Neil Turkewitz
Mar 5, 2019 · 8 min read
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©2019 Neil Turkewitz

In Defense of Unfair Competition: A Skewed Tale of Sorrow & Mischief

by Neil Turkewitz

Okay, so I just finished reading “Unfair Disruption” by Mark A. Lemley and Mark P. McKenna. Wait, that’s not really accurate. I confess to finding it unreadable, by which I do not mean illegible. The type face was fine. The content itself — arguing that copyright owners are fundamentally allergic to technology and predisposed to reject “innovation” in favor of maintaining an antiquated status quo, was badly in need of some disruption. In any event, I do want to acknowledge that I “skimmed” it would be more accurate than saying I “read” it.

Lemley and McKenna don’t like copyright. That doesn’t make them unique. It’s kind of a thing in academia. And they apparently love disruption. Very cutting age and hip of them. Or at least, it was a few years ago. The blind fealty to the wonders of disruptive technologies brought to the world by Silicon Valley titans is so pre-CA (Cambridge Analytica) and doesn’t play quite as well in a world more aware of the dangers of unregulated power in the hands of tech overlords, but I digress.

Lemley and McKenna are motivated by the observation that incumbents will generally use whatever tools are available to them to maintain their power, and that legal/regulatory action may be employed as part of the defense of the status quo. They further observe that determinations of fairness may be somewhat circular given the predisposition of viewing incumbency as the set point and characterizing changes that would displace existing relationships as “unfair.” Here’s the interesting thing — I agree with these observations completely. My own viewpoint is that we should hold the status quo up to the same scrutiny as we would new entrants. If we demand empirical support to effect changes, why do we not demand the same from legacy actors?

Sadly, from there, any and all agreement disappears as Lemley and McKenna, blinded by their dislike of copyright, make nonsensical parallels between unrelated developments and take great liberties with facts and law. Because law/regulation can be used to prevent competition, they try to pigeonhole everything into that category, regardless of whether it fits or not. They conflate that which should not be conflated. Anti-trust and unfair competition laws are, at their core, about competition. Copyright is not about competition — it is about protecting original expression, and only prevents authors from having to compete against unauthorized versions or derivatives of themselves. It does not affect new entrants except to the extent that new entrants want to appropriate or distribute the creative works made by third parties. Lemley and McKenna portray copyright owners as the buggy whip manufacturers of yore, desperately clinging to the manufacture of an outdated good, (although to their credit, at least they never literally say “buggy whip”), without seeming to grasp that disruptive technologies haven’t affected the demand for goods protected by copyright. Creative works protected by copyright, unlike buggy whips made irrelevant by the arrival of the automobile, remain very much in demand.

Here’s a perfect example — their very introduction of the supposed dynamic of disruption designed to contextualize how copyright owners assert rights to prevent similar disruption:

“New technologies disrupt existing industries. They always have, and they probably always will. The printing press put quite a few monks out of the manuscript hand-lettering business. Railroads displaced much (though by no means all) of the barge and shipping industry. They were in turn displaced by long-haul truck drivers, who are now at risk of being displaced by self-driving trucks…

Incumbents, then, have a strong incentive to stop the disruption that accompanies new technology. And they often rely on intellectual property (IP), unfair competition, or related legal doctrines as tools to do so….One notable example in the copyright context involves digital media technology, much of which was held illegal because early uses frequently infringed copyright.11

11 Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 919 (2005) (holding that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties”). Disclosure: Mark Lemley represented Grokster in that case.”

Note the deception — Lemley and McKenna seamlessly transition from disruptive technologies which replaced the need for their antecedents (printing press to handwriting, railroads to shipping to trucks to self-driving trucks) to a theory of innovation in the Grokster case which involved the unauthorized distribution of copyright works and which was completely dependent upon the existence of such works. They then suggest that the Grokster case was an attempt to stifle a technology in order to restrict competition when Grokster was in fact about business practices, not technology itself. Indeed, the first sentence of the Supreme Court’s opinion sets out the issue to be addressed: “The question is under what circumstances the distributor of a product capable of both lawful and unlawful use is liable for acts of copyright infringement by third parties using the product. We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”

Thus, while the Grokster case involved technology, it was not about technology. Lemley, as counsel to Grokster, is well aware that the Grokster decision was not some kind of referendum on the underlying technology. Interestingly, there are other copyright cases in which the technology itself is more in play, cases like Sony Betamax or Diamond Rio, but those decisions actually prove the opposite of Lemley’s contention and instead reflect that courts tend to disfavor copyright claims when they perceive them as seeking to address technology itself. So instead of focusing on the Supreme Court decision which is inconsistent with his premise that copyright law allows copyright owners to prevent the uses of technology, Lemley instead treats us to the old reliable standby of Jack Valenti’s 1982 Congressional testimony (and not a courtroom) in which he expresses the film industry’s concerns about the VCR — concerns which did not rule the day in court or in Congress!

