Law and Information

John Palfrey and I released today in Washington D.C. a White Paper and three case studies on ICT Interoperability and eInnovation (project homepage here.) The papers are the result of a joint project between Harvard’s Berkman Center and the Research Center for Information Law at St. Gallen, sponsored by Microsoft. Our research focused on three case studies in which the issues of interoperability and innovation are uppermost: digital rights management in online and offline music distribution models; various models of digital identity systems (how computing systems identify users to provide the correct level of access and security); and web services (in which computer applications or programs connect with each other over the Internet to provide specific services to customers).

The core finding is that increased levels of ICT interoperability generally foster innovation. But interoperability also contributes to other socially desirable outcomes. In our three case studies, we have studied its positive impact on consumer choice, ease of use, access to content, and diversity, among other things.

The investigation reached other, more nuanced conclusions:

• Interoperability does not mean the same thing in every context and as such, is not always good for everyone all the time. For example, if one wants completely secure software, then that software should probably have limited interoperability. In other words, there is no one-size-fits-all way to achieve interoperability in the ICT context.
• Interoperability can be achieved by multiple means including the licensing of intellectual property, product design, collaboration with partners, development of standards and governmental intervention. The easiest way to make a product from one company work well with a product from another company, for instance, may be for the companies to cross license their technologies. But in a different situation, another approach (collaboration or open standards) may be more effective and efficient.
• The best path to interoperability depends greatly upon context and which subsidiary goals matter most, such as prompting further innovation, providing consumer choice or ease of use, and the spurring of competition in the field.
• The private sector generally should lead interoperability efforts. The public sector should stand by either to lend a supportive hand or to determine if its involvement is warranted.

In the White Paper, we propose a process constructed around a set of guidelines to help businesses and governments determine the best way to achieve interoperability in a given situation. This approach may have policy implications for governments.

• Identify what the actual end goal or goals are. The goal is not interoperability per se, but rather something to which interoperability can lead, such as innovation or consumer choice.
• Consider the facts of the situation. The key variables that should be considered include time, maturity of the relevant technologies and markets and user practices and norms.
• In light of these goals and facts of the situation, consider possible options against the benchmarks proposed by the study: effectiveness, efficiency and flexibility.
• Remain open to the possibility of one or more approaches to interoperability, which may also be combined with one another to accomplish interoperability that drives innovation.
• In some instances, it may be possible to convene all relevant stakeholders to participate in a collaborative, open standards process. In other instances, the relevant facts may suggest that a single firm can drive innovation by offering to others the chance to collaborate through an open API, such as Facebook’s recent success in permitting third-party applications to run on its platform. But long-term sustainability may be an issue where a single firm makes an open API available according to a contract that it can change at any time.
• In the vast majority of cases, the private sector can and does accomplish a high level of interoperability on its own. The state may help by playing a convening role, or even in mandating a standard on which there is widespread agreement within industry after a collaborative process. The state may need to play a role after the fact to ensure that market actors do not abuse their positions.

While many questions remain open and a lot of research needs to be done (including empirical studies!), we hope to have made a contribution to the ongoing interoperability debate. Huge thanks to the wonderful research teams on both sides of the Atlantic, especially Richard Staeuber, David Russcol, Daniel Haeusermann, and Sally Walkerman. Thanks also to the many advisors, contributors, and commentators on earlier drafts of our reports.

Today, I attended a small, but really interesting conference chaired by my colleagues Professor Werner Wunderlich und Prof. Beat Schmid from the Institute for Media and Communication Management, our sister institute here at the Univ. of St. Gallen. The conference was on “The Future of the Gutenberg Galaxy” and looked at trends and perspectives of the medium “book”. I’ve learned a big deal today about the current state of the book market and future scenarios from a terrific line-up of speakers. It was a particular pleasure, for instance, to meet Prof. Wulf D. von Lucus, who’s teaching at the Univ. of Hohenheim, but is also the Chairman of the Board of Carl Hanser Verlag, which will be publishing the German version of our forthcoming book Born Digital.

We covered a lot of terrain, ranging from definitional question (what is a book? Here is a legal definition under Swiss VAT law, for starters) to open access issues. The focus of the conversation, though, was on the question how digitization shapes the book market and, ultimately, whether the Internet will change the concept “book” as such. A broad consensus emerged among the participants (a) that digitization has a profound impact on the book industry, but that it’s still too early to tell what it means in detail, and (b) that the traditional book is very unlikely to be substituted by electronic formats (partly referring to the superiority-of-design-argument that Umberto Eco made some time ago).

