An alternate approach to channeling?

• Author: McKenna, Mark P.
• Position: Trademark law

ABSTRACT

Intellectual property law has developed a variety of doctrines to police the boundaries between various forms of protection. Courts and scholars alike overwhelmingly conceive of these doctrines in terms of the nature of the objects of protection. The functionality doctrine in trademark law, for example, defines the boundary between trademark and patent law by identifying and refusing trademark protection to features that play a functional role in a product's performance. Likewise, the useful article doctrine works at the boundary of copyright and patent law to identify elements of an article's design that are dictated by function and to channel protection of those features to the patent system. These are important doctrinal tools, and they play valuable roles in the overall intellectual property system.

These channeling doctrines, however, reflect an incomplete sense of the interplay between various modes of intellectual property protection. Because they focus on subject matter, the existing channeling doctrines only prevent parties from claiming multiple forms of protection for particular features. They therefore ignore firms' ability to use various intellectual property rights as alternative appropriation mechanisms even when those rights apply to different aspects of a product or service. This Article considers how, if at all, this use of intellectual property rights as alternative appropriation mechanisms ought to inform the boundaries of the various intellectual property regimes. In particular, it considers whether alternative channeling doctrines--ones that would force claimants to elect among types of protection even when those forms apply to different features--are appropriate.

TABLE OF CONTENTS INTRODUCTION I. EXTANT BOUNDARY-POLICING DOCTRINES IN IP LAW II. IP RIGHTS AS COMPLEMENTARY OR SUBSTITUTE APPROPRIATION MECHANISMS III. ACCOUNTING FOR SUBSTITUTE APPROPRIATION MECHANISMS A. Are Overlapping Economic Benefits a Problem? B. Taking Interaction into Account 1. A New Doctrine of Election? 2. Cross-Boundary Accounting CONCLUSION INTRODUCTION

Most discussions of the boundaries of intellectual property (IP) law deal with geographic boundaries--the extent to which IP rights in one country ought to reach activities in another-or subject matter boundaries--the nature and scope of particular IP rights, especially when multiple IP rights might be implicated. This Article focuses on the boundaries of particular forms of protection, but it does so in a somewhat different way. Rather than focusing on the forms of protection available for particular features or types of objects, it focuses on the ways firms can use different forms of IP protection as complementary or alternative appropriation mechanisms, even when the various types of protection apply to different features of a product. I argue that intellectual property theory and doctrine fail to account for the economic complementarity (and even redundancy) of IP rights, and that policymakers must take account of this type of overlap to a much greater extent in shaping the boundaries of intellectual property protection.

1. EXTANT BOUNDARY-POLICING DOCTRINES IN IP LAW

   Several doctrines within intellectual property law attempt to reduce the incidence of overlapping rights. These doctrines define the boundaries of particular rights in terms of the subject matter eligible for protection, and they attempt to channel protection of particular subject matter into one regime or another.

   The boundaries these doctrines enforce, however, are defined exclusively in terms of the object of protection. The functionality doctrine in trademark law, for example, polices the boundary between trademark and patent law by identifying features of a product's design or packaging that trademark law will not reach because they are "essential to the use or purpose of the article ... or [affect] the cost or quality of the article." (1) Such functional features must be protected, if at all, by patent law. Indeed, the fact that a claimed feature is or was the subject of a utility patent is strong evidence of functionality and "adds great weight to the statutory presumption that features are deemed functional until proven otherwise." (2) The functionality doctrine, then, serves primarily to identify features which are properly the subject of patent law rather than trademark law and channel protection of those features to the patent system. (3)

   The useful article doctrine similarly polices the boundary between copyright and patent law by identifying and excluding from copyright protection features of an article that are not separable from the article's utilitarian function. (4) Courts have articulated a number of different tests for determining when particular features are conceptually separable, but all of the tests are intended to differentiate features that are integral to the function of the object from those that are not. The Second Circuit in Brandir International Inc. v. Cascade Pacific Lumber Co., (5) for example, adopted a test that distinguishes between "design elements [that] reflect a merger of aesthetic and functional considerations, [such that] the artistic aspects of a work cannot be said to be conceptually separable from the utilitarian elements" and "design elements [that] can be identified as reflecting the designer's artistic judgment exercised independently of functional influences [and therefore are conceptually separable]." (6) Likewise, although it adopted a somewhat different test, the Seventh Circuit in Pivot Point focused on the contribution of particular design elements to the utilitarian function of the article:

   Conceptual separability exists, therefore, when the artistic aspects of an article can be conceptualized as existing independently of their utilitarian function. This independence is necessarily informed by whether the design elements can be identified as reflecting the designer's artistic judgment exercised independently of functional influences. If the elements do reflect the independent, artistic judgment of the designer, conceptual separability exists. Conversely, when the design of a useful article is as much the result of utilitarian pressures as aesthetic choices, the useful and aesthetic elements are not conceptually separable. (7) All of these tests courts have used to evaluate conceptual separability are similar to the tests for functionality in that, in both contexts, courts exclude certain features from protection because of the nature of those features. The useful article and functionality doctrines reflect a judgment that certain features should be protected, if at all, with a particular form of rights, and they seek to channel protection of those features to the "right" regime. (8) This is the general thrust of channeling doctrines in intellectual property law, of which there are other examples. (9) Courts overwhelmingly conceive of the overlap between types of IP protection in terms of the forms of protection available for particular features. This focus is not wrong; the various extant boundary-policing doctrines play important roles in the intellectual property system. It is, however, an incomplete account of overlapping rights.

2. IP RIGHTS AS COMPLEMENTARY OR SUBSTITUTE APPROPRIATION MECHANISMS

   Exclusive focus on particular features is odd because firms evaluate their IP options from a product perspective rather than a feature perspective. And it is clear that, at the product level, IP rights have overlapping economic effects. Existing channeling doctrines do not capture this form of overlap because it arises not from an attempt to claim multiple rights for the same features, but from the use of different rights regimes to protect different aspects of a single economic product or service. This is an important oversight because firms relying on these multiple forms of protection are often able to capture greater economic benefits than any of the individual regimes assume.

   McNeil Laboratories' strategy regarding Tylenol is a case study here. Tylenol is a brand name pain reliever, the active ingredient of which is acetaminophen (also known as paracetamol). (10) McNeil began selling acetaminophen in the United States in 1955 under the name Tylenol Children's Elixir. (11) Though various inventions involving acetaminophen remain under patent, including one for extended release acetaminophen particles patented in 2000, (12) the basic compound has long been in the public domain. (13) Indeed Tylenol competes against a number of generic competitors who sell acetaminophen preparations, in addition to the many other pain relief and fever reducing products with different active ingredients. Despite this competition, Tylenol, the chemical composition of which is known and can be copied in exact or near exact form, retails at a significant premium over generic versions of acetaminophen. (14)

   This is a serious puzzle because intellectual property theory conceives of the economic consequences of different forms of protection in relative isolation. Consider, for example, the way the narratives of patent and trademark law conflict. According to the conventional patent narrative, patent rights are necessary because, in their absence, competitors who avoided the fixed costs of invention would be able to copy the invention and undercut the inventor's price. (15) This would ultimately drive the price of the invention down to (or near) the marginal cost of production, which would not be sufficient for the inventor to recoup the costs of developing the invention. (16) Patent law therefore solves a problem of appropriability, allowing firms to invest the time and resources necessary to develop an invention with confidence they will be able to recoup their investments by excluding others from copying the invention. (17)

   The conventional trademark narrative, on the other hand, predicts very different behavior by market entrants...