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Abstract: In this article, we attempt to answer some fundamental questions regarding the role played by the courts in the patent system by examining a set of patent cases in great detail. To this end, we have constructed a new database based on court docket reports for all patent cases filed in 1995 and 1997 and tracked the evolution of these cases (about 3700 cases) through to settlement or adjudication on the merits. The focus of this effort is on keeping track of a number of variables to understand the precise disposition of each case. We have also tracked different characteristics in order to estimate patent litigation costs in each case. For instance, we note the amount of time taken by each case through to final disposition. In addition, we have devised a new proxy for measuring costs - the number of documents filed by all the parties in each case - which we believe is more closely correlated with actual litigation costs than the traditional measures of time expended and the stage of termination in each case. Our results show that many more patent cases are adjudicated on the merits (either at the pre-trial stage through a grant of summary judgment or at trial) than is commonly thought. This work is one of the few scholarly efforts in empirical litigation scholarship that can actually estimate this amount because most other papers rely exclusively on the imprecise categorization of the Administrative Office of U.S. Courts to determine case outcomes. Our results demonstrate that in addition to the small number of patent cases going to trial (about 5%), another significant percentage of cases (about 8-9%) are resolved on the merits through summary judgment. Consequently, summary judgments are important in patent cases for determining patent validity and infringement, and the summary judgments related to patent validity occur earlier in the litigation compared to summary judgments related to patent infringement. This result is somewhat encouraging given the important role played by the courts in revoking patent rights improvidently granted at the outset by the PTO. Nevertheless, despite the fact that such rulings occur early in the proceedings compared to patent trials, we should still be concerned about the huge transaction costs associated with patent litigation because summary judgments in general, and summary judgment based on invalidity in particular, are expensive compared to summary judgments granted on other grounds. In addition, there is a significant difference in duration and number of documents filed in cases resolved through summary judgment for the 1997 filed cases compared to the 1995 filed cases. This is consistent with the changes brought about by the Markman decision that invigorated claim construction as a threshold legal issue in patent litigation. The increased importance placed on first construing the claims before addressing infringement or invalidity after Markman necessitates that significant resources be allotted to the step of claim construction before (or concurrent with) filing motions for summary judgment. Overall, our results show that transaction costs associated with patent litigation loom large, and rulings on the merits by the courts concerning patent validity, patent infringement, and remedies for infringement (i.e., injunctive relief or damages) are rare, expensive, and not pursued to completion by most litigants. Instead, most patent cases settle fairly quickly (about 12-15 months) after the filing of the complaint, thereby reducing the actual cost of patent litigation considerably. This work has significant implications for all civil litigation in general, and for recent efforts to reform the patent system by either improving patent quality through new administrative procedures at the PTO or for substantive patent law reform. Our results strongly suggest that patent litigation is largely a settlement mechanism, and hence, any proposed change in the patent laws should be analyzed in terms of the incentives generated for prompt settlement of patent disputes. In addition, entities and interest groups seeking cheaper and/or a greater number of patent rulings concerning validity and infringement will be wise to look elsewhere, perhaps at other patent institutions such as the PTO or at other alternative dispute resolution (ADR) mechanisms that complement the courts.
Patent Litigation, Civil Litigation, Settlement, Patent Validity
Patent Litigation, Patent Empirical Work, Patent Reform
Abstract: Scholars have neglected the privatization of the Internet, despite the obvious significance of the U.S. Government turning control over a powerful new communication medium to the private sector. This article provides a detailed historical study on the transition from a government sponsored backbone network to multiple commercially owned backbone networks. Next we document a number of problems that occurred during these privatizations. Not only have these problems led to a lack of competition in the backbone industry, but also the same types of problems are reoccurring in the ongoing privatization of Domain Name System (DNS). The three types of problems that occurred in both privatizations, and will likely occur again in future Internet privatizations, unless recognized, can be categorized as follows: problems with procedural fairness in the processes adopted by the government; the government's management of competition during the privatizations; and problems related to the management of the technological infrastructure. In response, we have developed a series of proposals to address existing problems and to prevent these problems from reoccurring in future privatizations. The specific proposals for the backbone industry are twofold. First, there must be an interconnection policy that ensures all networks non-discriminatory access to the Internet. Second, the government should support the development and use of standardized technologies, which contribute to interconnection, through a new Code-based technological interconnection policy. Such a policy is informed by a guiding principle that new technologies should not amplify network effects and should instead facilitate competition. Thus, we wish to place a discussion of network effects squarely within the discourse on Internet privatization. To increase competition for the ongoing privatization of the DNS, we have three main proposals. First and most importantly, the U.S. Government must ensure that ICANN is accountable to the Internet community as a whole and not just business interests. Second, the U.S. Government must ensure that there is more transparency and public input into ICANN's decision-making. Finally, it must be remembered that a privatization is a means to achieve desirable public purposes, such as the creation of competition, and not an end all by itself since privatization does not, in and of itself, guarantee competition in the relevant market. Without multiple competing firms, the proper use of interconnection agreements to counter network effects in the DNS, and fair treatment by ICANN, there will continue to be problems with the privatization of the DNS. In analyzing the privatizations of the Internet, our analysis is steeped in the theoretical construct of "Code." Throughout this work, we explained how Code could regulate behavior, for example, by affecting competition between backbone providers. However, Code all by itself cannot create competition; instead there must be put into place the requirement of policies that all parties shared common ground rules for all competitors. Thus our analysis shows that both Code and policies are necessary to bring competition to the Internet. Additionally, the privatizations have also highlighted two important roles for the government with respect to Code. First, government must be vigilant in ensuring Code is not implemented which is contrary to our societal interests, such as the maintenance of competition in the marketplace. Second, the government should consider encouraging or mandating the development of Code for vindicating certain societal interests, especially in those areas that the private sector has little interest in. The results of this study provide insights and evidence about the appropriate role of government in regulating the Internet. While most rulemaking on the Internet is conducted in a decentralized "bottom-up" manner, this approach has its limitations. Some of these limitations include the private sector acting as top-down rule makers; the limited mobility of most individuals to switch between different rule sets; the role of network effects; and how "bottom-up" rulemaking could be contrary to our society's values. Similarly, the history of the privatizations demonstrates the problems the government had with their use of "top-down" rulemaking. The overarching lesson is that both "top-down" and "bottom-up" modes of regulations have their limitations and problems.
