Category: Intellectual Property

Self-Defeating Savings Strategies

cost balloon.jpgYesterday I did a CLE presentation for lawyers in pharmaceutical firms, focusing on the interaction between the new Medicare Part D and companies’ patient assistance programs (PAPs). The PAPs try to provide very-low-cost drugs to low-income individuals who fall through the cracks of existing insurance programs. Astonishingly, a complex web of Medicare “fraud and abuse” law could actually lead to criminal (and civil) sanctions for such programs if they offer financial assistance designed to get someone through the “donut hole” gap in coverage; as the Office of the Inspector General (OIG) of the U.S. Dep’t of Health and Human Services put it, “Pharmaceutical manufacturer PAPs that subsidize Part D cost-sharing amounts present heightened risks under the anti-kickback statute.”

After extraordinary controversy, the Centers for Medicare and Medicaid Services backed down a bit, claiming merely to insist that PAPs exist outside Part D coverage. This helped a bit, but when one reads the advisory opinions the OIG issues, they are not exactly perfect safe harbors. They contain pretty contradictory language, only purport to assess risk probabilistically, and raise the possibility that conduct that does not present a high risk of liability under the Anti-Kickback statute may well implicate other state and federal laws. (Ahh, the joys of guidance documents in admin law.)

According to the agency, it wants to put pharma under fraud & abuse scrutiny in because they might “increase the number of beneficiaries using the manufacturer’s product who reach the catastrophic benefit in any given coverage year,” steering people away from cheaper drugs. But one has to wonder if this particular obsession with cost-saving is really all that helpful to the program. Consider the following research on “meat-ax” rationing in the New Hampshire Medicaid program:

Jerry Avorn and his colleague at Harvard, Steve Soumerai, were responsible for showing that, when New Hampshire put a cap on the monthly number of prescriptions that welfare recipients would get for free, the result was an increase in nursing home admissions that probably cost the state government as much as it saved on drug costs.

In other words: one part of the bureaucracy may avoid paying for $200 of diuretics, but other parts may well end up having to cover a hospital admission due to congestive heart failure that runs to tens of thousands of dollars. Squeeze one part of the medical cost balloon, and it may just start bulging in some other area.

This is one reason why I’m happy Jason Furman’s recent report on cost-consciousness in health care reform does acknowledge this “big picture,” and proposes little to no cost-sharing for especially helpful interventions, especially preventive care. The OIG might want to focus less on new applications of fraud and abuse laws to Part D, and more on the type of economic analysis that allows us to see the true costs of denying drugs to the elderly.

Photo Credit: PingNews/Flickr.

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Student Legal Services at NC State and RIAA File-Swapping

According to an editorial at TechnicianOnline, the website for the NC State student paper, Student Legal Service at NC State is representing students in actions by the RIAA over file swapping. It is the first I’ve heard of a university providing free legal services to students against the recording industry in these suits, although I can’t claim to have followed these cases systematically. In the end, this representation will probably not change the outcome of these cases dramatically, but it may discourage plaintiffs from overreaching against legally unsophisticated defendants.

Postrel (and Fergie) on Egalitarian Glamour

glamor.jpgI’ve always had a love-hate relationship with Virginia Postrel’s work–so perceptive an aesthetic theorist, yet so complacent about commercial culture! But those studying IP have to come to terms with it, if only because she wrestles with a topic central to our endeavor: what is the value of those cultural products protected by copyright and trademark law? In The Substance of Style, Postrel argued that we routinely and vastly underestimate the contribution of design and beauty to our well-being. From an upcoming book proposal on Glamour, it looks like she’s about to expand and refine that argument.

