Tuesday 3 February 2015

An Energetic, Engaging and Balanced Symposium on Patent, Copyright and Trademark Trolls PART IV

The final panel was entitled, “Copyright and Trademark Trolls: Fable or Fact?”  The panelists included: Chris Arledge, Co-founder and Managing Partner, One LLP; Tom W. Bell, Professor of Law, Chapman University Fowler School of Law; Brad A. Greenberg, Postdoctoral Research Scholar in Intellectual Property, Columbia Law School; Lindy Herman, Senior Associate, Fish & Tsang LLP; and Michael S. Mireles, Professor of Law, University of the Pacific, McGeorge School of Law.  The moderator was Professor Mary Lee Ryan, Chapman University Fowler School of Law.  The following is a partial description of the panel discussion.

I was the first presenter and discussed my forthcoming paper which explains why “trademark trolls” are not a problem in the United States.  First, I explained that I was not proposing a practice requirement for patents, that trademarks are critical to our capitalist economy, that there are arguably problems with trademark enforcement--such as trademark bullies, and that a “troll-like” problem can develop in the trademark sphere because of changing law.  Second, I noted that the defining characteristic of a patent troll is failure to practice the invention.  Since U.S. trademark law has a use requirement, the trademark troll problem is effectively mitigated.  Further, failure to use can result in abandonment and the use requirement underlies the prohibitions against naked licensing and assignments in gross.  Next, trademark law has well-established inter partes proceedings such as opposition and cancellations actions which protect a producers ability to control related markets.  Third, policymakers have reacted well to potential troll-like problems in the domain name space by enacting the Anti-Cybersquatting Act and ICANN’s dispute resolution policy.  Policy makers have also learned from prior issues in the trademark field.  For example, ICANN was very thoughtful and proactive in making sure that the same cybersquatting issues would not arise in the new top level domain name space.   Fourth, I noted that U.S. Supreme Court case law directed at patent trolls may make a troll problem less likely to develop.  eBay v. MercExchange has been applied to trademark cases removing the categorical rule that a demonstration of a likelihood of confusion means that irreparable harm is proven.  The Octane Fitness case lowering the standard for attorney fees in patent law cases has also been applied to trademark cases.  Moreover, the same strategic advantages available to patent trolls are not available in the trademark field: layering defendants; asymmetrical discovery; availability of counterclaims; forum shopping; and intent is a factor for determining trademark infringement and dilution. 

Mr. Greenberg provided a very thoughtful discussion of copyright trolls.  He stated that there is an estimate that “41% of all cases filed were filed by copyright trolls.”  He states that some scholars argue that trolls are attracted to copyright trolling because of the low level and cost of obtaining a copyright, and the attractiveness of statutory damages.  He also states that scholars agree that copyright trolls are bad.  He has argued that we should have a presumptive fair use requirement that only applies to copyright trolls.  First, he looks to what is a copyright troll.  There are many definitions.  He identifies a copyright troll as someone who “acquires a copyright to enforce them,” “invests in a work based on litigation value not commercial value,”  “lacks a good faith licensing program” and “exploits statutory damages for settlement on often weak claims.”   He discussed the Righthaven litigation.  He noted that Righthaven recovered over 100 settlements.  He also discussed copyright porn trolls.  He explained how they use shame in litigation, but without making a clear connection between the IP address and the actual user.  Second, he looked at what makes trolls bad.  He thinks trolls “screw up” the incentive/access balance.  He discussed potential positive contributions of trolls, including: “they may increase compensation to authors;”  “free authors from having to monitor infringement” and deter infringement by making enforcement more likely.  The bad is that they encourage litigation and “compensate for litigation value instead of commercial value.”   He noted that copyright trolls can “chill speech.”  He states we survive because of “tolerated use” as Professor Tim Wu has noted.  Trolls do not tolerate uses.  He notes that the question “is what form will trolls take next.”

Professor Tom Bell provided a fascinating discussion of copyright as privilege.  He states that we have an “uneasy feeling” about copyright.  He believes that the problem is that we are treating copyright essentially stronger than other property.  He notes that we should be skeptical of calling copyright and taxi medallions “property.”  He notes that copyright porn trolls “engage in mass extortion” as a District Court Judge has stated as well.  These plaintiffs are using remedies that are stronger than common law remedies for other forms of property—property in the tangible.  He notes that law and economics scholars recognize that transaction costs are low with respect to enforcing rights in real property, so markets work there.  That is not true in copyright and particularly with porn suits.  The transaction costs include the difficulty of determining what is protected by copyright and there is also an issue with identifying the correct infringers.  The problem is the very large amount of statutory damages.  He thinks the solution is not to think about copyright as a “right,” but as a privilege.  He further discusses taxi medallions that can be very valuable, at least until Uber.  Uber reduces the value of taxi medallions.  He states that taxi medallion holders believe that they essentially have a “property” right and are protesting against the loss of their right.  However, he thinks that a better view is to look at taxi medallions as privileges.  He thinks that we have “market legal failures” with respect to copyright trolls and taxi medallions.  Since transactions costs are too high, then property type remedies are not appropriate.  We should view them as privileges instead that can be “tinkered” with “as long as due process requirements are met.”

Mr. Arledge provided a compelling argument concerning copyright enforcement.  He states that we need to think about copyright trolls from the perspective of understanding how attacking trolls will impact content creation.  He provides a very nice example of a paparazzi photograph and the erosion of the market for those photos because of mass infringement on the internet.  A solution may be obtaining licenses, however, the problem with trying to get licenses from the folks posting the photos is the usage of the DMCA “safe harbor.”  However, the issue is that once you use the DMCA process is that the value of that photograph is lost.  He notes that “the market is fundamentally broken.”  He believes courts are “stretching” the DMCA “safe harbor” beyond what he believes Congress intended.  He also discusses an example of a Russian website that is an “infringement mill” and a court has held that it falls within the “safe harbor.”  He further critiques the attractiveness of statutory damages to trolls.  He makes several points, including that many defendants do not have money and cannot pay, and are not worth going after.  The folks with money may not cave because of statutory damages.  He believes this is because a jury is unlikely to grant statutory damages for a weak copyright claim, so he would not bring the suit.  Finally, he asks what is the value of a paparazzi photograph offered for licensing—it has a very low value.  He encourages caution when proposing reform without empirical data especially when people are losing their livelihoods. 

Ms. Herman made several helpful comments.  She stated that you are unlikely to get statutory damages against defendants—you will get what they can pay for.  She does note that the threat of statutory damages can be helpful.  She believes what matters ultimately is the business decision.  She notes that frivolous litigation occurs in other areas of law and that, perhaps, some activity or entities do not necessarily need the label of troll.  She thinks the copyright “porn troll” problem concerns tactics—such as shaming the user.  That is the problem. 

The full discussion via webcast for the panels is available here. 

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