Various commentators have suggested that the current system of trade sanctions for violation of WTO obligations be replaced with financial compensation. The details of these proposals vary, but one option is to allow firms injured by violations to recover damages. This paper questions the wisdom of such proposals, and argues that the current system in which those injured by violations do not reap the benefit of sanctions – a “decoupled” sanctions regime in economic parlance – may well be superior for a number of reasons. The paper also reviews and refines the view of current WTO practice as an analogue to expectation damages in private contracts. The original version of this paper was prepared for the interdisciplinary workshop on The Calculation and Design of Trade Sanctions in WTO Dispute Resolution, at the Graduate Institute in Geneva, 2008. The revised version will appear in The Law, Economics and Politics of Retaliation in WTO Dispute Settlement, forthcoming from Cambridge University Press.
{"title":"Optimal Sanctions in the WTO: The Case for Decoupling (and the Uneasy Case for the Status Quo)","authors":"A. Sykes","doi":"10.2139/ssrn.1444589","DOIUrl":"https://doi.org/10.2139/ssrn.1444589","url":null,"abstract":"Various commentators have suggested that the current system of trade sanctions for violation of WTO obligations be replaced with financial compensation. The details of these proposals vary, but one option is to allow firms injured by violations to recover damages. This paper questions the wisdom of such proposals, and argues that the current system in which those injured by violations do not reap the benefit of sanctions – a “decoupled” sanctions regime in economic parlance – may well be superior for a number of reasons. The paper also reviews and refines the view of current WTO practice as an analogue to expectation damages in private contracts. The original version of this paper was prepared for the interdisciplinary workshop on The Calculation and Design of Trade Sanctions in WTO Dispute Resolution, at the Graduate Institute in Geneva, 2008. The revised version will appear in The Law, Economics and Politics of Retaliation in WTO Dispute Settlement, forthcoming from Cambridge University Press.","PeriodicalId":90732,"journal":{"name":"Stanford technology law review : STLR : an online high-technology law journal from Stanford Law School","volume":"114 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-08-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78447708","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Patent law is crucial to encourage technological innovation. But as the patent system currently stands, diverse industries from pharmaceuticals to software to semiconductors are all governed by the same rules even though they innovate very differently. The result is a crisis in the patent system, where patents calibrated to the needs of prescription drugs wreak havoc on information technologies and vice versa. According to Dan L. Burk and Mark A. Lemley in this book from the University of Chicago Press, courts should use the tools the patent system already gives them to treat patents in different industries differently. Industry tailoring is the only way to provide an appropriate level of incentive for each industry.
专利法对鼓励技术创新至关重要。但就目前的专利制度而言，从制药到软件再到半导体等不同行业，尽管它们的创新方式截然不同，但都受到同样规则的约束。其结果是专利制度的危机，根据处方药的需求校准的专利对信息技术造成了严重破坏，反之亦然。根据Dan L. Burk和Mark A. Lemley在这本由芝加哥大学出版社出版的书中所述，法院应该使用专利制度已经赋予他们的工具，以不同的方式对待不同行业的专利。行业定制是为每个行业提供适当激励水平的唯一方法。
{"title":"The Patent Crisis and How Courts Can Solve It","authors":"D. Burk, Mark A. Lemley","doi":"10.2139/ssrn.1349950","DOIUrl":"https://doi.org/10.2139/ssrn.1349950","url":null,"abstract":"Patent law is crucial to encourage technological innovation. But as the patent system currently stands, diverse industries from pharmaceuticals to software to semiconductors are all governed by the same rules even though they innovate very differently. The result is a crisis in the patent system, where patents calibrated to the needs of prescription drugs wreak havoc on information technologies and vice versa. According to Dan L. Burk and Mark A. Lemley in this book from the University of Chicago Press, courts should use the tools the patent system already gives them to treat patents in different industries differently. Industry tailoring is the only way to provide an appropriate level of incentive for each industry.","PeriodicalId":90732,"journal":{"name":"Stanford technology law review : STLR : an online high-technology law journal from Stanford Law School","volume":"2 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-02-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75886165","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A number of doctrines in modern copyright and patent law attempt to strike some balance between the rights of original developers and the rights of subsequent improvers. Both patents and copyrights are limited in duration and in scope. Each of these limitations provides some freedom of action to subsequent improvers. Improvers are free to use material that is in the public domain because the copyright or patent has expired. They are free to skirt the edges of existing intellectual property rights, for example by taking the ideas but not the expression from a copyrighted work or "designing around" the claims of a patent. However, improvers cannot always avoid the intellectual property rights of the basic work on which they wish to improve. Some improvements fall within the scope of the preexisting intellectual property right, either because of an expansive definition of that right or because economic or technical necessity requires that the improver hew closely to the work of the original creator in some basic respect. Here, the improver is at the mercy of the original intellectual property owner, unless there is some separate right that expressly allows copying for the sake of improvement.
