The Volokh Conspiracy - Intellectual Property Meets Contract Law

The next session is Intellectual Property (IP) Meets Contract Law. It is being chaired by Jean Braucher (Arizona). She explains that part of the issue is whether IP merely provides default rules that can be contracted around by entering into contracts. The concept of "default rules" is very basic to understanding contract law. The speakers are Peggy Radin (Stanford), Maureen O'Rourke (Interim Dean of BU), and Mark Lemley.

Peggy Radin is going first. She says she now teaches contracts after she realized that people could contract around all the meticulously negotiated intellectual property rules by such practices as clickwrap and browsewrap agreements. She asks whether contract law should be considered preempted by federal IP law. She is now insisting on the distinction between the "public" law (which sets original entitlements) and "private" law of contracts that rearranges the background property rights, in this case intellectual property rights.

Peggy has written seminal work on inalienability of rights, and she is now wondering whether the power to contract around background IP entitlements should be limited. . . . [to view the rest of this post click on show]

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	[Randy Barnett, June 15, 2005 at 2:04pm] Trackbacks Intellectual Property Meets Contract Law The next session is Intellectual Property (IP) Meets Contract Law. It is being chaired by Jean Braucher (Arizona). She explains that part of the issue is whether IP merely provides default rules that can be contracted around by entering into contracts. The concept of "default rules" is very basic to understanding contract law. The speakers are Peggy Radin (Stanford), Maureen O'Rourke (Interim Dean of BU), and Mark Lemley. Peggy Radin is going first. She says she now teaches contracts after she realized that people could contract around all the meticulously negotiated intellectual property rules by such practices as clickwrap and browsewrap agreements. She asks whether contract law should be considered preempted by federal IP law. She is now insisting on the distinction between the "public" law (which sets original entitlements) and "private" law of contracts that rearranges the background property rights, in this case intellectual property rights. Peggy has written seminal work on inalienability of rights, and she is now wondering whether the power to contract around background IP entitlements should be limited. . . . [to view the rest of this post click on show] (show) My battery gave out on my laptop, so I had to switch to my Treo but I left the keyboard in my room. So I missed much of what Peggy had to say. Darn it! need to buy a new battery, but as I cannot access the wireless network in the meeting room, in the future it is just as easy to compose this on my Treo using the keyboard. I got back in time to hear Mark Lemley (also of Stanford). Mark begins by noting how Microsoft imposes what amounts to a speech code on those who use its web building software and reports other examples of amazing terms included in software browsewrap "agreements." This includes spyware licenses restricting your right to remove it. His point is that when consent is eliminated, fantasically one-sided terms can result, contrary to what he says was the suggestion of Clay Gillette. The issue is when there should be restrictions on the ability to enforce such terms. (I have written about and endorsed such limits in the form contract context here.) Mark's discussion of "preemption" of contracts by federal IP law is a bit too technical to summarize here. He basically says that sometimes the courts find that IP law preempts contracts and other times they not. The issue is how strong is the intellectual property policy. Mark suggests that, rather than focusing on how important is the IP policy, we could also ask how much of a contract is there? Is this a browsewrap in which consent is really fictitious, or is it a specifically negotiated agreemments? The more the contract is really negotiated and agreed to, the more receptive we may be to allowing it to supercede the background IP rule. The more it looks imposed by one party on another without even a hint of assent, the less willing we should be to allow contracting around the IP. We should consider contracts on a sliding scale between these extremes. Given a proper antipathy to browsewrap agreements, this sounds reasonable, but perhaps this is because there is no real assent at all. But when we talk about other form contracts to which you do need to indicate your assent (even if you do not read the terrms) I wonder which side of the line these would fall. Mark does not say, but I'll bet he has an opinion. Next up is my boss—I mean my Dean—Maureen O'Rourke. She is discussing how the American Law Institute treats software, and the licenses that you agree to when using it. Is there a need for separate rules governing software or can it be handled by general contract law. She is the assistant reporter for the ALI project developing "principles." She is listing the questions they are addressing. She is now discussing contract preemption again, and she agrees with Mark that you need a sliding scale depending on the nature of the contractual assent. She founds that the idea of contracts trumping IP law is much weaker with browsewrap agreements where consent is largely fictional. But what about click-wrap agreements with formal consent? She too does not address it, though she does refer pejoratively to "boilerplate" form contracts. Because such forms operate "against the world" they looks more like legislation than contracts and it is more troubling to allow these sorts of contracts to vary the rights provided by IP. She closes by discussing the restrictive terms that define "open source" agreements. Although "open" they still provide restrictions on use that differ from the background IP regime. I asked the panel from the floor about whether the proposal is really a "sliding scale" in which completely negotiated contracts are at one end of the scale and browsewrap with no indication of consent is on the other. Do they really think that click wrap and other form contracts where there is a manifestation of assent to an unread form supplied by one party should get some middling treatment. Or is it really a dichotomy and we need to decide whether click wraps are one side of the line or the other. In my article on form contract I do think that form contracts like "click" agreements should fall into a middle category in which, what Todd Rakoff called, "visible" terms (which it is rational to read) get enforced as a matter of course and "invisible" terms (about which it is rational to remain ignorant) only get enforced when they are not a surprise. (See my article here.) Mark said he really does think there should be a sliding scale, rather than a dichotomy, but he did not address what middle treatment the middle types of agreements should receive. Alan Schwartz of Yale asks the next (and last) question. He asks whether is any preemption at all. The issue is whether private acts are permitted under copyright laws. If so, then state contract law applies. His questions flummoxes the panel, I think, because he is using the term "preemption" in a more technical sense than are the panelists who are using "preemption" to refer to private contracts, as opposed to the state law of contracts. Mark thinks it really is a preemption issue because the question in whether you can go to (state) courts to enforce your private agreements that federal law says cannot be enforced. The hard part is figuring out what federal law really prohibits. I am posting this after lunch and the next session begins in a few minutes. So I have to run. 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