I was the last speaker at the forum and faced the challenge to talk about the future of books from a legal perspective. Based on the insights we gained in the context of our Digital Media Project and the discussion at the forum, I came up with the following four observations and theses, respectively:

Technological innovations – digitization in tandem with network computing – have changed the information ecosystem. From what we’ve learned so far, it’s safe to say that at least some of the changes are tectonic in nature. These structural shifts in the way in which we create, disseminate, access, and (re-)use information, knowledge, and entertainment have both direct and indirect effects on the medium “book” and the corresponding subsystem.

Some examples and precursors in this context: collaborative and evolutionary production of books (see Lessig’s Code 2.0); e-Books and online book stores (see ciando or Amazon.com); online access to books (see, e.g., libreka, Google Book Search, digital libraries); creative re-uses such as fan fiction, podcasts, and the like (see, e.g., LibriVox, Project Gutenberg, www.harrypotterfanfiction.com).

Law is responding to the disruptive changes in the information environment. It not only reacts to innovations related to digitization and networks, but has also the power to actively shape the outcome of these transformative processes. However, law is not the only regulatory force, and to gain a deeper understanding of the interplay among these forces is crucial when considering the future of books.

While fleshing out this second thesis, I argued that the reactions to innovations in the book sector may follow the pattern of ICT innovation described by Debora Spar in her book Ruling the Waves (Innovation – Commercialization – Creative Anarchy – Rules and Regulations). I used the ongoing digitization of books and libraries by Google Book Search as a mini-case study to illustrate the phases. With regard to the different regulatory forces, I referred to Lessig’s framework and used book-relevant examples such as DRM-protected eBooks (“code”), the use of collaborative creativity (“norms”), and book-price fixing (“markets”) to illustrate it. I also tried to emphasis that the law has the power to shape each of the forces mentioned above in one way or another (I used examples such as anti-circumvention legislation, the legal ban on book-price fixing, and mandatory copyright provisions that preempt certain contractual provisions.)

The legal “hot-spots” when it comes to the future of the book in the digital age are the questions of distribution, access, and – potentially – creative re-use. The areas of law that are particularly relevant in this context are contracts, copyright/trademark law, and competition law.

Based on the discussion at the forum, I tried to map some of the past, current, and emerging conflicts among the different stakeholders of the ecosystem “book”. In the area of contract law, I focused on the relationship between authors and increasingly powerful book publishers that are tempted to use their unequal bargaining power to impose standard contracts on authors and transfer as many rights as possible (e.g. “buy out” contracts).

With regard to copyright law, I touched upon a small, but representative selection of conflicts, e.g. the relation between right holders and increasingly active users (referring to the recent hp-lexicon print-version controversy); the tensions between right holders and (new) Internet intermediaries (e.g. liability of platforms for infringements of their users in case of early leakage of bestsellers; e.g. interpretation of copyright limitations and exemptions in case of full-text book searches without permission of right holders); the tension between publishers and libraries (e.g. positive externalities of “remote access” to digital libraries vs. lack of exemptions in national and international copyright legislation – a topic my colleague Silke Ernst is working on); and the tension between right holders and educational institutions (with reference to this report).

As far as competition law is concerned, I sketched a scenario in which Google Book Search would reach a dominant market position with strong user lock-in due to network effects and would decline to digitize and index certain books or book programs, for instance due to operational reasons. Based on this scenario, I speculated about a possible response by competition law authorities (European authorities in mind) and raised the question whether Google Book Search could be regarded, at some point, as an essential facility. (In the subsequent panel discussion, Google’s Jens Redmer and I had a friendly back-and-forth on this issue.)

Not all of the recent legal conflicts involving the medium “book” are related to the transition from an analog/offline to a digital/online environment. Law continues to address book-relevant issues that are not new, but rather variations on traditional doctrinal themes.