Focusing on a variety of glam entities, Postrel distills three common components which “are not aesthetic elements but imaginative qualities: grace, mystery, and transcendence.” She reverentially recites a litany of products and personages that ooze glamor: Oprah, art deco, and Pre-Raphaelites all get props. To her credit, she recognizes glamour can be used for evil as well as good–she notes how Leni Riefenstahl glamorized a horrific Nazi program. But that’s just a bump on the road for a treatment that clearly wants to elevate our appreciation of glamour:

[D]espite its dangers, we would be foolish simply to reject glamour. It is too powerful to be denied, and its power can inspire good as well as evil. Although glamour has been a tool for tyrants, it has also provided an imaginative refuge for the ostracized and oppressed. . . . True sophistication lies not in rejecting or eschewing glamour—a largely futile approach—but in understanding how it works.

Note the slipperiness of the terms of evaluation here; where once “good, evil, and danger” were our guideposts, by the end of the paragraph “sophistication” becomes the summum bonum. Her discussion also reminds me of the Nussbaum-Kahan exchange in Bandes’s The Passions of Law, where Nussbaum argues for purging public life of emotions like disgust, while Kahan argues for a progressive appropriation of the concept. I think Kahan got the better of that exchange, but I’m a bit skeptical of glamor…even in the wake of books like Dream, Stephen Duncombe’s argument for tapping into “America’s collective unconscious through spectacle.”

There’s always a democratic edge to Postrel’s work, a gnawing need to establish that a new age of design, aesthetics, and glamour is a tool of self-realization for the masses. She admits that “Glamour can erode our appreciation of quotidian pleasures, and our sympathy with human limitations, exacerbating our dissatisfaction with life as it actually exists. And glamour can exclude outsiders as surely as it can dignify them.” But she always finds some way of de-emphasizing these trends, noting, for instance, that “The 1930s made glamour a truly mass phenomenon, one no longer dependent on geography or class.” (Yep, the KMart blue light special offers up glam items just as frequently as Agnes B.) For Postrel, the answer is not to beat or ignore the glamorous, but to join them: “glamour can . . . provide an essential imaginative leap toward personal achievement or social and economic progress.”

Though I should probably wait for the whole book before I pass judgment, I have to say now that I’m not buying the masstige angle. Glamour is inevitably exclusionary, the classic example of a positional good: by her own terms, the glamorous have to transcend somebody, and that’s usually the rest of us. Rather serendipitously, hip-hop diva Fergie provides a great example of this process in her video “Glamorous.”

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Million Dollar Kitty

cat.jpgGrand Central Publishing recently paid a $1.25 million advance for the story of Dewey the Library Cat. Apparently the book

will tell the story of how the kitten was found in the late-night book drop of the public library in Spencer, Iowa, a town in the northwest part of the state, and adopted by Ms. Myron and the other librarians. Slowly, over the course of his 19-year life, Dewey became a town mascot who lifted the spirits of residents hit hard by the 1980s farming crisis.

Dewey’s story will “need to sell at least 250,000 copies in hardcover to cover the cost of the advance.” Which leads me to wonder–what exactly are they paying for here? The co-authors will be “Vicki Myron, the head librarian in Spencer, Iowa; and Bret Witter, a former editorial director at Health Communications, the publisher of the “Chicken Soup for the Soul” books.” Certainly Ms. Myron has the inside scoop on taking care of Dewey, and Witter’s helped churn out buckets of spirit-lifting pablum. But is the advance really about something more, like the “life story” rights?

I’ve always found life story rights a bit puzzling. If a docudrama is basically a retelling of something that has happened, anyone can “use” those facts. But a brief glance at a bit of a sample “life story” agreement reveals some reasons why someone may want to buy “life rights.” Here is some of the language:

(a) Upon exercise of the option, Purchaser shall own the exclusive right throughout the world, in perpetuity, to produce, distribute, exhibit, license and otherwise exploit, in any and all media (now known or hereafter devised), motion pictures, television productions and other audiovisual works of all kinds (the “Works”), including without limitation sequels and remakes, based on or portraying your life story or depicting you, as well as exclusive ancillary rights . . . to use your name, likeness and other identifying characteristics in connection with the Works.