{"title":"The Economics of Improvement in Intellectual Property Law","authors":"Mark A. Lemley","doi":"10.31235/osf.io/sjxtz","DOIUrl":"https://doi.org/10.31235/osf.io/sjxtz","url":null,"abstract":"A number of doctrines in modern copyright and patent law attempt to strike some balance between the rights of original developers and the rights of subsequent improvers. Both patents and copyrights are limited in duration and in scope. Each of these limitations provides some freedom of action to subsequent improvers. Improvers are free to use material that is in the public domain because the copyright or patent has expired. They are free to skirt the edges of existing intellectual property rights, for example by taking the ideas but not the expression from a copyrighted work or \"designing around\" the claims of a patent. However, improvers cannot always avoid the intellectual property rights of the basic work on which they wish to improve. Some improvements fall within the scope of the preexisting intellectual property right, either because of an expansive definition of that right or because economic or technical necessity requires that the improver hew closely to the work of the original creator in some basic respect. Here, the improver is at the mercy of the original intellectual property owner, unless there is some separate right that expressly allows copying for the sake of improvement.","PeriodicalId":90732,"journal":{"name":"Stanford technology law review : STLR : an online high-technology law journal from Stanford Law School","volume":"71 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2008-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89799318","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This essay responds to an article by Daniel Shaviro which argues in part that the failure of empirical assumptions behind the permanent income hypothesis undermines the case for preferring consumption taxation over income taxation. We consider each of Shaviro's arguments and conclude that none change the basic considerations in favor of consumption taxation in any significant way. Shaviro concludes that administrability and implementation concerns should be central to the choice of the tax base and that these concerns are likely to point to taxing consumption. We agree with this conclusion.
{"title":"Consumption Taxation is Still Superior to Income Taxation","authors":"D. Weisbach, Joseph Bankman","doi":"10.2139/ssrn.1012953","DOIUrl":"https://doi.org/10.2139/ssrn.1012953","url":null,"abstract":"This essay responds to an article by Daniel Shaviro which argues in part that the failure of empirical assumptions behind the permanent income hypothesis undermines the case for preferring consumption taxation over income taxation. We consider each of Shaviro's arguments and conclude that none change the basic considerations in favor of consumption taxation in any significant way. Shaviro concludes that administrability and implementation concerns should be central to the choice of the tax base and that these concerns are likely to point to taxing consumption. We agree with this conclusion.","PeriodicalId":90732,"journal":{"name":"Stanford technology law review : STLR : an online high-technology law journal from Stanford Law School","volume":"17 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2007-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88591108","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The United States Patent and Trademark Office is tasked with the job of reading patent applications and determining which ones qualify for patent protection. It is a Herculean task, and the Patent Office pursues it subject to enormous informational and budgetary constraints. Nonetheless, under current law, courts are bound to defer to the Patent Office's decisions regarding patent validity. In this Article, we argue for reform. Deference to previous decision-makers is appropriate in instances where those previous decisions have a high likelihood of accuracy, and the patent system should endeavor to create processes that fit this mold. But granting significant deference to the initial process of patent review is indefensible and counter-productive. Patents should be vulnerable to challenge until and unless they are significantly evaluated in an information-rich environment. At that point, they will have earned and therefore should be accorded a presumption of validity. Such an approach would better serve the patent's systems long-run incentive goals, and it would give patent applicants better incentives to file for genuine inventions but leave their more obvious and incremental accomplishments outside the patent system's purview. Here, we therefore suggest the creation of a two-tier system of patent validity, with patents that are subject to intensive scrutiny accorded a strong presumption of validity, while untested patents are left to be evaluated more fully in court.