I used the Michael Baigent et al. v. Random House Group decision by the London’s High Court of Justice as one example (has the author of Da Vinci Code infringed copyright by “borrowing” a theme from the earlier book Holy Blood, Holy Grail?), and the recent Esra-decision by the German BVerfG as a second one (author’s freedom of expression vs. privacy right of a person in a case where it was too obvious that the figure used in a novel was a real and identifiable person and where intimate details of the real person were disclosed in the book.)

Unfortunately, we didn’t have much time to discuss several interesting other issues and topics that were brought up and related to the generation born digital and its use of books – and the consequences of kids’ changed media usage in a changed media environment, e.g. with regard to information overload and the quality of information. Topics, to be sure, that John Palfrey and I are addressing in our forthcoming book.

In sum, an intense, but very inspiring conference day.

Update: Dr. David Weinberger, among the smartest people I’ve ever met, has just released a great article on ebooks and libraries.

Here in Ottawa, I had the pleasure to speak at the OECD Technology Foresight Forum of the Information, Computer and Communications Policy Committee (ICCP) on the participative web – a forum aimed at contributing to the OECD Ministerial Meeting “The Future of the Internet Economy” that will take place in Seoul, Korea, in June 2008.

My remarks (what follows is a summary, full transcript available, too) were based on our joint and ongoing Harvard–St.Gallen research project on Digital Natives and included some of the points my colleague and friend John Palfrey and I are making in our forthcoming book “Born Digital” (Basic Books, 2008).

I started with the observation that increased participation is one of the features at the very core of the lives of many Digital Natives. Since most of the speakers at the Forum were putting emphasis on creative expression (like making mash-ups, contributing to Wikipedia, or writing a blog), I tried to make the point that participation needs to be framed in a broad way and includes not only “semiotic democracy”, but also increased social participation (cyberspace is a social space, as Charlie Nesson has argued for years), increased opportunities for economic participation (young digital entrepreneurs), and new forms of political expression and activism.

Second, I argued that the challenges associated with the participative web go far beyond intellectual property rights and competition law issues – two of the dominant themes of the past years as well as at the Forum itself. I gave a brief overview of the three clusters we’re currently working on in the context of the Digital Natives project:

• How does the participatory web change the very notion of identity, privacy, and security of Digital Natives?
• What are its implications for creative expression by Digital Natives and the business of digital creativity?
• How do Digital Natives navigate the participative web, and what are the challenges they face from an information standpoint (e.g. how to find relevant information, how to assess the quality of online information)?

The third argument, in essence, was that there is no (longer a) simple answer to the question “Who rules the Net?”. We argue in our book (and elsewhere) that the challenges we face can only be addressed if all stakeholders – Digital Natives themselves, peers, parents, teachers, coaches, companies, software providers, regulators, etc. – work together and make respective contributions. Given the purpose of the Forum, my remarks focused on the role of one particular stakeholder: governments.

While still research in progress, it seems plain to us that governments may play a very important role in one of the clusters mentioned above, but only a limited one in another cluster. So what’s much needed is a case-by-case analysis. I briefly illustrated the different roles of governments in areas such as

• online identity (currently no obvious need for government intervention, but “interoperability” among ID platforms on the “watch-list”);
• information privacy (important role of government, probably less regarding more laws, but better implementation and enforcement as well as international coordination and standard-setting);
• creativity and business of creativity (use power of market forces and bottom-up approaches in the first place, but role of governments at the margins, e.g. using leeway when legislating about DRM or law reform regarding limitations and exceptions to copyright law);
• information quality and overload (only limited role of governments, e.g. by providing quality minima and/or digital service publique; emphasis on education, learning, media & information literacy programs for kids).

Based on these remarks, we identified some trends (e.g. multiple stakeholders shape our kids’ future online experiences, which creates the need for collaboration and coordination) and closed with some observations about the OECD’s role in such an environment, proposing four functions: awareness raising and agenda setting; knowledge creation (“think tank”); international coordination among various stakeholders; alternative forms of regulation, incl. best practice guides and recommendations.

Berkman Fellow Shenja van der Graaf was also speaking at the Forum (transcripts here), and Miriam Simun presented our research project at a stand.

Today and tomorrow, the OECD delegates are discussing behind closed doors about the take-aways of the Forum. Given the broad range of issues covered at the Forum, it’s interesting to see what items will finally be on the agenda of the Ministerial Conference (IPR, intermediaries liability, and privacy are likely candidates.)

