From Theory to Practice: the Questionable use of Custom in the Law Governing Intellectual Property
If you're feeling all pipe-smokish and tweedy this holiday season, take a look at Loyola Law School Professor Jennifer E. Rothman's article in the Virginia Law Review, The Questionable Use of Custom in Intellectual Property (2007) 93 Va. L. Rev. 1899 (title links to .pdf of the article) (h/t to Concurring Opinions for the link)
We here here at the IP ADR Blog place a great deal of emphasis on the benefits of private dispute resolution. This does not mean, however, that we are uninterested in the development of a theoretically sound IP rule of law, particularly as we transition from a paper-based to screen-based and from a producer-driven to creator-driven knowledge economy.
Because Professor Rothman's article is destined to influence the continued development of that law in the (somewhat hysterical) IP legal and business climate in which we're now all operating, we provide a holiday sample below (with link to full article above).
First, there is no reason to think that the customary practices that develop in the context of IP transactions will lead to an optimal development or allocation of IP. Industry-developed practices are likely to be suboptimal because they are often generated by efforts to avoid litigation or to preserve relationships, rather than by efforts to develop optimal IP rules or even rules preferred by the involved parties.
Customs that develop in the IP context are also likely to be suboptimal because the IP industries are not particularly close-knit and have fewer repeat transactions between the same parties than other industries in which the use of custom has been favored by scholars.
Moreover, the different economic and political power of parties in IP markets means that the customary practices do not fairly represent the parties but instead skew toward the interests of the most powerful IP owners.
Second, the use of custom in the context of IP generally does not further parties’ expectations of what should be the governing rules, and, even when it does, such expectations should not drive the determination of IP rights because of countervailing public interests at stake that demand a minimum level of access to others’ IP.
Third, . . . autonomy interests that justify a preference for private ordering in other areas of the law point in the opposite direction in IP law. The public goals inherent in affording IP rights cut against deference to private ordering in the IP context.
Even though I conclude that custom should never provide a basis for creating dispositive legal rules in any IP case, custom continues to have some relevance and value as evidence for a variety of inquiries. There are inquiries in IP law, and elsewhere, for which customary practices are relevant and not unduly prejudicial. In such instances, it is appropriate and may be necessary for courts to consider evidence of custom.
I present six main vectors along which a custom should be situated to determine whether the custom is likely to provide meaningful information.
The vectors evaluate the certainty of the custom, the motivation for the custom, the representativeness of the custom, how the custom is applied (both against whom and for what proposition), and the implications of the custom’s adoption.
To have any value, a custom must be certain. To determine whether there is a clear custom, it must be determined that the custom is uniformly recognized and supported, and that there are no contradictory or competing customs. Customary practices or norms that develop with the express purpose of formulating an aspirational set of practices should be given more weight than those that develop simply to avoid litigation or to preserve relationships. Customs that develop with a diverse representation of interests, such as those of owners and users and big and small players in the IP industries, should be given more credence than those that are driven by self-interested subgroups.
For similar reasons, a custom should generally only be applied against parties who participated in its development or, at least, who were adequately represented in the development of that custom. When custom is used simply to determine what is generally done or what parties intended in a contract or quasi contract, custom is at its most useful because it is not standing in for any second-order inquiries.
Even when customary practices have some value under the proposed framework, there should always be an independent analysis of what the adoption of a particular custom would mean for IP owners and users going forward.
Left unchecked, customary practices threaten to swallow up IP law and replace it with industry-led IP regimes that give the public and other creators more limited rights to access and use intellectual property. The approach that I present for evaluating custom in the IP context is vital in the process of recalibrating IP and an important step toward developing a more theoretical approach to evaluating the allocation of IP rights. Such an approach also encourages both users and owners of IP to dissent from customary practices with which they disagree and to expressly identify the motivations behind particular practices and norms.
Looking at custom through the lens of IP also provides powerful evidence for limiting the role of custom in the law more broadly and adds a compelling framework for understanding when preference should be given to top-down government regulation and adjudication over decentralized private rulemaking. To the extent custom can provide relevant data points, the framework that I develop provides solid direction for future theorists and courts.