{"title":"Rethinking Patent Law's Presumption of Validity","authors":"D. Lichtman, Mark A. Lemley","doi":"10.31235/osf.io/knvp3","DOIUrl":"https://doi.org/10.31235/osf.io/knvp3","url":null,"abstract":"The United States Patent and Trademark Office is tasked with the job of reading patent applications and determining which ones qualify for patent protection. It is a Herculean task, and the Patent Office pursues it subject to enormous informational and budgetary constraints. Nonetheless, under current law, courts are bound to defer to the Patent Office's decisions regarding patent validity. In this Article, we argue for reform. Deference to previous decision-makers is appropriate in instances where those previous decisions have a high likelihood of accuracy, and the patent system should endeavor to create processes that fit this mold. But granting significant deference to the initial process of patent review is indefensible and counter-productive. Patents should be vulnerable to challenge until and unless they are significantly evaluated in an information-rich environment. At that point, they will have earned and therefore should be accorded a presumption of validity. Such an approach would better serve the patent's systems long-run incentive goals, and it would give patent applicants better incentives to file for genuine inventions but leave their more obvious and incremental accomplishments outside the patent system's purview. Here, we therefore suggest the creation of a two-tier system of patent validity, with patents that are subject to intensive scrutiny accorded a strong presumption of validity, while untested patents are left to be evaluated more fully in court.","PeriodicalId":90732,"journal":{"name":"Stanford technology law review : STLR : an online high-technology law journal from Stanford Law School","volume":"40 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2007-08-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84101934","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Imagine a stock market in which buyers and sellers couldn't find out the prices at which anyone else sold a share of stock. If you wanted to buy (or sell) a share of stock, you'd have to guess what it was worth. The result, everyone would agree, would be massively inefficient. Willing buyers and sellers would often miss each other. Patents, however, exist in just such a blind market. Want to know if you're getting a good deal on a patent license, or acquiring rights in a technology? Too bad. Even if that patent or ones like it have been licensed dozens of times before, the terms of those licenses, including the price itself, will almost invariably be confidential. Patent owners who want to put their rights up for sale face the same problem. The result? Willing licensors and licensees can't find each other. Patent auctions often fizzle, because without a thick market - one with an array of buyers and sellers bidding on price - no one can know whether they are getting a steal or being had. When parties do license patents, the prices are (to the extent we can tell) all over the map. And the rest of the world has no idea what those prices are. This in turn means that courts lack adequate benchmarks to determine a ?reasonable royalty? when companies infringe patents. The solution is straightforward: require publication of patent assignment and license terms. Doing so won't magically make the market for patents work like a stock exchange; there will still be significant uncertainty about whether a patent is valid and what it covers. But it will permit the aggregate record of what companies pay for rights to signal what particular patents are worth and how strong they are, just as derivative financial instruments allow markets to evaluate and price other forms of risk. It will help rationalize patent transactions, turning them from secret, one-off negotiations into a real, working market for patents. And by making it clear to courts and the world at large what the normal price is for patent rights, it will make it that much harder for a few unscrupulous patent owners to hold up legitimate innovators, and for established companies to systematically infringe the rights of others.