I’m delighted to announce that our Research Center for Information Law at the University of St. Gallen – usually focusing more on basic research rather than implementing project work – has just launched an online data privacy case law collection (in German and French) that features the entire collection of cases decided by the Swiss Commission for Data Privacy and Freedom of Information from 1993 – 2006. The Commission has now been integrated into the “Tribunal administrativ federal“, the branch of the Supreme Court that deals with administrative law issues. Free online access to the collection is particularly exciting since only part of the Commission’s decisions has been published so far. Thanks are due to the Swiss Federal Chancellery and the St. Gallen University’s Research Council for financial support. And, of course, special thanks to Silke Ernst, LL.M., for excellent project management.

A few days ago, I returned from Cambridge, MA, where I had been spending two inspiring and inspired weeks. Here are only three of the many (professional) highlights:

I was very fortunate, once more, to be on the faculty of the OII summer doctoral program (SDP) that – for the first time – took place at Harvard Law School (and, no, there hasn’t been an attempt to bring it to St. Gallen, rumors to the contrary…). My friends at the Berkman Center did a fantastic job in pulling together a very interesting summer program with a terrific line-up of contributors. Most importantly, however, the Berkman team led by John Palfrey and Colin Maclay selected a fantastic group of 30 PhD students from various disciplines and from across the world. I have been attending all except one of the doctoral programs since 2003, but this group impressed me in particular. We had a series of excellent discussions on a number of fascinating topics, covering meta-, methodological, and substantive issues. Among my favorite debates were the discussions about ICT4D, digital natives, identity, privacy, and peer production, and I very much enjoyed JZ’s talk about academic charisma and communication. In addition, I had the pleasure to moderate four student sessions in which the PhD candidates presented their research, and was naturally especially fascinated by Joris van Hoboken’s dissertation on search engine regulation. He, among several others (check out the aggregator), provided also excellent blog coverage of the SDP 2007 (here, his final post).

A second highlight, doubtlessly, were great conversations about our ongoing digital natives project. I had several thought-provoking discussions with my colleague John Palfrey (whom I admire so much not only for being a gifted teacher, brilliant mind, and thoughtful leader, but equally for being a truly amazing collaborator and friend), about the scope of our early-stage research project, about methodologies, the goals of our project, and the message(s) we want to send in the book that we’re currently co-authoring. Also the various contacts with the members of our Berkman/St. Gallen digital native research team, including Erin Mishkin (team leader), Chen Fang, Nadine Blaettler (from our St. Gallen team, currently in Boston), Tony Pino, and Miriam Simun (who has spent the past few weeks here in St. Gallen), among others, made this trip a particularly exciting one. Similarly enjoyable were excellent interventions (including some push-back) from my colleagues Ethan Zuckerman and danah boyd.

Another interesting experience was a symposium hosted by the Harvard Business School on the Internet as a Public Good. A number of great scholars and activists were invited to think about the question as to what extent the Internet can be seen as a public good. I was invited to give a brief talk from the legal/policy perspective, but did unfortunately not a great job in framing the discussion – despite my well-known love for coherent frameworks. In any event, it was an intellectually challenging workshop that also made it clear how even the brightest people in one room may sometimes face difficulties to really enhance a discussion in a structured way. The co-organizers Colin Maclay, Karim Lakhani, David Weinberger, Amar Ashar, Frank Hecker and Zak Greant deserve a great thank you for running this experiment with an immensely complex and equally fascinating workshop topic.

In sum, a wonderful time in Cambridge and yet another illustration why I really do think that MA 02318 is the best place in the world. Thanks to Catherine Bracy, Seth Young, Amar Ashar, Becca Tabasky, and all other Berkman staff members who helped me planning this trip and took care of the logistics.

Now back in St. Gallen, I will spend most of August on the book I mentioned above, on a text with Prof. Herbert Burkert on the information law approach vs. the business law approach as applied to technological innovation, an article about Google, a book chapter on corporate social responsibility/sphere of influence, a piece on IPR and neuro-science, and – last but not least – an overdue commentary on the new Swiss GmbH-Law. Besides, I’m working on our upcoming study trip to Shanghai and try to adjust to the Chinese mentality: “panta rei”. So, please forgive me if I’m a slow responder (and blogger, for that matter) over the weeks to come.

