Comment: Of Contracts, Commerce, and Intellectual Property

2 Colum. J. Eur. L. 491 (1996)

Alice Haemmerli. Dean of Graduate Studies and International Programs, Columbia University School of Law.

In the course of her comments, Professor Ginsburg made a point about federalism and intellectual property that I would like to develop further: the determination whether state law has been preempted by federal law’ is often a difficult one. In addition, the political dimensions of U.S. federalism are as crucial as the legal ones, implying the need to justify federal intervention or preemption on the basis of the policy objectives of federal law. This comment will examine the intersection of federal intellectual property law with two traditional preserves of the states: contract law and commercial law.

Beginning with contract law, the first thing to note is that intellectual property is exploited and yields value to its owner by means of licenses, which are contracts. In general, contracts, including those relating to intellectual property, are formed and created under state law. As the United States Supreme Court has stated, “Commercial agreements traditionally are the domain of state law. State law is not displaced merely because the contract relates to intellectual property.” Thus, while federal intellectual property statutes such as the Patent Act and the Copyright Act’ control substantive rights in patents and copyrights, they do not, as a general matter, control the terms of patent and copyright licenses.

This duality of patents and copyrights – the federal nature of their subject matter and the state-law nature of contracts licensing their use – can create complications when plaintiffs attempt to enforce their rights in court. It can also raise interesting questions as to the borderline between federal and state law at the substantive level.

The first part of this comment briefly addresses the jurisdictional issues, examining cases that deal with the question whether a case “arises under” federal law. The second part of the comment is concerned with the substantive interplay of federal intellectual property law and state commercial law. It looks at recent case law that has asserted the preemption of state law by federal intellectual property law, and suggests a desirable outcome from both a policy and practical standpoint. That outcome entails some thoughts about subsidiarity which relate to Professor Loewenheim’s report.