in the tax system").
147. Hellwig, supra note 4, at 1007-08 (ultimately concluding that such tax planning should not be patentable).
148. See Burk &. McDonnell, supra note 49, at 999.
149. See, e.g., S. 2369, 110th Cong. (2007) (setting forth an amendment to § 101 excluding tax planning from patent protection);.
150. Beale, supra note 62, at 146-47 (arguing to categorically deny patent protection to tax-reduction strategies);.
151. Hellwig, supra note 4, at 1028-29 (suggesting that tax patents may be excluded on subject matter grounds);.
152. Moulton, supra note 68, at 665-67 (same). There have been other proposed solutions as well, such as making an individual immune from patent infringement liability due to tax patents, .
153. see id. at 662-63, or limiting the available remedies to a tax-patent holder, .
154. see Drennan, supra note 68, at 329-31. There is also the possibility of collateral, administrative remedies.
155. See, e.g., Patented Transactions, 72 Fed. Reg. 54, 615 (Sept. 26, 2007) (to be codified at 26 C.F.R. pts. 1 and 301) (proposing the addition of tax-planning patents to the category of transactions that must be reported to the IRS).
156. See sources cited supra note 75.
157. See In re Bilski, 545 F.3d 943 (Fed. Cir. 2008), cert, granted sub nam.
158. Bilski v. Doll, 77 U.S.LW. 3442 (June 1, 2009) (No. 08-964) (argued Nov. 9, 2009).
159. See supra note 75.
160. See supra notes 14-16.
161. See Burk & McDonnell, supra note 49, at 996 ("Competitors will have to pay a licensing fee to use a patented strategy-").
162. See supra Part I.A (explaining the reduction in quantity created by intellectual property protection).
163. This argument is similar to the rebuttal to the deadweight loss argument against intellectual property protection. See supra Part LA.
164. Burk & McDonnell, supra note 49, at 1003-04 (concluding that "[g]iven the general focus of most tax scholars on trying to discourage too much use of tax investment strategies, encouraging such [tax'planning] strategies through patent policy does seem rather odd").
165. See April! Statement, supra note 63, at 41 ("[I]t would be hard to identify a subject less in need of further innovation than tax planning.");.
166. Moulton, supra note 68, at 656 ("Ample incentives exist, in the absence of patent protection, for individuals to seek out new compliant tax-saving strategies.");.
167. NYSBA Letter, supra note 67.
168. For an example of such a method, see George Cooper, The Taming of the Shrewd: Identifying and Controlling Income Tax Avoidance, 85 COLUM. L. REV. 657, 675-76 (1985).
169. See Aprill Statement, supra note 63 ("Existing economic incentives already provide ample inducement for the development, promotion, and implementation of tax planning strategies.").
170. See Burk & McDonnell, supra note 49, at 992-93.
171. Secrecy is, unsurprisingly, a condition of trade secret protection. UNIF. TRADE SECRETS ACT § l(4)(i) (1986).
172. Tax planners require their clients to keep the plans confidential. See Andrew Franklin Peterson, Trade Secrets and Confidentiality: Attorney Ethics in the Silent World of Tax Planning, 17 BYU J. PUR L 163 (2002). The tax return itself would not necessarily breach the secrecy although a taxpayer might have to file IRS Form 8886 and disclose that he or she entered into a confidential transaction.
173. See Treas. Reg. § 1.601 l-4(b)(3) (2009) (defining a "confidential transaction");.
174. id. § 1.601 l-4(d) (requiring that Form 8886 be filed with the tax return).
175. See UNIF. TRADE SECRETS ACT §§ 2-3;.
176. RESTATEMENT (THIRD) OF UNFAIR COMPETITION §§ 44-45 (1995).
177. See supra Part I.B.
178. This is the same analysis that makes deadweight loss such a concern for intellectual property law-if the underlying subject matter is something we want society to have access to. See supra Part I.A. Here, however, we want to limit access, so this introduction of true deadweight loss is not a drawback but a gain.
179. This might not be totally true because trade secret protection gives the tax-plan creator some access to supracompetitive pricing, or pricing higher than a competitive market could sustain. However, trade secret protection is not as strong as patent protection, and thus the market control is not as absolute. See Mark A. Lemley &. David W. O'Brien, Encouraging Software Reuse, 49 STAN. L. REV. 255, 297 (1997) ("Because of the strong rights patent law provides, the standards for obtaining a patent are higher than those for obtaining a copyright or a trade secret").
180. Hellwig, supra note 4, at 1013-17.
181. Aprill Statement, supra note 63, at 38 ("As a result, taxpayers, their advisers, and others may need to begin considering whether to conduct patent searches in connection with any tax planning activity, whether to seek expert advice, and depending on the results, what course of action to pursue in response to a possible patent claim.").
182. Patent infringement exposes the tax planner and taxpayer to monetary damages and an injunction against further use of the patented tax plan. 35 U.S.G §§ 283-284 (2006). There is also the possibility of treble damages for willful infringement and the payment of the patentee's attorneys' fees. Id. §§ 284-285.
183. See AprilI Statement, supra note 63, at 38 (citing the possible malpractice exposure).
184. See Hellwig, supra note 4, at 1013-17, 1021-22 (noting that "[p]rofessional reputation plays a critical role in the tax planning community").
185. See Burk & McDonnell, supra note 49, at 995-97;.
186. Hellwig, supra note 4, at 1013-17.
187. The latter case occurs either because the patentee can now increase price further because of less competition or because there is a finite pool of tax planning that can be provided by the current stock of tax planners.
188. See, e.g., Hellwig, supra note 4, at 1026-27 (citing the limitation on choice of counsel caused by tax patents).
189. Cf. id. at 1017-18 (mentioning the possibility but dismissing it as unlikely).
190. See, e.g., Richard L Doemberg & Fred S. McChesney, On the Accelerating Rate and Decreasing Durability of Tax Reform, 71 MINN. L. REV. 913 (1987) (describing tax legislation as the product of interactions between Congress and various interest groups). Tax Foundation, About Us, http://www.taxfoundation.oig/about/(last visited Mar. 25, 2010) ("The mission of the Tax Foundation is to educate taxpayers about sound tax policy and the size of the tax burden borne by Americans at all levels of government.").
191. See Hellwig, supra note 4, at 1017(setting forth this hypothetical).
192. As discussed further below, individuals have filed patents for the purpose of stopping any use of the claimed subject matter. See Gregory R. Hagen & Sébastien A. Gittens, Patenting Port-Human Chimeras, Transgenics and Stem Cells for Transplantation m the United States, Canada, and Europe, 14 RICH. J.L. & TECH. 11, 33-34 (2008) (discussing how Stuart Newman and Jeremy Rifkin filed a patent application on the production of "human-animal chimeras" because they were opposed to such technology).
193. See Jonathan Remy Nash & Richard L Revesz, Markets and Geography: Designing Marketable Permit Schemes to Control Local and Regional Pollutants, 28 ECOLOGY L.Q. 569, 658-59 (2001).
194. UNIF. TRADE SECRETS ACT § 1(4) (1986). Some disclosure was required by 1RS regulations, but it was fairly minimal.
195. See Treas. Reg. § 1.6011-4(b)(3) (2009). This secrecy was important to the value of tax planning, particularly tax shelters.
196. Hellwig, supra note 4, at 1024-25.
197. See 35 U.S.C § 112 para. 1 (2006) (best mode requirement);.
198. id. § 122(b)(1)(B) (2006) (publication requirement). However, it is worth noting that there are several exceptions to the publication requirement.
199. See id. §§ 122(b)(2)(A), (b)(2)(B)(i).
200. Burk & McDonnell, supra note 49, at 1000-01 ("Another possible positive effect is on public disclosure of tax planning strategies, which may affect the ease of Service enforcement.").
