Whalen & Zingg on The Patent-Eligibility of Artificial Intelligence after Alice Corp. v. CLS Bank International

Ryan Whalen (The University of Hong Kong – Faculty of Law) and Raphael Zingg (Waseda University) have posted “Innovating under Uncertainty: The Patent-Eligibility of Artificial Intelligence after Alice Corp. v. CLS Bank International” (Research in Law and Economics, Volume 30 (2022)) on SSRN. Here is the abstract:

Artificial intelligence-related inventions raise complex questions of how to define the boundaries around patentable subject matter. In the United States, many claim that the recent doctrinal developments by the Supreme Court have led to incoherence and excessive uncertainty within the innovation community. In response, policymakers and stakeholders have suggested legislative amendments to address these concerns. We first review these developments, and subsequently use the patent examination record to empirically test the claims of increased uncertainty. We find that, although uncertainty did spike following the Supreme Court’s holding in Alice, it quickly returned to levels comparable to its historic norm. This has implications both for those advocating for legislative changes to the law of eligible subject matter, as well as other jurisdictions considering adopting a test similar to that applied in Alice.

Friedmann on Digital Single Market, First Stop to The Metaverse

Danny Friedmann (Peking University School of Transnational Law) has posted “Digital Single Market, First Stop to The Metaverse: Counterlife of Copyright Protection Wanted” (Law & Econ of the Digital Transformation, Klaus Mathis and Avishalom Tor, eds. (Springer, 2022 Forthcoming)) on SSRN. Here is the abstract:

Building upon the “fair use by design” concept of Niva Elkin-Koren, this chapter is exploring how artificial intelligence can be used to implement exceptions or limitations.

Section 2 will give a brief overview of the evolution of the copyright acquis in the US and EU, in regard to platforms, discuss the implications of strict liability in an era of massive online use and infringements, which already has pushed and, a fortiori, will push platforms in the metaverse in the direction of automatic, scalable solutions, which on their turn, will increase the need for sufficient safeguards of unauthorized but legal use that falls under an exception or limitation.

Section 3 introduces the implications of the metaverse in regard to intermediary liability of copyright infringement and the need for “breathing space” for users and experimenting.

Section 4 explores the safeguards for legitimate use of content, which includes exceptions and limitations.

Building on Elkin-Koren’s “fair use by design” concept, Section 5 provides the prerequisites of designing algorithmic exceptions or limitations, and whether automated content recognition tools should be qualified as “high risk AI” under the proposed Artificial Intelligence Act, and incentives against over-blocking.

Kraizberg on Non-fungible Tokens: A Bubble or the End of an Era of Intellectual Property Rights

Elli Kraizberg (Bar-Ilan University) has posted “Non-fungible Tokens: A Bubble or the End of an Era of Intellectual Property Rights” on SSRN. Here is the abstract:

The viability of the exponentially growing non-fungible token (NFT) markets is evaluated by identifying potential value-generating mechanisms that may be rationalized. NFTs are claimed to securitize “ownership rights short of use”. This paper evaluates the likelihood that NFTs will replace existing mechanisms that protect producers’ rightful claim to use their assets, or replace the need to apply the legal code that governs intellectual property rights (IPR). A condition for this shift is derived for a category of assets whose use or consumption does not reduce their scarce supply.

Tang on Privatizing Copyright

Xiyin Tang (UCLA School of Law; Yale Law School) has posted “Privatizing Copyright” (Michigan Law Review, Forthcoming) on SSRN. Here is the abstract:

Much has been written, and much is understood, about how and why digital platforms regulate free expression on the Internet. Much less has been written— and even much less is understood—about how and why digital platforms regulate creative expression on the Internet—expression that makes use of others’ copyrighted content. While § 512 of the Digital Millennium Copyright Act regulates user-generated content incorporating copyrighted works, just as § 230 of the Communications Decency Act regulates other user speech on the Internet, it is, in fact, rarely used by the largest Internet platforms—Facebook and YouTube. Instead, as this Article details, creative speech on those platforms is instead governed by a series of highly confidential licensing agreements entered into with large copyright holders.