Abstract: This invited contribution, which is written for a non-legal, social policy audience, begins by addressing the complex relationship between intellectual property and the ag-biotechnology industry. This section presents a detailed examination of the value chain in the ag-biotech industry and its implications for intellectual property protection. The value chain in the ag-biotechnology industry is becoming increasingly multilayered and complex. As a result, a system that permits downstream players in the ag-biotech value chain to not only reap the rewards of innovation but also share in the significant risks associated with R&D must be developed. A patent system is an effective way of achieving coordination and sharing of the risks and benefits of R&D among the various players in the ag-biotech value chain. Stated alternatively, it is critical to design IP regimes that adequately reward the inventor for her efforts and provide economic stability to promote R&D investment by understanding and capturing the downstream economic benefits of innovation. On the other hand, as the fruits of biotechnology are becoming an integral part of our daily living, the social welfare benefits of the intellectual property system for the consumer population and society at large must also be carefully defined. Satisfying both these objectives is the central policy challenge in the relationship between intellectual property protection and ag-biotechnology.
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.
Abstract: Open standards are widely considered to have significant economic and technological benefits. This has led many governments to consider mandating open standards for document formats. Document formats are how a computer stores memos or spreadsheets. Governments are moving away from Microsoft's proprietary DOC format to open standard document formats, such as the OpenDocument Format (ODF) and Office Open XML (OOXML). The belief is that by shifting to open standards, governments will benefit from choice, competition, and the ability to seamlessly substitute different vendor implementations. This paper suggests that governments seeking the benefits of open standards need to consider the role of interoperability. Without multiple interoperable implementations, i.e., "running code", users will not gain the advantages of competition and substitutability. To highlight the issues around interoperability, we examined the interoperability issues around ODF and OOXML. This research assesses interoperability among different software implementations of each document formats. For example, the implementations for ODF included KOffice, Wordperfect, TextEdit, Microsoft Office, and Google Docs. A set of test documents was used to evaluate the performance of other alternative implementations. Our analyses show that there are significant issues with interoperability among various implementations. Users face numerous issues when transferring files between different implementations. While the best implementations may result in formatting problems, the worst implementations actually lose information, e.g., information found in pictures, footnotes, comments, tracking changes, and tables. Our findings include specific scores for each implementation. There was considerable variation among how well each implementation performed. For ODF, the compatibility scores ranged from a raw score of 151 (100% - weighted percent) to 48 (55% - weighted percent). We consider several implications of these results including the lack of perfect compatibility between implementations, the lack of good implementations outside of Windows, and the surprisingly good overall performance of OOXML implementations. The interoperability issues are troubling and suggest the need for improved interoperability testing for document formats. The results also highlight the importance of interoperability for open standards in general. Without interoperability, governments will be locked-in to the dominant implementations for either standard and in the process lose many of the benefits that might accrue from adopting an open standard in the first instance.
Abstract: This article begins by establishing the failure of statutory law or common law in the U.S. to guarantee a right of electronic privacy in the workplace. Unlike Europe, we do not recognize a universal right of privacy or human dignity, and it is unlikely that we will see a legally guaranteed, zone of privacy in the American workplace. Proceeding on that basis, I then ask how this issue can be addressed through a market-based, contractarian framework, and what principles should inform employer-employee e-policies that are typically being developed by U.S. firms. To set the stage, I explicate the underlying concerns of employers and employees regarding access to e-mail and the Internet and electronic privacy at the workplace. Relying on insights from microeconomic, principal-agent theory, I show that in the modern computerized workplace, the difficulty in establishing supervision and control over the agent's activities, the difficulty in controlling the flow of information to and from the firm, together with the firm's need to employ the Internet to capitalize on the enhanced efficiencies resulting from an online presence, contributes to an overall loss in the principal's (i.e., the employer's) power and lessens her ability to take effective, unilateral action against the agent. As a result, it is possible to define an incentive-compatible, benefit-maximizing contract between employers and employees based on the following principles: employee participation in defining e-policies; full disclosure of all implementation schemes pursuant to these e-policies; and employer monitoring to ensure compliance with such e-policies. Such an incentive-compatible contract is superior to other solutions based solely on self-interested behavior by either the principal or the agent. Further, it is not only a lower cost result, it also promotes mutual trust and cultivates the development of fairness norms, thereby, increasing productivity and contributing to higher profits. I also present some specific implementation details of e-policies designed along the lines described above. Finally, should Congress decide to act, the principles outlined above can serve as the basis for new legislation in this arena.
Abstract: It is widely recognized that the Patent Office grants overly broad patents since it has deficient knowledge of the relevant prior art, especially in high technology areas with significant non-patent prior art. This paper presents five strategies to: (a) increase the quantity and quality of information obtained by the Patent Office from the patentee and her competitors; and (b) to create disincentives for patentees to engage in opportunistic behavior by capitalizing on the information asymmetry between patentees and the Patent Office. The first and second strategies propose changes to our current prior art information disclosure rules based on insights from the economic theory of incomplete contracts. The first strategy proposes that we give patentees the option of presenting an expanded information disclosure statement (IDS) to the Patent Office disclosing all relevant prior art, including an analysis of how the claims, as filed, relate to this disclosed prior art. If the patentee chooses to exercise this option, the issued patent will be granted a specific presumption of validity with respect to the disclosed prior art. In the alternative, if the patentee does not choose the expanded IDS option outlined above, then the second strategy proposes that we eliminate the presumption of validity for any patent that issues under the current disclosure rules. As an optimal alternative, the first and second strategies can be adopted together. As another alternative, the second strategy can be adopted by itself. Based on insights from cognitive dissonance and from empirical data regarding oppositions in Germany and Japan, the third strategy proposes that we institute a pre-grant, third party, patent opposition system based on a publication date that is set at 90 days from the issuance of the first Office Action. This proposal creates a mechanism for third parties to participate in the patent examination process prior to its issuance. Addressing issues in software patents, the fourth strategy proposes that we mandate the use of representational languages in the specification of computer software patents in order to satisfy disclosure requirements and to explicate the metes and bounds of the claimed patent right for software inventions. The fifth strategy proposes that we create a one-way, pro-defendant fee shifting system if patents are invalidated or revoked in a litigation or opposition proceeding based on certain categories of prior art that are reasonably likely to be discovered by a diligent patentee. This proposal attempts to increase the costs borne by the patentee of engaging in opportunistic enforcement of bad patents. If these strategies were implemented in concert, we would put in place incentives and mechanisms to create a better informed Patent Office that is more likely to grant patent rights commensurate with innovation and not impoverish the public domain.
