By engaging and extending insights from two relatively discrete lines of existing scholarship—the postmodern critique of romantic authorship and the more pragmatic literature on copyright in works produced with the aid of computers—this Article seeks to answer the vexing copyright questions that attend the artificially intelligent production of cultural works. It does so by developing the argument that all creativity is inherently algorithmic and that works produced autonomously by computers are therefore less heterogeneous to both their human counterparts and existing copyright doctrine than appearances may at first suggest.

Today, Bauby might have instead have used a revolutionary new technology from neuroscience to communicate his memoir. A technology known as brain-machine interface enables a computer to “read” brain activity and to decode it through pattern-recognition algorithms. Cyberkinetics Neurotechnology Systems, Inc. has developed a brain-machine interface technology that connects the motor cortex of the brain to a computer, where the subject is able to move a cursor on the computer screen, check email, change the volume, and select or move anything on the screen that would be possible with cursor movements by simply thinking about hand movements. So by connecting Bauby to this brain-machine interface, he might have typed out his memoir himself by thinking about the letters of the words he wished to communicate.

Brain-machine interface has already extended beyond the two-dimensional world to the control of three-dimensional objects. Researchers at Duke University pioneered a study in which they connected electrodes to the motor cortex of a monkey’s brain to interpret the electrical impulses arising from the firing of the neurons that signaled movement to the monkey’s limbs. The researchers studied those electrical impulses to learn the neural process involved in moving the monkey’s limbs. They then used this knowledge to build a brain-machine interface device to allow the monkey to manipulate a robotic arm through its thoughts. After training, the monkeys could manipulate a robotic arm that was connected directly to its brain such that the monkey ceased moving its own arm and instead moved the robotic arm to achieve its intended movement through intentional thought.

The next step—human control of robotic arms by thought alone—has become reality. Tim Hemmes, a paraplegic by car accident, moved a robotic arm through brain-machine interface technology that decoded his intention to move the arm and translated it into three-dimensional action. With the help of a new type of chip that was implanted on his brain, Hemmes focused his deliberate intention on moving the three-dimensional arm and succeeded in doing so. To accomplish this feat, Hemmes had to undergo brain surgery whereby electrodes were implanted in his brain to record the electrical signals in his motor cortex brain region. Those electrical signals were connected to the robotic arm and after training for several weeks Hemmes could mentally achieve its movement.

Despite these extraordinary advances that enable individuals to move three-dimensional objects through consciously willing those actions and the ability to now isolate the deliberate intentions in the brain, scholars continue to debate the existence of free will. Whether Bauby had used brain-machine interface to transcribe his memoir or communicated via eye-blinks, a stronghold of scholars would challenge whether he acted freely. Not because Bauby suffered from the tragic and rare neurological condition called locked-in syndrome, characterized by the paralysis of all voluntary muscles except for those that control eye movement while leaving one conscious and able to think and reason. Rather, because such scholars question whether human actors have free will, or merely an illusion of freedom. Scholars who deem free will merely illusory claim that all events are determined by past events, including every event in the mind one would call choice.

This essay illustrates why neuroscience supports a robust theory of human freedom. Rather than condemning humanity to a reductionist view of human actions, neuroscience provides a lens through which a long-standing debate about freedom of choice versus freedom of action can be renewed and resolved. Research investigations into the neural processes involved in preferences, desires, and human actions offer new insights into the flexibility and control that human actors exercise over voluntary actions.

Distinguishing between choice with respect to preferences and desires, and freedom to act in particular ways is consistent with a legal system that punishes for wrongful actions but not wrongful desires that are not acted upon. Yet legal scholars argue that the criminal justice system relies on a much thinner and consequential justification for individual responsibility than freedom of action. The prevailing concept of free will advanced by legal scholars is one that I call “legal free will.” Scholars of legal free will argue that the law does not need a metaphysical account of freedom, nor does it rely upon one for its legitimacy. This essay argues that rather instead of eschewing theoretical free for criminal responsibility, legal scholars could embrace advances in neuroscience to support a theory of freedom that focuses on voluntary actions.

