Peter S. Menell

Beyond the Throwaway Society: An Incentive Approach to Regulating Municipal Solid Waste

This Article develops a multi-tier pricing model for internalizing the social costs of municipal solid waste and balancing transaction costs. The Article concludes that, while comprehensive monitoring systems would be prohibitively expensive, there are feasible economic incentive systems that would be extremely effective in reducing the quantity and improving the composition of the municipal solid waste stream. Moreover, the transaction costs of implementing these systems could be kept within reasonable bounds. Simple curbside charges, based on the volume or weight of mixed refuse, provide strong incentives for source reduction, separation of valuable materials, and purchasing of materials that are reusable, recyclable, or less expensive to landfill or incinerate. Another possible option is a highly flexible system of retail charges implemented by entering data on disposal costs into optical scanning cash register systems. This system would facilitate carefully tailored adjustments to individual product prices to reflect disposal costs. If this pricing system were combined with a curbside charge, even greater social benefits could be reaped. Beyond the analysis of particular policy tools, the Article also considers means whereby incentive-based regulatory policies could be implemented within our complex federal system encompassing diverse local communities.

An Analysis of the Scope of Copyright Protection for Application Programs

The article describes how the first courts to address the scope of copyright protection for application programs have tended to view application programming as predominantly an exercise in creative expression and accordingly have interpreted the scope of copyright protection in this area quite broadly. As Part I explains, however, many design choices in writing application programs are made by applying the principles of the scientific fields of human factor analysis and software engineering. Thus, the tendency of courts to view application programming as more akin to literary creativity than to scientific and engineering advancement threatens to give broad legal protection to basic principles of human factor analysis and software engineering without requiring the creators of the programs embodying those principles to satisfy the more exacting standards of patent law. The article concludes that a careful application of the idea/expression merger doctrine, recognizing the importance of scientific considerations in application programming and the need to standardize computer-human interfaces, would both foster the invention, development, and diffusion of improved application programs and comport with basic copyright principles.

Tailoring Legal Protection for Computer Software

This article applies economic analysis to the design of legal protection for computer software.

A Note on Private versus Social Incentives to Sue in a Costly Legal System

This article presents a game-theoretic model of costly litigation. The model shows that where an injurer can calibrate the level of damages done to other parties, it sacrifices in profits an amount related to the victims litigation costs by inducing suit. Thus the structure of the legal system implicitly internalizes the costs of litigation. Whether complete internalization occurs depends on such considerations as the information of the parties and the injurers ability to control damages precisely.

The Challenges of Reforming Intellectual Property Protection for Computer Software

This article examines three critical, interrelated challenges for reforming legal protection for computer software: (1) analyzing the market failures that might justify government intervention to define (or alter) the legal entitlements granted for software innovations; (2) predicting the likely path of computer technology; and (3) anticipating and navigating potential impediments to legislative reform of legal protection for software. It warns that patent protection for computer software poses serious potential problems and should be addressed before powerful economic interests vest in large software patent portfolios.

Governance of Intellectual Resources and Disintegration of Intellectual Property in the Digital Age

The Supreme Court’s decision in eBay v. MercExchange brought into focus whether intellectual property policy should follow reflexively in the wake of tangible property doctrines or instead look to the distinctive market failures and institutional features of intellectual resources. Professor Richard Epstein argues in a recent article that “virtually all of the current malaise in dealing with both tangible and intellectual property stems from the failure to keep to the coherent rules of acquisition, exclusion, alienation, regulation, and condemnation that are called for by the classical liberal system . . . .” Epstein purports to validate what he calls the “carryover hypothesis”: that principles governing tangible property “do, and should, influence the growth of intellectual property law,” and that apart from durational limits on patents and copyrights, there are essentially no significant departures from the private property mold needed to optimize intellectual property. This article responds to Epstein’s premises, framework, and analysis and provides a broader and richer analytical framework for promoting innovation and creativity in the digital age. In so doing, it demonstrates that intellectual property does not and should not resemble Professor Epstein’s idealized classical liberal cathedral. To the contrary, “disintegration” characterizes the intellectual property landscape and hewing to a classical liberal private property paradigm overlooks valuable prescriptions for the evolution of the intellectual property field. While the institution of private property that has developed for tangible resources provides valuable insights into how to encourage efficient economic development, it is not a panacea for all resources, contexts, and societies. Careful consideration of the characteristics of intellectual resources, comparative institutional analysis, and empirical research provide the keys to promoting innovation and creativity.

