Jim Gibson’s Comments [Mobblog: The New Servitudes]

   Molly’s insights and observations in The New Servitudes seem self-evident—almost obvious—until one considers that no one has really made them before. For me, that’s the definition of a great article, and reading it was a rare treat. I’m delighted to be included in the mob that has a chance to blog on it here.

   I’ll share two thoughts here:

   1. The article got me thinking about the preferred structure for regulating transactions in information goods: the top-down, public law approach of copyright and other intellectual property regimes versus the bottom-up, private law approach of contracts and servitudes. This is obviously not an either/or proposition; indeed, as Molly points out, copyright law’s default entitlements form the point of departure for the private-law restrictions in the licenses that she examines (the Microsoft Vista EULA, the GPL, and the Creative Commons licenses) and thus influence the degree to which such licensing schemes impose additional notice costs, generate negative externalities, and create difficulties for downstream users.

   But it struck me that some of the problems that Molly identifies might be mitigated if public law provided a more flexible range of entitlement options. Consider the “Problem of the Future” that has arisen in the context of copyleft licenses. One is not likely to find a more cooperative and collaborative community than open-source programmers and their Creative Commons cousins. Yet their focus on long-term benefit and their repeat transactions have created and then locked in an increasingly obsolete set of norms; as Molly explains, the sheer number of contributors to these projects makes altering the existing license terms nearly impossible, even if everyone recognizes the advantages of doing so. (I can see the article’s title now: The Creative (Anti)Commons.)

   If Congress were to offer a smorgasbord of opt-in copyright protections, however, this anticommons issue might not arise. So why shouldn’t the government develop intermediate sets of entitlements, like the Creative Commons licenses? Such a regime would provide only default rules, so individualized bargaining could still take place, but it would mitigate the lock-in problem of large-scale, collaborative licensing regimes. More generally, an increase in public law options would reduce the need for individualized tailoring at the contract/servitude level, which could help address some of the other problems that Molly identifies.

   Among other things, such an approach would require resurrecting copyright’s defunct opt-in provisions (particularly notice), but as I’ve argued elsewhere that may be a good idea regardless of the servitudes issue. Also, it would generate some new costs, in the form of the need for the consumer to become familiar with these various regimes and identify which one governs a given transaction; I can only hypothesize that the corresponding benefits that I have identified would be greater.

   2. Although I took Property from Glen Robinson, my knowledge of the intricacies of servitudes is a more than a bit lacking (my fault, not Glen’s), and like many others I have tended to view shrink-wrap and click-wrap licenses through a contract lens. And in the contract context, the aspect of such licenses that bothers me the most is that notice of the licensing terms often arrives quite late in the transaction, if it arrives at all. The end user may have a sense that there are additional terms awaiting him or her in the box or during software installation, but the cost of acquiring these terms is considerable and usually involves a fair amount of investment on the purchaser’s part (at least relative to the overall value of the transaction). This insulates such terms from the market pressures that we might normally expect to do the heavy regulatory lifting here.

   In contract law, my understanding is that we handle late-arriving terms through the infamous “battle of the forms” (and its counterpart in UCC § 2-207). This approach has not gained much purchase in the world of shrink-wrap and click-wrap licensing (somewhat inexplicably, in my view—see ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996); Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir. 1997)), but it at least provides a theoretical framework within which we can think about late-arriving contract terms. I cannot think of a similar concept in the law of servitudes, but I thought I would throw this out there for those more knowledgeable about such things.

   Parsing this issue raises other more tangential issues. I will touch on three, all from the software world:

a. First, where do we stand if the seller loses the battle of the forms (or its servitudes equivalent)? In other words, what happens if the shrink-wrap or click-wrap license does not become part of the bargain or encumber the chattel? On this note, let me just mention the underappreciated section 117 of the Copyright Act, which creates a use privilege for the owner of a copy of software, thus obviating the need to get any license from the copyright holder.

b. Second, section 117 in turn raises the “license versus sale” issue, because software companies insist that the section does not apply; apparently no one ever “owns” any “copies” of their programs. I have never understood the “license versus sale” dichotomy; for me, asking, “Is this transaction is a license or a sale?” makes about as much sense as asking, “Which is faster, New York or by car?”

c. Finally, even if the user has a legal privilege to install and run a program, technological restrictions may prevent the exercise of this privilege. And the Digital Millennium Copyright Act puts legal weight behind those technological protections, so that even a skilled hacker may decide to forgo a privileged use.

   Many thanks to Molly for a great read and to the Chicago folks for including me here!