Some U.S. Legal Developments Relevant to Consumer & Copyright Law Professor Peter P. Swire Moritz College of Law The Ohio State University Amsterdam, IVR Conference December 14, 2007

Overview Spyware and unfair and deceptive practices Spyware and unfair and deceptive practices The 9 No-nos and permissive licensing The 9 No-nos and permissive licensing Theme – influence of Chicago School Theme – influence of Chicago School Description here – not trying to say status quo is correct Description here – not trying to say status quo is correct

Unfair & Deceptive Federal Trade Commission & state laws bar unfair and deceptive practices Federal Trade Commission & state laws bar unfair and deceptive practices Deception well accepted against fraud, privacy violations, & computer security violations Deception well accepted against fraud, privacy violations, & computer security violations Limits of deception – requires the company to make a promise that it breaks Limits of deception – requires the company to make a promise that it breaks Clickwrap licenses arent deceptive if they say we reserve all rights and consumers have none Clickwrap licenses arent deceptive if they say we reserve all rights and consumers have none

Unfairness FTC spyware cases in 2007 on unfairness FTC spyware cases in 2007 on unfairness Good news – brought where no promises by companies Good news – brought where no promises by companies Bad news (for expansive consumer rights) – unfairness only where concrete economic harms to consumers, under 1980s guidance Bad news (for expansive consumer rights) – unfairness only where concrete economic harms to consumers, under 1980s guidance Finding of that harm for spyware Finding of that harm for spyware This economic harm test has been a strict limit against broader consumer protection unless there is deception This economic harm test has been a strict limit against broader consumer protection unless there is deception

Analogy to IP Licensing 1970s antitrust guidelines very strict about IP licensing 1970s antitrust guidelines very strict about IP licensing For instance, patent holder puts limits on how licensees can use the patent For instance, patent holder puts limits on how licensees can use the patent The Nine No-Nos The Nine No-Nos Per se ban on many IP licensing terms Per se ban on many IP licensing terms This approach, if it had been maintained, would be a precedent for unfair clauses in clickwrap consumer context This approach, if it had been maintained, would be a precedent for unfair clauses in clickwrap consumer context

9 No-Nos & Chicago School Chicago School view of the Nine No-Nos Chicago School view of the Nine No-Nos Contract/license terms often efficient Contract/license terms often efficient E.g., IP licensing brings together complementary factors of production E.g., IP licensing brings together complementary factors of production Consumers benefit from lower prices & new products Consumers benefit from lower prices & new products By 1995, Antitrust Guidelines say IP licensing typically welfare-enhancing & procompetitive By 1995, Antitrust Guidelines say IP licensing typically welfare-enhancing & procompetitive

Conclusion Chicago School & economic tests remain powerful Chicago School & economic tests remain powerful Unfairness only if economic harm Unfairness only if economic harm License restrictions presumed procompetitive License restrictions presumed procompetitive Will be uphill battle to strike down IP license terms with these tools Will be uphill battle to strike down IP license terms with these tools