《法学相关资料合集》（英文版） Beyond Preemption: The Law and Policy of Intellectual Property.pdf_P11-P15

1999] BEYOND PREEMPTION law,25 choice of forum,26 the remedies to be awarded,27 and the implied warranties of noninfringement, merchantability, and program content.28 All of these provisions can be waived by contract. And since Article 2B makes it so easy to write and enforce the terms of a contract, a software vendor with a good lawyer can quite easily enforce virtually whatever terms it likes simply by putting them “conspicuously” in a multi-page document that the user cannot even see (much less agree to) until after buying, installing, and beginning to run the software.29 There are only a few limitations on a software vendor’s power to create whatever terms it likes.30 Notably, contract terms that are unconscionable may not be 25 .See U.C.C. § 2B-107(a) (Draft, Aug. 1, 1998). 26 .See id. § 2B-108(a). 27 .See id. § 2B-703(a), (d). 28 .See id. §§ 2B-401(d), 406. 29 .The August Draft is more extreme in this respect than previous drafts. The February Draft endorsed Restatement (Second) of Contracts section 211 (1981), which permits hidden terms to be enforced unless they are “unfair” or “surprising” and would cause most purchasers to reject the contract were they aware of the terms. See U.C.C. § 2B-208, reporter’s note 3 (Draft, Feb. 1998). By contrast, the August Draft rejects section 2B-211, concluding that even unfair, surprising, “deal-killer” terms that are hidden inside shrinkwrap licenses may be enforced as long as they are not actually unconscionable. See U.C.C. § 2B-208, reporter’s note 1 (Draft, Aug. 1, 1998). 30 .Section 2B-106(b) lists twelve rules that cannot be varied by contract. See id. § 2B-106(b). But on closer inspection many of these supposedly mandatory rules turn out to be illusory. For example, section 2B-106 lists as mandatory rules choice of law and choice of forum, see id. § 2B-106(b)(1)-(2), but both the choice of law and choice of forum provisions themselves provide that they can be varied by contract, see id. §§ 2B-107(a), 2B-108(a). Similarly, the “mandatory” rules governing disclaimer of warranties in section 2B-406, see id. § 2B-106(a)(9), in fact provide that warranties can be disclaimed; they merely set out the means for doing so, see id. § 2B-406. And perhaps most egregious, section 2B-705(a)—claimed as a mandatory rule governing the statute of limitations, see id. § 2B-106(b)(11)—in fact provides that the parties can vary the statute of limitations within a certain range, see id. § 2B-705(a). A contract provision that did purport to vary a statute of limitations—just what section 2B-705(a) would allow—was held unconscionable in Angus Medical Co. v. Digital Equipment Corp., 840 P.2d 1024, 1030-31 (Ariz. Ct. App. 1992). In these cases, what is claimed to be a mandatory rule turns out to be a default rule after all. In other cases, it is not clear whether the rule is mandatory or not. For example, section 2B-704 provides that an excessive liquidated damages clause is “void as a penalty.” U.C.C. § 2B-704(a) (Draft, Aug. 1, 1998). Section 2B-106 touts this as a mandatory rule. See id. § 2B-106(b)(10). But section 2B-703 provides that the parties can agree to additional remedies not provided for in the statute. See id. § 2B-703(a). Does section 2B-704(a) impliedly limit section 2B-703(a)? We aren’t told; if anything, the language of section 2B-106 might be read to imply that section 2B-704(a) is not a mandatory rule. See id. § 2B-106(b) (“Except to the extent provided in the following listed sections, the agreement may not vary . . . the limitations on liquidated damages . . . .”); id. § 2B-106(c)(1) (“[T]he use of mandatory language or the absence of a phrase such as ‘unless otherwise agreed’ in a provision of this article does not preclude the parties from varying the effect of the provision by agreement.”); id. § 2B-106(a) (“Except as otherwise expressly provided in this article or in Article 1-102(3), the effect of any provision of this article, including allocation of risk or imposition of a burden, may be varied by agreement of the parties.”). Still other instances of the mandatory rules are so obvious that one wonders why they needed to be included at all. For example, section 2B-118 appears to provide that if you didn’t order a product, and you return it, you don’t have to pay for it, see id. § 2B-118; section 2B-626 provides that a licensor has to provide notice before terminating a contract governing information that the licensee owns, see id. § 2B-626. Perhaps I should be heartened that these are mandatory rules and the parties can’t contract around them. In fact, though, I am more concerned that the negative implication of section 2B-106 is that every other provision in Article 2B can be varied by contract. See Joel Rothstein Wolfson, Nine Questions People Always Ask About the Proposed Article 2B of the UCC, J. Internet L., April 1998, at 17, 18 (noting that under Article 2B, “you may contract out of virtually any restriction, right or obligation in the statute”). Wolfson refers to the “short list” of mandatory rules as “common sense exclusions.” Id