Yet despite the dominance of private contracting in ordering how millions of pieces of digital content are made and distributed on a daily basis, little is known, and far less has been written, on just what the new rules governing create expression are. This is of course, by design: these license agreements contain strict confidentiality clauses that prohibit public disclosure. This Article, however, pieces together clues from publicly-available court filings, news reporting, and leaked documents. The picture it reveals is a world where the substantive law of copyright is being quietly rewritten—by removing the First Amendment safeguard of fair use, by inserting in a new moral right for works that Congress had deemed, in the Copyright Act, ineligible for moral rights protection, and, through other small provisions in the numerous agreements digital platforms negotiate with rightsholders, influencing and reshaping administrative, common, and statutory copyright law. Further still, recent changes or lobbied-for changes to copyright’s statutory law seek to either enshrine the primacy of such private contracting or altogether remove copyright rule-making processes from government oversight, shielding copyright’s public law from independent considerations of public policy and public scrutiny.

Changing copyright’s public law to enshrine the primacy of such private ordering insulates the new rules of copyright from the democratic process, from public participation in, and from public oversight of, the laws that shape our daily lives. Creative expression on the Internet now finds itself at a curious precipice: a seeming glut of low-cost, or free, content, much of which is created directly by, and distributed to, users—yet increasingly regulated by an opaque network of rules created by a select few private parties. An understanding of the Internet’s democratizing potential for creativity is incomplete without a concomitant understanding of how the new private rules of copyright may shape, and harm, that creativity.

Hugendubel on Blockchain Technology and Intellectual Property – A Basic Introduction

Julia Hugendubel (CMS) has posted “Blockchain Technology and Intellectual Property – A Basic Introduction” on SSRN. Here is the abstract:

Blockchain technology is predicted to have a major impact on the intellectual property (IP) ecosystem. More and more projects are being launched, both in the public and private sector. The World Intellectual Property Organization (WIPO) has built up a Blockchain Task Force and is preparing a new WIPO Standard to encompass all types of IP rights and the entire IP lifecycle; the German Government published a strategy paper on blockchain with a chapter on applications in the creative arts sector; a European Blockchain Service Infrastructure is being built up; the European Union Intellectual Property Office (EUIPO) established an Anti-Counterfeiting Forum as part of the broader EU strategy to create a blockchain ecosystem and now has its own blockchain for trademarks and designs in the EU. Furthermore, LVMH, with brands such as Louis Vuitton, developed its own blockchain to track luxury goods; Kodak started a blockchain initiative for image rights management; music and film streaming are offered on blockchain platforms; sports clubs discuss micro-licensing of their IP rights; digital fashion is created for distribution using blockchain.

Moreover, news abounds of blockchain-based non-fungible tokens (NFTs) representing basically everything imaginable – both digital and physical – in the IP ecosystem, to track the origin of art and all manner of products. However, interestingly enough, as early as 2012 a whitepaper was published linking the idea of smart property by Nick Szabo and digital collectibles to blockchain and at the same time introducing the first kind of NFTs, coloured coins.

The developments in the blockchain space, including in the area of IP, are progressing at a rapid pace, both from a technological and a value perspective. For example, the value of crypto art traded on blockchain from 2018 to 2020 was estimated at about 15 million US Dollar (with about 8.2 million US Dollar worth of crypto artwork in December 2020 ). In March 2021, the most expensive piece of artwork linked to an NFT in history was sold by Mike Winkelmann (Beeple) for 42,329.453 Ether, at the time worth 69,346,250 million US Dollar. The NFT marketplace OpenSea has set and then beat daily records several times, reaching a new peak of 322,982,301 million US Dollar of trading volume on 29 August 2021.

Nevertheless, many applications for IP matters are still in their infancy. The reason for this might lay, aside from the rather complex technological details, in uncertainties about their regulation and legal standing in court, such as the recognition of a legal binding smart contract.

Therefore, the article introduces the very basic features of blockchain technology and blockchain-based IP applications. The article then dives into concrete IP use cases that are currently offered and developed on the market. It also gives a general overview of opportunities and existing challenges for the IP ecosystem. The legal perspective is mainly a German and European one.

Moerland & Kafrouni on Online Shopping with Artificial Intelligence: What Role to play for Trade Marks?

Anke Moerland (Maastricht University – Department of International and European Law) and Christie Kafrouni have posted “Online Shopping with Artificial Intelligence: What Role to play for Trade Marks?” on SSRN. Here is the abstract:

The debate on how artificial intelligence (AI) influences intellectual property protection has so far mainly focussed on its effects for patent and copyright protection. Not much attention has been paid to the effects of artificial intelligence technology for trade mark law. In particular, what has not yet been sufficiently investigated is the question as to whether trade marks still fulfil their role in a world in which consumers are assisted by AI technology when purchasing in the online market place. In how far do we still need trade marks to avoid consumer confusion? Or do the other functions of trade marks justify their continuous protection? In view of the fact that intellectual property rights have a market-distorting effect, it is in society’s interest to question whether trade mark protection is still justified.