Today in Hong Kong, I’ve had the pleasure to catch up with some of my colleagues and friends who are living and working in Asia. The conversation with Rebecca MacKinnon, my former Berkman fellow Fellow and now assistant professor at the University of Hong Kong’s Journalism and Media Studies Center, resonates in particular. We touched upon several themes and topics in which we share an interest, ranging from Chinese culture, U.S. foreign politics, to corporate social responsibility, among many others. We then started talking about the digital natives project(s), and youth and new media research questions (Rebecca actually teaches “new media” at HKU). Starting from different places and looking from different perspectives, we concluded that two (related) sets of question will likely end up being on our shared research agenda for the months to come.

• First, media literacy and education of digital natives. While media education in the digital environment has become an important topic especially in the U.K. through the work of Ofcom and experts like Professor David Buckingham and Professor Sonia Livingstone, it’s still in its infancy in many other parts of the world. From all I’ve learned now in the context of our digital native project – and from what I know about the current state of neuroscience with regard to cognitive and emotional development – its seems crucial to start with media education at pre-school or primary school level at latest. If anyone has pointers to good web resources, case studies and/or curricula in this area, please drop me a note.

• Second, users rights and responsibilities in the digital environment. This issue is obviously related to the first one and concerns the question as to what extent our societies do provide mechanisms to have a discourse about our rights, but also responsibilities (and that’s where it gets tricky from a political perspective) as empowered users in the digitally networked environment. While great work has been done with regard to the “rights”-part of the discussion – largely driven by NGOs and consumer protection organizations (see here for a recent example) – we may need to figure out in the near future how to address also the question of the new responsibilities as “speakers” that are associated with the fundamental shift from passive consumers to active users. Interestingly, the role of citizens as producers of information has reportedly been addressed in a (if I recall correctly: still unpublished) draft of an information freedom act in an Eastern European country. Legislation, however, is most likely not the right starting place for such a discussion, I would argue.

In short, more food for thought – and additional research tasks for our digital native team. (Thanks, Rebecca, for a great conversation.)

Over the past two days, I had the pleasure to co-moderate with my colleagues and friends Prof. John Palfrey and Colin Maclay the second Berkman/St. Gallen Workshop on ICT Interoperability and eInnovation. While we received wonderful initial inputs at the first workshop in January that took place in Weissbad, Switzerland, we had this time the opportunity to present our draft case studies and preliminary findings here in Cambridge. The invited group of 20 experts from various disciplines and industries have provided detailed feedback on our drafts, covering important methodological questions as well as substantive issues in areas such as DRM interoperability, digital ID, and web service/mash ups.

Like at the January workshop, the discussion got heated while exploring the possible roles of governments regarding ICT interoperability. Government involvement may take many forms and can be roughly grouped into two categories: ex ante and ex post approaches. Ex post approaches would include, for example, interventions based on general competition law (e.g. in cases of refusal to license a core technology by a dominant market player) or an adjustment of the IP regime (e.g. broadening existing reverse-engineering provisions). Ex ante strategies also include a broad range of possible interventions, among them mandating standards (to start with the most intrusive), requiring the disclosure of interoperability information, labeling/transparency requirements, using public procurement power, but also fostering frameworks for cooperation between private actors, etc.

There was broad consensus in the room that governmental interventions, especially in form of intrusive ex ante interventions, should be a means of last resort. However, it was disputed how the relevant scenarios (market failures) might look like where governmental interventions are justified. A complicating factor in the context of the analysis is the rapidly changing technological environment that makes it hard to predict whether the market forces just need more time to address a particular interoperability problem, or whether the market failed in doing so.

In the last session of the workshop, we discussed a chart we drafted that suggests steps and issues that governments would have to take into consideration when making policy choices about ICT interoperability (according to our understanding of public policy, the government could also reach the conclusion that it doesn’t intervene and let the self-regulatory forces of the market taking care of a particular issue). While details remain to be discussed, the majority of the participants seemed to agree that the following elements should be part of the chart:

1. precise description of perceived interoperability problem (as specific as possible);
2. clarifying government’s responsibility regarding the perceived problem;
3. in-depth analysis of the problem (based on empirical data where available);
4. assessing the need for intervention vis-à-vis dynamic market forces (incl. “timing” issue);
5. exploring the full range of approaches available as portrayed, for example, in our case studies and reports (both self-regulatory and regulation-based approaches, including discussion of drawbacks/costs);
6. definition of the policy goal that shall be achieved (also for benchmarking purposes), e.g. increasing competition, fostering innovation, ensuring security, etc.

