This Article addresses a conflict between the fiduciary duty of disclosure under state law and the anti-fraud provisions of the federal securities laws. In the Securities Litigation Uniform Standards Act of 1998, Congress balanced the federal interest of discouraging frivolous securities litigation against the need of the states to regulate the conduct of corporate directors. In the Uniform Act, Congress preempted most state securities fraud class actions, but also specifically preserved state claims based on the fiduciary duty of disclosure as enunciated by the Delaware courts at the time of enactment. At that time, the Delaware courts had limited the fiduciary duty of disclosure to communications made when the corporation was seeking some sort of shareholder action, such as a shareholder's decision to vote or tender his securities. In other words, the fiduciary duty of disclosure would not attach if a misleading statement appeared in a corporate press release or public document made to the market generally. Congress drafted the so-called "Delaware carve-out" to reflect this distinction: under the Uniform Act, actions based on the fiduciary duty of disclosure are preserved only if shareholder action has been requested by the corporation. After the passage of the Uniform Act, however, the Delaware Supreme Court expanded the scope of the fiduciary duty of disclosure to reach all communications made by directors, whether shareholder action had been requested or not. Thus, following the Malone v. Brincat case, the Uniform Act preempts certain class actions based on a breach of fiduciary duty of disclosure, prohibiting the Delaware courts from holding directors of Delaware corporations liable for even flagrant breaches of their fiduciary duty of disclosure. This Article argues that Congress should amend the Delaware carve-out to preserve all actions based on a breach of fiduciary duty of disclosure, including actions based on misleading communications made to the market generally. It demonstrates that this approach will protect Delaware's strong interest in regulating the conduct of directors of corporations organized under its corporate statute without undercutting the important policies of the Uniform Act.
{"title":"Director Communications and the Uneasy Relationship Between the Fiduciary Duty of Disclosure and the Anti-Fraud Provisions of the Federal Securities Laws","authors":"J. O’Hare","doi":"10.2139/SSRN.336241","DOIUrl":"https://doi.org/10.2139/SSRN.336241","url":null,"abstract":"This Article addresses a conflict between the fiduciary duty of disclosure under state law and the anti-fraud provisions of the federal securities laws. In the Securities Litigation Uniform Standards Act of 1998, Congress balanced the federal interest of discouraging frivolous securities litigation against the need of the states to regulate the conduct of corporate directors. In the Uniform Act, Congress preempted most state securities fraud class actions, but also specifically preserved state claims based on the fiduciary duty of disclosure as enunciated by the Delaware courts at the time of enactment. At that time, the Delaware courts had limited the fiduciary duty of disclosure to communications made when the corporation was seeking some sort of shareholder action, such as a shareholder's decision to vote or tender his securities. In other words, the fiduciary duty of disclosure would not attach if a misleading statement appeared in a corporate press release or public document made to the market generally. Congress drafted the so-called \"Delaware carve-out\" to reflect this distinction: under the Uniform Act, actions based on the fiduciary duty of disclosure are preserved only if shareholder action has been requested by the corporation. After the passage of the Uniform Act, however, the Delaware Supreme Court expanded the scope of the fiduciary duty of disclosure to reach all communications made by directors, whether shareholder action had been requested or not. Thus, following the Malone v. Brincat case, the Uniform Act preempts certain class actions based on a breach of fiduciary duty of disclosure, prohibiting the Delaware courts from holding directors of Delaware corporations liable for even flagrant breaches of their fiduciary duty of disclosure. This Article argues that Congress should amend the Delaware carve-out to preserve all actions based on a breach of fiduciary duty of disclosure, including actions based on misleading communications made to the market generally. It demonstrates that this approach will protect Delaware's strong interest in regulating the conduct of directors of corporations organized under its corporate statute without undercutting the important policies of the Uniform Act.","PeriodicalId":45537,"journal":{"name":"University of Cincinnati Law Review","volume":"1 1","pages":""},"PeriodicalIF":0.4,"publicationDate":"2002-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68587674","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Countries differ in terms of their levels of wealth, economic structures, technological capabilities, political systems, and cultural tradition. No two countries have the same needs or goals. As a result, policymakers face different political pressures and make different value judgments as to what would best promote the creation and dissemination of intellectual works in their own countries. These uncoordinated judgments eventually result in a conflicting set of intellectual property laws around the world. As countries become increasingly interdependent in this globalized economy, these conflicting laws create tension and sometimes result in disputes. To minimize differences and prevent conflicts, countries use a variety of dispute resolution techniques, including self-help, coercion, mutual exchange of information, international agreements, and multilateral regimes. Commentators generally analyze these techniques by focusing on the number of parties involved in resolving an intellectual property dispute. Using a unilateral-bilateral-multilateral trichotomy, commentators suggest that one can infer some general characteristics of a dispute resolution arrangement by counting the number of parties involved in resolving a conflict. This Article argues that, although the unilateral-bilateral-multilateral trichotomy provides some helpful insights into the nature of a dispute resolution arrangement, it provides very limited information about the effectiveness and future prospects of that arrangement. Thus, the Article proposes a new, but companion, analytical framework, which focuses on the approach used to resolve the conflict, instead of the number of parties involved. Drawing on the experiences of mediators, business strategists, and international relations theorists, this Article argues that the nonzero-sum approach is the most preferable approach used to resolve global intellectual property disputes.