{"title":"How to Make a Patent Market","authors":"Mark A. Lemley, N. Myhrvold","doi":"10.31235/osf.io/c286x","DOIUrl":"https://doi.org/10.31235/osf.io/c286x","url":null,"abstract":"Imagine a stock market in which buyers and sellers couldn't find out the prices at which anyone else sold a share of stock. If you wanted to buy (or sell) a share of stock, you'd have to guess what it was worth. The result, everyone would agree, would be massively inefficient. Willing buyers and sellers would often miss each other. Patents, however, exist in just such a blind market. Want to know if you're getting a good deal on a patent license, or acquiring rights in a technology? Too bad. Even if that patent or ones like it have been licensed dozens of times before, the terms of those licenses, including the price itself, will almost invariably be confidential. Patent owners who want to put their rights up for sale face the same problem. The result? Willing licensors and licensees can't find each other. Patent auctions often fizzle, because without a thick market - one with an array of buyers and sellers bidding on price - no one can know whether they are getting a steal or being had. When parties do license patents, the prices are (to the extent we can tell) all over the map. And the rest of the world has no idea what those prices are. This in turn means that courts lack adequate benchmarks to determine a ?reasonable royalty? when companies infringe patents. The solution is straightforward: require publication of patent assignment and license terms. Doing so won't magically make the market for patents work like a stock exchange; there will still be significant uncertainty about whether a patent is valid and what it covers. But it will permit the aggregate record of what companies pay for rights to signal what particular patents are worth and how strong they are, just as derivative financial instruments allow markets to evaluate and price other forms of risk. It will help rationalize patent transactions, turning them from secret, one-off negotiations into a real, working market for patents. And by making it clear to courts and the world at large what the normal price is for patent rights, it will make it that much harder for a few unscrupulous patent owners to hold up legitimate innovators, and for established companies to systematically infringe the rights of others.","PeriodicalId":90732,"journal":{"name":"Stanford technology law review : STLR : an online high-technology law journal from Stanford Law School","volume":"112 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2007-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87834600","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper addresses an important aspect of the interdisciplinary collaboration between law and economics: the use antitrust courts can and should make of empirical industrial organization economics, in light of the expansion of empirical knowledge generated during the last few decades. First we show how courts can apply what economists have learned about identification of alternative theories of industry structure and firm strategy to the problems of defining markets and determining whether market power has been exercised. We emphasize that the same analytic issues arise regardless of whether the evidence on these concepts is quantitative or qualitative. Second we show how courts can adopt a strategy employed in the research literature, by exploiting generalizations across closely related industries to help evaluate evidence and resolve cases. We also discuss ways of increasing the institutional capacity of the judicial system to make use of these two bodies of economic learning. These include a possible limited role for neutral economic experts in litigation, and a role for the antitrust enforcement agencies in identifying and codifying relevant generalizations about industries from the empirical economic literature to make that learning available to courts.
{"title":"Economic Evidence in Antitrust: Defining Markets and Measuring Market Power","authors":"J. Baker, T. Bresnahan","doi":"10.2139/ssrn.931225","DOIUrl":"https://doi.org/10.2139/ssrn.931225","url":null,"abstract":"This paper addresses an important aspect of the interdisciplinary collaboration between law and economics: the use antitrust courts can and should make of empirical industrial organization economics, in light of the expansion of empirical knowledge generated during the last few decades. First we show how courts can apply what economists have learned about identification of alternative theories of industry structure and firm strategy to the problems of defining markets and determining whether market power has been exercised. We emphasize that the same analytic issues arise regardless of whether the evidence on these concepts is quantitative or qualitative. Second we show how courts can adopt a strategy employed in the research literature, by exploiting generalizations across closely related industries to help evaluate evidence and resolve cases. We also discuss ways of increasing the institutional capacity of the judicial system to make use of these two bodies of economic learning. These include a possible limited role for neutral economic experts in litigation, and a role for the antitrust enforcement agencies in identifying and codifying relevant generalizations about industries from the empirical economic literature to make that