201. Admittedly, even with patent protection now available, some tax planners will stay with trade secret protection. However, some clearly will not, as shown by the rash of tax patents currently being filed, issued, and enforced. See supra notes 63-64. The fact that some are patenting will prompt others to as
202. See, e.g., Hellwig, supra note 4, at 1022-23 n.54 (discussing the possibility of defensive publishing in the tax-patent area);.
203. Ronald J. Mann, Do Patents Facilitate Financing in the Software Industry?, 83 TEX. L. REV. 961, 990 (2005) (reporting on defensive patenting behavior in the software industry);.
204. Gideon Parchomovsky, Publish or Perish, 98 MICH. L. REV. 926, 928 (2000) (discussing defensive publishing). There is an argument that moving to patent protection from trade secret protection will lead to more rapid diffusion of ideas because die patent system is a more efficient form of protection.
205. See Burk & McDonnell, supra note 49, at 995. However, this argument is overcome by the many ways in which the patent process limits innovation and restricts the ability of competing firms to build on the developments of others.
206. See infra Part II.A.2.
207. See Tax Patent Hearing, supra note 49, at 12-15 (statement of Mark Everson, IRS Comm'r) (explaining the cooperation between the IRS and the USPTO and also the IRS's affirmative searching of patents for potentially abusive tax-planning methods).
208. See supra text accompanying notes 84-90.
209. See infra Part I.B.
210. See Burk & McDonnell, supra note 49, at 997 ("[C]reating new tax planning strategies is a cumulative and modular process that builds upon earlier strategies.");.
211. Hellwig, supra note 4, at 1023 ("[T]ax strategies in the past have been incrementally refined through replication-").
212. See Burk & McDonnell, supra note 49, at 997 (discussing the modular nature of tax planning). The percolation of ideas among tax professionals plays a key role as well with tax planners exchanging notes and concepts through conferences, meetings, and tax periodicals.
213. See Aprill Statement, supra note 63, at 38 ("There is an astonishing array and number of meetings, conferences, conventions, and listservs where tax planning ideas are shared.");.
214. Hellwig, supra note 4, at 1022.
215. Merges &. Nelson, supra note 31, at 872-78 (explaining the negative impact patent protection can have on cumulative industries).
216. Burk & McDonnell, supra note 49, at 997, 1001;.
217. Hellwig, supra note 4, at 1023 ("Whereas tax strategies in the past have been incrementally refined through replication, the fear of patent infringement would pose a significant obstacle to downstream improvement of a patented technique.").
218. See supra notes 112-113.
219. See generally Carl Shapiro, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting, in 1 INNOVATION POUCY AND THE ECONOMY 119, 121 (Adam B. Jafife et al. eds., 2001) (stating that the U.S. patent system "is in danger of imposing an unnecessary drag on innovation by enabling multiple rights owners to 'tax' new products, processes, and even business methods");.
220. Michael A. Heller, The Tragedy of the Anticommons: Property m the Transition From Marx to Markets, 111 HARv.L.REv. 621 (1998) (foundational article);.
221. Michael A. Heller & Rebecca S. Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical Research, 280 SCIENCE 698, 698-700 (1998) (arguing that an increase in private intellectual property rights in biomedical research may reduce the total amount of such research).
222. See Burk & McDonnell, supra note 49, at 996-97.
223. See Hellwig, supra note 4, at 1022-23.
224. Id. at 1026-27.
225. Id. at 1024-25 (noting that the novelty of a tax shelter, and in turn the lack of a "copycat transaction[ ]," is crucial to prevent detection of the tax planning).
226. See, e.g., Burk & McDonnell, supra note 49, at 1000-01;.
227. Drennan, supra note 68, at 304-19;.
228. Hellwig, supra note 4, at 1012-23;.
229. Moulton, supra note 68, at 638-41.
230. See Burk &. McDonnell, supra note 49, at 999-1001 (considering but dismissing the possibility because they "do not believe that [patents are] likely" to reduce innovation in the tax planning space). Because of their ultimate dismissal of the likelihood that patents will hamper innovation, they conclude that "we do need to face up to the likelihood that business method patents will encourage more innovation and diffusion of tax planning strategies in the long run, and they may indeed be disturbing." Id. at 1001. We obviously do not agree that this is the conclusion based on our own analysis with regard to patent's impact on the industry. Some of Burk & McDonnell's work also cuts against this determination.
231. Id. at 1001-02. We, however, just accept as true that innovation in this area is harmful.
232. See, e.g., id. at 1001-02;.
233. Drennan, supra note 68, at 329-30;.
234. Hellwig, supra note 4, at 1027;.
235. Moulton, supra note 68, at 667-69.
236. For a list of samples, see Bagley, supra note 4, at 475.
237. See, e.g., id. ("The moral controversies surrounding these and other biotech inventions stem from several concerns including those arising from the mixing of human and animal species, the denigra' tion of human dignity, the destruction of potential human life, and the ownership of humans.").
238. See, e.g., Margo A. Bagley, Stem Cells, Cloning and Patents: What's Morality Got to Do With ft?, 39 NEW ENG. L. REV. 501, 507-09 (2005);.
239. Bagley, supra note 4, at 475-76 ("The availability of a government imprimatur granting exclusive rights over morally controversial inventions is especially problematic in die area of biotechnology because no one should 'own' and the government should not encourage certain inventions.");.
240. Valerie J. Phillips, Half-Human Creatures, Hants & Indigenous Peoples: Musings on Ramifications of Western Notions of Intellectual Property and the Newman-Rifkin Attempt to Patent a Theoretical Half-Human Creature, 21 SANTA CLARA COMPUTER & HIGH TECH. L.J. 383 (2005).
241. Contra Magnani, supra note 47, at 459 ("[Excluding controversial technologies from patentability would not prevent their development.").
242. See, e.g., Bagley, supra note 4, at 532-39 (suggesting a legislative morality-based limit on patent subject matter eligibility).
243. Use of the moral utility doctrine declined over the course of the twentieth century, see id. at 476-77, .
244. and the Federal Circuit planted a seemingly final nail in its coffin in 1999 in Juicy Whip, Inc. v. Orange Bang, Inc., 185 F.3d 1364, 1366-68 (Fed. Cir. 1999) (noting that the utility requirement does not allow "the Patent and Trademark Office or the courts to serve as arbiters of deceptive trade practices").
245. But see Timothy R. Holbrook, The Expressive Impact of Patents, 84 WASH. U. L.R. 573, 606-08 (2006) (citing "[a] recent rejection at the PTO office [that] suggests use of morality may yet resurface at the PTO").
246. See, e.g., Bagley, supra note 4, at 473, 504-06, 515 (citing examples of cloning and human chimera inventions produced by university researchers);.
247. Peter Lee, The Evolution of Intellectual Infrastructure, 83 WASH. L. REV. 39, 110 n376 (2008) ("[I]ntrinsic motivations to create, government funding of basic research, and norms of non-exclusivity in academic science suggest that economic incentives may not be as necessary to produce this primary infrastructure.").
248. But see Brett M. Frischmann, The Pull of Patents, 77 FORDHAM L. REV. 2143, 2146 (2009) ("Given limits in government funding of research-the primary driver of the university science and technology research enterprise- universities have begun to pursue and employ patents aggressively to transfer technology, encourage entrepreneurship, and generate revenues that may support research efforts.").
249. PRESIDENT'S COUNCIL OF ADVISORS ON SCI. And Tech., UNIVERSITY-PRIVATE SECTOR RESEARCH PARTNERSHIPS IN THE INNOVATION ECONOMY 35 (2008) ("Current metrics to evaluate the success of university researchers and determine tenure decisions are limited primarily to publications and Federal grants and often fail to recognize other critical factors.");.