CALIFORNIA LAW REVIEW [Vol. 87:111 enforced.31 While there were once mandatory rules regarding self-help, most limitations on the licensor’s right to use self-help were eliminated in the August Draft.32 In short, Article 2B allows those who draft the contract terms to enforce almost any terms they desire.33 B. Potential Conflicts with Intellectual Property Law Article 2B’s expansion of contractual power sets up the potential for numerous conflicts between intellectual property and contract law.34 Intellectual property law is designed to provide creators with a limited set of rights over ideas and inventions in order to serve the instrumental purpose of encouraging more 31 .See U.C.C. §§ 2B-110, 2B-208(a)(1) (Draft, Aug. 1, 1998). 32 . All prior drafts had imposed unwaivable restrictions on unilateral self-help by licensors. See U.C.C. § 2B-716(e) (Draft, Apr. 1998) (“The licensee cannot waive the protections of this section . . . .”). But see id. § 2B-716, reporter’s note 2(e) (“The rights under this Section cannot be waived prior to breach.” (emphasis added)). The August Draft abolishes section 2B-716, with the result that unilateral self-help is virtually always permissible. For a discussion of the deficiencies in Article 2B’s self-help proposals, see Cohen, supra note . Even the weak protections of section 2B-715, see U.C.C. § 2B-715 (Draft, Aug. 1, 1998), do not extend to technological self-help imposed pursuant to another self-help provision, section 2B-310, see id. § 2B-310. 33 .In a market transaction, contract drafters will by and large be the intellectual property owners. But it is worth noting that large purchasers that draft intellectual property licensing agreements can also impose onerous terms on authors. See Ginsburg, supra note (discussing this problem). Article 2B section 2B-208(b) does create a right to a refund in mass-market shrinkwrap license transactions if the buyer has no opportunity to review the terms until after purchase and does not “manifest assent” to the terms by opening the package or using the software. See id. § 2B-208(b). This might be thought of as a “right” of purchasers that cannot be waived, although the August Draft doesn’t explicitly say this. I do not include it in the list of provisions that can’t be waived because it seems to define what constitutes a contract in the first place, rather than what terms will be included. The same is true of Article 2B sections 2B-111 and 2B-112, which define the terms “manifests assent” and “opportunity to review,” see id. §§ 2B-111, 2B-112, and section 2B-201, relating to the 34 .Article 2B’s drafters indirectly acknowledge this. At the insistence of the ALI, they included section 2B-105, which states what one might otherwise consider obvious: in cases in which Article 2B rules conflict with federal law, federal law must prevail. See U.C.C. § 2B-105(a) (Draft, Aug. 1, 1998). The ALI motion in fact called for something more than this tautology. For a discussion of the ALI vote, see McManis, supra note , at 176. Similarly, after NCCUSL insisted on a provision protecting the public policy in the free flow of information, the drafters added a highly watered-down version of such a limitation in Article 2B section 2B-105(b). See U.C.C. § 2B-105(b) (Draft, Aug. 1, 1998). Despite the NCCUSL vote, the current Draft proclaims that “[a] term or contract that results from an informed private agreement between commercial parties should be presumed to be valid and a heavy burden of proof should be imposed on the party seeking to escape the terms of the agreement . . . .” Id. § 2B-105, reporter’s note 3. On the basis of these provisions, one might assert that there is no “conflict” between state and federal law; federal law can continue to govern intellectual property to the extent that it chooses. But this seems misleading. A state statute that by its own admission “push[es] against” federal law, see U.C.C. art. 2B Preface at 10 (Draft, Aug. 1, 1998), sets up conflicts between state and federal law. The fact that federal law wins in these cases of conflict doesn’t mean that the conflict doesn’t exist. Further, unless we assume that every contract dispute will be litigated, and that federal law will be brought into every suit under Article 2B, the new contract rules may have an effect on marginal cases that the prior contract regime would not. The effect might be in terrorem, or it might operate in cases where resource-poor defendants simply don’t know anything about the complex and arcane rules of federal intellectual property law. The reporter’s notes to section 2B-208 also include a weak suggestion that contracts limiting certain user rights in intellectual property might be unconscionable. See U.C.C. § 2B-208 reporter’s note 3(b) (Draft, Aug. 1, 1998). But the August Draft does not pursue this suggestion, and indeed acknowledges that federal policy will play the dominant role in determining how Article 2B interacts with intellectual property law. See id

