The Intellectual Property Bargain: Consumer Perspectives in a Global Economy

George Nathanael is a second-year JD student at Osgoode Hall Law School

On a beautiful Friday at the Schulich School of Business, IP Osgoode presented “The Intellectual Property Bargain: Consumer Perspectives in a Global Economy“. This one-day conference brought together academics, practicing lawyers, and students to participate in presentations and discussions that aimed to infuse current debates in intellectual property law policy with a consideration of consumer interests. The witty and insightful chair, the engaging speakers, and the receptive audience, all made for a very successful event.

Professor David Vaver of Osgoode Hall Law School chaired the conference and began the day by noting the usage of the term “bargain” within the conference’s title. Though intellectual property laws have often been framed as a bargain between society and the inventor, in that exclusive rights are traded for innovation, consumers do not actually engage in any bargaining and usually do not understand what intellectual property means to them. Professor Vaver stated that the bargain analogy may have been a neat way of marketing a monopoly right, since these types of rights can be seen as simple state creations. The consumer perspective has largely been ignored, which is odd because the consumer can take on any role within the triad of inventor-distributor-public that the laws account for.

Professor Robert Kozinets of the Schulich School of Business, who is an anthropologist by training, gave the first talk about the online consumer. He argued that there is a battle going on, and various interests are fighting for symbols, marks, meanings, and other like “stuff”. We have always loved our stuff but it has not always been so controlled, so copying intellectual property is a natural reaction. Consumption is much more complex than is traditionally made out to be and the distinction between consumption and production is difficult to realize, especially in our digital age. Even the mere act of “consuming” a webpage, by navigating through it, can produce valuable information for others. With the growing participatory culture that dominates the internet today, consumers are able to be even more active than in the past. Professor Kozinets believes that when the two human association models of Gemeinschaft (where individuals are concerned with the interests of the community first and foremost) and Gesellschaft (where individuals are primarily concerned with self-interest) are merged, there can be problems. The growing culture of online communal sharing of “stuff” by consumers runs counter to many of the current legal doctrines based on the protection of intellectual property for a single owner.

Dr. Dev Gangjee from the London School of Economics spoke next about the construction of a consumer perspective in trademark law. Trademark laws exist to preserve the communicative function of a trademark, and as such, the likelihood of confusion among consumers is an important test that is often used to determine if one mark infringes another. However, the recent U.K. decision of L’Oreal v. Bellure seems to indicate that double identity infringement is wrong not because it causes confusion but because the owner has an absolute right of use. In this case, a producer of knock-off perfumes created one with a similar smell as one of L’Oreal’s and placed it in packaging of a similar style, but it was quite easy to see that consumers would understand that it was indeed a knock-off because the packaging and name of the perfume were obvious modifications of the original style. Additionally, the case of Intel v. CPM saw the court finding that marks bring about imagery driven by the marketing of a company, and this despite the fact that consumers can play a large part in creating the meaning behind trademarks as well. Dr. Gangjee ended by noting that trademark law seems to be in a transition and is becoming more like patent and copyright law in that it is encouraging investment into brands. Without questioning the rightness or wrongness of this path, he asked whether or not investment in brands is really as valuable as investment into new inventions and works of art, and the technological and cultural benefits that they produce.

Next, Professor Geertrui Van Overwalle of the University of Leuven in Belguim considered the role of consumers in the patent system. She stated that the trends are shifting and that more attention is being given to consumers in patent law. There are both passive consumers, who are simple ordinary users, and active consumers, who adapt products in the market to their own needs. In the latter class, there can be described four levels of consumer inventiveness: (1) copying or reproducing a product for personal use; (2) replacing an element in a product for personal use; (3) improving a device with added characteristics for personal use; and (4) improving a device for personal use and commercial exploitation. Patent law has differential treatment for the different levels of inventiveness; the first two are allowed but not encouraged through private use exceptions, and the last two are stimulated by patent law through the granting of positive rights. Professor Van Overwalle questioned whether the third and fourth levels of consumer inventiveness are actually motivated by the patent system. Though the goals of patent law are to reduce costs and better goods, it does not really seem to account for innovation stimulated by factors other than profits.

Pascale Chapdelaine, a PhD candidate at Osgoode and an Adjunct Professor at the University of Toronto’s Faculty of Law contributed to the conference that she had a large part in organizing. She spoke about consumers’ reasonable expectations regarding usage of digital music recordings. Copyright holders and consumers have been treated as being within independent spheres until only recently, and we ought to think more about how to empower consumers. Based on a number of consumer surveys, it is evident that users’ beliefs about what they are allowed and not allowed to do with their recordings do not align with reality. Using consumers’ reasonable expectations is one way of arriving at fairness in copyright law, since currently the copyright holder has much of the power to dictate how their work is to be used, which occurs through mechanisms such as standard form agreements and technological locks. Furthermore, user rights can be clarified by using similar starting points as consumer protection laws. Specifically, it was suggested that there ought to be a “private purpose” right that goes beyond just copying. Copyright law is heavily based on statute, but it is incomplete, and so more focus should be placed on the purpose of copyright itself as opposed to the act.

The final speaker was Professor Ariel Katz of the University of Toronto, and his topic was the enforcement of end-user agreements. License terms can serve to strip users of their rights and to somewhat extend the rights of holders, and because they are often shrink wrap agreements this raises issues of a lack of realistic consent. Treating user rights as always inalienable is untenable because it assumes that the allocation of rights within a statute is optimal in every situation. Forcing courts to always uphold contracts of adhesion puts too much power in the hands of the copyright holder and can prevent certain socially useful actions such as criticism of a work. Competition law will likely only have a limited role in determining when certain contract provisions should be upheld because competition law is meant to deal with exceptions to an already competitive market and is not meant to manage the intellectual property regime. Moreover, it would be quite a strain on a court’s resources to hear expert testimony regarding what sorts of provisions are worth upholding for the sake of the economy. A good way of avoiding both extremes is to treat the enforceability of a provision as being inversely proportional to the provision’s intrusiveness on one’s personal activities; the more intrusive a restriction on one’s personal activities then the greater the justification required to uphold the provision. Professor Katz noted that a restriction that is more intrusive, such as preventing private performance of a work, should also anyway have less incentive for prevention than a restriction that is not as personal, such as preventing commercial piracy with a work, since it will usually not affect the rights holder’s interests as much.

It seemed that most of the speakers either implicitly or explicitly took the position that intellectual property law ought to be based on a positivist notion of rights that regulate and incentivize certain outcomes and strike a balance between competing interests, as opposed to being based on rigid natural rights theories that we often see in discussions of tangible property. If this perspective was adopted more widely, perhaps many of the debates currently going on in the media, among legislative bodies around the world, and within the blogosphere, would not be as polarizing. One thing is for sure, and that is if the intellectual property regime is truly to be treated as a bargain there must be compromise on all sides, and the consumer perspective must be taken into account when reaching such a compromise.

The archived video and PowerPoint presentations from the conference can be accessed here.