The Legislators and the Innovators

Two hundred years after the founding fathers wrote the U.S. Constitu­tion, the government that it created thrust the Internet from the temples of academe into the cold, cruel commercial world.

This charge defines the overriding objective of IP policy: to harness the profit motive to motivate innovation. Want to encourage inventors to invent and authors to write? Bribe ‘em. Let them charge people to use their ideas and their innovations for long enough to keep them innovat­ing, and then make them release their innovations into the public realm. From then on, the people may use the ideas free of charge.

Such bribery (or motivation) is not a bad idea, at least in theory, proving once again that the drafters of our Constitution were pretty savvy thinkers. But they left the details of IP law to Congress—and that’s always a challenge. While policy goals are often straightforward, the operational laws intended to reach those goals can be rather complex. And so, while U.S. IP policy can be stated in a simple sentence, U.S. IP laws are based on a few long and detailed statutes. That distinction between idea and implementation has split the world of IP. A key issue that separates temple-dwelling IP scholars from those who practice IP law is the significance the two groups place on IP policy. Good IP lawyers know that IP law is what it is; we presume that Congress fulfilled the Constitution’s policy prescriptions.

Our modern world differs from that of the Constitution in many ways. The information sector wreaked havoc on the generally sensible system that early Congresses had established. Those Congresses couldn’t possi­bly have imagined words that actually did something. In their world, authors drew upon words and grammars to create texts. Inventors applied technical creativity to solve problems. The distinction between them was clear. So what would they make of the computer programmer, who draws upon words and grammars to solve challenging technical problems? Is such a person an author or an inventor? And how should the law motivate—or bribe—such a person? These questions rage as matters of front-line controversy among IP scholars. They also reveal how legal rules can alter economic incentives, which in turn determine which technologies attract innovative fervor and investment.

But back to Congress. The Constitution, adopted in 1789, gave the new Congress the power to bribe authors and inventors to encourage innovation. Of course, that first Congress had a whole government to build, and the Constitution never told Congress that it had to reserve rights for authors and inventors—just that it could if it wanted to. Nevertheless, Congress seemed to feel that a working IP system was a priority item. That very first Congress deciding that authors and inven­tors each needed different incentives; it gave us both the Patent Act of 1790 (for inventors) and the Copyright Act of 1790 (for authors). While each statute has been updated a handful of times, grown increasingly more complex with each update, and granted stronger property rights with each update, many of the broad outlines remain essentially as they were more than 200 years ago.

Inventors with a new, useful, not-terribly-obvious way to solve a par­ticular problem can apply to the Patent and Trademark Office (PTO).

The process for Authors is easier, though in theory the rights are not quite as good. An author or an artist who composes something original receives immediate copyright protection, even without registering it with the Copyright Office. That protection gives the copyright holder the exclusive right to copy, to distribute, to perform, or to display the work, as well as comparable rights over “derivative works” based on the original. Copyright protection, however, covers only the expression of the idea, not the idea itself. That means that we’re all free to write novels about youthful wizards. (Good luck.)

The Copyright Act appears to offer authors something of value without extracting too much cost from society at large. But unlike the short-term life of patents, copyright protection currently lasts ninety-five years. Back in 1790, copyrights lasted only fourteen years. Then, slowly and incrementally, Congress made them longer and longer. They didn’t hit ninety-five years until 1998, when the Sonny Bono Copyright Term Extension Act responded to the pressing needs of Disney, whose copy­right protecting Mickey Mouse was about to expire. Now, the whole point of IP policy was supposed to be to motivate innovation. And it seems unlikely that, in the late 1920s, Walt Disney weighed his heirs’ prospects for convincing Congress to extend copyright protection for an extra twenty years in deciding whether or not to create his cartoon mouse. So from that perspective, Congress does seem to have dropped the ball.

But to some, it appeared that Congress had done more than that. Some people believed that Congress had exceeded its constitutional charge.