Part I begins with a discussion of legal free will, a concept that appears most controversially in criminal law but also pervades most areas of law. Underpinning the attribution of responsibility in criminal law is a presumption that humans are free to act and to refrain from acting (“legal free will”). But legal free will is in fact a misnomer since the freedom it describes is a vacuous one. Scholars claim that the law holds individuals responsible for their actions not because they are free, but because it is expedient to treat them as if they are free. This leaves the legal system open to persistent attacks on its legitimacy for failing to comport with ordinary intuitions about moral responsibility. In criminal law in particular, legal free will creates a problem because its proponents disclaim any need to grapple with questions about moral responsibility. Because the power of the state and the threat to liberty is at its highest in the control of conduct deemed criminal, the refusal to grapple with questions of theoretical free will leaves the criminal justice system open to a never-ending slew of attacks. Part II illustrates the newest incarnation of these attacks, which have been rooted in neuroscience. Scholars are coalescing around the belief that neuroscience supports determinism and substantiates the claim that at the very least some individuals—if not all individuals—lack moral responsibility. Proponents of this view argue that the legal sanctions of the criminal justice system, such as blame, stigma, and shame, should therefore not follow. Part III then uses emerging studies in neuroscience to support a distinction between freedom of action and freedom with respect to our preferences and desires. This distinction matters, as Part IV argues that freedom of action offers a robust theory of freedom for attributions of responsibility.

In Part II we describe our data. In Part III we first make univariate statistical comparisons of litigation rates between Internet patents and NIPs, between the two subgroups of Internet patents and NIPs, and between the Internet patent subgroups themselves. We then use multivariate logistic regression to determine whether being an Internet patent or being within one of the Internet patent subgroups still contributes to the likelihood of being litigated after we controlled for other patent characteristics found to be positively or negatively associated with litigation by previous studies. Part IV expands our study by analyzing more closely a number of other case-specific litigation variables for both Internet patents and NIPs. We conclude and revisit potential future research questions in Part V.

This year’s Symposium is co-sponsored by Stanford’s Center for Internet and Society and will examine First Amendment challenges in the Digital Age. The first panel will explore European and American views of a right to be forgotten and how to balance privacy with free expression. The second panel consists of a discussion of First Amendment architecture, protection of speech spaces, and net neutrality. The third panel will examine Protect-IP and SOPA from a First Amendment perspective.

The Symposium will culminate with STLR’s 15th Anniversary Reception in the Neukom Building Faculty Lounge from 5:00 pm – 6:00 pm, co-sponsored by the Palo Alto offices of Morrison Foerster and Baker & McKenzie.

There has been overwhelming interest in this year’s Symposium and we have reached our capacity. Registration is now closed. The full schedule is available here.

The importance of deterring patent settlements based on potentially invalid patents need not be particularly stressed, as scholars have repeatedly found that invalid patents have significant innovation-stifling/anticompetitive effects. As such, invalid patents can disturb the delicate balance between the patent system and antitrust laws. Although antitrust laws protect robust competition while the patent system enables patentees to suppress competition for extended periods of time, modern thinking has dismantled the concept that the patent system and antitrust laws are in conflict. The common view is that the two bodies of law are actually complementary, as both share the common goal of promoting innovation and enhancing consumer welfare. Consequently, the grant of a patent exempts the holder from the normal prohibition against monopolies, but nevertheless, such immunity might be stripped if the patent at issue is invalid.

This Article will examine the issue of deterring patent settlements involving NPEs based on potentially invalid patents. This Article focuses solely on NPEs, because NPEs appear to own a substantial number of the most-litigated patents, they are more likely to enforce them, and, as will be explained in Part II of this Article, NPEs are primarily interested in settling their patent disputes, because their business model is typically based on enforcing patents and extracting lucrative settlements. The Article asserts that although recent court decisions have made it more challenging for NPEs to obtain very lucrative settlements, the current legal framework is still ill-suited to deter patent settlements based on invalid patents. Moreover, the Article suggests that the fact that recent court decisions have ostensibly made it more difficult for NPEs to obtain lucrative settlements could actually be counter-productive, as sued entities might now find it even more cost-beneficial to settle the case rather than take it to trial.  Consequently, the validity of a patent at issue might never be litigated, which is a very concerning fact, given that NPEs own almost two-thirds of the most-litigated patents. As a major part of the solution to the NPE problem, this Article argues in favor of expanding the role of consumer-led private litigation in deterring NPE patent settlements based on invalid patents, particularly those procured by defrauding the PTO.