250. Melissa J. Alcorn, Note, Biotechnology Law: A Tale of Peptides and Lasers: Is Integra Lifestyles I, Ltd. v. Merck KGaA the End of the Experimental Use Defense for Biomedical Innovation, or Does § 271(e)(1) of the Patent Act Save the Day?, 57 okla. L. REV. 381, 396 (2004) ("The researcher works for the incentive of publication, tenure, and recognition in their field, not for maximum patent protection.").
251. But see Frischmann, supra note 129, at 2162 n.55 (noting that patents receive consideration in tenure decisions at Texas A&M and that faculty at other universities have pushed for similar policies).
252. See, e.g., Holbrook, supra note 128, at 577 ("Research into biological causes of behaviors is inevitable and, indeed, has already begun.");.
253. Arti Kaur Rai, Regulating Scientific Research: Intellectual Property Rights and the Norms of Science, 94 NW. U. L. REV. 77, 88-94 (1999) (discussing the strong norms that prompted molecular biology research even without patent protection).
254. See, e.g., Holbrook, supra note 128, at 622 (noting that even though the denial of patent protection will not stop the production of such technologies, there are other reasons to deny such protection).
255. See, e.g., supra Figure 2 (depicting the static downside to patent protection).
256. See, e.g., supra notes 114 Sl 117.
257. See Merges & Nelson, supra note 31, at 873-74;.
258. Rai, supra note 131, at 115, 127-35.
259. See, e.g., Heller & Eisenberg, supra note 117, at 698-99 (arguing that patents can deter innovation in the field of basic biological research).
260. Hagglund, supra note 47, at 66-69.
261. Holbrook, supra note 128, at 595 &. n.135.
262. (citing DEAN H. HAMER &. PETER COPELAND, THE SCIENCE OF DESIRE 219 (1994)).
263. Susanna Monseau, A Review of European Design Protections Does Not Support the Fashion Industry Contention That Congress Should Single Out Fashion for Special Design Protection 9-10 (Apr. 16, 2009) (unpublished manuscript, on file with author).
264. See A Bill To Provide Protection/or Fashion Design: Hearing on H.R. 5055 Before the Subcomm. on Courts, the Internet, and Intellectual Property of the H. Comm. on die Judiciary, 109th Cong. 87 (2006) (testimony of Christopher Sprigman, Associate Professor, University of Virginia School of Law).
265. IBISWorld, Fashion Design Services in the U.S. 3, 29 (2008 & Update 2009).
266. Id. at 3 (projecting return to positive growth through 2013 after negative growth in 2009).
267. See Jonathan M. Barnett, Essay, Shopping for Gucci on Canal Street: Reflections on Status Consumption, Intellectual Property, and the Incentive Thesis, 91 VA. L. REv. 1381 (2005) [hereinafter Barnett, Essay];.
268. C. Scott Hemphill &Jeannie Suk, The Law, Culture, and Economics of Fashion, 61 STAN. L. REv. 1147 (2009);.
269. Raustiala & Sprigman, supra note 5;.
270. Jonathan M. Barnett et al., The Fashion Lottery: Cooperative Innovation in Stochastic Markets 24 (U.S.C Legal Stud. Research Paper Series No. 08-21, 2008) [hereinafter Barnett et al., Fashion Lottery]. We refer here to U.S. law; there are stronger protections in Europe.
271. See infra notes 234-237 and accompanying text.
272. For an explanation of the useful article doctrine and its application to fashion, see Joseph E. McNamara, Modifying the Design Piracy Prohibition Act To Offer "Opt-Out" Protection for Fashion Designs, 56 J. COPYRIGHT SOC'Y U.S.A. 505, 510-13 (2009), .
273. and Raustiala & Sprigman, supra note 5, at 1699-1700.
274. McNamara, supra note 144, at 513-15;.
275. Raustiala & Sprigman, supra note 5, at 1704-05. The average design patent application takes more than eighteen months to work its way through the Patent Office. Id. at 1704.
276. Barnett et al., Fashion Lottery, supra note 143, at 8-10;.
277. Raustiala & Sprigman, supra note 5, at 1700-04.
278. Raustiala &. Sprigman, supra note 5, at 1705-15. This copying dynamic has existed since at least the 1800s.
279. See Caroline A. Foley, Fashion, 3 ECON. J. 458, 471 &. n.5 (1893) (noting that "it is not impossible, by close observation of the inception of a taste, and estimation of the average rate of diffusion both in time and space, to anticipate its final stage, as a want of the million, and reap a rich harvest of profit" and giving a real life example from France).
280. Raustiala & Sprigman, supra note 5, at 1722;.
281. see also Barnett, Essay, supra note 143, at 1398- 1401 (describing a similar phenomenon for bags and fashion accessories).
282. Raustiala & Sprigman, supra note 5, at 1728-32;.
283. see also Barnett et al., Fashion Lottery, supra note 143, at 31-38 (describing the intricate process of sharing design ideas throughout the design community).
284. Raustiala & Sprigman, supra note 5, at 1719-20. Raustiala and Sprigman call this "induced obsolescence." Id. at 1722.
285. Your kids think the same about what you are wearing.
286. A haute couture evening gown can cost upwards of $150, 000. Elizabeth Hayt, The Hands That Sew the Sequins, N.Y. TIMES, Jan. 19, 2006, at Gl.
287. One researcher asserts that the female clientele for haute couture comprises no more than five hundred women worldwide. Veronica Manlow, designing clothes: culture and Organization of the Fashion Industry 100 (2007).
288. We should point out that there may be gradations of copying even among low-end retailers. See Hemphill & Suk, supra note 143, at 1172-74 (labeling H&M and Zara "fast-fashion designers" and Forever 21a "[f]ast-fashion copyist! ]").
289. Indeed, some low-end retailers have partnered with household-name designers to create their own distinctive lines (e.g., Kohl's and Vera Wang, Wal Mart and Norma Kamali, and, until recently, Target and Isaac Mizrahi).
290. Id. at 1157-59. To be fair, Raustiala and Sprigman recognize a similar dynamic.
291. Raustiala & Sprigman, supra note 5, at 1733 ("Today, many trends bubble up from the street, rather than down from major houses. ").
292. Hemphill &. Suk, supra note 143, at 1166-68.
293. Not that the authors would know.
294. In any event, the distinctions are small. See Kal Raustiala & Christopher Sprigman, Response, The Piracy Paradox Revisited, 61 STAN. L. REV. 1201, 1206-09 (2009) (summarizing the many ways in which Hemphill and Suk agree with their approach);.
295. see also Raustiala & Sprigman, supra note 5, at 1733 ("Our argument depends less on who determines what is desirable than on how a regime of low IP protection, by permitting extensive and free copying, enables emerging trends to develop and diffuse rapidly, and, as a result of the positionality of fashion, to die rapidly.").
296. See, e.g., Hemphill & Suk, supra note 143, at 1164-65 (stating that consumers want to be "in fashion" and "part of a trend" and that differentiation occurs within these collective movements).
297. Hemphill and Suk disagree with this proposition. First, they argue that "close copying"- the creation of exact knock-offs of apparel designs-does little to fuel the fashion cycle and that a narrow intellectual property right forbidding close copying would accordingly help the industry. Id. at 1180-90. In our view, however, Raustiala and Sprigman have the better argument, for reasons they explain more ably than we could See Raustiala &. Sprigman, supra note 158, at 1213-16 (responding to the Hemphill & Suk article). Second, Hemphill and Suk claim that many consumers are "lifecycle pricers" whose fashion expenditures remain stable regardless of how quickly fashions come and go, which means that a faster cycle would reduce industry profits. Hemphill &. Suk, supra note 143, at 1182-83. Again, we believe that Raustiala and Sprigman convincingly rebut this assertion, .
