Critics of patent and copyright often argue that copyright causes censorship,1 while patents inhibit free trade and competition.2 For this reason, and because of the way the state can use copyright and the fight against piracy as an excuse to clamp down on information sharing and also the Internet itself, I’ve argued that copyright is worse than patent.3
But patent and copyright are not so easily compartmentalized. Patents also give rise to censorship (see, e.g, my post Cato/Reason/CEO brief opposing medical diagnostic process patents as violating freedom of speech [update: Patents Threaten To Silence A Little Girl, Literally.]), and copyright also restricts free trade and competition. Patent law’s effect on speech and expression, and copyright law’s effect on free trade, is not surprising–after all, the price signals of a free market are a type of communication. So interfering with expression has to hamper the market, and hampering the market has to affect price signals, i.e. communications. Censorship affects the efficiency of the market, and intervention in the market suppresses free expression and communication of useful information. (This is one reason patent and copyright ought to be considered similar type of laws, despite protestations by some critics that we have to treat each IP law separately. See my post “Intellectual Property” as an umbrella term and as propaganda: a reply to Richard Stallman.)
We and others have given a lot of attention lately to the danger copyright poses to freedom of expression and also the Internet itself, in the wake of the SOPA battle. (See posts on C4SIF and Techdirt for more information.) But in the wake of the temporary defeat of SOPA, the looming Trans-Pacific Partnership trade agreement (Death by Copyright-IP Fascist Police State Acronym) threatens to exacerbate copyright’s affect not only on free speech and the Internet but on free trade itself.
I noted before (Supreme Court lets ban on “gray market” imports stand; Leveraging IP) how copyright law can be used to stop resales of legitimately purchased products, like Omega watches, by slapping some copyrighted symbol on the product and manufacturing it outside the US to exploit a quirk of US copyright law–and how this could imperil libraries and sales of used books, if the book was made outside the US (Libraries: Prepare to burn foreign books, courtesy copyright law). As Mike Masnick explains in a recent Techdirt post (below), the TPP may make this even worse, by giving companies selling products the ability to ban secondary markets and resale of the goods they sell consumers–for example, an iPhone. In effect, TPP could allow Apple, for example, to prevent the “owner” of an iPhone from reselling it or even lending it to someone, on the grounds that it was includes copyrighted material (such as iOS) but was made overseas so that it is exempt from the First Sale doctrine (which normally would permit someone who buys a copyrighted item to resell it, lend it, etc.). One can just imagine ebay and garage sales and gazelle.com being viewed as illegal “piracy” because owners of objects are … reselling them without permission of the original manufacturer.
Scary stuff. Here’s Masnick’s excellent but chilling, post.
Update: For another example of how patent law, not just copyright law, serves to censor free speech: here we have a patent troll using patents to potentially shut down, or impose a heavy tax, on podcasting, and to violate the First Amendment rights of donors to anonymity and privacy. See UPDATE: EFF Fights Patent Troll Demand For Save Podcasting Campaign Donor Information.
See also Tom G. Palmer, “Intellectual Property: A Non-Posnerian Law and Economics Approach,” Hamline L. Rev. 12, no. 2 (Spring 1989; https://perma.cc/DH7K-ZCRV): 261–304, p. 264 (footnote omitted): “Monopoly privilege and censorship lie at the historical root of patent and copyright.”
How The US Trade Rep Is Trying To Wipe Out Used Goods Sales With Secretive TPP Agreement
from the trade-for-thee-but-not-for-me dept
For a while now, we’ve been covering the gradual legal assault on the First Sale doctrine and beyond. The First Sale doctrine, of course, is what lets you resell a legally purchased book without having to first obtain permission from the copyright holder. Of course, copyright holders generally hate the First Sale doctrine, because it often means that their products have to compete against “used” versions of their own products as well. Of course, this view is very shortsighted and economically ignorant. A healthy used or resale market has been shown to increase the amount people will pay for new items — because they recognize that there’s a secondary market and they can recoup some of what they paid for the original. Thus a healthy secondary market, contrary to what some believe, can often improve the health of the primary market.
But, there have been a few very questionable lawsuits that are chipping away at the first sale doctrine, starting with the infamous Omega case, in which the watchmaker exploited the phrase “made under this title” to argue that any goods made outside the US were not subject to first sale rights under copyright law, because they were not “made under this title.” That 9th Circuit ruling (which remains in place after the Supreme Court split down the middle — with Kagan abstaining due to her earlier involvement in the case) was one thing, in that there were some limitations. But then the 2nd Circuit went to loony town in suggesting that some books that were legally purchased in Asia could not be resold in the US without permission (i.e. an expensive license). While the district court who reviewed the Omega case on remand recently rejected Omega’s claim as copyright misuse, there is a lot of fear over this issue as the courts sort things out.
The risk of the Omega case goes even further, since it could wipe out the used goods market not just for “content,” but for physical goods as well. That’s because Omega didn’t just exploit the “under this title” part of the law, it exploited copyright law itself. Remember, it sells watches. What do watches have to do with copyright? Absolutely nothing. But Omega’s trick was to create a little design drawing, which it then got a registered copyright on… and then engraved that drawing in a tiny tiny spot on the back of the watch where almost no one will ever notice it. It serves absolutely no purpose… other than to make a physical object subject to the crazy excesses of copyright law. Thankfully the district court saw through that and recognized it was copyright misuse, but who knows what the higher courts (or other circuits) will say.
Of course, all this fighting in the courts over this might be moot if the Trans Pacific Partnership Agreement (TPP) is approved. We’ve been covering the incredibly secretive negotiations over that agreement, including last year’s leaked draft of the IP section. However, we didn’t quite realize the extent to which the US Trade Representative (USTR) and the big industry interests were seeking to use the TPP process to wipe out the used goods market. [continue reading…]
- For examples of copyright censorship, see Libraries: Prepare to burn foreign books, courtesy copyright law; The Patent, Copyright, Trademark, and Trade Secret Horror Files); Paramount Trying to Ban “Godfather” Sequels with Copyright; Copyright Censorship versus Free Speech and Human Rights; Excessive Fines and the Eighth Amendment. [↩]
- How many examples do we need? See Patent Trolls Cost The Economy Half A Trillion Dollars since 1990; Yet Another Study Finds Patents Do Not Encourage Innovation; EU newsflash: patents are anticompetitive!; Intellectual Property Advocates Hate Competition; IP Rights as Monopolistic Grants to Overcome the Public Goods Problem; also Samsung, Apple continue patent dispute; Apple accuses Motorola, Samsung of monopolizing markets with patents–or, you’ve got to be kidding me; We Hope Apple Wins the Patent Wars; Android Patent Trouble Worsens: Motorola Considers Collecting IP Royalties; Apple vs. Microsoft: Which Benefits more from Intellectual Property?; EU: Apple-Samsung row could be stifling competition; EU Injects Itself Into Apple-Samsung Patent War. [↩]
- Patent vs. Copyright: Which is Worse?; Where does IP Rank Among the Worst State Laws?; The U.N. Threat to Internet Freedom; Masnick on the Horrible PROTECT IP Act: The Coming IPolice State; The Ominous PROTECT IP Act and the End of Internet Freedom. [↩]
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