Privately Legislated Intellectual Property Rights: Reconciling Freedom of Contract with Public Good Uses of Information

Abstract

In drafting the assent-based paradigm of Article 2 of the U.C.C., Professor Karl Llewelyn established the concept of a negotiated middle ground with which to overcome unforeseen difficulties in relational contracts and to preserve the status of the parties over time.In the emerging information economy, however, the efficiencies of electronic transactions have led the drafters of a proposed model law, the Uniform Computer Information Transactions Act (UCITA), based completely on prior U.C.C. Article 2B proposals, to break with the assent-driven model of contract formation altogether. [Our article, which was written prior to the removal of UCITA from the U.C.C. framework, is no less applicable to UCITA as a stand alone model law.] The goal of the drafters is to promote the growth of a new kind of market in which information goods defined by standard form contracts of adhesion compete with other, similarly defined information products in a perfectly free market.This project presents an array of new problems whose optimal solutions can only be surmised. That, indeed, is the best reason for preferring a contractual approach which, by proceeding case by case, can gradually reveal the empirical foundations for more refined legislative solutions later on. Yet, little is gained by pretending that the model law merely represents some logical extension of the assent-driven model of contract formation embodied in the provisions of Article 2 concerning sales of goods. Such disingenuous pretensions breed mistrust by appearing to cover up the truth in order to vindicate the exercise of naked market power.Critics and supporters alike should recognize that UCITA, formerly proposed U.C.C. Article 2B, presupposes a quest for a different kind of contracts model better suited to the information economy. It then becomes possible to consider ways of replacing the negotiated middle ground philosophy that underlies Article 2 with a middle ground capable of sustaining information transactions rooted in click-on and shrinkwrap licenses that suffer from a chronic lack of mutual assent. Unlike the tenets of Article 2, however, the philosophical grounding of the model law affects the future development of core sectors of the information-based economy. It must, therefore, mesh with intellectual property laws and policies in a way that suitably accommodates the national system of innovation. The public interest unconscionability doctrine, whose contours we explore in this Article, would facilitate non-negotiable computerized information transactions without allowing content providers to disrupt the upstream operations of a research-based information economy. It would provide incentives from within the governing rules of contracts law for licensors to formulate standard form contracts that avoid undue conflicts with both state and federal intellectual property laws.