298. see Raustiala & Sprigman, supra note 158, at 1211 n.21;.
299. we add only that the notion of farsighted, rational lifecycle pricing is at odds with consumers' acknowledged tendency to form part of a decentralized collective focused on staying in style, .
300. see, e.g., Hemphill & Suk, supra note 143, at 1167 (noting that consumers are "ever on the lookout for something new" and for "a fresh basis for asserting commonality"), and indeed is also at odds with the collective action inefficiencies that underlie the basic notion of buying new clothes before one's old clothes wear out, see Barnett, Essay, supra note 143, at 1385. A discussion of these issues is not complete, however, without reference to Hemphill and Suk's responses to these and other critiques of their approach. C. Scott Hemphill & Jeannie Suk, Reply, Remix and Cultural Production, 61 STAN. L. REV. 1227 (2009).
301. There is precedent for this change. Copyright fails to protect fashion because of the useful article doctrine, which also once stood in the way of protection for architectural works. Architectural works escaped the useful article doctrine when they received their own section 102(a) category in 1990. See Architectural Works Copyright Protection Act, Pub. L No. 101-650, tit VII, § 703, 104 Stat 5089, 5133 (1990). Therefore, to remove the useful article constraint on fashion and bring it within copyright's scope, Congress would simply have to add "clothing" or "apparel" to the list of copyrightable categories in 17 U.S.G § 102(a) (2006). Note, however, that recent proposals have involved more of a sui generis regime.
302. See infra note 269.
303. See Raustiala & Sprigman, supra note 5, at 1696.
304. See Barnett et al., Fashion Lottery, supra note 143 (demonstrating that a high-IP regime would stifle fashion innovation).
305. We realize, of course, that other outcomes are possible-that protecting fashion with strong intellectual property entitlements might not necessarily slow down the industry. In Part III, infra, we deal with those alternatives that fashion has in common with other low-IP industries. For now we merely note in passing that those who have studied the interplay of intellectual property and fashion tend to share our view that stronger entidements would impede innovation and reduce production.
306. See Barnett, Essay, supra note 143, at 1418;.
307. Kal Raustiala, How Copyright Law Could Kill the Fashion Industry, NEW REPUBLIC, Aug. 13, 2007, http://www.tnr.com/article/fashion-victims. Hemphill & Suk disagree slightly, as discussed above
308. . See supra note 160.
309. THORSTEIN VEBLEN, THE THEORY OF THE LEISURE CLASS 118-31 (Houghton Mifflin 1973) (1899).
310. See Letter From John Locke to Some Member of Parliament (1691), Some Considerations of the Lowering of Interest, and Raising the Value of Money, in 4 THE WORKS OF JOHN LOCKE 2, 58-59 (12th ed. London, C. Baldwin 1824);.
311. JOHN RAE, THE SOCIOLOGICAL THEORY OF CAPITAL 245-76 (Charles Whitney Mixter ed., MacMillan Co. 1905) (1834).
312. For an insightful economic analysis of the dynamics of purchases to stay "in style," see H. Leibenstein, Banduwgon, Snob, and Veblen Effects in the Theory of Consumers' Demand, 64 Q.J. ECON. 183 (1950).
313. WILLIAM SHAKESPEARE, MUCH ADO ABOUT NOTHING ACT 3, sc. 3.
314. JULIET B. SCHOR, THE OVERSPENT AMERICAN: UPSCALING, DOWNSHIFTING, AND THE NEW CONSUMER 107 (1998);.
315. accord RAE, supra note 166, at 273;.
316. MELVIN WARREN REDER, STUDIES IN THE THEORY OF WELFARE ECONOMICS 65-67 (1947);.
317. Barnett, Essay, supra note 143, at 1416-17.
318. See, e.g., ROBERT H. FRANK, CHOOSING THE RIGHT POND 151 (1985) (noting that "emphasizing observable consumption may be highly adaptive from the individual's point of view [but] is clearly maladaptive from the standpoint of the population as a whole" because "[o]ne individual's forward move in any hierarchy can occur only at the expense of backward moves by others").
319. This claim has a long pedigree. One can detect it in Veblen and his predecessors, see supra notes 165-166, and in other observers as well, e.g., Foley, supra note 147, at 461 ("Fashion cannot claim to express such changes in habits and modes of life as are due to fresh discoveries and to improvements in taste and comfort as such, nor from those consequent on change in physical or social environment.").
320. But see ALFRED MARSHALL, PRINCIPLES OF ECONOMICS 145-46 n.l (2d ed. 1891) ("For to arrange costumes beautiful in and of themselves, various and well-adapted to their purposes is an object worthy of high endeavor, it belongs to the same class, though not to the same rank in that class, as the painting of a good picture.").
321. See Hemphill &. Suk, supra note 143, at 1152, 1162 (arguing that positionality and trends also influence purchases of creative works outside of fashion);.
322. cf. Raustiala & Sprigman, supra note 5, at 1689 n.l (finding insufficient basis for the claim that fashion goods have lower "IP content" than other expressive works).
323. Jonathan Barnett has made a similar point about social welfare and the fashion cycle, see Barnett, Essay, supra note 143, at 1418, and James Grimmelmann had the same thought in commenting on the Raustiala and Sprigman article, .
324. see Is Fashion a Bad?, Posting of James Grimmelmann to University of Chicago Law School Faculty Blog, http://uchicagolaw.typepad.com/faculty/2006/1l/ is-fashion-a-ba.html (Nov. 14, 2006, 10:14 EST).
325. See, e.g., DIANA E.H. RUSSELL, DANGEROUS RELATIONSHIPS 113-56 (1998) (reviewing evidence for a causal link between pornography and rape);.
326. Edward Donnerstein, Pornography: Its Effect on Violence Against Women, in PORNOGRAPHY AND SEXUAL AGGRESSION 53, 63-78 (Neil M. Malamuth & Edward Donnerstein eds., 1984) (summarizing research showing increased aggression toward women after exposure to "aggressive pornography");.
327. Dolf Zillmann & Jennings Bryant, Effects of Prolonged Consumption of Pornography on Family Values, 9 J. FAM. ISSUES 518, 540-42 (1988) (finding decreased regard for marriage, fidelity, and procreation after repeated exposure to pornography). Of course, the view that pornography is bad for society, and for women in particular, has its critics.
328. See, e.g., NADINE STROSSEN, DEFENDING PORNOGRAPHY: FREE SPEECH, SEX, AND THE FIGHT FOR WOMEN'S RIGHTS (1995).
329. Ann Bartow has suggested "conditioning copyright registration and enforcement [of pornography] upon showings by producers not simply that performers are eighteen years or older, but also that their performances were consensual and recorded with the understanding that they would be widely distributed." Bartow, supra note 4, at 802. An earlier student note proposed something similar.
330. See Note, supra note 46, at 1503 (arguing for "federal legislation that would invalidate a copyright registration or a patent if the creator (or her agent) violated specific criminal laws in the immediate production of the material for which the protection is sought").
331. Murray v. Benbow, (1822) 4 St. Tr. (N.S) 1409 (Ch.).
332. Martinetti v. Maguire, 16 F. Cas. 920, 922 (C.C.D. Cal. 1867) (No. 9173).
333. Broder v. Zeno Mauvais Music Co., 88 F. 74, 79 (C.C.N.D. Cal. 1898).
334. Barnes v. Miner, 122 F. 480, 489 (C.C.S.D.N.Y. 1903).
335. Dane v. M&H Co., 136 U.S.P.Q. (BNA) 426, 427 (N.Y. Sup. Ct. 1963).
336. E.g., Miller v. California, 413 U.S. 15, 24 (1973) (using contemporary community standards to determine whether material was outside the First Amendment's protection).
