51:2 The Unfallen Sky

Abstract

Changes in technology disrupt settled practices. Disruption portends new balances among competing interests. New balances imply new winners and new losers. Must the prospect of new winners and losers imply the need for different legal rules? Should it? “No,” and a highly qualified “sometimes,” are the answers I defend here.

Changes in winners and losers do not entail changes in legal rules because technological change may not render law more able to alter balances struck by the messy mélange of human behavior. Changes are as likely to lessen that ability. To borrow from James Coolidge Carter, changes in the actual state of affairs often frustrate the pursuit of some ideal state of affairs, and the pursuit of the ideal is itself often a costly and dubious enterprise. The fact of technological change therefore cannot, in and of itself, justify legal change, though change might be warranted as a factual matter in particular situations.

The most important practical questions are what we know about the effects of current rules, technological changes, and the probable effects of proposed changes in the law. Sadly it is very hard to know the net costs and benefits of legal change with respect to particular situations and harder still to know these amounts with respect to the sum of relevant situations. This lack of knowledge is not much of a warrant for particular policies. In my view, however, it does suggest that changes that help persons in such situations arrange their own affairs are more likely to be desirable than changes that try to ensure certain results.

The epistemological problems just mentioned can be ameliorated somewhat by looking at specific legal rules. I do so in the context and form of consequentialist argument popular over the past twenty years: If some rule x is not calibrated to provide adequate safeguards to users, then bad result y will follow. So, some notable arguments have gone: If websites are allowed to sue users on a theory of trespass to chattel then the freedom of the Internet will be diminished or, possibly, the Internet itself will grind to a halt; if technology sellers are allowed to characterize transactions as licenses rather than sales, or are allowed to restrict uses of technology that courts would consider fair (in copyright) or at least not improper (in trade secret), then the rate of innovation, and thus social welfare, will suffer.

Some of these predictions are testable and experience has found them wanting. Courts are divided concerning the trespass to chattels tort, but there is no reason to believe jurisdictions approving the use of the tort in the Internet context are faring worse than jurisdictions that have rejected it. Technology vendors have wide latitude to characterize transactions as licenses and to restrict activity that would be lawful apart from such restrictions. There is no reason to believe rulings granting such latitude have impeded progress. In other cases, experience has shown that some doctrinal changes likely would be beneficial. In my view, for example, experience argues in favor of expanding independent invention as a defense to patent infringement, either as a new doctrine or through expansion of the doctrine of prior user rights. This change pushes against the history of patent law but in a way that would bring that law more in line with other laws and with the strong intuition that persons who sink costs into doing their own work should be able to reap whatever benefits the market will provide.

In general, three lessons should be taken from the past twenty years of debate. Law is an important but limited tool for dealing with technological change. Dire predictions about the consequences of legal decisions frequently have not been borne out. The falling of the sky has been predicted often, in other words, but the sky remains unfallen. In such circumstances, a familiar prescription is a wise one: align rights with costs, enforce voluntary exchanges, keep an eye out for monopoly and fraud, and do not try to pick winners and losers. Where change conforms to this prescription it is likely to be desirable or at least do little if any harm.