ABSTRACT INTRODUCTION I. THE INTELLECTUAL PROPERTY CHALLENGE: MOTIVATING Innovation without Impeding Progress II. FINDING BALANCE: THE FUNDAMENTAL PROBLEM OF LEGISLATIVE IMPLEMENTATION A. The Federal Patent Statute: Rights and Exceptions 1. Providing the Required Time-Limited Incentive 2. Furthering Progress. a. Disclosure b. Reservations: Statutory Subject Matter, Novelty and Obviousness/Exhaustion and Repair B. The Federal Copyright Statute: Rights and Exceptions 1. Providing the Required Time-Limited Incentive 2. Furthering Progress a. Disclosure b. Reservations: Fair Use and Sections 107-122 C. Trademarks III. THE UNBALANCING EFFECT OF TECHNOLOGICAL ACCELERATION IV. THE ROLE OF THE CONSUMER IN PROMOTING PROGRESS (EARLY ADOPTERS) V. CONGRESSIONAL AND JUDICIAL BALANCE POINTS A. Congress's Balance B. The Courts' Balance 1. Deference to Congressional Balancing 2. Judicial Independent Judgment VI. RESTORING THE BALANCE A. The Preferred Solution: A Statutory Right to "Technology-Shifting" B. Judicial Intervention INTRODUCTION
Intellectual property laws require a balance between the need to motivate innovation and the need to prevent that motivation from stifling further innovation. The foundation of copyright and patent law (1) is Article I, Section 8 of the Constitution, which gives Congress the power to secure "for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries," (2) but that power is subject to the duty "[t]o promote the Progress of Science and useful Arts." (3)
That congressional power is implemented through federal patent (35 U.S.C.) and copyright (17 U.S.C.) statutes, each of which provide general protection for innovators coupled (consistent with the constitutional duty) with exceptions designed to minimize certain aspects of the innovation-stifling effects of monopolies. While patents and copyrights are authorized by the same clause of the Constitution, their implementing statutes differ and congressional attitudes toward the two regimes have been radically different. While patent rights have been under attack and restricted, Congress has expanded copyright owners' rights, to the point where several Supreme Court Justices have questioned whether the rights exceed constitutional authority.
Overly broad intellectual property rights injure competitors and consumers. A particularly vulnerable class of consumers consists of "early adopters," consumers who adopt early stage technology before an industry standard is established (for example, buyers of Radio Shack's Tandy computer, Sony's Betamax videorecorder or Toshiba's HDD high-definition DVD players). These consumers invest not only in the machinery necessary to use the early stage technology but also in the time and effort to learn how to make use of the technology before it has been fully tested by large groups of users, and in the development of libraries of data that can only be accessed using the new machinery. These early adopters contribute significantly to the ultimate success or failure of new technologies and do so at the risk of losing their investment if a different technology prevails as the industry standard, rendering their choice obsolete.
Congress has the initial responsibility for striking the appropriate balance between motivation of innovators on the one hand, and prevention of innovation-stifling overprotection (and consequently protection of the general public) on the other. There are examples of congressional balancing in both the copyright and patent statutes. The copyright statute contains a fair use exception, which permits the use of copyrighted works for purposes such as criticism, and also contains an exclusion of protection for ideas, which permits experimentation with alternative expressions of underlying concepts. The patent statute contains an exception for medical research and also contains a general exclusion of protection for laws of nature, which prevents monopolization of fundamental discoveries that might otherwise prevent development of entire fields.
The speed of technological change, particularly in the converging fields of computer software, music, video, television, and communications, coupled with the power of technology industry lobbies, has left the statutory balance tilted in favor of rewarding innovators at the expense of further innovation and of consumers.
Courts have held that additional protections are required by the constitutional duty to promote progress: the Supreme Court recognized a time-shifting exception to the rights of innovators in Sony Corp. v. Universal City Studios, Inc., (4) and lower courts have recognized a place-shifting exception. (5) It is now the time and place for a technology-shifting exception.