337. 604 F.2d 852 (5th Cir. 1979) (interpreting the 1909 Copyright Act).
338. Id. at 854.
339. Few courts have even discussed the issue. In 1982, the Ninth Circuit followed Mitchell Brothers to the letter except that its ruling was based on the 1976 Copyright Act, the statute that governs today. See Jartech, Inc. v. Clancy, 666 F.2d 403 (9th Cir. 1982). Only one subsequent case has expressed any doubt about ignoring morality in copyright matters, but it left the issue open and instead disposed of the controversy on other grounds.
340. See Devils Films, Inc. v. Nectar Video, 29 F.Supp. 2d 174 (S.D.N.Y. 1998).
341. E.g., Murray v. Benbow, (1822) 4 St. Tr. (N.S) 1409 (Ch.) (Eldon, LC.) ("There is a great difficulty in these cases, because it appears a strange thing to permit the multiplication of copies by the way of preventing the circulation of a mischievous work..");.
342. 10 JOHN LORD CAMPBELL, LIVES OF THE LORD CHANCELLORS AND KEEPERS OF THE GREAT SEAL OF ENGLAND 257 (5th ed. 1868).
343. ("So the injunction was refused [in Sowhey v. Sherwood, (1817) 35 Eng. Rep. 1006, 1007-08 (Ch.) (Eldon, LC.)], and hundreds of thousands of copies of Wat Tyler, at the price of one penny, were circulated over the kingdom.").
344. See Stockdale v. Onwhyn, (1826) 108 Eng. Rep. 65, 66 (K.B.);.
345. see also Mitchell Bros., 604 F.2d at 862 (rejecting the district court's view "that on the whole the long-term discouragement of the creation of obscene works would outweigh the short-term increase in the dissemination of obscene works caused by the refusal of an injunction");.
346. Bonnie Wilkinson, Recent Development, Copyright-The Obscenity Defense m Actions To Protect Copyright, 46 FORDHAM L. REv. 1037, 1039 &. n.20 (1978) (noting that "disagreement regarding the wisdom of the doctrine" dates to Lord Eldon's time and "is still with us").
347. See, e.g., Cases of Walcot v. Walker; Sou they v. Sherwood; Murray v. Benbow, and Lawrence v. Smith, Q. REv., July 1822, at 123, 133 (arguing that "[t]he desire of obtaining notoriety, and of producing an effect, are much stronger motives to publication than the mere contingency of profit" and that the first-mover advantage is also a significant incentive for the author);.
348. Jeremy Fhillips, Copyright in Obscene Works: Some British and American Problems, 6 ANGLO.-AM. L. REV. 138, 156-57 (1977) (noting that "commerce in [obscene] works is thoroughly lucrative even in the absence of protection").
349. Ann Bartow, Open Access, Law, Knowledge, Copyrights, Dominance and Subordination, 10 lewis & clark l. Rev. 869, 881 (2006). Playboy in particular was the plaintiff in many cases that established important online precedents, although newcomer Perfect 10 has been setting the pace more recently.
350. See, e.g., Perfect 10, Inc. v. Visa Int'l Serv. Ass'n, 494 F3d 788 (9th Cir. 2007) (copyright and trademark);.
351. Perfect 10, Inc. v. CCBill LLC, 488 FJd 1102, (9th Cir. 2007) (copyright);.
352. Perfect 10, Inc. v. Amazon.com, Inc., 487 F.3d 701 (9th Cir. 2007) (copyright);.
353. Playboy Enters, v. Netscape Comm. Corp., 354 F.3d 1020 (9th Cir. 2004) (trademark);.
354. Playboy Enters, v. Welles, 279 FJd 796 (9th Cir. 2002) (trademark);.
355. Playboy Enters, v. Universal Tel-A-Talk, Inc., 48 U.S.P.Q.2d (BNA) 1779 (ED. Pa. 1998) (trademark);.
356. Playboy Enters, v. AsiaFocus Intl, No. Civ. A. 97-734-A, 1998 WL 724000 (ED. Va. Apr. 10, 1998) (trademark);.
357. Playboy Enters, v. Calvin Designer Label, 985 F. Supp. 1220 (N.D. Cal. 1997) (trademark);.
358. Playboy Enters, v. Chuckleberry Publ'g, Inc., 939 F. Supp. 1032 (S.D.N.Y. 1996) (trademark);.
359. Playboy Enters, v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993) (copyright).
360. FREDERICK S. LANE III, OBSCENE PROFITS 209 (2000).
361. By Web 2.0, we mean internet applications that encourage interactivity and user input.
362. Bartow, supra note 4, at 802 (noting that "[u]ser-generated pornography is a widespread phenomenon on Web 2.0" and that it "[l]ack[s] a corporate presence or conventional for-profit structure").
363. Sunny Freeman, Pom 2.0: What Happens When Free Pom Meets Social Networking, ALTERNET, July 10, 2007, http://www.alternet.org/sex/56414/?page= entire ("[Tlhe ease of posting porn online is causing a panic among some adult film producers, who spend big budgets on big stars, only... to see viewers turn to free, amateur porn instead.").
364. See Tom Johansmeyer, Dirty Sexy Money, ATLANTIC, Jan-Feb. 2009, at 26;.
365. Matt Richtel, For Producers of Pornography, Internet's Virtues Turn to Vices, N.Y. TIMES, June 2, 2007, at Al;.
366. Claire Hoffman, Obscene Losses, PORTFOLIO, Oct 15, 2007, http:/www.portfblio.com/culture-lifestyle/culture-inc/arts/2007/10/15/ YouPom-Vivid-Entertainment-Profile.
367. Press Release, Larry Flynt &. Joe Francis, Hustler's Larry Flynt and Girls Gone Wild CEO Joe Francis Ask for Government Bailout of the Adult Entertainment Industry (Jan. 7, 2009) (on file with authors).
368. Id.
369. See supra Part I.A. The second negative effect of the entitlement is that it increases costs of downstream innovation, see supra Part I.B, but we focus here on the first effect under the assumption that pornography sees little in the way of innovation.
370. See infra notes 233-249 and accompanying text.
371. Freeman, supra note 192 ("New aggregators like YouPorn and PornoTube make it easier for a new audience to find free Internet porn, previously often only accessible to 'techies' who knew how to use often illegal file sharing methods like Bit Torrent.").
372. Id. (noting that users post both amateur and commercial pornography on aggregator websites).
373. See, e.g., Matthew Belloni, Pom Filmmakers Join Fight Against Internet Piracy, REUTERS, Jan. 13, 2008, available at. http://www.reuters.com/article/ filmNews/idUSN1363855720080113
374. In addition to the Porno Tube case, major media companies have recently filed cases against YouTube, see Viacom Int'l v. YouTube, Inc., No. 07-CV-2103 (S.D.N.Y. filed Mar. 13, 2007), and two music search engines, .
375. see Warner Bros. Records Inc. v. SeeqPod, Inc., No. CV08-00335 (CD. Cal. filed Jan. 18, 2008);.
376. Capitol Records, Inc. v. MP3tunes LLC, No. 07-Civ-9931 (S.D.N.Y. filed Nov. 9, 2007). Another aggregator website, Stage6.com, shut down in 2008 in the midst of similar litigation.
