By Gordon Hull
Last time, I introduced the exchange between Mark Lemley and Robert Merges on IP theory, and made the initial case that Lemley is essentially arguing for the theoretical primacy of neoliberal biopower in intellectual property. Merges, as will hopefully become evident below, is more interested in grounding IP in juridical notions of rights-bearing subjects. Lemley finds such grounding not just wrong but incoherent and irrational, on the grounds that it is a refusal to use empirical evidence. What I want to do here is dig out some of the textual evidence to support my argument, specifically by looking at some of the work Lemley puts in the “faith-based” camp. That is, the way Lemley critiques other efforts at IP theory seems to me to exemplify the hold that Chicago has on IP scholarship. I want to look at his treatment of three such competing views: he finds them completely unintelligible when they use a non-utilitarian form of reason (Merges), he ignores it when they argue from an economic perspective that rejects the basic assumptions of the Chicago school’s development of IP (Amy Kapczynski), and he contorts them into an unpersuasive utilitarian frame when they challenge wealth aggregation as the appropriate standard for evaluation (Madhavi Sunder). Let’s look at these in reverse order.
First, Lemley admits near the end that “you might oppose IP protection not because you think it won’t drive innovation but because you think society focuses too much on innovation and not enough on other values,” citing Sunder’s From Goods to the Good Life (for an earlier, article version of the argument, see her IP3, which is the text I’m citing here). But Sunder says a lot more than this; indeed, she explicitly argues that “we must recognize that the interrelationship between culture and economics goes well beyond incentives” (264). More specifically, IP stages a struggle over social relations (275) and “intellectual property law’s convergence with identity politics reveals links between cultural representation and equality, which traditional economic analyses of intellectual property overlook” (276). She flatly rejects utilitarianism as a comprehensive theory of IP (283ff), invoking arguments that directly attack the market-price nexus. For example:
“The modern law and economics approach would rely upon the market to spur creation – but this leads to the mistake that drugs for baldness are more important than drugs for malaria …. Understanding intellectual property as incentive-to-create reduces to the claim that the ability to pay, as evidenced in the marketplace, should determine the production of knowledge and culture” (284).
The malaria example is fairly common; its point is that patents give incentives to develop things for people who can pay. Since the global poor can’t pay, their needs are systematically under-served by the patent system. Perhaps even more significantly in the present context, and with explicit reference to Martha Nussbaum and Amartya Sen’s “capabilities approach” to human development, Sunder argues that we would be better off thinking of “development as freedom and agency.” Sunder is not Nussbaum, of course, but Lemley is missing the theoretical core of her position: the excessive focus on innovation cannot be separated from the utilitarian focus on markets.
Second, Lemley criticizes Amy Kapczynski’s “Cost of Price” for “rejecting utilitarianism in an attempt to move beyond price in evaluating IP” (1344 n61). Again, that’s not really a serious engagement with Kapczynski’s paper. Kapczynski’s argument is that there was an initial debate in neoclassical economics between Kenneth Arrow, who thought IP generated high deadweight losses, and Harold Demsetz, who argued in Hayek-mode that whatever inefficiencies would be generated by deadweight loss would pale in comparison to those induced by government procurement regimes. Kapczynski: “he suggested that despite the deadweight loss that accompanies pricing, property rights in information may be more efficient than government production, largely because of the way that exclusive rights in information guide decisions about the allocation of inventive resources” (974). Demsetz’s view became the dominant one (“this argument has been so deeply internalized in the field of IP law that it is typically taken for granted” (975), though, like Hayek, he applies it against central planning).
The result is a significant drag on IP scholarship today, which asks “which IP regime is most efficient,” rather than posing the prior question of whether a given IP regime is more efficient than other ways to generate production. Kapczynski then cites a wealth of recent economic literature to make the argument that IP is not obviously more efficient than prizes, government contracts, or commons-based regimes. Hence:
“The post-Demsetzian economics literature has proliferated a series of parameters that influence the comparative efficiency of these different systems, including, most importantly, the competitiveness of the research environment; the cost of research as compared to the value of the reward; the riskiness of research or creativity; the importance of private information about the cost or value of creation; the costs of overseeing effort in the context of contracts; and the comparative costs of rent seeking, uncertainty, and the administration of each system. The information economics literature thus offers no general endorsement of any mechanism, much less a clear endorsement of IP” (988).