Lemley and McKenna’s piece continues this pattern of making some general unobjectionable statement followed by a series of examples which make little sense. One of my favorites was this one:

We begin from the premise that the market generally is better suited than are courts to determining which industry structure will have greater social value. That doesn’t mean courts should never intervene to prevent development or deployment of new technology, but it does mean that they should regard that intervention as extraordinary and requiring justification in the purpose of the law being employed.” But who doesn’t begin with that premise? There’s no argument that markets operating under the parameters of property interests as determined by Congress should be where decisions get made about social value. Courts are there only to adjudicate disagreements where there are conflicts about the interpretation of law. Courts don’t determine for themselves when or how to engage. And of course, this analysis wholly ignores the fact that both the “development” and “deployment” of technology entail human decision-making, otherwise known as conduct. So while courts should refrain from making decisions in the abstract about technology, they should very much be involved in addressing conduct. Indeed, many of the harms societies are facing around the globe in connection with the internet flow from the willingness to treat online conduct as outside the jurisdiction of governments or subject to a form of tech exceptionalism under which conduct is excused merely because it takes place via the internet.

Lemley and McKenna cite at some length the ways that regulations can be used to thwart competition and protect legacy actors rather than to advance sound public policy objectives. They recognize that some regulatory authority is valid (e.g. tech neutral policies to prohibit discrimination, presumably health and safety), and proclaim: “But giving individual companies the ability to thwart disruptive entry is the wrong way to go about it.” Okay, so again, who doesn’t agree? This is the straw man of straw men — designed to hide that fact that addressing infringement is not the same as thwarting disruptive entry. Disruptive entry to copyright would be a new way of producing works without the need for actual creators. The production of creative works through AI might be such an example, although even that is not as clear as it might be given the human programming behind AI and whether that might constitute authorship within the meaning of the copyright law. But the broader issue is that no one is seeking to ban such putative “disruptive entries.” Lemley and McKenna, like many before them — and hopefully fewer after them, recite the mistaken notion that unauthorized distribution of the works of third parties is somehow disruptive in the Schumpeterian sense without recognizing that it is not a new, more efficient way of producing the good. Streaming may disrupt retail, but it doesn’t disrupt the production of creative works.

In the end, Lemley and McKenna’s bold proposal is that courts should not issue injunctive relief, should guard against large awards of damages, and should require “a unique causal connection between the infringing nature of the defendant’s work and the disruption of the market.” In other words, any remedy should only mitigate demonstrated harm, and only where that harm is manifest, non-hypothetical, and measurable.

This too is unoriginal, and has been discussed for years. Indeed, former Register of Copyrights David Ladd in his 1982 Brace Lecture, “The Harm of the Concept of Harm in Copyright,” addressed the risks of reliance upon concepts of harm, and Jane Ginsburg summed up this complex relationship very nicely in her 2015 article entitled: Copyright: No Longer a Property Right?

“The fundamental purpose of copyright is to foster an environment of respect — both material and moral — for authorship conducive to creative endeavors. Recognizing authors’ property rights in their creations favors the development and persistence of a culture of authorship. Subjecting authors’ rights to a proof-of-harm requirement clashes both philosophically and rhetorically with a property rights conception of copyright, and thus devalues authorship. Even were one to interpolate a harm criterion to qualify the property right, too cramped an understanding of the nature of the harm risks endangering the creative environment.”

That seems as good a place to end as any. I have only used half of my notes and have left some of my favorites on the cutting room floor, but I fear that this piece is growing too long. Perhaps I will write a sequel in exploring this fairy tale. For the moment, I will close as I opened — noting a rare agreement with Lemley and McKenna. They conclude: “The law shouldn’t prevent new entrants from disrupting existing incumbents without good reason.” I can’t think of a better reason than safeguarding the vitality of a copyright system that sustains creators and fuels creativity. #

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