{"title":"Toward a Nonzero-sum Approach to Resolving Global Intellectual Property Disputes: What We Can Learn from Mediators, Business Strategists, and International Relations Theorists","authors":"Peter K. Yu","doi":"10.2139/SSRN.309859","DOIUrl":"https://doi.org/10.2139/SSRN.309859","url":null,"abstract":"Countries differ in terms of their levels of wealth, economic structures, technological capabilities, political systems, and cultural tradition. No two countries have the same needs or goals. As a result, policymakers face different political pressures and make different value judgments as to what would best promote the creation and dissemination of intellectual works in their own countries. These uncoordinated judgments eventually result in a conflicting set of intellectual property laws around the world. As countries become increasingly interdependent in this globalized economy, these conflicting laws create tension and sometimes result in disputes. To minimize differences and prevent conflicts, countries use a variety of dispute resolution techniques, including self-help, coercion, mutual exchange of information, international agreements, and multilateral regimes. Commentators generally analyze these techniques by focusing on the number of parties involved in resolving an intellectual property dispute. Using a unilateral-bilateral-multilateral trichotomy, commentators suggest that one can infer some general characteristics of a dispute resolution arrangement by counting the number of parties involved in resolving a conflict. This Article argues that, although the unilateral-bilateral-multilateral trichotomy provides some helpful insights into the nature of a dispute resolution arrangement, it provides very limited information about the effectiveness and future prospects of that arrangement. Thus, the Article proposes a new, but companion, analytical framework, which focuses on the approach used to resolve the conflict, instead of the number of parties involved. Drawing on the experiences of mediators, business strategists, and international relations theorists, this Article argues that the nonzero-sum approach is the most preferable approach used to resolve global intellectual property disputes.","PeriodicalId":45537,"journal":{"name":"University of Cincinnati Law Review","volume":"70 1","pages":"569-650"},"PeriodicalIF":0.4,"publicationDate":"2002-05-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68560988","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Copyright law, originally excused as a necessary evil, threatens now to become an inescapable burden. Because state and common law rights seemed inadequate to protect expressive works from unrestricted copying, the Founders expressly authorized federal copyright legislation. Lawmakers have read that constitutional mandate liberally. Each new version of the Copyright Act has embodied longer, broader, and more powerful legal protections. Meanwhile, private initiatives have developed increasingly effective means of safeguarding copyrighted works. Alarmed that these dual trends benefit copyright owners at too great an expense to the public interest, many commentators argue that the Copyright Act should limit and preempt non-statutory alternatives. But that puts matters exactly backwards. Besieged by lobbyists and bloated by public choice pressures, the Copyright Act has fallen into statutory failure. Insofar as common law and self-help technologies unite to secure exclusive rights in expressive works, in contrast, they succeed in overcoming the market failure that originally justified the Copyright Act. If legislativeand private protections prove too powerful in combination, therefore, copyright owners should have the right to choose between the two. Rather than automatically nullifying private efforts, courts should allow the owners of expressive works to abandon the Copyright Act's protections and rely once more on non-statutory ones. Because the idea has only just begun to draw scholarly attention, this paper offers a comprehensive analysis of such an exit option. It finds that principles of law, equity, and policy favor opening an escape from copyright and describes both potential and currently functioning means of putting that theory into practice.