377. Mike Freeman, DivX to Dump Video-Sharing Stage6 Service, SAN DIEGO UNION-TRIBUNE, Feb. 26, 2008, at C1.
378. See David Ho, Video on Internet Gets Boost, ATLANTA J.-CONST., Oct. 19, 2007, at G5 (describing an agreement under which aggregator sites will filter user-posted content). Google's YouTube service was conspicuously absent from die deal, but it had already begun to filter for unauthorized content voluntarily. Id.
379. See Jennifer M. Urban & Laura Quilter, Efficient Process or "Chilling Effects"! Takedown Notices Under Section 512 of the Digital Millennium Copyright Act, 22 SANTA CLARA COMPUTER & HIGH TECH. L. J. 621, 666 (2006) (finding that 30 percent of the nine hundred takedown notices under the Digital Millennium Copyright Act analyzed in the authors' study were flawed in some significant way).
380. See generally Mark P. McKenna, The Normative Foundations of Trademark Law, 82 NOTRE DAME L. REV. 1839 (2007).
381. See supra note 128 and accompanying text.
382. See supra notes 176-184 and accompanying text.
383. 15 U.S.C. § 1052(a) (2006);.
384. see also Stephen R. Baird, Moral Intervention in the Trademark Arena: Banning the Registration of Scandalous and Immoral Trademarks, 83 trademark rep. 661, 666 & n.15 (1993) (discussing earlier federal statutes);.
385. id. at 792-93 (discussing state statutes). Some commentators argue that such marks should be denied protection altogether.
386. See id. at 790-95;.
387. 3 Louis Altman & Malla Pollack, Callmann on Unfair Competition, Trademarks and monopolies § 17.21, at 134-36 (4th ed. 2008).
388. See Stacey L. Dogan & Mark A. Lemley, The Merchandising Right: Fragile Theory or Fait Accompli?, 54 EMORY L.J. 461, 471-78 (2005).
389. 15 U.S.C.§ 1125(c) (2006).
390. Wendy Gordon made a similar argument in commenting on the Raustiala and Sprigman fashion article. See Posting of Wendy Gordon to University of Chicago Law School Faculty Blog, http://uchicagolaw.typepad.com/faculty/2006/11/status- marks.html (Nov. 14, 2006, 9:36 EST).
391. See supra notes 143-146 and accompanying text.
392. See supra notes 75-76 and 127-128 and accompanying text.
393. See supra notes 175-184 and accompanying text.
394. See Hagglund, supra note 47, at 60-64;.
395. supra notes 63-67 and 200 and accompanying text.
396. See, e.g., Carroll, supra note 6.
397. See 17 U.S.C. §§ 1301-1332 (2006) (boat hulk);.
398. id. §§ 901-914 (semiconductors);.
399. Int'l News Serv. v. Associated Press, 248 U.S. 215, 238 (1918) (articulating the "hot news" doctrine).
400. And even this line blurs with computer software, which is protectable under both patent law and copyright law.
401. There are. See, e.g., Burk & Lemley, supra note 24;.
402. Joseph P. Liu, Regulatory Copyright, 83 N.C. L. Rev. 87 (2004).
403. See MANCUR OLSON, THE LOGIC OF COLLECTIVE ACTION 53-57 (1971).
404. Hemphill & Suk, supra note 143, at 1183 & n.142;.
405. see also Design Law-Are Special Provisions Needed to Protect Unique Industries?: Hearing Before the Subcomm. on Courts, the Internet, and Intellectual Property of the H. Comm. on the Judiciary, 110th Cong. 21 (2008) (testimony of Naicisco Rodriguez, Member of die Board of Directors, Council of Fashion Designers of America, in support of protection).
406. For more on the part that miscalculation, ignorance, and inattention might play, see infra notes 248-249 and accompanying text.
407. We cannot help but point out that the familiar prisoner's dilemma narrative exemplifies our point that individual welfare and social welfare often diverge. The story involves two prisoners whose inability to act collectively during plea bargaining leads to a suboptimal outcome from their perspective. See, e.g., MORTON D. DAVIS, GAME THEORY: A NONTECHNICAL INTRODUCTION 108-09 (rev. ed. 1983). We need not go into the details here; we merely note that the optimal outcome for the prisoners, escaping prosecution for the crime they are presumed to have committed, is hardly the optimal outcome for society at large, which would prefer to see criminals punished. For social welfare purposes, there is no dilemma at all; maximizing the prisoners' inefficiency, like maximizing the inefficiency of tax planning or fashion cycles, would actually be a better outcome.
408. See sources cited supra note 220;.
409. see also Raustiala & Sprigman, supra note 158, at 1223 (explaining how elite designers might do better under a strong entitlement regime);.
410. Barnett et al., Fashion Lottery, supra note 143, at 30 & n.39 (same).
411. Raustiala & Sprigman, supra note 5, at 1695.
412. See Brief for Double Rock Corp. et al. as Amici Curiae in Support of Petitioners, Bilski v. Doll, No. 08-964 (Aug. 6, 2009) (argued) (including small- and mid-sized financial institutions arguing for a broad patentable subject-matter requirement);.
413. Brief for Bank of America Corp. et al. as Amici Curiae in Support of Respondent at 2, Bilski v. Kappos, No. 08-964 (Oct 2, 2009) (argued) (arguing, among other things, that "tax mitigation techniques" should not be patentable).
414. See John R Duffy et al., Early Patent Publication: A Boon or Bane? A Discussion on the Legal and Economic Effects of Publishing Patent Applications After Eighteen Months of Filing, 16 CARDOZO ARTS & EOT. L. J. 601, 604 (1998) (identifying a political division between large corporations and small inventors);.
415. Christopher Cotropia, The Individual Inventor Motif in the Age of the Patent Troll, 12 YALE J.L & TECH. 52 (2009).
416. See, e.g., John R. Allison et al., Valuable Patents, 92 GEO. L. J. 435, 468 (2004) (noting that the small inventor lobby has resisted recent changes to patent law designed to harmonize U.S. patent rules with those in the rest of the world).
417. This means that those who place a high value on distributional equity might have a problem with our approach since it could enrich a few players (tax-plan originators, biotech pioneers, leading fashion designers, commercial pornographers) at the expense of others in the same industry.
418. See, e.g., LAWRENCE LESSIO, FREE CULTURE 218 (2004) (noting that more than two-thirds of the original congressional sponsors of the Copyright Term Extension Action received contributions from Disney's political action committee).
419. See James Gibson, Once and Future Copyright, 81 NOTRE DAME L. REV. 167, 168(2005).
420. See Christopher A. Cotropia, Modernizing Patent Law's Inequitable Conduct Doctrine, 24 berkeley Tech. L.J. 723, 780 (2009) (detailing the process and the costs of obtaining a patent).
421. See Gideon Parchomovsky & R. Polk Wagner, Patent Portfolios, 154 U. PA. L. REV. 1, 31-41 (2005);.
422. see also Bronwyn H. Hall & Rosemarie Ham Ziedonis, The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1979-1995, 32 RAND J.ECON. 101 (2001) (exploring the same issues in the context of the semiconductor industry).
423. Such remedies are available in both patent, 35 U.S.C § 283 (2006) (injunctions);.
424. id. § 284 (treble damages);.
425. id. § 285 (attorneys' fees), and copyright, 17 U.S.C. § 502 (2006) (injunctions);.
426. id. § 504 (disgorgement of profits and statutory damages of up to $150, 000 per work infringed);.
427. id. § 505 (attorneys' fees). For a detailed discussion of the effect of such remedies on users of intellectual property, .
428. see Gibson, supra note 44.