learning available to courts.","PeriodicalId":90732,"journal":{"name":"Stanford technology law review : STLR : an online high-technology law journal from Stanford Law School","volume":"23 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2006-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81620488","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study several interconnected problems that arise under the current U.S. patent system when a patent covers one component or feature of a complex product. This situation is common in the information technology sector of the economy. Our analysis applies to cases involving reasonable royalties, but not lost profits. First, we show using bargaining theory that the threat to obtain a permanent injunction greatly enhances the patent holder’s negotiating power, leading to royalty rates that exceed a natural benchmark range based on the value of the patented technology and the strength of the patent. Such royalty overcharges are especially great for weak patents covering a minor feature of a product with a sizeable price/cost margin, including products sold by firms that themselves have made substantial R&D investments. These royalty overcharges do not disappear even if the allegedly infringing firm is fully aware of the patent when it initially designs its product. However, the hold-up problems caused by the threat of injunctions are reduced if courts regularly grant stays to permanent injunctions to give defendants time to redesign their products to avoid infringement when this is possible. Second, we show how hold-up problems are magnified in the presence of royalty stacking, i.e., when multiple patents read on a single product. Third, using third-generation cellular telephones and Wi-Fi as leading examples, we illustrate that royalty stacking can become a very serious problem, especially in the standard-setting context where hundreds or even thousands of patents can read on a single product standard. Fourth, we discuss the use of “reasonable royalties” to award damages in patent infringement cases. We report empirical results regarding the measurement of “reasonable royalties” by the courts and identify various practical problems that tend to lead courts to over-estimate “reasonable royalties” in the presence of royalty stacking. Finally, we make suggestions for patent reform based on our theoretical and empirical findings.
{"title":"Patent Holdup and Royalty Stacking","authors":"Mark A. Lemley, C. Shapiro","doi":"10.31235/osf.io/akyqz","DOIUrl":"https://doi.org/10.31235/osf.io/akyqz","url":null,"abstract":"We study several interconnected problems that arise under the current U.S. patent system when a patent covers one component or feature of a complex product. This situation is common in the information technology sector of the economy. Our analysis applies to cases involving reasonable royalties, but not lost profits. First, we show using bargaining theory that the threat to obtain a permanent injunction greatly enhances the patent holder’s negotiating power, leading to royalty rates that exceed a natural benchmark range based on the value of the patented technology and the strength of the patent. Such royalty overcharges are especially great for weak patents covering a minor feature of a product with a sizeable price/cost margin, including products sold by firms that themselves have made substantial R&D investments. These royalty overcharges do not disappear even if the allegedly infringing firm is fully aware of the patent when it initially designs its product. However, the hold-up problems caused by the threat of injunctions are reduced if courts regularly grant stays to permanent injunctions to give defendants time to redesign their products to avoid infringement when this is possible. Second, we show how hold-up problems are magnified in the presence of royalty stacking, i.e., when multiple patents read on a single product. Third, using third-generation cellular telephones and Wi-Fi as leading examples, we illustrate that royalty stacking can become a very serious problem, especially in the standard-setting context where hundreds or even thousands of patents can read on a single product standard. Fourth, we discuss the use of “reasonable royalties” to award damages in patent infringement cases. We report empirical results regarding the measurement of “reasonable royalties” by the courts and identify various practical problems that tend to lead courts to over-estimate “reasonable royalties” in the presence of royalty stacking. Finally, we make suggestions for patent reform based on our theoretical and empirical findings.","PeriodicalId":90732,"journal":{"name":"Stanford technology law review : STLR : an online high-technology law journal from Stanford Law School","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2006-08-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89510576","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