Abstract: This article revisits the conventional wisdom that privilege protection is necessary to avoid chilling corporate self-evaluation and remediation. Courts and commentators have repeatedly urged that if a firm knows a regulator can access its internal audit records, it will correspondingly not engage in diligent compliance monitoring. In this way, the firm can avoid generating information that a regulator or other third parties can use against it. To investigate this contention, I have presented a formal game theory model that incorporates the different strategies employed by a firm and a regulator. This model emphasizes that the firm's self-audit records are not independent. Rather, both the firm and the regulator change their respective strategies depending on each's perception of the other's strategy/response. Hence, it is necessary to conduct an equilibrium analysis to consider both the firm's and the regulator's response simultaneously. More specifically, this analysis demonstrates that the protection accorded by the SEP removes the disincentive for self-policing but does not create any positive incentive for self-policing. In contrast, a legal regime that grants regulatory access to internal audit materials creates a positive incentive for firms to engage in self-policing. In contrast, a legal regime without regulatory access (i.e., an inspection regime). Increased corporate self-policing achieved through a higher self-auditing rate enables us to capture the societal benefits of early detection and remediation of environmental violations. Under this analysis, a multi-pronged embrace measures that create positive incentives for firms to engage in self-policing, such as permitting regulatory access to audit materials and providing mitigated penalties for firms engaging in self-policing. As part of such a regime, limiting the admissibility of audit materials in third-party proceedings reduces the disincentive for firms to engage in self-policing.
Abstract: In high technology areas such as biotechnology and computer software, the U.S. Patent and Trademark Office (PTO) is poorly informed about the relevant prior art. In these cases, it may be optimal for the PTO to provide incentives to the patentee to produce a complete prior art disclosure. Such incentives could accord a specific, high presumption of validity to the prior art disclosed by the patentee, thereby limiting the use of the disclosed prior art for invalidation purposes in subsequent (i.e., post-issuance) litigation. Building upon Grossman and Hart's model of incomplete contracts, we show that a regime that trades a reduction in post-issuance litigation uncertainty for a complete prior art disclosure maximizes social welfare because it benefits both the patentee and the PTO. The patentee favorably views the reduction in litigation uncertainty and greater control over the possibility of the public's perspective, a fuller prior art disclosure may allow the PTO to grant patent rights commensurate with innovation and to avoid the detrimental consequences of an overbroad patent grant. In sum, this proposal is an incentive-capatible trade that maximizes joint social surplus. The optimal policy for high technology inventions (characterized by asymmetric information and high productivity effects) provides incentives for well-informed patentees to reveal information regarding the relevant prior art to the PTO during patent prosecution. This is consonant with a body of contracting literature that proposes that when parties are asymmetrically informed, default rules that penalize the more informed party will be welfare-enhancing by inducing that party to reveal information. However, in our case, we do not impose a penalty on the better-informed party, the patentee. Rather, we permit a transfer of ex post bargaining rights (i.e., reduce the public's residual right to invalidate the patent) in order to induce the better-informed party to reduce the informational asymmetry between the patentee and the PTO.
Abstract: This Article offers a critical reassessment of U.S. approaches to intellectual property protection for plant innovation. Three developments make this reassessment timely. First, the Supreme Court has finally confirmed that utility patent claims to plants and seeds satisfy the 35 U.S.C. Section 101 subject matter eligibility requirement. Plant innovation in the United States is now subject to utility patent protection, as well as concurrent protection under the Plant Variety Protection Act (PVPA). However, little work has been done to explain the role of PVPA protection in a system of concurrent protection, or to develop a coherent policy vision within which the utility patent and PVP systems might operate. Second, technological advancements, particularly in plant biotechnology, are making clear the value of germplasm. U.S. patent and PVPA regimes must be optimized to encourage private sector investment in germplasm development while retaining reasonable access to germplasm to accommodate farming practices and public sector activities. Third, intellectual property protection for plant innovation is a key international intellectual property issue. The TRIPS Agreement expressly allows World Trade Organization (WTO) countries the option of adopting sui generis plant variety protection systems as an alternative to - or in combination with - utility patent protection for plant innovation. This Article focuses on one facet of the reassessment project: the role of plant variety protection in the U.S. intellectual property system. We first assess U.S. plant variety protection from an historical and comparative perspective, analyzing the emergence of the concept of "breeders' rights" in Europe and its eventual appearance in the United States. We then delineate the "essential traits" of the modern PVPA and note its points of divergence from a patent-like model. Next, we conduct an empirical analysis of the modern PVPA in which we present the results of statistical PVP data and anecdotal studies of PVPA acquisition, licensing, and enforcement activity for corn and soybean crops. We draw a number of conclusions from these studies. First, the history of plant variety protection regimes in the United States and abroad reveals that the role of plant variety protection in the overall intellectual property scheme has mutated greatly without any fundamental changes to the general statutory approach to plant variety protection. Whereas plant variety protection was initially designed as the primary (or even exclusive) form of intellectual property protection for seed-grown plants, the coming of plant biotechnology, and the dawning acceptance of utility patents for plants, has relegated plant variety protection to a secondary role. Modest statutory amendments to the PVPA have shown no real promise of lifting the PVPA up from this secondary status. Second, our empirical assessment of licensing and enforcement activities concerning U.S. plant variety protection certificates confirms that the PVPA regime as presently constituted plays only a marginal role in stimulating plant breeding research in the United States. Our assessment strongly suggests that the PVPA does not provide patent-like ex ante innovation and investment incentives and that the PVPA has not generated substantial ex post licensing and enforcement activity. Instead, its role in the United States appears to be very modest: it may serve as a marketing tool; it may provide some non-propagation licensing rights akin to contractual shrink-wrap rights, enforceable against those who deal in "saved" seeds; and it may provide a superior alternative to trade secret protection - for example, for seeds whose secret parent lines might otherwise be revealed through reverse engineering. Third, the insights from this paper have implications beyond the area of plant intellectual property rights. For example, we intend to adapt our analysis to analyze the effectiveness of other sui generis, technology-specific, legislatively created intellectual property rights, such as the Semiconductor Chip Protection Act. We then intend to formulate broader conclusions about the effectiveness of "small" and porous, technology-specific intellectual property rights regimes.