To be sure, the Article does not suggest that patent settlements are undesirable, even though it is worth noting here that the generally favorable attitude towards settlements does not necessarily apply to the patent system because of its interaction with antitrust laws. Along the same lines, the Article does not suggest that all NPE patents are invalid, nor that just because a substantial number of litigated patents were found invalid, settled patents are also likely to be invalid. The Article merely argues that the available data and cases suggest that validity of patents in NPE settlements is a legitimate issue and, because of NPEs’ unique business model and the need to maintain the delicate balance between the patent system and antitrust laws, the role of consumers in addressing this issue ought to be expanded.

The Article has seven parts and is divided as follows: Part II of this Article discusses in modest detail the business model of NPEs, and explains why they are so controversial and successful in obtaining lucrative settlements. Part III reviews recent court decisions, including three major Supreme Court decisions that directly affect settlements involving NPEs. Part IV points out that the “new environment” does not adequately solve the NPE problem and argues that it might actually be counter-productive in deterring NPE settlements based on invalid patents, particularly those procured by defrauding the PTO. Part V discusses the issue of consumer standing to bring antitrust claims based on invalid patents via Walker Process claims that, in certain circumstances, can subject the patent holder to punitive antitrust damages. Part V underlines that courts and commentators are currently split on the issue of consumer standing to bring antitrust claims based on invalid patents via Walker Process claims. Part VI discusses a very recent decision from the Second Circuit—the first appellate treatment of the underlying consumer standing issue—in which the Second Circuit has introduced a novel follow-on consumer litigation approach.

Part VII first addresses the criticism of the Second Circuit’s opinion. Part VII then points out that the Supreme Court has recently denied certiorari in the case decided by the Second Circuit, so the underlying consumer standing issue is destined to play out in lower courts. In fact, in two very recent 2011 decisions, lower courts reached opposite conclusions on the issue of consumer Walker Process standing. Furthermore, Part VII suggests that just as Justice Kennedy has taken into consideration NPEs’ unique business model and practices while analyzing policy justifications for granting injunctive relief, lower courts should do the same when analyzing policy justifications for limiting consumer Walker Process standing to follow-on litigation. Finally, the Article concludes that the Second Circuit’s policy considerations for limiting consumer standing to a follow-on litigation do not necessarily apply to NPEs, particularly to those NPEs that the Federal Trade Commission has labeled as patent-assertion entities (PAEs) in its new report released in March of 2011. Therefore, lower courts should lean towards allowing consumers unconditional Walker Process standing in NPE cases in order to deter NPE settlements based on invalid patents. Part VII ends by addressing possible criticism to arguments in favor of expanding the role of consumers in Walker Process litigation.

Although size is important in understanding the nature of the shift, size alone is not the issue. It is also the method of organization and the types of activities that are causing a paradigm shift in the world of patents and innovation.

These entities, which we call mass aggregators, do not engage in the manufacturing of products nor do they conduct much research. Rather, they pursue other goals of interest to their founders and investors. Non-practicing entities have been around the patent world for some time, and in the past, they have fallen into two broad categories. The first category includes universities and research laboratories, which tend to have scholars engaged in basic research and license out inventions rather than manufacturing products on their own. The second category includes individuals or small groups who purchase patents to assert them against existing, successful products. Those in the second category have been described colloquially as “trolls,” which appears to be a reference to the children’s tale of the three billy goats who must pay a toll to the troll waiting under the bridge if they wish to pass. Troll activity is generally reviled by operating companies as falling somewhere between extortion and a drag on innovation. In particular, many believe that patent trolls often extract a disproportionate return, far beyond the value that their patented invention adds to the commercial product, if it adds at all.