Goodyear on Embedding Permission Culture: A New Approach to the Server Test Quandary

Michael Goodyear has posted “Embedding Permission Culture: A New Approach to the Server Test Quandary” (75 Okla. L. Rev. __ (Forthcoming 2022)) on SSRN. Here is the abstract:

The practice of embedding—inserting code that displays content located elsewhere on the Internet—is ubiquitous online. Millions of users insert or encounter embeds daily. As a core type of link, embedding has helped disseminate information far and wide, furthering the goals of both copyright law and the Internet. For over a decade, embedding has been considered lawful under copyright law, guaranteed by a Ninth Circuit doctrine known as the server test, which holds that a person only displays a work when he or she hosts and serves it. This rule, which has greatly influenced the growth of the modern Internet, has recently come under siege, with two decisions from the U.S. District Court for the Southern District of New York threatening the harmony of the server test and the future of the practice of embedding.

This article enters the growing debate about the server test for two reasons. First, it offers legal and policy justifications for the server test, demonstrating that the preservation of the server test is desirable. Second, it considers alternative theories for permitting embedding. Finding that the alternative theories that have generally been proposed would be poor defenses for embedding, this article instead identifies a private ordering theory of permission-driven embedding that grants greater choices to content creators while preserving copyright and the Internet’s balance between exclusive rights and the spread of knowledge. As this article explains, permission-driven embedding is already here, with major online platforms already adopting it in part. Therefore, notwithstanding the server test’s prognosis, permission-driven embedding is part of the future of online content distribution.

Gervais on AI Derivatives: the Application to the Derivative Work Right to Literary and Artistic Productions of AI Machines

Daniel J. Gervais (Vanderbilt Law) has posted “AI Derivatives: the Application to the Derivative Work Right to Literary and Artistic Productions of AI Machines” (Seton Hall Law Review, Vol. 53, 2022) on SSRN. Here is the abstract:

This Article predicts that there will be attempts to use courts to try to broaden the derivative work right in litigation either to prevent the use of, or claim protection for, literary and artistic productions made by Artificial Intelligence (AI) machines. The Article considers the normative valence and the (significant) doctrinal pitfalls associated with such attempts. It also considers a possible legislative alternative, namely attempts to introduce a new sui generis right in AI productions. Finally, the Article explains how, whether such attempts succeed or not, the debate on rights (if any) in productions made by AI machines is distinct from the debate on text and data mining exceptions.

Ferrandis & Lizarralde on Open Sourcing AI: Intellectual Property at the Service of Platform Leadership

Carlos Muñoz Ferrandis (Max Planck Institute for Innovation and Competition; Universidad de Alicante; Global Innovation, Policy & Law Research Group (GIPLaw-UA)) and Marta Duque Lizarralde (TUM School of Management,Technical University of Munich) have posted “Open Sourcing AI: Intellectual Property at the Service of Platform Leadership” on SSRN. Here is the abstract:

Artificial Intelligence – AI – is one of the most strategic technologies of our century. Consequently, tech companies are adopting intellectual property strategies to protect their investment in the field, which encompasses copyright, patents and trade secrets. While the number of AI-related patent applications is increasing, the number of open source AI projects sponsored by major AI patent holders is also on the rise. This article explores the strategic reasons behind the growing adoption of open source licensing in the AI space. More precisely, it assesses how IP rights are articulated around “openness” as a competitive factor in ecosystem competition, and how some players are using open source licensing successfully to attract a critical mass of users and build an ecosystem around their AI platforms. Moreover, this article integrates the debate on the protectability of AI features by IP rights to assess the potential implications for open source. Finally, it analyses the most used open source licences in AI projects and highlights existing and future challenges from an IP and contractual law perspective.

Meurer on Bilski and the Information Age a Decade Later

Michael J. Meurer (Boston University – School of Law) has posted “Bilski and the Information Age a Decade Later” on SSRN. Here is the abstract:

In the years from State Street in 1999 to Alice in 2014, legal scholars vigorously debated whether patents should be used to incentivize the invention of business methods. That attention has waned just as economists have produced important new research on the topic, and just as artificial intelligence and cloud computing are changing the nature of business method innovation. This chapter rejoins the debate and concludes that the case for patent protection of business methods is weaker now than it was a decade ago.