Abstract: In this paper, we formally demonstrate that incorrectly issued patents can survive in the market without judicial review, even when the invention is neither novel nor non-obvious. We support this contention by presenting a game theoretic model that studies the interaction between the patentee and an alleged infringer/challenger. Using this model, we demonstrate the impact of the transaction costs in the patent system at the administrative stage in the Patent Office and at the enforcement stage in the courts, and highlight the inability in our current system to mount effective challenges to improperly granted patents in the current system. We also evaluate how changes in patent litigation costs and the quality of adjudication in the courts affect the incentives to challenge patents thereby affecting the probability of securing a patent. We show that there is a need to advance new mechanisms to improve the administrative processes employed by the Patent Office. Specifically, we support including administrative challenges, such as patent oppositions, in order to improve Patent Office functioning by correcting and limiting the number of improperly granted patents. We describe and analyze the characteristics of such an opposition system, including the costs of such a process, the timing of the process with respect to patent issuance, and the scope of the estoppel granted to such a process for both subsequent oppositions and court challenges to the patent. We conclude that a low-cost, post-grant, opposition process based primarily on written submissions with a limited estoppel effect and administered by Administrative Opposition Judges (AOJs) will serve as an effective instrument for improving the quality of patents that are issued and enforced. In other words, including these incentives for producing better quality patents will decrease the number of incorrectly issued patents. These incentives will improve overall social welfare thereby reducing the incentives for strategic conduct and aggressive patenting in many technology areas. Finally, we present empirical results from an exciting patent reform experiment taking place in Japan in the past four years and compare these results to the insights obtained from our model. Since April 2000, Japan has embraced a dual patent invalidation system that permits patent challenges in both the Japanese Patent Office (JPO) and their District Courts. Our empirical data on dual invalidation processes in Japan from 2000-2003 demonstrate that there are sound economic and institutional reasons for maintaining the ability to raise patent validity challenges in both the Patent Office and the courts since both mechanisms are complementary and necessary.
Abstract: We present three economic arguments for cyberinsurance. First, cyberinsurance results in higher security investment, increasing the level of safety for information technology (IT) infrastructure. Second, cyberinsurance facilitates standards for best practices as cyberinsurers seek benchmark security levels for risk management decision-making. Third, the creation of an IT security insurance market redresses IT security market failure resulting in higher overall societal welfare. We conclude that this is a significant theoretical foundation, in addition to market-based evidence, to support the assertion that cyberinsurance is the preferred market solution to managing IT security risks.
Cyberinsurance, liability, internet security
Abstract: In a stimulating and thought-provoking article, "Rational Ignorance at the Patent Office," 95 NW. L. REV. 1495 (2001), Professor Mark A. Lemley urges that he does not necessarily think that there is a problem with how the U.S. Patent and Trademark Office (PTO) handles patent applications. The agency does the best it can. To use his phrase, the PTO is rationally ignorant. The agency is not omniscient and it cannot ensure that every patent is truly novel, useful, and non-obvious. As Professor Lemley puts it, "The basic idea of rational ignorance is that any person will spend only a certain amount of time or money to obtain a piece of information. If obtaining that information costs more than the information is worth, an individual will (or should) rationally choose to remain ignorant of it." Consequently, if one is to correct the patent system, the only really feasible solution is for the courts to more closely scrutinize the patents that come before them. In short, the main patent reform we need is to remove the presumption of patent validity that is currently codified in the Patent Act. We urge that Professor Lemley seems to ignore the broader goals of the PTO in determining when the agency is being rationally ignorant. As we argue, the real issue is not of rational ignorance, but optimal ignorance. In other words, what is the optimal amount of ignorance from the perspective of society, assessing both the costs and benefits of the patent system on all actors, as opposed to just the PTO collecting and assessing information about prior art and novelty and non-obviousness. Drawing from another example, as with optimal deterrence in criminal law, optimal ignorance focuses on the incentive effects throughout society, not just on specific agents, whether patent examiners or criminals. When the PTO grants a wrong patent, the patentee, nevertheless, obtains exclusive rights and the possibility of monopoly power that can generate various inefficiencies. The patent system provides other firms and inventors recourse to the judicial system to correct the situation. Nonetheless, as we formally show, the existence of high transaction costs, including high litigation costs, ensures that many wrongly granted patents continue to survive in the market and to produce inefficient results in the economy. Thus, when it comes to ignorance in the patent system, the key question is not the rational ignorance of the agency; rather, it is the agency's optimal ignorance. As policy makers, we can be ignorant of the prior art to the extent that we set the marginal investment in information-gathering by the PTO to be equal to the marginal reduction in social costs from granting better patents. In addition, an optimal ignorance approach may suggest why it is more likely that the PTO is subjected to bounded rationality, rather than rational ignorance. Optimal ignorance requires the PTO to assess the full social benefits of acquiring more information and weighing them against the social costs. For reasons we have suggested, the social benefits of a patent may be amorphous, resting on understandings of progress and non-obviousness. For this reason alone, we might expect the PTO to be subjected to cognitive and information limitations with respect to its role in distinguishing between deserving and undeserving patents. Furthermore, if the PTO is, in fact, subject to bounded rationality for the complex problems in assessing benefits, Professor Lemley's arguments against administrative reform and in favor of judicial review are weakened. Professor Lemley's arguments lead to the following problem. If the PTO is engaging in rational ignorance, then it is not satisfying its mandate, and reforms that ensure optimal ignorance are desirable. If the PTO is acting out of optimal ignorance, then the case exists that the agency is subject to bounded rationality, thereby supporting reforms to cure it of its cognitive and informational limitations. Either way, the case for administrative agency reforms is justified and needs to be more fully and properly addressed.