Discussion (and research!) to be continued over the weeks and months to come.

I had the great pleasure to speak today at Harvard Law School’s Worldwide Alumni Congress here in Washington D.C. Together with my friend John Palfrey, Executive Director of the Berkman Center and Clinical Professor of Law, and my colleague James L. Cavallaro, Executive Director of the Human Rights Program at Harvard and also Clinical Professor, we were presenting research in progress on Internet filtering and human rights issues. In this thematic context, we also had a very interesting discussion about internationalization and the question whether an academic institution like Harvard should focus solely on research, or as to what extent it should also engage in advocacy. Not surprisingly, the alumni in the audience had different views on the topic. However, there emerged some sort of consensus that advocacy is less of an issue in cases where academia – for instance as part of a clinical program –represents a client, because that’s ultimately the thing lawyers are supposed to do.

The line-up of speakers is fantastic as you can take from the website, and so is the social and cultural program. Once again I’m impressed how much effort this wonderful school puts into relationship management – in the best sense of the word. At least some of us at the Univ. of St. Gallen could learn a great deal from our colleagues and friends on this side of the Atlantic – not only in terms of professionalism, but also with regard to personal commitment of faculty members and University staff. For me personally, yet another rewarding experience, both professionally and personally (with thanks to the Alumni office and JP for making it possible.)

I’m currently on my way to far-away Olympic Valley, CA, where I have the great pleasure to attend the Gruter Institute for Law and Behavioral Research Conference on Law, Behavior, and the Brain. The conference, led by Monika Gruter Cheney, brings together a terrific interdisciplinary group of roughly 40 experts in areas such as evolutionary biology, neuroscience, behavioral economics, and – yes – also a number of legal scholars. During four days, we will be exploring topics such as “State of Play: Law, Behavioral Biology and Neuroscience,” “Rationality, Emotions and Moral Judgments in Humans and Other Species,” “Property and Economics,” and “Results in Neuroeconomics and Experimental Economics,” to list just a few sessions. I’m much looking forward to learning from all conference contributors, including Paul Zak, Carl Bergstrom, Kevin McCabe, John Clippinger, Bruce Hay, Oliver Goodenough, Susan Bandes, Larry Frolik, Sara Beale, Terry Maroney, among many others.

Here are the abstracts of my contributions to the conference:

1) Panel on Law & Emotions

A recent interdisciplinary conference in Switzerland was dedicated to law & emotion scholarship. In my brief presentation, I would like to answer the apparently trivial question asked by a conference participant: “Given the fact that it isn’t that much of a surprise that even judges, prosecutors, etc. have emotions, and that therefore emotions play a role in decision-making processes with legal relevance, what’s really the contribution of law & emotion research and scholarship? What’s new about it?”. I will try to answer this question in a systematic way, arguing that law & emotion research has (or might have) an impact on (at least) two levels, each consisting of two elements: the analytical level with the elements “phenomenon (stipulated facts)” and “legal actors”, and the design level with “norms applicable to the facts of the case” and “norms governing the production of law.” I will use a few stories – ranging from file-sharing to the U.S. Patriot Act – to illustrate these points.

2) Presentation on Digital Institutions / Social Signaling Theory

Social signals play an important role in defining social relations and structuring societies, both in the on- and offline world. In my presentation, I will focus on the role of social signaling in the digitally networked environment. More precisely, I will explore the promises and limitations of social signaling theory as applied to cyberspace, including digital institutions. In essence, I will address three questions: First, in what online contexts do we have an interest in signal reliability and honest signaling? Second, what are regulatory strategies and approaches (using Lessig’s framework of four modes of regulation) to increase the reliability of social signals? And third, who will make the decisions about the degrees of required signal reliability in cyberspace?