She then argues that none of these IP alternatives have the distributive justice and privacy problems to the extent that IP does.
Now, perhaps the last of these points is an example of “faith-based IP.” But Kapczynski uses them as additional evidence that a reflexive reliance on wealth-maximizing utilitarian theories of intellectual property haven’t earned their default status. The core of the paper is based on contemporary information economics. That Lemley doesn’t see this indicates, I think, how deeply embedded his paper is in its specific intellectual context.
Finally, Lemley finds other arguments unintelligible or irrational on their face. In response to theorists who talk about Locke, he cites a paper by Seana Shiffrin to support the claim that “when John Locke wrote of IP, it was to condemn it, not to treat it as in inherent part of the natural order” (1339, n38). But this simplifies Locke: Locke wrote against the renewal of the English book licensing act, and in favor of a more market-based approach. Locke’s arguments were fundamental in the developing of the Statute of Anne, the first copyright act. Shiffrin also advances what she freely declares to be an idiosyncratic reading of Locke. She concludes:
“For the bulk of intellectual products, then, the basic Lockean justification for parceling them out to specific individuals for exclusive control is missing. The abilities to prevent the use of given intellectual works by others and to prevent the creation of derivative works run counter to the presumption of common ownership and the concomitant concern to make full use of resources. Even if the proviso-based conditions for individual appropriation could easily be met, that would not suffice to justify individually initiated departures from the default presumption of common ownership and common use” (157).
Students of Locke will correctly pause at the term “proviso” here, but Shiffrin treats labor as a “proviso” limiting a presumption in favor of common ownership. Put crudely, her Locke (which is based on Simmons) is essentially the opposite of McPherson’s Locke. My own view (which Merges sharply contests in his Locke chapter) is that IP might be almost a paradigmatic instance of the sort of claim Locke would endorse, but that the sufficiency and waste provisos would lead him to favor fairly weak IP rights. The point to make here is simply that there is a substantial debate about what a “Lockean” theory of IP might look like. Against that background, Lemley’s effort to reduce all non-utilitarian theories to a “belief system that says the government should restrict your speech and freedom of action in favor of mine, not because doing so will improve the world, but simply because I spoke first” (1339) is a substantial distortion. At the very least, even a cursory glance at Locke underscores that he is also concerned with making sure that people do not let resources go to waste, even if he expresses that as a matter of natural law and not utilitarianism.
The problem is not just, or perhaps even primarily, Locke. Lemley does not engage either Kantian or Hegelian justifications for IP, even though the former features prominently in Merges’ book and the latter is prominent among non-consequentialist versions of IP. But neither reduces to “I spoke first,” even if one accepts that as a reading of Locke. The Kantian variant is probably most interesting in this context, because Kant draws such a sharp distinction between actions done for the sake of utility and those done for the sake of reason. The only additional point I will make about Kant here is that part of the theory is based on a view of human agency: we all presuppose that we act for a reason when we do things, and that we would be completely unable to understand ourselves as agents in the world if we were unable to render an account of our actions in language that was independent of brute incentives (at the very least, we would have to explain why those incentives provide reasons for action).