Abstract: This Article deconstructs code using case studies and shows that code is not neutral and apolitical but instead embodies the values and motivations of the institutions and actors building it. The term "code," as we use it, consists of the hardware and software components of information technologies. Code is increasingly being sought as a regulatory mechanism in conjunction with or as an alternative to law for addressing societal concerns such as crime, privacy, intellectual property protection, and the revitalization of democratic discourse. Our analysis examines how societal institutions, such as universities, firms, consortia, and the open source movement, differentially influence the production of code. Relying on four case studies, we analyze how institutions differ in structure and motivation, and how they are affected by different social, political, economic, and legal influences. We then analyze how these societal institutions, which all approach code creation differently, influence the technical and social characteristics of the code that is developed by them. For example, code developed by a university is likely to contain different values and biases, regarding societal concerns such as privacy, than code developed by a firm. This analysis provides a crucial first step in understanding how society shapes these new technologies. Ultimately, this work may assist policymakers in proactively shaping the development of code to address societal concerns.
Abstract: In December 2001, the U.S. Supreme Court confirmed that plants are eligible subject matter for protection under the utility patent regime, notwithstanding the existence of limited forms of intellectual property protection for plants under the Plant Patent Act (PPA) and the Plant Variety Protection Act (PVPA). As fundamental as the J.E.M. decision may be, the Supreme Court confronted only one relatively narrow issue of patent acquisition in J.E.M. It will now fall to the lower courts to work out how numerous other issues of patent law doctrine apply to plants, and to Congress to consider broader policy issues concerning the relationship among IP regimes for plants. In this article, we analyze the J.E.M. decision, identify issues that J.E.M. leaves unresolved, and explain how those issues have begun to manifest themselves in recent plant IP disputes. The J.E.M. case concerned an issue of patent acquisition, and so the Court had no occasion to comment on issues of patent scope and enforcement of patents on plant-related innovation. One such issue is whether patent infringement can occur as a consequence of pollen drift. In this case, we conclude that courts (and legislatures) would be well-advised to not craft a special infringement regime for patented plants. Seed saving by farmers raises issues that are analytically similar to those surrounding experimental use in patent law. Whereas the utility patent statute includes no express exemption from infringement for patented seed that a farmer saves and re-uses, the PVPA does include a narrow saved-seed exemption. Sellers can limit the scope of an implied license by employing express license restrictions as a condition on the sale of the patented item. Whether these agreements can be enforced has recently been the subject of litigation. Major seed producers typically include express license restrictions on seed bags (called "bag tag" or "seed-wrap" licenses), when purchasing seed. In a recent decision, the Court of Appeals for the Federal Circuit upheld Monsanto's Roundup Ready technology agreement against a challenge mounted by a Mississippi farmer, Homan McFarling. The McFarling case and others like it are likely to spur state legislatures into passing legislation that will seek to regulate contracting practices in seed producer-grower transactions. Within the past year, seed-contract legislation has been proposed in numerous states in the Farm Belt. Some legislative proposals purport to outlaw contract provisions that prohibit seed saving. Some prohibit contract provisions that specify where the grower will be subject to suit for patent infringement. Proposals of this type may well prove controversial. Although states have authority to regulate contracts (including IP contracts) affecting their citizens, states lack authority to enact regulations that conflict with federal IP regime. Courts may well be called upon to draw the line in future cases involving seed-wrap license agreements that arguably conflict with state regulations. Turning away from patent law doctrine towards broader policy concerns, one major policy question after J.E.M. is whether there remains a meaningful long-term role for plant variety protection under the PVPA. PVPA protection is cheaper to obtain than is utility patent protection, and may facilitate branding. In addition, PVPA protection may be superior to trade secret protection in that trade secret protection does not preclude reverse engineering. However, we expect that utility patent protection will quickly emerge as the dominant form of IP protection for the domestic seed industry. Whether this arrangement is optimal will be an important future question for IP policymakers.
Abstract: Historically, intellectual property systems have facilitated the commercialization of plant innovation by offering specialized protection regimes for specialized circumstances. In 1930, the U.S. Congress created a "plant patent" regime designed specifically to provide rights against unauthorized asexual propagation, a serious problem in the nursery industry. In 1970, Congress created a "plant variety protection" (PVP) regime that is tailored to provide limited rights against duplication of protected varieties via seeds, a matter of obvious importance in the commercialization of crop plants. At the time, no one perceived any conflict between the specialized regimes and the general "utility" patent system. However, today, the emergence of plant biotechnology, and continued advances in plant breeding techniques, have prompted new questions about the reach of the utility patent regime and its compatibility with plant-specific regimes. In October 2001, the U.S. Supreme Court heard arguments in J.E.M. Ag Supply v. Pioneer Hi-Bred, in which the Court considered whether plant innovation can be protected -- like all other innovation -- under the general "utility" patent system, or whether plant innovation is to be consigned exclusively to specialized regimes. The Court's decision is likely to have major ramifications for the future application of intellectual property regimes to plant research. The decision is likely to have significant practical implications as well. Since 1985, the U.S. Patent and Trademark Office (PTO) has granted hundreds of utility patents on all aspects of innovation relating to plant science: on plants themselves, seeds, breeding methods, plant biotechnology. The Court's J.E.M. decision could impact the validity of many of these existing utility patents on plants. In this article, we explain the issues that the Court will be asked to consider, assess the Court's options in resolving the case, and propose a resolution that best balances private rights and public access to the results of plant research. Our proposal calls for the Court to preserve the current state of the law, in which plants fall among the categories of subject matter that are eligible for utility patent protection. The Court should decline the invitation to rework the nation's intellectual property policy as applied to plants, leaving the job of comprehensive policy reformulation - if it is needed at all - to Congress.