1999] BEYOND PREEMPTION creation.35 For many good reasons, the law does not grant intellectual property owners boundless control over their creations. First, granting exclusive rights raises the cost of new works to the public, and in some cases means that the public won’t get access to the works at all.36 Second, granting property rights to original creators allows them to prevent subsequent creators from building on their works, which means that a law designed to encourage the creation of first-generation works may actually risk stifling second-generation creative works.37 Third, the goal of intellectual property is only to provide the “optimal incentive,” not the largest incentive possible. Past a certain point, it would be inefficient to withhold works from the public domain in order to provide ever-decreasing “incentives” to their creators.38 As Larry Lessig has observed, “while we protect real property to protect the owner from harm, we protect intellectual property to provide the owner sufficient incentive to produce such property. ‘Sufficient incentive,’ however, is something less than ‘perfect control.’”39 Giving the parties unlimited power under contract law to vary the rules of intellectual property creates considerable tension with this balanced incentive 35 .See Lemley, Romantic Authorship, supra note , at 888-90 (collecting some of the innumerable sources supporting this proposition). Even the list of Supreme Court decisions emphasizing this limited, instrumental purpose is impressive. See, e.g., Graham v. John Deere Co., 383 U.S. 1, 9 (1966) (“The patent monopoly was not designed to secure to the inventor his natural right in his discoveries. Rather, it was a reward, an inducement, to bring forth new knowledge.”); 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 [it] is the best way to advance public welfare . . . .”); accord Fogerty v. Fantasy, Inc., 510 U.S. 517, 524 (1994); Feist Publications, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 349-50 (1991); Stewart v. Abend, 495 U.S. 207, 225 (1990); Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 167 (1989); Dowling v. United States, 473 U.S. 207 (1985); Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984); Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975); Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 476 (1974); Goldstein v. California, 412 U.S. 546, 559 (1973); United States v. Paramount Pictures, Inc., 334 U.S. 131, 158 (1948). 36 .See, e.g., New Era Publications Int’l v. Carol Publ’g Group, 904 F.2d 152, 185 (2d Cir. 1990) (involving litigation brought by the Church of Scientology to keep its works from being further distributed to the public); Salinger v. Random House, Inc., 811 F.2d 90, 94-95 (2d Cir. 1987) (involving litigation brought by J.D. Salinger to prevent any distribution of a book that contained excerpts from his private letters); Rosemount Enter. v. Random House, Inc., 366 F.2d 303, 306-07 (2d Cir. 1966) (asserting copyright law to suppress unauthorized biography of Howard Hughes); Religious Tech. Ctr. v. Netcom On-Line Communication Servs., Inc., 923 F. Supp. 1231, 1244 (N.D. Cal. 1995). 37 .For more on this, see Lemley, Economics of Improvement, supra note , at 1042-72 (discussing the reasons copyright owners and improvers will not always come to terms through licensing). See also Wendy J. Gordon, Toward a Jurisprudence of Benefits: The Norms of Copyright and the Problem of Private Censorship, 57 U. Chi. L. Rev. 1009, 1024 (1990). 38 .Arguably we have reached this point already, Congress recently extended copyright protection from its current term of life plus fifty years to life plus seventy years. See H.R. 604, 105th Cong. (1997). I have never met anyone who seriously argued that the additional incentive provided by the reward to great-grandchildren in the additional twenty years would actually make the difference in encouraging the creation of any new works. 39 . Lawrence Lessig, Intellectual Property and Code, 11 St. John’s J. Legal Comment. 635, 638 (1996); see also Dreyfuss, supra note , at 198 (“[A] core premise of federal innovation policy . . . [is] that information leaks: That is, knowledge flows inevitably into the domain of the public, where innovators can use what others have learned and improve upon what they have done.”)

