Cutting-edge analysis of technology law https://www.law.duke.edu/journals/dltr/index Mon, 30 May 2011 23:00:00 +0500 Justin Van Etten The rise of software and software licensing has led to another phenomenon: the attempted enforcement of software licenses through copyright law. Over the last fifteen years, content creators have begun to bring copyright suits against licensees, arguing that violation of license terms withdraws the permission needed to run the software, turning the use of the software into copyright infringement. Not surprisingly, courts have rejected this argument, and both the Ninth Circuit, in MDY v. Blizzard, and the Second Circuit, in Krause v. Titleserv, have developed new legal rules to prevent copyright enforcement of contract terms. This iBrief explores software licensing in detail, analyzes the courts’ responses, and concludes that the Ninth Circuit’s approach to copyright enforcement of license terms is preferable to the Second Circuit’s approach because it is supported by legislative history, more straightforward, and more likely to prevent future content creators from enforcing their licenses through contract. http://www.law.duke.edu/journals/dltr/articles/2011dltr007 2011dltr007 Tue, 9 August 2011 23:45:00 +0500 Robert Goldscheider Fifty years ago, Robert Goldscheider helped pioneer the use of a methodology known as “the 25% Rule,” a tool for determining reasonable royalties in intellectual property licensing negotiations. The Rule holds that licensees of intellectual property normally deserve the lion’s share of the profit because they usually bear the bulk of the business risk associated with bringing the intellectual property to market. Experts familiar with the art of intellectual property licensing frequently rely on the 25% Rule to rationally determine reasonable royalties in litigation and transactional settings. The Rule’s prominence has been accompanied by unfortunate misunderstandings about its form and substance. It is not, as some suggest, intended to be a simple shortcut to determine patent royalties. Rather, it was developed as, and remains, a meticulous methodology inspired by significant private transactions and ultimately refined by brilliant judicial interpretation. As such, it is inappropriate to condescendingly diminish it to a mere “rule of thumb.” When properly understood and applied, the Classic 25% Rule is an effective discipline that achieves the high standards of reliability demanded by the U.S. Supreme Court in the Daubert and Kumho Tire cases. On January 4, 2011, the Federal Circuit, in Uniloc v. Microsoft, held that “the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation.” This decision is problematic for a variety of reasons: (1) it assumes that the 25% Rule, as it is classically understood, is a rule of thumb; (2) district courts could interpret it as prohibiting damages experts from applying the Classic 25% Rule as a tool for determining a baseline royalty rate, because of the court’s confusion between a baseline royalty rate and a “reasonable royalty” under § 284 of the Patent Act; and (3) it could denigrate the skills of true experts who have utilized, and continue to utilize, the Classic 25% Rule in a way that otherwise meets the admissibility standards of the Federal Rules of Evidence. This article attempts to correct these misunderstandings in the hope of restoring some certainty in an area of jurisprudence that, unfortunately, has become an unpredictable area of the law. http://www.law.duke.edu/journals/dltr/articles/2011dltr006 2011dltr006 Mon, 30 May 2011 22:45:00 +0500 Jeremy J. Beck and Libby Van Cleve Oral history provides society with voices and memories of people and communities experiencing events of the past first-hand. Such history is created through interviews; an interview, however, like any other type of intellectual property—once in a fixed form—is subject to copyright law. In order to make oral history available to the public, it is critically important that individuals generating and acquiring oral history materials clearly understand relevant aspects of copyright law. The varied nature of how one may create, use, and acquire oral history materials can present new, surprising, and sometimes baffling legal scenarios that challenge the experience of even the most skilled curators. This iBrief presents and discusses two real-world scenarios that raise various issues related to oral history and copyright law. These scenarios were encountered by curators at Yale University’s Oral History of American Music archive (OHAM), the preeminent organization dedicated to the collection and preservation of recorded memoirs of the creative musicians of our time. The legal concerns raised and discussed throughout this iBrief may be familiar to other stewards of oral history materials and will be worthwhile for all archivists and their counsel to consider when reviewing their practices and policies. http://www.law.duke.edu/journals/dltr/articles/2011dltr005 2011dltr005 Wed, 8 April 2011 13:50:00 +0500 Hillary Greene The ability of intellectual property owners to earn monopoly rents and the inability of horizontal competitors to price fix legally are two propositions that are often taken as givens. This iBrief challenges the wholesale adoption of either proposition within the context of buyer price-fixing in intellectual property markets. More specifically, it examines antitrust law’s role in protecting patent holders’ rents through its condemnation of otherwise ostensibly efficient buyer price fixing. Using basic economic analysis, this iBrief refines the legal standards applicable at this point of intersection between antitrust and patent law. In particular, the author recommends the limited abandonment of per se condemnation of buyer price-fixing within pure