***
It is odd to hear Merges grouped into the faith-based, and not just on the evidence of his book, from which he cites a number of passages supporting utilitarian reasoning (he also appears to know the philosophical literature better than Lemley, citing some standard critiques of utilitarianism, such as the tendency to legitimate what most would call immoral outcomes, and the difficulty in calculating outcomes). Even Lemley concedes that Merges is “the leading patent scholar of the last generation and the strongest voice for economic analysis of the patent system” (1336). Merges’ sin, other than invoking Locke and Rawls, appears to be that he, like Kapczynski, has a broader reading of economics. In his contribution to the Oxford Handbook on Law and Economics, Merges notes that “formal IP rules are [now] seen as embedded in a larger economic context.” For example, in picking up an argument from his book – that strong IP rights give owners the ability to waive those rights strategically (in my review, this was one of the points to which I objected, on normative grounds), Merges argues:
“Scholars have shown that they understand why the ability to selectively waive IP rights is an essential dimension of their usefulness in the context of platform competition. This is a far cry from a simple, unidimensional ‘incentive’ story where an increase in IP protection is tested for its effect on total R&D investment”
He also incorporates more economic theory to make the case that IP affects industry structure by affecting firm boundaries:
“The basic insight from this literature is that IP rights can actually affect the location of firm boundaries. The key to this new understanding of IP is to see it not primarily as something that affects overall incentive levels, but instead as an instrument that affects transactions – and hence the organization of production. Advocates of this view see IP as a way for small, specialized firms to protect against opportunism when contracting with larger firms. IP makes it easier for specialized firms to sell technology and know-how via arm’s length contracts, which permits specialized producers to exist as independent firms. IP rights can then be said to effect industry structure; without these rights, specialized knowledge subject to opportunistic copying would have to be produced within large, vertically integrated firms” (internal cites omitted)
Perversely, discussion of firm boundaries lies squarely with the Coasean tradition of law and economics (I discuss this in the context of research on cloud computing here), even if it deviates from the Demsetzian theory of IP. Merges concludes that “the upshot is that IP may, at the margin, enable more small and independent firms to remain viable even in industries where multi-component products are assembled and sold by large, vertically-integrated firms.” Those who have read his book will note that he thinks Kantian justifications of IP support precisely such small and independent firms. So Merges is not hostile to evidence any more than Sunder or Kapczynski. The question is what empirical evidence to look at, and what to do when the evidence underdetermines policy. The social and economic complexity of IP makes such undertermination nearly inevitable.
***
Merges’ answer to Lemley includes a substantial argument to the effect that, empirically, people do reason with deontological concepts like fairness. In that sense, any descriptively adequate account of IP needs to take such reasoning into account. Thus, “evidence has mounted in the past twenty-five years or so that there are very extensive overlaps in peoples’ basic moral intuitions. Indeed, it has become common in some circles to speak confidently of ‘moral universals.’” He then proceeds with a discussion of experimental philosophy’s work on the trolley problem and on psychological research showing that even small children reason with concepts like first possession. I am congenitally allergic to trolley problem discussions, but I think the point he is making is an important one. Here is the summary:
“Moral philosophers familiar with empirical studies of moral judgment across cultures posited a similar type of template, only in the moral sphere. Observations, such as those centered on the trolley problem, confirm that people from all cultures and with all education backgrounds share similar judgments concerning right and wrong actions in several basic human situations.”
I am not sure the argument works exactly as intended, because Lemley could easily respond by embracing what some think is an uncomfortable paradox of utilitarian theory: that the best way to achieve utilitarian results might be to teach people not to be utilitarian moralizers. This tension (if it is one, and I’m not sure it is) goes at least back to Mill, who notes in his (arguably not-too-utilitarian; see also here) Utilitarianism that drilling people in the virtues is probably the best way to achieve utilitarian outcomes.
What Merges’ evidence about ordinary people’s psychological dispositions does indirectly do is underline that most people do not think like law and economics would like them to (that the poor especially aren't economically rational, and need to be coerced into becoming so is an argument that goes back at least to Malthus). Homo economicus is not by nature. Merges invokes a version of the paradox I alluded to in the previous paragraph: “paradoxically, there is empirical evidence that when it comes to moral issues, people are not primarily empiricists.” This underscores that the neoliberal project of treating people as rational economic actors is inherently a coercive one, insofar as it necessarily attempts to remake human subjectivity in its own mold (there is a large literature on this; see my paper on notice and consent privacy for the argument and some citations; see also Frank Pasquale’s and my critique of corporate wellness programs, as well as here, here, and here (this one is especially apt given GOP efforts to destroy Medicaid)). The extent to which this particular complaint is applicable to Lemley’s own work is, I think, debatable and well beyond the scope of this already-too-long blog post. But I do think it underscores that the debate over IP theory is also a debate about social power and how it should be understood, probably more than it’s a debate about economic incentives. Indeed, framing it as a debate about economic incentives is arguably itself an exercise in social power.
Recent Comments