Indirect Copyright Liability and Technological Innovation

Over the past decade, numerous scholars and commentators have asserted that the indirect copyright liability standards applied in the Napster, Aimster, and Grokster decisions, among others, significantly chill technological innovation. This article examines this critical conjecture and offers both a broader framework for assessing the relationship between indirect copyright liability and technological innovation and some suggestive empirical results. The conceptual analysis demonstrates that the question of whether indirect copyright liability chills technological innovation inherently requires consideration of a broader range of social balances, market mechanisms, and roles for mediating institutions. Several countervailing forces, such as the relatively modest capital requirements associated with the technology at issue, the nature of the many established research environments, the philosophical and cultural orientation of many digital technology researchers, various liability-insulating institutions, the ability of investors and technology companies to manage risk, and the importance of technological advance in fields unaffected by copyright liability, suggest that the effects of indirect copyright liability on innovation in replication and distribution technologies will be less dire and more complex than the conjecture suggests. Moreover, the Chilled Innovation conjecture downplays the beneficial effects of indirect copyright liability on the development of balanced technologies (those that tend to balance incentives to create copyrighted works with advances in information dissemination) while ignoring the adverse effects of broad immunity, which fosters deployment of parasitic technologies that tend to drive out balanced technologies. To the extent that the Chilled Innovation conjecture has force, it is not at the basic research and development stages of the innovation pipeline, but rather at the commercialization stage – which is where in the innovation process such effects are most appropriately focused. This limits the effects of choking innovation in its infancy. The article also offers a partial test of the chilled innovation conjecture by examining academic research and patent data. The findings indicate that the Napster-Aimster-Grokster trilogy does not appear to have derailed technological innovation in the peer-to-peer field.

Chapter 19 Intellectual Property Law

Abstract This chapter provides a comprehensive survey of the burgeoning literature on the law and economics of intellectual property. It is organized around the two principal objectives of intellectual property law: promoting innovation and aesthetic creativity (focusing on patent, trade secret, and copyright protection) and protecting integrity of the commercial marketplace (trademark protection and unfair competition law). Each section sets forth the economic problem, the principal models and analytical frameworks, application of economic analysis to particular structural and doctrinal issues, interactions with other legal regimes (such as competition policy), international dimensions, and comparative analysis of intellectual property protection and other means of addressing the economic problem (such as public funding and prizes in the case of patent and copyright law and direct consumer protection statutes and public enforcement in the case of trademarks).

Using fee shifting to promote fair use and fair licensing

The fair use doctrine seeks to facilitate socially optimal uses of copyrighted material. As a practical matter, however, cumulative creators, such as documentary filmmakers and many contemporary musicians, are often reluctant to rely on the fair use doctrine because of its inherent uncertainty, the potentially harsh remedies for copyright infringement, and the practical inability to obtain effective pre-clearance rights. Moreover, copyright owners have no obligation under existing law to respond to a cumulative creator’s inquiry. Thus, a familiar refrain in professional creative communities is “if in doubt, leave it out.” In this Article we propose a novel mechanism that would afford a limited, cost-effective process for pre-clearing works, promote fair negotiation over cumulative uses of copyrighted works, and reduce the exposure of cumulative creators from the inherent risks of relying on copyright’s de minimis and/or fair use doctrine. Under this mechanism, a cumulative creator has authority to make a formal offer of settlement to use copyrighted material for a project. If the copyright owner does not respond to the offer, the cumulative creator would be permitted to use the work provisionally by paying the settlement amount into escrow. If the copyright owner rejects the proposed license fee and sues for infringement, the copyright owner will bear the cumulative creator’s litigation costs (1) if the court determines that the use of the material qualifies as fair use or (2) if the court determines that the fair use doctrine did not excuse the use but where the cumulative creator’s offer of settlement (the proposed license fee) exceeded the amount of damages that the court determines to be appropriate. In the former case, the escrow amount is returned to the cumulative creator. In the latter case, the copyright owner receives the infringement award from the escrow account and the remainder returns to the cumulative creator. Our fair use fee-shifting proposal encourages copyright owners to take settlement offers seriously and negotiate around the fair use doctrine’s inherent uncertainties. In so doing, this mechanism protects the reliance costs of cumulative creators, reduces transaction costs, and discourages hold-out behavior. Overall, our mechanism should enrich cultural production by increasing the use of copyrighted content in follow-on works while fostering markets for cumulative creativity and providing fair compensation to copyright owners of underlying works.

Sound Recordings, Works for Hire, and the Termination-of-Transfers Time Bomb

In crafting the Copyright Act of 1976, Congress brokered a grand compromise between authors and publishers so as to bring about a unitary term of protection. Authors obtained an inalienable right to terminate transfers 35 years after an assignment, subject to designated carve outs for nine categories of collaborative works that could become unmarketable following termination due to the transaction costs of reassembling the necessary rights. While motion pictures and encyclopedias made the list, sound recordings were not expressly covered - although they arguably fit into other designated categories. This Article traces the background to this dispute, which will likely take on great salience in 2013, when the first post-1976 works become eligible for termination.