CALiFORNiA LAW REVIEM TVoL. 87: 111 structure.40 And permitting the parties to alter intellectual property law with a standard-form, unsigned"shrinkwrap license, in which even the fiction of agreement"is stretched to the vanishing point, exalts the(standard) form of contract law over the substance of intellectual property. 41 In the following Sections i describe a few common contractual terms which Article 2B would presumptively enforce and, in so doing, create tension ith intellectual property law 42 While many of these common terms are found in ontracts drafted by intellectual property owners that interfere with user rights, the everse is also true--contract provisions drafted by licensees may also interfere with the rights of intellectual property owners. My purpose in the remainder of this Part is only to highlight these areas of potential conflict, and not(yet)to suggest how the conflicts should be resolved Just because a contractual term creates tension with intellectual property law does not mean that it is necessarily unenforceable, I will focus my attention on what that tension means in the balance of the Article 43 I. Patent Lay Patent law confers broader rights on intellectual property owners than any other intellectual property law. 44 It is therefore the least likely source of problems for the licensor; most of what a licensor wants, patent law already gives her Nonetheless, patent licensors sometimes do seek to get more than federal patent licy will give them. Two such conflicts are particularly common entives for protecti But good or bad, this is still an acknowledgment that contract law casewhere, Gisburg challeng a very idea of coe fict of interests between authors and ago址 because cons here pode es that this does not mean that there is no tension between the interests of autho 品毗a址要b亚如mamB删器i interest,defined in social terms, but it is unlikely to be in labor's interes cEUA王Hm:mdme the property rights priesthood is firmly in ce0mor:图npeg5pme,a品 particular intellectual property rules and common shrinkwrap license terms). Certain of these sections are adapted from Lemley, id. For some ways of analyzing and resolving these tensions, see infra Parts Il, Ill 136573 ing the general attributes of patent law ad品es hnological Age

CALIFORNIA LAW REVIEW [Vol. 87:111 structure.40 And permitting the parties to alter intellectual property law with a standard-form, unsigned “shrinkwrap license,” in which even the fiction of “agreement” is stretched to the vanishing point, exalts the (standard) form of contract law over the substance of intellectual property.41 In the following Sections, I describe a few common contractual terms, which Article 2B would presumptively enforce and, in so doing, create tension with intellectual property law.42 While many of these common terms are found in contracts drafted by intellectual property owners that interfere with user rights, the reverse is also true—contract provisions drafted by licensees may also interfere with the rights of intellectual property owners. My purpose in the remainder of this Part is only to highlight these areas of potential conflict, and not (yet) to suggest how the conflicts should be resolved. Just because a contractual term creates tension with intellectual property law does not mean that it is necessarily unenforceable; I will focus my attention on what that tension means in the balance of the Article.43 1. Patent Law Patent law confers broader rights on intellectual property owners than any other intellectual property law.44 It is therefore the least likely source of problems for the licensor; most of what a licensor wants, patent law already gives her. Nonetheless, patent licensors sometimes do seek to get more than federal patent policy will give them. Two such conflicts are particularly common. 