(b) You agree that in producing the Works, Purchaser shall have the right to add to, delete from, modify and fictionalize your life story and you waive all claims arising therefrom, except in the event of intentional defamation of you.

So the real advantage for the purchaser of the “life story” rights is fending off potential defamation or right of publicity lawsuits. One query–does purchase of the life rights of some notable figure also give the purchaser the same right to sue others that the seller agreed not to enforce against the purchaser? Then I could see these agreements being quite potent…for an aggressive purchaser may threaten virtually any rival storyteller in the marketplace of ideas with some kind of right of publicity or defamation suit.

Photo Credit: Flickr/Huxleyesque. No, that’s not Dewey…no way I’m risking a copyright suit with that feline corporate juggernaut.

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Agriculture and the Pharmaceutical Industry

In this policy brief, the Oakland Institute argues that “The enormous public resources invested in agriculture have benefited [pharmaceutical] companies by promoting the sale of [genetically engineered] seeds over and above their actual value and by allowing them to multiply their research efforts at minimal cost through collaborations with public institutions.” It’s an argument that I’ve seen before, although this is perhaps the most reader-friendly version that I’ve seen.

What I find interesting is the framing of subsidies as occuring through the (semi-)public works of “public-private partnerships and the patenting of university generated knowledge,” because it seems analogous to earlier public-works agricultural subsidies: that is, big water projects. What I also find interesting (and maybe it’s because of my relative newness to this field, and my focus more on the agricultural/environmental side of things) is its emphasis on the companies as part of the pharmaceutical industry, rather than on companies as part of Big Agriculture (which is more of what I see in the agricultural literature). I think this further highlights the importance of promoting dialogue between agricultural reform advocates (who often focus more on direct subsidies) and biotech patent reform advocates, as well as a reassessment of earlier public works projects and their unintended detrimental effects.

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More thoughts about Turnitin

Thanks to all who have posted interesting comments about Turnitin. I particularly appreciate the thought behind the comments arguing that Turnitin has no fair use defense, but I haven’t changed my mind. Let me explain why I still think it’s fair use in the limited space this forum permits.

At the outset, I’ll concede factors 2 and 3 for the plaintiffs, although in at least some cases the nature of the copyrighted work may be sufficiently factual (i.e. academic research paper) that 3 isn’t the slam dunk that some have suggested. That having been said, remember that factors 2 and 3 alone are not enough to swing fair use for a plaintiff, as we learned in the Sony case, where factors 1 and 4 insulated widespread wholesale copying of fictional works.

It’s true that Turnitin is engaged in a commercial endeavor, but that alone doesn’t swing a fair use analysis either. In Campbell v. Acuff-Rose, the Supreme Court understood that people create parodies for commercial purposes, but still reversed the lower court’s pro-plaintiff decision. In doing so, the Court astutely observed that commercial use is a factor that weighs against fair use, but that a great deal depends on whether the defendant’s use substitutes for the plaintiff’s. Although the Turnitin’s use is commercial, its purpose in doing so is to produce critical information about the scholarly bona fides of the plaintiff and others, and not to create copies that displace the plaintiff’s work in the marketplace.

Now let’s consider the markets that the defendant’s use might affect. First, it may diminish the plaintiff’s ability to sell papers to people who want to plagiarize. Second, the defendant may diminish the plaintiff’s ability to sell his paper to outfits like Turnitin for purposes of trying to catch plagiarists.

As for the first market, Turnitin’s use does not substitute for the plaintiff’s work. Yes, Turnitin’s use affects that market, but that is because Turnitin produces information that exposes the plaintiff and the plaintiff’s customer as dishonest academics. That’s criticism and comment, and it does not count as affecting the marketplace for the copyrighted work. Campbell stands for the proposition that if people don’t want the plaintiff’s product because of something they learned from the defendant’s alleged infringement, that is not an effect on the market for the copyrighted work. To quote the Court, this is the “distinction between potentially remediable displacement and unremediable disparagement.”