The new mass aggregator, however, is an entirely different beast. To begin with, funding sources for mass aggregators include some very successful and respectable organizations, including manufacturing companies such as Apple, eBay, Google, Intel, Microsoft, Nokia, and Sony, as well as academic institutions such as the University of Pennsylvania and Notre Dame, and other entities such as the World Bank and the William and Flora Hewlett Foundation. Nations such as China, France, South Korea, and Taiwan even have their own mass aggregators to varying degrees.

Moreover, the acquisition appetites and patent supply sources are quite interesting. Mass aggregators may have portfolios that range across vastly different areas of innovation from computers to telecommunications to biomedicine to nanotechnology. In some of the acquisition activity, mass aggregators purchase large chunks, and even the majority, of an operating company’s patents and patent applications. They typically pay cash up front, as well as a share of any future profits generated from asserting the patents against anyone other than the selling manufacturer. Mass aggregators have engaged in other unusual acquisition approaches as well, including purportedly purchasing the rights to all future inventions by researchers at universities in developing countries. Other acquisition approaches purportedly include targeted purchases of patents that are of particular interest to the mass aggregators’ investors.

The types of returns promised to investors and the types of benefits offered to participants are also quite different from garden-variety non-practicing entities, as are some of the tactics used in organizing the entities and in asserting the patents. Finally, the scale itself is simply mind-boggling. Mass aggregators operate on a scale and at a level of sophistication and complexity that would have been unimaginable a decade ago. They have taken the prototype strategies pioneered by a prior generation of non-practicing entities and changed them into some of the cleverest strategies yet seen in the intellectual property rights field.

The goal of this article is to shed some light on mass aggregators. We hope to provide some understanding of the nature of the change, to analyze its economics and implications, and to offer some normative considerations. In the descriptive section, we focus on the oldest and largest of the mass aggregators, Intellectual Ventures, which has gone to great lengths to maintain secrecy. Working from public sources and investing thousands of hours of research, we offer a detailed picture of the entity, tracing through approximately 1300 shell companies and thousands of patents. The section also describes in brief form several other mass aggregators, including ones that are public companies.

From its inception, the company’s management takes data security very seriously. The company forms an interdepartmental team to assess potential vulnerabilities to the company’s website, computers, and physical building, creates a written data security plan and policy, and, each year, conducts a data inventory to help identify where it stores the information that it collects and who has access to that information. As the company grows, it may even hire a Chief Privacy Officer who does everything from training employees on how to shred old invoices to making sure that the company’s growing list of outside vendors don’t have disparate data security practices. This company has complied with its obligation to secure consumer data, right?

Maybe not. The Federal Trade Commission’s settlements with SettlementOne Credit, ACRAnet, Inc., and Fajilan and Associates, Inc. suggest that in addition to enacting good practices for their own operations and making sure that their vendors do the same, companies are responsible for making sure that their customers have adequate data security. Although the FTC cites several statutes as the basis for this “duty to police customers,” it is not at all clear that the FTC’s theory could survive judicial scrutiny. Part I of this article provides a brief history of the FTC’s success over the past ten years to position itself as the primary federal regulator concerning issues of data security. Part II discusses the FTC’s recent enforcement actions and settlements with SettlementOne Credit, ACRAnet, and Fajilan. Part III analyzes the limits of the FTC’s data security enforcement powers. As part of this analysis, it reviews the scope of the new duty that the Commission proposes as part of the Reseller settlements, and analyzes whether the duty that the Commission seeks to impose can be supported by the Commission’s authorizing legislation. Finally the article concludes that the Commission’s attempt to create a new duty to police customers lacks firm statutory support and may not be successful if challenged in court.

In the nearly thirty years since then, that standard has been fairly applied in a variety of contexts, including with respect to the actions of flea markets, landlords, and credit card processors. In Tiffany (NJ) Inc. v. eBay Inc., though, the U.S. Court of Appeals for the Second Circuit took a different approach; it held that the operator of the online marketplace could be found liable only if it had “specific” knowledge of the infringement:

[A] service provider must have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods.  Some contemporary knowledge of which particular listings are infringing or will in the future is necessary.