{"title":"Escape from Copyright: Market Success vs. Statutory Failure in the Protection of Expressive Works","authors":"T. Bell","doi":"10.2139/SSRN.307820","DOIUrl":"https://doi.org/10.2139/SSRN.307820","url":null,"abstract":"Copyright law, originally excused as a necessary evil, threatens now to become an inescapable burden. Because state and common law rights seemed inadequate to protect expressive works from unrestricted copying, the Founders expressly authorized federal copyright legislation. Lawmakers have read that constitutional mandate liberally. Each new version of the Copyright Act has embodied longer, broader, and more powerful legal protections. Meanwhile, private initiatives have developed increasingly effective means of safeguarding copyrighted works. Alarmed that these dual trends benefit copyright owners at too great an expense to the public interest, many commentators argue that the Copyright Act should limit and preempt non-statutory alternatives. But that puts matters exactly backwards. Besieged by lobbyists and bloated by public choice pressures, the Copyright Act has fallen into statutory failure. Insofar as common law and self-help technologies unite to secure exclusive rights in expressive works, in contrast, they succeed in overcoming the market failure that originally justified the Copyright Act. If legislativeand private protections prove too powerful in combination, therefore, copyright owners should have the right to choose between the two. Rather than automatically nullifying private efforts, courts should allow the owners of expressive works to abandon the Copyright Act's protections and rely once more on non-statutory ones. Because the idea has only just begun to draw scholarly attention, this paper offers a comprehensive analysis of such an exit option. It finds that principles of law, equity, and policy favor opening an escape from copyright and describes both potential and currently functioning means of putting that theory into practice.","PeriodicalId":45537,"journal":{"name":"University of Cincinnati Law Review","volume":"16 1","pages":"741"},"PeriodicalIF":0.4,"publicationDate":"2002-04-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68548226","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The impressive growth of Internet markets has been accompanied by an important academic debate on how to regulate them. Commentators have suggested traditional top-down or bottom-up regulatory approaches based largely on ideological grounds. To date, there has been no rigorous analysis of the various proposals for e-commerce regulation. In this article, the authors analyze the advantages and shortcomings of each regime and propose a mixed solution that maximizes net social welfare. The authors first present a model of the institutional background of an economic system and provide evidence of its functioning on the Internet, which permits an evaluation of market functioning on the Internet as compared to real world markets. This evaluation indicates that the Internet is a system technologically different from real life markets, and thus government and private sector initiatives have a different impact on its structure. The authors also examine the economic and political implications of Internet regulation, discuss the various bottom-up and top-down approaches to this regulation, and conclude that a pure regulatory system is not viable and that a cooperative result is welfare improving. The authors then construct a game theoretic model in order to analyze the different regimes proposed for Internet regulation. Based on this analysis, the authors propose a new, optimal regulatory regime based on tacit cooperation between the government and private sector regulators and show how such a regime maximizes net social welfare for both consumers and firms and avoids the drawbacks of the top-down or bottom-up regulatory approaches. In this tacit, public-private cooperative solution, the authors identify a role for government in setting minimum baseline standards for problems such as online privacy, preventing the capture of private regulators through meaningful oversight, increasing the participation of firms in private regulatory initiatives, and also serving as the enforcer of last resort. Finally, the authors perform two, thorough case studies of private third-party regulation - regulation of online privacy by BBBOnLine and regulation of online consumer fraud by the Federal Trade Commission (FTC). The authors demonstrate how both private self-regulatory and top-down government regulation can be improved significantly by incorporating specific insights drawn from their optimal regulatory regime.
{"title":"Optimizing Regulation of Electronic Commerce","authors":"J. Kesan, Andres Gallo","doi":"10.2139/SSRN.289668","DOIUrl":"https://doi.org/10.2139/SSRN.289668","url":null,"abstract":"The impressive growth of Internet markets has been accompanied by an important academic debate on how to regulate them. Commentators have suggested traditional top-down or bottom-up regulatory approaches based largely on ideological grounds. To date, there has been no rigorous analysis of the various proposals for e-commerce regulation. In this article, the authors analyze the advantages and shortcomings of each regime and propose a mixed solution that maximizes net social welfare. The authors first present a model of the institutional background of an economic system and provide evidence of its functioning on the Internet, which permits an evaluation of market functioning on the Internet as compared to real world markets. This evaluation indicates that the Internet is a system technologically different from real life markets, and thus government and private sector initiatives have a different impact on its structure. The authors also examine the economic and political implications of Internet regulation, discuss the various bottom-up and top-down approaches to this regulation, and conclude that a pure regulatory system is not viable and that a cooperative result is welfare improving. The authors then construct a game theoretic model in order to analyze the different regimes proposed for Internet regulation. Based on this analysis, the authors propose a new, optimal regulatory regime based on tacit cooperation between the government and private sector regulators and show how such a regime maximizes net social welfare for both consumers and firms and avoids the drawbacks of the top-down or bottom-up regulatory approaches. In this tacit, public-private cooperative solution, the authors identify a role for government in setting minimum baseline standards for problems such as online privacy, preventing the capture of private regulators through meaningful oversight, increasing the participation of firms in private regulatory initiatives, and also serving as the enforcer of last resort. Finally, the authors perform two, thorough case studies of private third-party regulation - regulation of online privacy by BBBOnLine and regulation of online consumer fraud by the Federal Trade Commission (FTC). The authors demonstrate how both private self-regulatory and top-down government regulation can be improved significantly by incorporating specific insights drawn from their optimal regulatory regime.","PeriodicalId":45537,"journal":{"name":"University of Cincinnati Law Review","volume":"72 1","pages":"1497-1643"},"PeriodicalIF":0.4,"publicationDate":"2001-11-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68424529","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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