3) New Insights into Property Panel

My last year’s presentation focused on a new generation of neuro-science-informed arguments aimed at explaining large-scale file-sharing over P2P networks. This year, my contribution to the property panel will not focus on the explanation of a presumably illegal activity, but on a socially desirable one: In my talk entitled “Social economics of collaborative creativity”, I will provide a brief overview of the literature that seeks to explain why thousand of volunteers work together in lose-knit networks to peer-produce an online encyclopedia (Wikipedia), to come up with improved versions of an open-source web browser (e.g. Mozilla), or create shared open content platforms, to name just three examples. The presentation ends with the outline of a research agenda.

Over the past few weeks, our graduate students at the Univ. of St. Gallen have done quite some heavy lifting in the three courses that I described here. In my own course on law and economics of intellectual property rights in the digital age, we’ve completed the second part of the course, which consisted of three modules dealing with digital copyright, software and biz methods patents, and trademarks/domain name disputes. We were very fortunate to have the support of three wonderful guest lecturers. Professor John Palfrey taught a terrific class on digital media law and policy (find here his debriefing and putting-into-context). Klaus Schubert, partner with WilmerHale, provided an excellent overview of the current state of software patenting in and across the EU, in the U.S., and Japan and made us think about the hard policy questions up for discussion. Last week, Professor Philippe Gillieron from the Univ. of Lausanne discussed with us the legal and economic aspects of domain name disputes and ways to solve them (the focus was on UDRP – in my view a particularly interesting topic when analyzed through the lens of new institutional economics theory, see also here for variations on this theme.)

In the last session before “flyout” week, Silke Ernst and I had a first cut at a synthesis aimed at tying together several of the core themes we’ve been discussing so far. At the core of the session was the question as to what extent the law & economics approach can help us to deal with the complex IPR-questions that are triggered while transitioning from an analog/offline to a digital/online information environment. The students contributed to the session by presenting their views on the promises of and limits on a law & economics approach to IPR in the digital age. Using the time while traveling from Oxford back to Zurich, my recollection of the in-class discussion looks as follows (alternative interpretations, of course, encouraged and welcome) – starting with the argument that the law & economics approach to IPR serves at least two functions:

• On the one hand, it provides a toolset that helps us to frame, analyze, and evaluate some of the complex phenomena we observe in cyberspace (such as, for instance, large-scale file-sharing over P2P networks or the user-created content), and enables us to gain a better understanding of the interaction among existing rules and norms and these phenomena. We might want to call it the “analytical function” of law & economics (this aspect gets close to – but is in my view not exactly identical with – what has traditionally been described as the “positive” strand of discussion in law & economics.)

• On the other hand, law & economics may guide us at the design level (again, this gets close to what has been termed “normative” law & economics. For reasons I don’t want to discuss here, I don’t want to work with this distinction in the present context.). First, it can help us to identify the need for law reform by showing that the existing rules have a negative impact on social welfare. Here, the design function intersects with the previously mentioned analytical function. Second, law & economics provides a consistent framework to evaluate the impact of alternative means of regulation on the (economic) behavior of individuals and compare costs and benefits of different approaches aimed at solving a particular problem.

At a more granular level, we might identify the following promises and limitations of a law & economics approach with regard to the respective functionality:
Analytical function

• Promises: coherent framework, consistent and shared set of criteria, rational and quasi-objective analysis, …
• Limitations: Bounded rationality/areas of non-rationale behavior, lack of transparency regarding underlying causalities, limited possibilities to quantify phenomena, lack of empirical data, …

Design function:

• Promises: Cost-benefits analysis of alternative policy choices, taking into account perspectives of different actors in an ecosystem, at least ideal-type predictions based on models, …
• Limitations: Complexity of real-life situations, non-economic perspectives, motives, and effects, non-economic values, …

We reached some sort of consensus that the law & economics approach indeed provides a great toolset to analyze at least some of the trickiest IPR-related policy questions in cyberspace. However, the large majority seemed also to agree that some of the limitations of such an analysis become particularly visible in the digitally networked environment with phenomena such as commons-based peer production of content based on intrinsic motivations. Most of us also agreed that it would be dangerous to attempt to answer the IPR policy questions only against the backdrop of law & economics theory. Indeed, many of the decisions to be made in this space ultimately include choices about core values of our society that do not easily translate into the frameworks of law & economics, like for example informational justice, equal access, participatory culture, or semiotic democracy.

I’m very much looking forward to continuing the discussion about the role of law and economics in the digital age with my colleagues, the teaching team, and – most importantly – with the wonderful group of students enrolled in this seminar.