intellectual property contexts. As an alternative, a coarse screen which accounts for both price and innovation effects is proposed. This recommendation represents one example of how antitrust law can better account for the complicated and imperfectly understood effects of the patent system on social welfare. http://www.law.duke.edu/journals/dltr/articles/2011dltr004 2011dltr004 Wed, 6 April 2011 18:17:00 +0500 Austin J. Sandler Technological innovation continues to make trading and markets more efficient, generally benefitting market participants and the investing public. But flash trading, a practice that evolved from high-frequency trading, benefits only a select few sophisticated traders and institutions with the resources necessary to view and respond to flashed orders. This practice undermines the basic principles of fairness and transparency in securities regulation, exacerbates information asymmetries and harms investor confidence. This iBrief revisits the Securities and Exchange Commission's proposed ban on the controversial practice of "flash trading" and urges the Securities and Exchange Commission and the Commodity Futures Trading Commission to implement the ban across the securities and futures markets. Banning flash trading will not impact high-frequency trading or other advantageous innovative trading practices, and will benefit all market participants by making prices and liquidity more transparent. In the wake of the May 6, 2010 "flash crash" and the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, now is an opportune time for the Securities and Exchange Commission and Commodity Futures Trading Commission to implement the ban. http://www.law.duke.edu/journals/dltr/articles/2011dltr003 2011dltr003 Fri, 1 April 2011 04:42:00 +0500 Ryan P. O'Quinn After Barack Obama's election to the presidency, he promised that one of his top priorities in office would be to relieve the restrictions initiated by President George W. Bush on federal funding of embryonic stem cell research. President Obama followed through on his promise, but the celebrations in the nation's research labs were short-lived. Anti-abortion advocates and other scientists working in the field that would allegedly be out-competed in the federal funding arena brought a legal challenge to the new government position. The struggle culminated in August 2010 with a federal district court issuing a preliminary injunction to halt the new funding initiative. Although the government successfully appealed for a stay on the injunction pending arguments in the Court of Appeals, the decision has paralyzed research in the field. This iBrief argues that the injunction was wrongly granted, predicts how higher courts might treat the case, and suggests that the proper forum for addressing this controversy lies within the scientific community, not the judiciary. http://www.law.duke.edu/journals/dltr/articles/2011dltr002 2011dltr002 Fri, 1 April 2011 04:41:00 +0500 Matthew W. Turetzky Copyright law protects orphan and parented works equally--but it shouldn't. Consequently, current law unnecessarily restrains public access to works that authors have not exercised dominion over for decades. This problem has come to the fore in the Google Books settlement, which critics argue will give Google a de facto monopoly over orphan works. But this criticism implicates an obvious question: Why are orphan works protected by copyright law in the first place? If orphan works were in the public domain, then no one would worry about Google's supposed "monopoly" because Google's competitors would be free to copy the works without facing class action lawsuits. To address these concerns, I propose a new equitable defense to copyright infringement: the orphan theory of abandonment. http://www.law.duke.edu/journals/dltr/articles/2010dltr019 2010dltr019 Mon, 14 Feb 2011 04:23:00 +0500 Marc L. Roark Apple's success with the Apple iPhone has brought with it certain problems. Its success has engendered a community that has attempted to circumvent Apple's exclusive service agreement with AT&T. Unfortunately for Apple (and similarly situated manufacturers), intellectual property law allows consumers to alter their products so as to circumvent relationships that manufacturers may have with others. The patent and copyright law first sale doctrine allows consumers to manipulate a product after it is purchased. As a result, manufacturers are increasingly turning to alternatives to intellectual property to secure control over the device after the sale. One such alternative is the exclusion of warranty under Article 2 of the Uniform Commercial Code. This iBrief considers whether limitation of warranties have the deterrence effect manufacturers desire. Said differently, it considers whether manufacturers can use warranty limitations to prevent consumers from using their products in an unauthorized manner. The iBrief presents a behavioral model based on the Triandis model of planned behavior and enhances the model by accounting for likely and unlikely benefits and detriments. The model suggests that participants weigh the probability and magnitude of the detriment against the probability and magnitude of the beneficial impact when making the decision to engage in technological piracy. This model, considered with other empirical evidence, suggests that Apple's warranty could be a stronger deterrent for consumers than civil liability. The iBrief concludes that manufacturers can better protect their post-sale expectation of profits by raising consumer awareness of their warranty's quality and by raising awareness of the consequences for using the product in a way that is outside the terms of the consumers' authorized use. http://www.law.duke.edu/journals/dltr/articles/2010dltr018 2010dltr018 Mon, 14 Feb 2011 04:22:00 +0500