429. Council Directive 98/71, 1998 O.J. (L 289) 28 (EC).
430. See Raustiala & Sprigman, supra note 5, at 1735-43.
431. Karen Fong & Tom Grek, IP Special Report: Crimes of Fashion, LAWYER.COM, Jan. 19, 2009, http:/www.thelawyer.com/cgi-biri/item.cgi?id= 136319&d=415&h=417&f=416 (repeating that "[c]opycat fashion actions have recently been on the increase" and citing a handful of prominent cases).
432. Moreover, those that doubt that intellectual property rights will ever turn Europe into a hotbed of fashion lawsuits see a different picture when they consider the effect of such rights on our more litigious American society. See A Bill to Provide Protection for Fashion Design: Hearing Before the Subcomm. on Courts, the Internet, and Intellectual Property of the H. Comm. on the Judiciary, 109th Cong. 88 (2006) (testimony of Christopher Sprigman) (noting that the United States is unlike Europe in having "a class of litigation entrepreneurs who turn to the federal courts readily to seek leverage in competitive industries" and thus predicting "a chilling effect on the industry" if rights are granted in the United States).
433. Note also that supracompensatory remedies are generally available in the United States, see supra note 233, but not in Europe, see Council Directive 2004/48, art. 13, 2004 O.J. (L 195) 16, 23 (EC), which is another reason to expect more litigation and greater in terrorem effects here.
434. Liz McKenzie, Mistrial Declared in Trade Dress Suit v. Forever 21, LAW 360, May 29, 2009 (describing suits filed by filed by Diane von Furstenburg, Anna Sui, Harajuku Lovers, and others);.
435. see also Hemphill & Suk, supra note 143, at 1173 (finding fifty-three suits against Forever 21 between 2003 and 2008);.
436. Bamett et al., Fashion Lottery, supra note 143, at 29 (recounting appreciable m terrorem effect even under the current low-IP regime).
437. The SOGRATS tax patents dispute is the result of an individual player defecting from an industry that had not traditionally sought patent protection. See Beale, supra note 62, at 108-09. Recent research shows that most business method litigation is initiated by individuals rather than large market players. Josh Lerner, The Litigation of Financial Innovations (Nat'l Bureau of Econ. Research, Working Paper No. 14321, 2008) ("The finance patents being litigated are disproportionately those issued to individuals.").
438. One might view this as an offshoot of the endowment effect-the documented tendency of people to place a higher value on that which they own than that which they do not. See Richard Thaler, Toward a Positive Theory of Consumer Choice, 1 J. ECON. BEHAv. & ORG. 39, 44 (1980). Preliminary results from an empirical study suggest that the endowment effect is even stronger when the ownership involves intellectual property.
439. See Christopher J. Buccafiisco & Christopher Jon Sprigman, Valuing Intellectual Property: An Experiment 1 (John M. Olin Law & Econ. Research Paper Series, No. 2010-04, 2010), available at http://papers.ssrn.com/sol3/ papers.cfm?abstract-id=1568962.
440. Bartow, supra note 4, at 802 ("Some of the user-generating up-loaders, however, may assert proprietary intellectual property claims over their pornographic content"). Right now the norm appears to be no compensation for the uploading amateur, although he or she does retain ownership of the copyright in the uploaded material; the websites seem to require only a nonexclusive license.
441. See, e.g., Pornhub Terms & Conditions § 6(3), http://www.pornhub.com/ftont/terms (last visited Apr. 4, 2010);.
442. YouPorn Terms of Service § 6, http://www.youporn.com/terms (last visited Apr. 4, 2010).
443. Raustiala & Sprigman, supra note 5, at 1692.
444. See Hellwig, supra note 4, at 1018-19.
445. Id. at 1020 ("Patents on tax strategies, however, would introduce a winner-take-all aspect to the tax planning arena-").
446. Compaq Computer Corp. v. Comm'r, 277 FJd 778 (5th Cir. 2001). Brant Hellwig uses this example.
447. See Hellwig, supra note 4, at 1018-20.
448. See Hellwig, supra note 4, at 1018-19 (describing the tax planning strategy developed by Compaq as a "cross-border dividend-stripping transaction").
449. Id. Hellwig even notes that "[g]iven the claim that tax planning is socially undesirable, one could view Compaq's ability to preclude others from using the technique in a positive light" id. at 1019 nJ8. However, he dismisses this conclusion because he believes it wrongly assumes that the alternative is no tax planning at all rather than second-best alternatives that would lead to "greater distortion of taxpayer behavior." Id. One of the problems with this dismissal is that it fails to make the proper comparison-innovation with patent protection versus innovation without patent protection, given that tax planning is a field with a high level of innovation even under a low-IP regime. Thus, the proper analysis is a world where Compaq and everyone else operate with the highly effective tax plan, compared to a world where only Compaq can use this plan, and everyone else is forced to use something slightly less effective. If tax planning is bad, you would rather force individuals to have to use second-best planning methods-those that either do not result in as much tax savings or tax revenue loss for society or cost more to implement.
450. See, e.g., 144 CONG. REC. 24336 (1998) (statement of Rep. Mary Bono) (noting that her late husband "wanted the term of copyright protection to last forever" and regretting that constitutional constraints obliged her to settle for "forever less one day").
451. Indeed, legislators' inattention could ultimately save our approach from constitutional challenge since a deliberate attempt to use congressional power to suppress an industry could founder on the law and language of the First Amendment, see sources cited supra notes 181-182, and the Patent and Copyright Clause, which grants Congress the power to use patent and copyright to promote, not retard, progress in science and the useful arts, see U.S. CONST, art. I, § 8.
452. See Bagley, supra note 4, at 475-76 (cloning and other "morally controversial" biotechnology).
453. See supra notes 128 and 176-184 and accompanying text.
454. Tim Holbrook has suggested that the modern patenting process might not be as morally neutral as one might think; for example, it might grant protection to a method that "cured" a blind person of blindness but not one that "cured" a sighted person of his or her ability to see. Holbrook, supra note 128, at 579 n.30, 615. But he admits the possibility of a truly neutral approach and that it might be the best option even for those concerned about the imprimatur problem. Id. at 615-16.
455. See, e.g., I.R.S. Notice 2000-44, 2000-36 C.B. 255 (announcing that "losses" recognized in transactions which had been designed to provide taxpayers with an artificially inflated basis in their investment were not deductible for federal income tax purposes).
456. 26 U.S.C§ 7201 (2006).
457. See Christopher Robertson, Recent Developments in the Law and Ethics of Embryonic Research: Can Science Resolve the Ethical Problems It Creates?, 33 J.L Med. &. Ethics 384, 384 (2005) (noting that this is a decision based at least in part on moral considerations).
458. See, e.g., Lori B. Andrews, State Regulation of Human Fetal Tissue Transplantation, in 2 REPORT OF THE HUMAN FETAL TISSUE TRANSPLANTATION RESEARCH PANEL, at Dl (1988) (noting various state laws that regulate the disposition, transport, and research of dead fetuses, live fetuses, and embryos).
459. See, e.g., Coordinated Framework for Regulation of Biotechnology, 51 Fed. Reg. 23302 (June 26, 1986) (discussing the FDA's and other agencies' roles in regulating genetically modified food).
460. See infra text accompanying note 271.
461. See EDWARD DE GRAZIA, GIRLS LEAN BACK EVERYWHERE: THE LAW OF OBSCENITY AND THE ASSAULT ON GENIUS (1992).
462. Indirect regulation of pornography and fashion could conceivably present First Amendment issues as well. Here, however, we are concerned only with comparing direct regulation with indirect, and on that score it is clear that the former faces much greater free speech challenges than the latter since Congress has a long and unchallenged history of including certain forms of expression within copyright while excluding others. See Christopher C. Dremann, Copyright Protection for Architectural Works, 23 AIPLA Q.J. 325, 327-28 (1995).