It is a fundamental principle of patent law that no one infringes a patent unless they practice the complete invention. Nonetheless, patent courts have long recognized that focusing only on the party who actually practices the invention will sometimes let off the hook the party who most deserves to be held liable. Thus, for over a century patent courts have extended liability to one who does not himself infringe, but who actively induces infringement by another. Since 1952, this principle has been enshrined in section 271(b) of the patent statute. As an idea, it has proven uncontroversial. Surprisingly, however, despite the venerable nature of inducement in patent law, the actual content of the inducement requirement has remained something of a mystery. In particular, courts have proven unable to decide two fundamental issues - what it means actually to induce infringement, and what the inducer must know and intend in order to be liable for acting. Though the United States Court of Appeals for the Federal Circuit, which was created in 1982, now handles all patent appeals, it has not brought uniformity to either issue. Indeed, there are Federal Circuit opinions taking diametrically opposed positions on the law of inducement. This confusion is doubly unfortunate given that the Supreme Court has recently imported the law of inducement from patent into copyright law. Before we adopt the concept of inducement in copyright cases, it would seem helpful to know what exactly it means in patent cases. In this article, I set out the fundamental disagreements among the courts as to the conduct and intent prongs of inducement. I explore the policies behind inducement law, and suggest that these disagreements can best be resolved not by picking one side or the other, but by thinking of inducement as a sliding scale inquiry in which a more specific intent to infringe is required to find liability if the defendant's conduct is otherwise less egregious. This resolution not only makes policy sense, and integrates section 271(b) with the rest of the statute, but it may even have the virtue of explaining most of the apparently conflicting caselaw. Application of this sliding scale approach also has implications for secondary liability in copyright law.
{"title":"Inducing Patent Infringement","authors":"Mark A. Lemley","doi":"10.31235/osf.io/7guw6","DOIUrl":"https://doi.org/10.31235/osf.io/7guw6","url":null,"abstract":"It is a fundamental principle of patent law that no one infringes a patent unless they practice the complete invention. Nonetheless, patent courts have long recognized that focusing only on the party who actually practices the invention will sometimes let off the hook the party who most deserves to be held liable. Thus, for over a century patent courts have extended liability to one who does not himself infringe, but who actively induces infringement by another. Since 1952, this principle has been enshrined in section 271(b) of the patent statute. As an idea, it has proven uncontroversial. Surprisingly, however, despite the venerable nature of inducement in patent law, the actual content of the inducement requirement has remained something of a mystery. In particular, courts have proven unable to decide two fundamental issues - what it means actually to induce infringement, and what the inducer must know and intend in order to be liable for acting. Though the United States Court of Appeals for the Federal Circuit, which was created in 1982, now handles all patent appeals, it has not brought uniformity to either issue. Indeed, there are Federal Circuit opinions taking diametrically opposed positions on the law of inducement. This confusion is doubly unfortunate given that the Supreme Court has recently imported the law of inducement from patent into copyright law. Before we adopt the concept of inducement in copyright cases, it would seem helpful to know what exactly it means in patent cases. In this article, I set out the fundamental disagreements among the courts as to the conduct and intent prongs of inducement. I explore the policies behind inducement law, and suggest that these disagreements can best be resolved not by picking one side or the other, but by thinking of inducement as a sliding scale inquiry in which a more specific intent to infringe is required to find liability if the defendant's conduct is otherwise less egregious. This resolution not only makes policy sense, and integrates section 271(b) with the rest of the statute, but it may even have the virtue of explaining most of the apparently conflicting caselaw. Application of this sliding scale approach also has implications for secondary liability in copyright law.","PeriodicalId":90732,"journal":{"name":"Stanford technology law review : STLR : an online high-technology law journal from Stanford Law School","volume":"28 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2005-07-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80263701","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
There is cause to believe that institutional investors have a comparative advantage in identifying suboptimal governance structures, but that incumbent boards have a comparative advantage in rectifying those shortcomings, provided that the incumbents concur that the shortcomings are material. It follows that a desirable governance mechanism would simultaneously allow shareholders to specialize in the area of their comparative advantage (i.e., the identification of governance problems) and boards to specialize in their area of comparative advantage (i.e., the crafting of solutions to identified problems), while forcing boards to take shareholder criticism seriously. The direct shareholder access proposals under consideration by the SEC lack the significant benefits that can result from such functional specialization. The "advice and consent" procedure defined by Article II Section 