Abstract: Intellectual property law offers little solace for the fastidious. Intellectual property regimes germinate and proliferate in a generally untidy manner. Intellectual property regimes have fuzzy edges, and many regimes overlap with others - trademarks with copyrights, patents with trade secrets, copyrights with design patents - in unpredictable, unusual, and even alarming ways, resulting in complex intellectual property interfaces. In the past, the Supreme Court exhibited a measure of tolerance for messy interfaces among intellectual property regimes. Now, the Court's attitude may be shifting. Last term, the Justices showed signs of squeamishness over the prospect of concurrent patent and trade dress protection. This term, the Court has agreed to hear J.E.M. Ag Supply v. Pioneer, another, more complex case involving concurrent protection. In J.E.M., the problem is plants. The precise interface issue is whether plant innovation should be exclusively consigned to protection under the specialized "plant variety protection" regime, or whether it may also concurrently be protected under the general utility patent regime. In addition to its substantial practical significance, the case also raises many important theoretical questions: to what extent should the law tolerate messy interfaces between intellectual property regimes? Should innovators be entitled to accumulate protections, or should they be forced to elect from among regimes? Do differences among intellectual property regimes invariably signal conflict (and inefficiencies), or might they also signal synergies? In this essay, we analyze the intellectual property interface problem through the lens of the J.E.M. Ag Supply v. Pioneer case. We introduce the regimes at issue and explain the interface arguments, and analyze potential judicial and legislative approaches to reconfiguring the interface. We suggest that when deciding J.E.M., the Court should focus on the following considerations: (1) regarding the specific interface issue in the case - the utility patent/plant variety interface - the Court has already dealt adequately with the principal textual arguments in Chakrabarty, and recent scholarship only reinforces the correctness of the Chakrabarty plurality opinion. (2) reconfiguring an interface between patent and non-patent regimes by imposing judicially-crafted exceptions to patent eligibility is counterproductive; it stimulates opportunistic patent claims drafting and ancillary litigation, and may result in the diversion of innovation to less socially-desirable protection schemes. (3) reconfiguring an interface between patent and non-patent regimes should be left to the legislature when existing, entrenched doctrine supplies no compelling solution, and where the interface problem implicates complex policy judgments best rendered on a developed empirical record. Congress has not created intellectual property regimes so as to fit together seamlessly. Sometimes the interfaces are messy and create the potential for concurrent protection pursuant to overlapping regimes. Whether this configuration of intellectual property regimes advances technological progress or thwarts it is a complex policy judgment. In the case of plant innovation, it is a judgment best suited for Congressional deliberation. The alternative - judicial reconfiguration of the utility patent/PVPA interface through the use of patent eligibility restrictions - is likely to impose costs without achieving concomitant benefits.
Abstract: The role of individual inventors, small firms and entrepreneurs in the patent courts has become controversial for two, somewhat contradictory reasons. First, there is the view that small parties may be at a serious disadvantage in the courts since they do not have the financial resources to overcome the transactions costs of litigation. However, there is also a fear that some small inventors and licensing firms may be operating as trolls, using the courts as a mechanism to extract economic rents from large companies. Using original court documents to accurately identify the parties, outcomes and disputed patents in cases filed in 2000 and 2002, we explore how the resolution of patent cases relates to the nature of the parties. In particular, we examine whether individual inventors and entrepreneurs are ability to defend their patent rights and whether patent trolls are a significant problem. We find that small parties are quite active in our cohort of cases, constituting nearly half of all plaintiffs. However, most small plaintiffs are suing other small parties. Nonetheless, we also find that about 20% of small plaintiffs are suing defendants with annual sales greater than $500 million. These results indicate that small parties are active in the patent courts and are suing large alleged infringers, but that large infringers are not the primary focus of their activity. However, when small plaintiffs sue large defendants, the vast majority are able to overcome transaction costs and seek judgments against large firms or litigate to a trial. In fact, small firms are the most likely among all plaintiff categories to seek a judgment and are as likely as large firms suing other large firms to litigate to a trial. Thus, the possibility of high damages combined with institutional arrangements, such as contingency fee lawyers, may allow inventors and entrepreneurs to overcome the barriers to enforcement of patent rights. But, this conclusion must be accompanied by an important caveat. In cases with small plaintiffs, various indicators of patent quality, such as the number of claims and the number of backwards citations, increase with the size of the defendant. The same trend is not evident for large or medium sized plaintiffs. Thus, there is some evidence that when suing a large alleged infringer, small parties are only enforcing their most valuable patents, and that the average case may be filtered out. Finally, we explore the role of licensing firms, the most common candidate for the troll moniker. We find that the licensing firms in our cohort of cases - all of which would have classified as small firms as of 2002 - are a very small percentage of all plaintiffs. However, when licensing firms sue large firms, they do not have the same propensity to seek a judgment or go to trial as witnessed for other small firms suing large firms. Thus, our results suggest that patent litigation is not dominated by trolls, but the best candidates for the troll moniker do seem to behave differently in comparison with firms of similar size. However, these results should be evaluated with caution; it may also be that the small numbers of such firms makes it difficult to analyze their behavior.
Intellectual Property,Technology and Innovation, Patents, Litigation
Abstract: This article analyzes the effectiveness and limitations of the regulation of electronic commerce by private entities on the Net. In this sense, this work has a narrow focus. It is concerned about regulation of e-commerce and the improvement of regulatory regimes on the Net by attempting to increase the overall social welfare of both firms and consumers. My analysis relies on two detailed case studies of: (a) the regulation of online privacy rights by BBBOnline, and (b) the regulation of Internet domain names and addresses by the Internet Corporation for Assigned Names and Numbers (ICANN). In putting together these case studies, I have relied exclusively on publicly available information. I study the advantages and disadvantages of each regulatory regime and consider the problems faced by both types of institutions in efficiently managing a regulatory system. I then demonstrate how this system can be improved through governmental involvement. I claim that the failure of these third party institutions (TPIs) to create a regulatory framework for the Internet is proof of the need for a carefully defined government role. Based on the insights from the case studies, I then define this role for government as one that is intended to solve problems in the self-regulatory approach by setting minimum baseline standards for regulatory issues 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.
