I think that I will split up my comments a bit, doing some now and some in a subsequent post. For me, I start with wanting to understand why someone might want to impose a servitude and the kind of restrictions that are imposed. I don’t know that the paper offers a theory of use restrictions and those intrigue me.
In prior work, I have discussed two different sets of use restrictions. Molly discusses one of those, the turn-of-the-century limitations seen in early phonographs. You buy my phonograph, you have to play my cylinders on it. These are fairly conventional efforts at price discrimination in which the manufacturer is trying to sell the playing equipment for different prices to different customers and where the cylinders are used to measure intensity of demand. We can’t just assume that this sort of price discrimination is pernicious, and if we can’t do that, we may need to allow the use discrimination. (I lay out more of this in my Chicago L Rev piece, From Edison to the Broadcast Flag: Mechanisms of Consent and Refusal and the Propertization of Copyright (preprint version here).)
We can generalize that point, and I have done so in other work. There is certainly a class of servitude situations involving what we might call systems competition. Computer printers and toner cartridges are a good example of this. To the untrained eye, this looks like a pretty competitive market, and yet we have observed lots of use restrictions over time. Some of those have been contractual, but given the difficulty of enforcing those contracts, sellers have turned to technological lock-and-key systems. Efforts to break those systems have in turn taken us to cases under the Digital Millennium Copyright Act.
Consumers as a group can be better off if we make possible this sort of locked systems competition. Absent the lock, manufacturers will be forced to seek to recover all of their system development costs in the price of the printer and that can inefficiently discourage purchases of the printer. Better to recover more of those costs from heavy users and we can do that if we charge above marginal cost for the toner cartridge. But to do that, the cartridge needs to be locked to the printer. (I set this out in greater detail in my paper Copyright and the DMCA: Market Locks and Technological Contracts (preprint version here)).
In both of these cases, these use restrictions may enhance welfare. I don’t see how we assess old (or new) servitudes without understanding the circumstances under which use restrictions may be beneficial. I think that this is a general challenge for copyright law as it puts in play what role fair use should play. I will have more to say about that on Friday at a conference at Columbia Law.