Their crusade showed some initial promise. They convinced the Supreme Court to consider the issue—never a mean feat. But seven of the nine Justices decided that the Constitution gave Congress exceedingly broad flexibility, and that any time limit met the Constitutional require­ment of a “limited time.”² Nevertheless, Justices John Paul Stevens and Stephen Breyer did accept Lessig’s arguments. They raised a number of issues at the heart of IP policy, opening a discussion of the relationship among our existing statutes, Congressional behavior in updating them, and the intended purpose of the IP clause. Justice Ruth Bader Ginsburg, who wrote for her six colleagues (and thus with the full force of the Court behind her), picked up the gauntlet that they had thrown. She rejected their arguments, explaining that the extension to ninety-five years was consistent with the original purpose: Because Congress changed the IP laws from time to time, innovators were on notice that their rights could change; this notice was part of their overall motiva­tion. Her argument implies, of course, that innovators are also on notice that their rights could weaken (or even evaporate), should Congress decide to go that route.

Now, the significance of a debate between a court’s majority and its dissenters differs depending on how close to the bench you stand. If you don’t live in the legal world, it’s little other than a curiosity. Such debates have no immediate impact on the law, which is as the majority says it is. But legal scholars recognize that these debates are often harbingers of things to come. Eldred and Lessig gave the Supreme Court an opportu­nity to begin debating the appropriate relationship between IP law and IP policy. Though they lost this particular battle, they helped elevate the discussion from one that engaged only law professors to one that engaged the Court. Creative IP scholars and lawyers are now poring through the Justices’ words to find intriguing ambiguities, seeking ways to get the Supreme Court to consider deeper nuances in the relationship. And given the number of questions raised during the information sector’s formative years, not to mention those raised in other areas of active tech­nological innovation, they seem likely to find some.

The Court’s rejection of Eldred’s claim encapsulates many basics of IP law. The Constitution set up a policy objective, Congress devised a few complicated statutes, and the law is what the statutes say it is. IP lawyers and judges are not tasked with assessing the relationship between the policy and the law; that’s Congress’s job. So unless someone like Lessig can convince the Supreme Court that the IP laws actually violate the Constitution, the laws remain as Congress writes them. A mere demon­stration that the law in practice is likely to be inconsistent with the pur­poses of the Constitution is unlikely to be effective. Judges who inquire about Congressional fidelity to Constitutional policy are invariably labeled “activists” by anyone who disagrees with their conclusions.

But before we write to our Representatives and Senators, we have more to learn about IP. For example, the entire IP system is an “opt in” system. Anyone, author or inventor who prefers to keep an innovation secret, is free to do so. The government won’t offer him any special pro­tection, but we will respect his choice. Inventors who choose not to share the secrets behind their inventions can keep them as “trade secrets.” Courts protect trade secrets against industrial espionage and theft, but once someone else learns them—either independently or legitimately— the secret’s out and there’s not a damn thing the inventor can do about it. Not surprisingly, secrecy is more common among inventors than among authors. After all, I can still sell a machine based on a secret tech­nology. I can’t really imagine how or why anyone would buy a book with a secret text.

That is, I couldn’t have imagined it until I heard of a special kind of “book”: a computer program. Believe it or not, all three bodies of law protect commercial software. Software typically begins with a mathe­matical algorithm that may be patentable. The algorithm is implemented as copyrightable “source code” written in a high-level programming lan­guage, and then compiled into copyrightable “object code” lying further down the translation chain, closer to the machine’s language and incom­prehensible to human readers. Most software companies copyright and circulate this incomprehensible object code and retain the source code as a trade secret. As a result, the dominant legal protection for information products combines copyright and trade-secret law. Because trade-secret law is more a matter of espionage protection than actual IP rights, most of the discussion of information-sector IP focuses on copyright. But it’s important to remember that the triple threat of patented algorithms, copyrighted and trade-secret protected source code, and copyrighted object code protect many software products in the market today.⁴

Did Congress meet the constitutional policy objective? The answer depends on your perspective. And from the perspective of the informa­tion sector, the rights protecting software look pretty damn powerful.