Prior to the Second Circuit’s decision in Tiffany, the inquiry in other contributory liability cases did not explicitly focus on a particular level of knowledge, either specific or general, that would trigger liability.  Rather, courts considered the totality of the circumstances, including the prevalence of infringing activity in the marketplace, and then asked whether that should be sufficient to warrant the imposition of contributory liability.  Under this approach, a level of knowledge much closer to generalized knowledge of widespread infringement, rather than specific knowledge of particular instances of infringement, has traditionally been sufficient to support a finding of contributory liability.

In this respect, Tiffany is difficult to square with the line of cases since Ives, in which courts have applied the contributory infringement doctrine in analogous “brick-and-mortar” contexts.  In Fonovisa, for example, the Ninth Circuit found allegations of generalized knowledge of counterfeiting sufficient to state a claim. The Ninth Circuit upheld the sufficiency of a complaint alleging that the operator of a swap meet—the brick-and-mortar analogue of eBay.com—had knowledge of counterfeiting based on prior seizures followed by law enforcement letters noting continuing, unspecified acts of counterfeiting.  On its face, the evidence in Fonovisa is the same type of  “generalized” knowledge of illegal activity that the Second Circuit found insufficient in Tiffany, while purportedly applying the same contributory infringement test.

This article suggests that, by requiring knowledge of particular infringements, Tiffany introduced an artificial threshold into the standard for contributory trademark infringement liability that did not exist before.  In doing so, Tiffany failed to take adequate account of the common law roots of contributory liability doctrine, which have always taken a more flexible approach and which recognize that “generalized” knowledge of prevalent tortious conduct by third parties, coupled with assistance to the third party, can, under the proper circumstances, be sufficient to trigger a duty to take “reasonable precautions” to prevent that conduct. The article further suggests that the duty to take reasonable precautions should, as it has in the offline context, be triggered in the online marketplace context when an operator of an online marketplace has sufficient “generalized” knowledge of infringement so that it can “reasonably anticipate” that such conduct will continue to occur in the future. “Reasonable anticipation,” this article contends, does not require that the online marketplace have knowledge of “which particular listings are infringing,” but rather may be satisfied by demonstrating “generalized” knowledge that infringement is widespread in the marketplace.

This article further suggests that this more flexible standard is not only consistent with common law traditions, but also is supported by sound policy considerations.  By requiring knowledge of specific infringing transactions, the standard espoused by the Second Circuit in Tiffany effectively:  (a) eliminates the previously well-accepted standard that a party is contributorily liable if it has constructive knowledge of infringement and provides assistance to the infringer; and (b) reduces the test for contributory liability to an actual knowledge test.  An actual knowledge requirement, in turn, reduces the incentives for online marketplace operators to ensure the legitimacy of transactions on their sites and results in a higher incidence of infringing and counterfeiting

In fairness, counterfeit and infringing activity on online marketplaces does raise different issues than trademark violations in the brick-and-mortar context.  Online marketplace providers have less knowledge about the identity of sellers, have no physical access to the goods, and process a significantly greater number of transactions.  Those differences may well affect the way in which the parties’ respective rights and obligations should be balanced, but it should not change the underlying test of how contributory liability is assessed.  The common law standard is built upon the bedrock principle of reasonableness under all the circumstances.  Placing a duty on online marketplaces to take “reasonable precautions” if infringement can be “reasonably anticipated” recognizes and embodies the real-world limitation on the ability of either online marketplaces or brand owners to tackle this issue alone.  Rather, the centuries-old common law principles, applied in the modern, online context, envision a joint cooperative effort to ensure the legitimacy of online transactions for the benefit of all—online marketplaces, brand owners and consumers.

Part I of the article gives background on the growth of online marketplaces and the concomitant rise of counterfeiting and infringing activity.  Part II discusses the current state of the law regarding contributory trademark infringement liability, with a particular focus on the Ives litigation and the Second Circuit’s application of Ives in Tiffany.  Part III analyzes the common law roots of the contributory infringement doctrine.  This analysis concludes that the “generalized” knowledge standard is consistent with the common law origins of contributory trademark liability doctrine.  Part IV analyzes the “reasonable anticipation” standard in light of the underlying policies trademark law is designed to foster, and concludes that a “reasonable anticipation” standard, paired with a duty to take “reasonable precautions,” best furthers those policies.