40 .Jane Ginsburg notes that contract “may provide more effective protection than copyright” for some works. Jane C. Ginsburg, Copyright, Common Law, and Sui Generis Protection of Databases in the United States and Abroad, 66 U. Cin. L. Rev. 151, 151 (1997) [hereinafter Ginsburg, Common Law]. She generally views this as a good thing, because she thinks that copyright provides inadequate incentives for protection. See id. at 171. But good or bad, this is still an acknowledgment that contract law changes the existing balance. Elsewhere, Ginsburg challenges the very idea of a conflict of interests between authors and users. See Ginsburg, supra note , at 4 (calling “specious” the definition of the author’s interests that holds that they are at odds with the public’s). If her point is that authors and consumers should not always be at odds in copyright law, because consumers depend on what authors produce, I agree. But this does not mean that there is no tension between the interests of authors and those of consumers. Surely there is, just as there is tension between labor and management, or between buyers and sellers in any market arrangement. A law favoring management over labor may or may not be in the “public interest,” defined in social terms, but it is unlikely to be in labor’s interest. Perhaps Ginsburg’s point is that the “public interest” is an amalgam of the interests of everyone in society with a stake in the outcome, and cannot be identified solely by reference to consumers, or even by reference to users more broadly defined. Again, I would agree. But I know of no one who has suggested that the public interest in copyright law should be defined only by reference to consumers. Indeed, the opposite danger seems far greater; in setting copyright policy, Congress today seems inclined to think only of the interests of publishers, and even then, only of current and not future publishers. See, e.g., S. 2037, 105th Cong. (1998). “Agnostics and atheists” may be turning up among copyright lawyers and academics, as Ginsburg suggests, see Ginsburg, supra note , at 9, but the property rights priesthood is firmly in control of the lawmaking process. 41 .See Lemley, Shrinkwrap Licenses, supra note , at 1264-69 (discussing the tension between particular intellectual property rules and common shrinkwrap license terms). 42 .Certain of these sections are adapted from Lemley, id. 43 .For some ways of analyzing and resolving these tensions, see infra Parts II, III. 44 .See generally Robert P. Merges et al., Intellectual Property in the New Technological Age 128-36 (1997) (discussing the general attributes of patent law and its theoretical basis)

1999 BEYOND PREEMPTION First, licensors generally want licensees to agree not to dispute the validity of the patent being licensed. Licenses up until thirty years ago commonly included provisions by which the licensee agreed that the patent was valid, or at least not to challenge the validity of the patent in court. 45 In Lear, Inc.I Adkins,46 however, the Supreme Court held that licensees could not give up their rights to challenge the validity of a patent. In that case, the Court expressly rejected on preemption grounds a contract that attempted to"opt out " of the Second, patentees periodically attempt to extend their control over licensees beyond the scope of the patent itself. They may do this by granting licenses that: (1)extend the term of the patent beyond seventeen years; 48(2)tie patented to unpatented products in an attempt to capture the market for both; 49(3) require that the licensee grant back the rights to any improvement patents; 50 or(4) employ other means Contracts that accomplish such an extension of the patent monopoly have received mixed treatment by the courts. Some clauses, particularly those that extend the length of the patent or copyright term, have been declared unenforceable. 51 Others, particularly grantback clauses, are generally enforceable if hey do not run afoul of the antitrust laws. 52 In certain circumstances, courts no only refuse to enforce the license provision, they also punish the patentee for 69o0m上3193U98h,,390.s.2.36 46395U.S.653,670-71(1969) ee id. at 668-71; cf. Sola Elec. Co. v. Jefferson Elec. Co., 317US. 173, 176-77(1942 妞H匙lm吗 3:是:1四合(款 eless have to pay royalties to the owner of the invalid patent), cert denied, 118S 品23g中mRPm哥s er, The Licengaa'e cuoppel and the Incentive to Innovate, 72 Va L 48 See, e. g, Brulotte v. Thys Co., 379 U.S. 29, 33(1964). 19 See, e.g. Dawson Chemical Co v Rohm Haas Co., 448 U.S. 176, 179(1980). 1089. Such provisions are referred to as"grantback"clauses Merges et al., supra note,at 减9 t址 copyright misuse issues Intellectual Property 5.6 utss Federal Trade Comm n, Antitrust Guidelines for the Licensing of