2 of the United States Constitution provides a model of functional specialization within the structure of a representative democracy. This article adapts that "advice and consent" mechanism to the corporate context. Under the proposed mechanism, any director who is elected despite the fact that a majority of shareholders withhold authority for that director's election would suffer a variety of material disabilities imposed under SEC or SRO regulations. For example, the director might not be deemed independent for purposes of listing standards, and might be prohibited from voting on any matter required by SRO or SEC rules. Such directors could also be subject to rules that would call into question a corporation's ability to insure or indemnify them for violations of federal securities laws. Directors are unlikely to be enthusiastic about serving subject to such disabilities. Boards are also unlikely to be enthusiastic about the continued service of such directors. The proposed advice and consent mechanism can thereby create significant incentives for boards and shareholders to reach a compromise regarding acceptable board structures and candidates. An advice and consent mechanism has several clear advantages over the Commission's proposed shareholder access initiatives. An advice and consent mechanism seeks to promote cooperation between shareholders and incumbent boards rather than to provoke confrontation. It greatly reduces the danger that shareholders will resort to the proxy mechanism as a device for promoting special interest agendas, and also greatly diminishes the dangers of factionalization that can arise from the election of dissident directors to a board. The proposal eliminates the need for the Commission to adopt complex and potentially arbitrary rules defining "trigger conditions" and "qualified shareholders." There is also far less risk that the mechanism could be pre-empted by conflicting state legislation.
{"title":"Advice and Consent: An Alternative Mechanism for Shareholder Participation in the Nomination and Election of Corporate Directors","authors":"Joseph A. Grundfest","doi":"10.2139/ssrn.481021","DOIUrl":"https://doi.org/10.2139/ssrn.481021","url":null,"abstract":"There is cause to believe that institutional investors have a comparative advantage in identifying suboptimal governance structures, but that incumbent boards have a comparative advantage in rectifying those shortcomings, provided that the incumbents concur that the shortcomings are material. It follows that a desirable governance mechanism would simultaneously allow shareholders to specialize in the area of their comparative advantage (i.e., the identification of governance problems) and boards to specialize in their area of comparative advantage (i.e., the crafting of solutions to identified problems), while forcing boards to take shareholder criticism seriously. The direct shareholder access proposals under consideration by the SEC lack the significant benefits that can result from such functional specialization. The \"advice and consent\" procedure defined by Article II Section 2 of the United States Constitution provides a model of functional specialization within the structure of a representative democracy. This article adapts that \"advice and consent\" mechanism to the corporate context. Under the proposed mechanism, any director who is elected despite the fact that a majority of shareholders withhold authority for that director's election would suffer a variety of material disabilities imposed under SEC or SRO regulations. For example, the director might not be deemed independent for purposes of listing standards, and might be prohibited from voting on any matter required by SRO or SEC rules. Such directors could also be subject to rules that would call into question a corporation's ability to insure or indemnify them for violations of federal securities laws. Directors are unlikely to be enthusiastic about serving subject to such disabilities. Boards are also unlikely to be enthusiastic about the continued service of such directors. The proposed advice and consent mechanism can thereby create significant incentives for boards and shareholders to reach a compromise regarding acceptable board structures and candidates. An advice and consent mechanism has several clear advantages over the Commission's proposed shareholder access initiatives. An advice and consent mechanism seeks to promote cooperation between shareholders and incumbent boards rather than to provoke confrontation. It greatly reduces the danger that shareholders will resort to the proxy mechanism as a device for promoting special interest agendas, and also greatly diminishes the dangers of factionalization that can arise from the election of dissident directors to a board. The proposal eliminates the need for the Commission to adopt complex and potentially arbitrary rules defining \"trigger conditions\" and \"qualified shareholders.\" There is also far less risk that the mechanism could be pre-empted by conflicting state legislation.","PeriodicalId":90732,"journal":{"name":"Stanford technology law review : STLR : an online high-technology law journal from Stanford Law School","volume":"414 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2003-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84893995","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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