Abstract: This article critically examines the common justification for the corporate self-evaluative privilege (SEP) that such privilege protection is essential in order to avoid chilling corporate self-policing. We develop a formal game theoretic model to study the strategic interaction between a regulator and a firm considering a self-audit. We show that the protection accorded by the self-evaluative privilege removes the disincentive for self-auditing but does not create any positive incentive for self-auditing. In contrast, a legal regime that grants regulatory access to a firm's internal audit materials creates a positive incentive for firms to engage in self-policing and results in a higher self-auditing rate compared to an inspection regime (i.e., no regulatory access, thereby permitting inspections only). In addition, any disincentive to the firm to engage in self-policing can be minimized by limiting the admissibility of audit materials in third-party legal proceedings. Finally, mitigating possible penalties for firms engaging in good faith compliance auditing, can further encourage self-policing. Thus, as an alternative to the corporate SEP, we envision a combination of measures that maximizes the extent and probability of corporate self-policing comprising: (a) permitting regulatory access to self-audits; (b) limiting the admissibility of audit materials in third-party proceedings against the firm; and (c) providing mitigated penalties for firms engaging in good faith self-policing. These measures capture the societal benefits of increased corporate self-policing in terms of early detection and remedy of violations while minimizing the fear of collateral liability arising from one's self-evaluation efforts.
Abstract: Policymakers are increasingly pondering or evaluating the use of software and its influence on societal concerns such as privacy, freedom of speech, and intellectual property protection. A necessary step in this process is deciding what the "settings" should be for the relevant software. In this paper, we build upon work in computer science, behavioral economics, and legal scholarship to establish a well-defined framework for how default settings in software should be determined. This normative approach towards software settings stands apart from most previous scholarship, which focuses on the effect of software settings. Our recommendations include several scenarios where policymakers should intervene and ensure that defaults settings are set to enhance societal welfare. These recommendations are illustrated with three examples. If policymakers change the default settings in our examples, they would enhance competition, security, and privacy. We believe that the manipulation of software to enhance social welfare is a powerful tool and a useful complement to traditional legal methods.
Abstract: As our initial awe over the Internet diminishes, policymakers are recognizing the need to consider regulating Internet technologies. Legislation has been passed on a number of issues from security, filtering software in schools, spam, cell phone portability, and perhaps, spyware. This approach has been ad hoc because of the lack of a comprehensive analysis of the various approaches to regulating Internet based technologies. This paper fills this gap by providing a systematic analysis of the government's ability to shape these technologies through the use of its regulatory power, its fiscal power, and through the definition of intellectual property rights. The regulatory issues considered include prohibitions on code, using standards or market-based incentives, modifying liability, and requiring disclosure. The fiscal issues considered include government funding of research and development, the use of the government's procurement power, tax expenditures, and funding of education and training. This paper draws from Justice Breyer's seminal work on regulation and applies it to Internet technologies. This article stands apart from other work in this area because it does not focus on just one mechanism to shape code. It is the first article that considers these issues from a broader perspective that examines the complete panoply of government powers to regulate and shape code. In the process, it insightfully bridges work in regulation to that within cyberspace law and communication technologies.
Abstract: Regulation through "code," i.e., the hardware and software of communication technologies, is growing in importance. Policymakers are addressing societal concerns such as privacy, freedom of speech, and intellectual property protection with code-based solutions. While scholars have noted the role of code, there is little analysis of the various features or characteristics of code that have significance in regulating behavior. This paper examines three universal governance characteristics that policymakers may use to ensure code comports with societal concerns. The characteristics that are studied are transparency, defaults, and standards. For each characteristic, the paper discusses the salient regulatory issues for manipulating code. Additionally, the paper provides normative proposals for modifying some characteristics, such as defaults. In the future, our analysis should aid policymakers seeking to manipulate code to ensure that code comports with our societal values and addresses our societal concerns.
Information, Communication processes, Technology led strategy, Regulation, Standards, Modulators
Abstract: This paper presents a thorough empirical study of the performance of UDRP providers. We analyze the decisions of the complainants in deciding to send their claim to a particular provider and show that the duration of the dispute resolution services is at least as important as bias in determining the initial selection of providers. Our results show that the emphasis of theoretical and empirical work, which has been exclusively concentrated around the effects of pro-complainant bias, is, at least, incomplete. We then use the duration of these cases as the main variable to measure the general efficiency of each provider. Among our main findings, we claim that the various UDRP providers have different duration functions, implying the existence of forum shopping. Second, we demonstrate that there is bias in favor of specific countries for the different providers. Third, some panelists have completely different performance characteristics compared to the others suggesting that they are employing different methodologies to arrive at their decisions. Fourth, the performance of the providers is affected by the proofs presented by the complainants and respondents. Finally, we find that three member panels are just as efficient as single member panels. Our detailed analysis of the UDRP process has significant implications for the design of private dispute resolution regimes in general.
Abstract: It is widely recognized that software affects fundamental societal concerns, such as privacy. Software does not just appear, but is produced within a variety of societal institutions. This article analyzes how societal institutions shape the development of software and its resulting implications for society. Specifically, we consider how institutional rules are evident in the different structures, motivations, and influences of four societal institutions. We begin by discussing universities and continue on to firms, consortia, and the open source movement. Once we understand how all of these factors operate, we can offer predictions on the resulting attributes of software. In the final section, we show how these institutional factors explain the variation in the development of web browsers as well as in the incorporation of the societal value of security into software.
Abstract: The market for biotechnology products has expanded rapidly in the 1990s and is expected to give impulse to radical changes in agriculture around the world. Investment in research and development (R&D) of new seed varieties has become a key factor for agriculture development. In the last decades, the investment in R&D has switched from state sponsored research to private funding. At the same time, the market has moved towards a strong concentration in a few multinational firms, which now control most of the agricultural biotechnology R&D around the world. One of the most important issues regarding ag-biotechnology is the legal environment in which seeds are going to be produced and traded. A homogeneous legal framework characterizes domestic markets, while in international markets different legislation can distort or change marketing and production incentives. This paper analyzes the legal differences between the United States and Argentina, two of the most important exporters of grains in the world. As we show, the evolution of legislation and regulation in both countries help us understand the challenges of generating homogeneous protection in international markets, as well as the incentives for private sector companies operating under different legal systems. We will highlight the differences in property rights protection, as well as the incentives for producers and traders. The comparative analysis of this paper provides a useful framework to understand the complexities of international regulatory systems, and the challenges that multinational and local seed producers face in developing countries with weak legal/regulatory systems for the protection of intellectual property rights. The implications of not creating and providing significant legal regimes for protecting agricultural biotechnology innovation has significant impact in terms of the allocation of resources devoted to both indigenous research on plant innovation and also on the choices being made by growers acting in response to current weak property regimes.