463. E.g., Barnes v. Glen Theatre, Inc., 501 U.S. 560 (1991) (upholding a statute that did not permit nude dancing, but finding that under different circumstances nude dancing could be expressive conduct under the First Amendment);.
464. Tinker v. Des Moines Indep. Cmty. Sch. Dist., 393 U.S. 503 (1969) (holding that wearing a black arm band to school was protected speech);.
465. see also Ala. and Coushatta Tribes of Tex. v. Trs. of Big Sandy Indep. Sch. Dist., 817 F. Supp. 1319 (ED. Tex. 1993) (invalidating on free speech grounds a regulation that prohibited long hair).
466. See, e.g., United States v. Playboy Entm't Group, Inc., 529 U.S. 803, 811-13 (2000) (applying strict scrutiny and invalidating a regulation targeting sexually explicit material);.
467. Ark. Writers' Project v. Ragland, 481 U.S. 221, 233 (1987) (invalidating a tax that applied to certain types of magazines but not to others).
468. A legislature could ban all obscene content without running afoul of the First Amendment, see Miller v. California, 413 U.S. 15 (1973), but such a ban would cover only a small subset of pornographic material and would thus leave unaddressed many of the perceived evils of pornography.
469. Government restrictions on choices about one's personal appearance often encounter some form of First Amendment scrutiny, and they tend to survive only when the wearer's particular occupation demands uniformity in uniform. E.g., Goldman v. Weinberger, 475 U.S. 503, 510 (1986) (upholding restriction on military officers);.
470. Kelley v. Johnson, 425 U.S. 238 (1976) (upholding restriction on policemen);.
471. Litdefield v. Forney Indep. Sch. Dist., 268 F.3d 275 (5th Cir. 2001) (upholding restriction on students);.
472. United States v. Bd of Educ., 911 F.2d 882, 894 (3d Cir. 1990) (upholding restriction on teachers). A general ban on all new fashions would not seem to fit within these limits.
473. See City of Ladue v. Gilleo, 512 U.S. 43, 54-55 (1994) (invalidating a content-neutral ordinance that "almost completely foreclosed a venerable means of communication that is both unique and important" and thereby "eliminat[ed] a common means of speaking");.
474. Richard A. Seid, A Requiem For O'Brien: On The Nature Of Symbolic Speech, 23 CUMB L. REV. 563, 589 n.128 (1993) (arguing that a ban on hanging clothes on a clothesline might be speech restriction "if the government distinguished some clothes from others, e.g. fashion clothes from working clothes").
475. See Burk &. McDonnell, supra note 49, at 1000 (noting that "[s]ervice enforcement and rulemaking are highly imperfect in their ability to discourage inefficient planning strategies" and suggesting that "[g]iven such limitations, perhaps it makes sense to use... patent law... to supplement the imperfect tool of tax law");.
476. Hellwig, supra note 4, at 1024 ("The overall success of a tax shelter depends in large part on avoiding government detection for as long as possible"). Of course, direct regulation sometimes does succeed See id. at 1024 (noting that key appellate court rulings have the "tax shelter industry ... on the ropes").
477. However, when it does, it may be a matter of mere fortuity rather than the result of deliberate planning on the part of the government. Id. (indicating that things could be very different in tax shelter enforcement if a few rulings go the other way).
478. See Hellwig, supra note 4, at 1024 ("Virtually all shelter transactions become worthless once they come to the government's attention, primarily through administrative action intended to ensure that future users will have to litigate their doubtful claim to the purported tax savings.").
479. See, e.g., PRESIDENT'S COUNCIL ON BlOETHKS, HUMAN CLONING AND HUMAN DIGNITY xxi (2002) (noting that a mammal was successfully cloned in 1997, but that by 2002, Congress had yet to pass legislation restricting cloning).
480. See 35 U.S.C. §§ 102, 103 (2006);.
481. KSR Int'l Co. v. Teleflex, Inc., 550 U.S. 398, 418-22 (2007).
482. See Christopher Cotropia, The Folly of Early Filing in Patent Law, 61 HASTINGS L.J. 65, 75-82 (2009) (describing how the patent system encourages filing early in the development process).
483. We should mention that recent legislative proposals have contemplated less than full copyright protection for fashion design. For example, the most recent bill would grant three years of protection against substantially similar copies. Design Piracy Prohibition Act, H.R. 2196 § 2(d)-(e), 111th Cong. (2009);.
484. see also RR. 5055 § 1(c), 109th Cong. (2d Sess. 2006) (proposing three-year term).
485. Yet even these seemingly low-IP proposals would stifle the industry, as three years of protection is a lifetime in a world in which fashions come and go each season, see Peter Doeringer &. Sarah Crean, Can Fast Fashion Save the US Afford Industry?, 4 SOCIO-EOON. REv. 353, 359 (2006) (describing high turnover of trends), .
486. and substantial similarity is a far-reaching, daunting, and ambiguous standard, see Gibson, supra note 44, at 891. Even the narrower form of protection that Hemphill and Suk envision, see Hemphill &. Suk, supra note 143, at 1185-90, could chill innovation in the industry.
487. See Raustiala & Sprigman, supra note 158, at 1219-21 (critiquing Hemphill and Suk's proposal).
488. We recognize that direct regulation in the tax context would involve revising the tax code, not banning the patenting of the tax plan, so our point here is by way of analogy.
489. In addition, political reality makes such bans unlikely. This was not always so; in the ancient world, the elite maintained their status through sumptuary regulation that forbade the lower classes from imitating elite attire.
490. See SCHOR, supra note 169, at 8;.
491. Hemphill & Suk, supra note 143, at 1161-62. This produced a praiseworthy slowing of the fashion cycle albeit with a less-than-praiseworthy motive. But such laws are unthinkable today. Of course, direct regulation would not have to take the form of an outright ban. Instead, regulators could impose luxury taxes on expensive positional goods-another approach with a long pedigree.
492. See, e.g., RAE, supra note 166, at 286-89 (recognizing welfare gains that can come from taxing involved in positional consumption);.
493. MELVIN WARREN REDER, STUDIES IN THE THEORY OF WELFARE ECONOMICS 65-66 (1947) (same). Here too, political considerations favor our indirect approach. Raising taxes is never popular, even on the rich, and raising them to a level that would appreciably slow the fashion cycle may be well-nigh impossible. Moreover, a luxury tax would apply only to the trends that descend from the wealthy elite and leave unaffected the fashions that bubble up from the street or from a more diffuse Zeitgeist.
494. See, e.g., James Lindgren, Defining Pornography, 141 U.PA.L. REv. 1153 (1993) (reviewing and testing various definitions).
495. See supra notes 71-74 and accompanying text.
496. See 17 U.S.C § 102(a) (2006) (including literary works, pictorial works, and morion pictures within copyright's scope).
497. Therefore, our approach would merely maintain the status quo and entrench the holdings of Mitchell Brothers Film Group v. Cinema Adult Theater, 604 F.2d 852 (5th Cir. 1979), .
498. and Jartech, Inc. v. Clancy, 666 F.2d 403 (9th Cir. 1982), against their few attackers.
499. See Devils Films, Inc. v. Nectar Video, 29 F. Supp. 2d 174 (S.D.N.Y. 1998) (strongly implying that copyright should not protect obscene works but ultimately resolving the case without addressing that issue).
500. See supra notes 143-146.
501. See Michael Hart, The Chimera of Industrial Policy: Yesterday, Today and Tomorrow, 19 CAN.-U.S. L.J. 19, 36 (1993) ("Governments do not have a good track record of picking winners and losers, but losers have an excellent record of picking governments.").
502. See supra notes 65-66 and accompanying text.