Ideally, Congress should amend the copyright and patent statutes to provide this exception. The "exclusive" rights that the Constitution authorizes Congress to grant are exclusive in the sense of "rights to exclude" rather than "all-inclusive rights." Thus, there is room to reward innovators with exclusive rights while still reserving sufficient rights to guard against stifling further innovation. Until Congress takes such action, the courts should recognize that all statutory patent and copyright rights are subject to a constitutionally required right of technology-shifting.
THE INTELLECTUAL PROPERTY CHALLENGE: MOTIVATING INNOVATION WITHOUT IMPEDING PROGRESS
Patents and copyrights existed in eighteenth-century England and the colonies, although they differed from modern patents and copyrights. (6) The Articles of Confederation reserved the power to grant copyrights and patents to the states rather than create a federal system. (7) New Jersey, (8) New York, (9) Rhode Island, (10) and Virginia (11) all had copyright statutes, although those statutes secured authors' rights prior to publication, rather than the modern statute's right to prevent others from using the published work. Georgia (12) and New Hampshire (13) recognized both copyrights and patents. Most colonial patents were granted by special acts of the legislature, but at least one state, South Carolina, had a general patent statute. (14) Other state constitutions explicitly prohibited the grant of monopolies (15) and in any event, colonial patents appear to have been rarely granted and rarely enforced. (16)
By the time of the Constitutional Convention, James Madison could observe in hindsight that "[t]he States cannot separately make effectual provision for either [patents or copyrights]" (17) and the Convention incorporated Article I, Section 8, Clause 2, the basis of modern patent and copyright law, (18) into the Constitution. The Intellectual Property Clause empowers Congress "[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." (19) The records of the Constitutional Convention shed little light on the reason for including the Intellectual Property Clause. The clause was adopted without debate by the full Convention and with little record of committee deliberations. (20) The patent language in particular appears to have been added in committee with no record of who made the addition or why. (21) The first mention of a section directed to intellectual property appears in the records of August 18, 1787, when it was proposed to grant the federal government the power "[t]o secure to literary authors their copy rights for a limited time ... [;] [t]o encourage, by proper premiums and provisions, the advancement of useful knowledge and discoveries ... [;] [t]o grant patents for useful inventions[;] [and t]o secure to Authors exclusive rights for a certain time." (22) It appears that at least four alternatives were discussed: (1) "To secure to literary authors their copy rights for a limited time"; (23) (2) "To encourage by premiums & provisions, the advancement of useful knowledge and discoveries"; (24) (3) "To grant patents for useful inventions"; (25) and (4) "To secure to Authors exclusive rights for a certain time." (26)
The proposal was referred to the Committee of Detail (27) where it appears to have remained without further attention until August 31, 1787, when it was referred to the Grand Committee of Eleven along with a number of other unresolved proposals. (28) On September 5, 1787, the Committee of Eleven presented the Intellectual Property Clause to the Convention in its final form; (29) on September 12, the Committee of Stile and Arrangement presented the Constitution to the full Convention, with the Intellectual Property Clause unchanged, and on September 17, the clause was approved unanimously and without debate or any other record of why the interim language changes were made. (30)
Although there is little evidence on which to base a proof, logical arguments have been suggested for why such a clause might have been included in an eighteenth-century political document. The three most compelling arguments are that the clause was designed to provide an incentive to innovate, that the clause did no more than acknowledge what would have been viewed at the time as the natural property of authors and inventors, (31) and that the clause was meant to limit the ways in which the federal government could reward inventors and authors. (32)
An essay written during the ratification debates supports the first argument: that the justification for the clause was to reward inventors and authors. The essay further observes that the Intellectual Property Clause rewards inventors and authors without committing government resources, which the new federal government simply did not have. (33)
Supporting the "natural property" argument are contemporary statements such as those by the literary property committee of the Constitutional Convention, which was "persuaded that nothing is more properly a man's own than the fruit of his study," (34) of James...