As for the sale of the plaintiff’s work for detection of plagiarism, the effect on the marketplace is small at best. If the plaintiff wants to exploit a market for sale of manuscripts to people who want to plagiarize, the plaintiff will not sell into any market for catching plagiarists. Additionally, the plaintiff cannot claim that he writes specifically for the detection of plagiarism because there’s no demand for a work written for that purpose. A work is valuable for detecting cheaters only if it’s already a published work that someone might find and use, or if it has been sold to plagiarists. There is no meaningful independent demand for works used to catch plagiarists. Thus, its elimination would have no effect on the production of copyrighted works. Accordingly, the effect on this market, even if considered an effect on the market for purposes of copyright, is too small to swing factor 4 to the plaintiff.

Accordingly, I conclude that the defendant’s case in factors 1 and 4 is strong enough to overcome the plaintiff’s strength in 2 and 3.

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Students sue Turnitin

I saw on a listserv that two high school students have sued Turnitin, a service that identifies plagiarism, for copyright infringement. The apparent basis for the suit is that Turnitin archives papers it reviews for purposes of comparison against future papers. The Washington Post story about this suit contains opinions suggesting that the plaintiffs (who seek $150,000 in damages) have a good case.

While Turnitin does appear to violate the copyright holders’ right of reproduction, I think fair use clearly applies. Even if one considers the use commercial (couldn’t one also characterize the use as for purposes of criticism?), there is, in my opinion, no way that the use affects the marketplace for the copyrighted work. Turnitin’s archiving results in no distribution of the works. There is simply no way that this use injures any of the financial incentives associatd with copyright. What person writes a paper thinking “Hmmmm. Maybe one day I’ll get royalties when my paper gets submitted to Turnitin.”? This case reminds me of the one against Google Print, but I think it’s a lot weaker.

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Saving “Peyton Manning”

File this one under “Thank goodness for the courts!”. Yahoo reports that a Judge in Chicago stopped a Bears fan from changing his legal name to “Peyton Manning.” The fan in question, Scott Wiese, lost a bet on the Super Bowl. If the Bears lost to the Colts, Wiese promised he’d change his name to “Peyton Manning.” The judge stopped him on grounds it might be confusing or invade Manning’s privacy.

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Professor Suit Against Joyce Estate Settled

The highly publicized suit by Stanford Professor Carol Loeb Schloss against the estate of James Joyce has been settled. The Yahoo!/Reuters story suggests that the settlement was reached on terms reasonably favorable to Schloss. However, although I congratulate her and those who helped her bring the suit, I’m a little disappointed that law wasn’t made. Professors need concrete guidance about the extent to which scholarly quotation constitutes infringement, and the lack of final judgment preserves the ambiguity that copyright holders sometimes exploit to stifle criticism they don’t like.

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Constructing an IP Curriculum

A major challenge for law schools working with limited resources is the construction of IP course sequences. The three primary courses, patent, copyright, and trademark have each grown to the point that professors talk about making them 4 credits instead of 3. At the same time, there is continued student demand for an IP Survey course, usually of 4 credits, which is valuable to those unfamiliar with IP or who take it as part of a larger corporate law curriculum.

Here are some possibilities for how to structure things. First, have everyone start with an IP Survey course, making it a prerequisite for advanced courses in copyright, patent, and trademark. The problem here is that “serious” IP-focused students find it inefficient and would rather start off with more in-depth treatment, and there is also the inefficienty of unavoidable overlap (e.g. everyone reads certain cases in each course).

Second, have separate tracks. Students can start with IP Survey, or they can start with patent, copyright, and trademark. If one assumes that students who take IP Survey won’t take the other three, then concerns about overlap disappear. However, if someone who takes IP Survey decides to pursue IP as a career, they wind up with a lot of overlap between the two courses, raising an argument that the person who takes IP Survey before the other classes has an unfair advantage (something I’m not too sure about) or should get one less credit for the other courses.

At BC Law, we presently use the first solution, but I’m not entirely satisfied with it. What do others do?