1999] BEYOND PREEMPTION First, licensors generally want licensees to agree not to dispute the validity of the patent being licensed. Licenses up until thirty years ago commonly included provisions by which the licensee agreed that the patent was valid, or at least not to challenge the validity of the patent in court.45 In Lear, Inc. v. Adkins,46 however, the Supreme Court held that licensees could not give up their rights to challenge the validity of a patent. In that case, the Court expressly rejected on preemption grounds a contract that attempted to “opt out” of the distribution of rights established by patent law.47 Second, patentees periodically attempt to extend their control over licensees beyond the scope of the patent itself. They may do this by granting licenses that: (1) extend the term of the patent beyond seventeen years;48 (2) tie patented to unpatented products in an attempt to capture the market for both;49 (3) require that the licensee grant back the rights to any improvement patents;50 or (4) employ other means. Contracts that accomplish such an extension of the patent monopoly have received mixed treatment by the courts. Some clauses, particularly those that extend the length of the patent or copyright term, have been declared unenforceable.51 Others, particularly grantback clauses, are generally enforceable if they do not run afoul of the antitrust laws.52 In certain circumstances, courts not only refuse to enforce the license provision; they also punish the patentee for 45 .See, e.g., Automatic Radio Mfg. Co., Inc. v. Hazeltine Research, Inc ., 339 U.S. 827, 836 (1950), overruled in part by Lear, Inc. v. Adkins, 395 U.S. 653 (1969). 46 .395 U.S. 653, 670-71 (1969). 47 .See id. at 668-71; cf. Sola Elec. Co. v. Jefferson Elec. Co., 317 U.S. 173, 176-77 (1942) (holding that federal law preempts state rules estopping licensees from contesting patent practices that violate antitrust law). The Federal Circuit has recently criticized the opinion in Lear and issued a decision that is flatly inconsistent with it in one respect. See Studiengesellschaft Kohle M.B.H. v. Shell Oil Co., 112 F.3d 1561, 1567 (Fed. Cir. 1997) (criticizing Lear as reflecting a misguided skepticism towards intellectual property, and holding that licensees who successfully challenge the validity of a patent may nonetheless have to pay royalties to the owner of the invalid patent), cert. denied, 118 S. Ct. 560 (1997). But Lear’s rejection of contract terms binding licensees not to contest the validity of the licensed patent, see 395 U.S. at 670-71, remains good law. For a discussion of this issue, see Rochelle C. Dreyfuss, Dethroning Lear: Licensee Estoppel and the Incentive to Innovate, 72 Va. L. Rev. 677 (1986); Nellie A. Fisher, The Licensee’s Choice: Mechanics of Successfully Challenging a Patent Under License, 6 Tex. Intell. Prop. L.J. 1 (1997). 48 .See, e.g., Brulotte v. Thys Co., 379 U.S. 29, 33 (1964). 49 .See, e.g., Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176, 179 (1980). 50 .Such provisions are referred to as “grantback” clauses. See Merges et al., supra note , at 1089-90. 51 .See Meehan v. PPG Indus., 802 F.2d 881, 886 (7th Cir. 1986); Boggild v. Kenner Prods., 776 F.2d 1315, 1320-21 (6th Cir. 1985); cf. P.C. Films Corp. v. MGM/UA Home Video Inc., 138 F.3d 453, 458 (2d Cir. 1998) (suggesting in dictum that copyright owners cannot impose license restrictions after the copyright expires). But cf. Howard v. Sterchi, 974 F.2d 1272, 1277 (11th Cir. 1992) (enforcing a contract that extended beyond the expiration of the copyright without considering preemption or copyright misuse issues). 52 .See U.S. Dept. of Justice & Federal Trade Comm’n, Antitrust Guidelines for the Licensing of Intellectual Property § 5.6 (1995)