Abstract: The creation of ICANN was sought by the United States government to promote international cooperation in the governance of the Internet based on a bottom-up system in which government intervention was limited, if not eliminated. However, as the Internet has become a global phenomenon this initiative has faced increasing opposition from the international community. As we have shown in this work, the evolution of ICANN reveals how it slowly departed from its mere technical role into a more political one, in which all groups and constituencies try to impose their preferences. During the reform movement initiated from inside ICANN, different constituencies tried to exploit the situation by gaining power positions in the new structure. The political strength of different groups and constituencies reversed some of the initial reforms and produced a totally new structure. Reform attempts from inside ICANN were challenged by the international community. These efforts concentrated on changing the main structure of ICANN into a multilateral organization controlled by international governments and removing the direct control of ICANN from the United States government. In the end, even though the proposals seem to look for different structures to regulate domain names and numbers on the Internet, they represent a political struggle between opposite points of view. Among the results of our analysis we can highlight the following: first, as a result of the reform process, the private sector consolidated its political position in the ICANN structure, at least in the short run. With the new Bylaws, the private sector retained some of the power they had before and even gained more power. Among the winners of the reforms are: the GNSO constituencies, which gained important power spaces in the new design, ASO members, which had some gains, but more importantly, are still debating their future with a possibly more expansive relationship with ICANN, and the ccNSO, which were recognized as an independent Supporting Organization. Nonetheless, the inside-out attempt to reform proved to be weak because it failed to bring outside constituencies to the governance body and created opposition from the international community. The inside-out reform analysis allowed us to examine the political strength of its different constituencies. This process also showed how ICANN has become more of a political instrument, instead of a technical corporation. An indication of this is that most of the debate on the reform was based on how to divide the power inside ICANN, more specifically inside the Board of Directors, and how to maximize the capacity of each group to enforce their policies. Second, our analysis shows how the inside-out reforms sought to enhance international cooperation. Creating a Supporting Organization for the ccNSO and the incentives for international governments to participate in a better CGA opened the ICANN gates to more extensive international participation in policymaking. However, the international community did not respond adequately to the reform and tried to generate its own model for Internet Governance. The response of the International community to the regulatory regime of ICANN was the creation of a new organization with international ties and controlled by governments. This proposal, as summarized in the WGIG report, sought to overhaul ICANN and take away the United States' direct control of ICANN and the management of names and numbers on the Internet. As a result, we face a struggle between two different types of regulation, a bottom-up approach, with more participation from the private sector, and a top-down approach which intends to take Internet governance into the international arena. As shown in this work, Internet governance has become a hot political issue, and the organizations in charge of managing the regulatory regime will reflect these political preferences. The effectiveness of any of these governance regimes will depend on how well the specific structure of power provides an opportunity for consensus. In the end, the reform and the political struggle behind it have unmasked the political nature of ICANN. As a result, its future will depend on the consensus of its constituents and on the struggle between state and private sectors. In this debate, the United States government is one of the only governments defending ICANN in its current structure because of the contract that ties ICANN directly to the U.S. Department of Commerce. On the other hand, the international community is pushing the U.S. to hand over its sole control of ICANN. Given the tension between both parties, we believe that this transition could move forward through the creation of a supranational entity in charge, not just of ICANN's responsibilities, but also of other areas related to the Internet, i.e., e-commerce, Internet security. We call this organization the World Internet Governance Organization (WIGO), managed by a board representing the developed countries and the technical groups with a stake in the Internet. This would entail an institution organized somewhere in between the unilateral regime represented by ICANN and the multilateral approach proposed by the United Nations. WIGO would allow both parties to obtain some of their objectives. The U.S. would retain some power in designing the system, while other developed and developing countries would have more say in the direction of the system. A well-thought proposal that considers the foremost needs of the Internet will have a greater chance of succeeding than individual attempts to overtake over the governance of the Internet. Furthermore, it will generate a point of convergence for the diverse preferences of international stakeholders. Nonetheless, the success of such a proposal requires countries to realize that unorganized or individual attempts to regulate will not carry the day.
ICANN, Political Economy, Domain Name System
Abstract: The ability of communication technologies to favor certain societal concerns, such as privacy, is widely recognized. This article argues an institutional analysis is central to understanding how a technology affects a societal concern. This is demonstrated with a case study of the cookies technology, which has been shaped in differing ways by universities, firms, and consortia. A comparative institutional analysis finds that each of these institutions acted according to their own norms and processes in influencing the recipe for cookies. It is these institutional tendencies that shaped the cookies technology. By understanding these tendencies, policymakers can better assess, predict, and proactively influence the development of communication technologies to improve societal welfare.
Institutions, Communication Technologies, Law & Policy, Privacy, Cookies
Abstract: This study employs empirical data to provide insights into the impact of open standards. This work moves beyond the existing literature's reliance on hand-picked case studies by analyzing a very large number of open standards. The results of this research are timely as governments are advocating, and sometimes mandating, the use of open standards. Our study reveals inequalities in the impact of open standards that suggest a power-law relationship. We have also found that the duration of the development process in creating an open standard does not affect the ultimate impact of the standard, but that the length of the document describing the standard affects its impact. There are two datasets used in our analysis. The analysis focuses on standards developed by the Internet Engineering Task Force (IETF) because it is held as the exemplar for developing open standards. The first set encompasses 3221 IETF publications from August 1987 to January 2006. The second set consists of 32 standards, selected randomly from 2000 to 2003. The variables of interest include information about the standard document, the authors, the development process, and the impact of the open standard. The first part of the analysis found a power-law relationship in the impact of open standards. A few open standards have a very high disproportionally large impact, while there are many other standards that have a slight impact. This relationship should not be surprising. Standards are analogous to other decisions that fit the power-law relationship, because people can freely choose between many standards. This result has implications for improving the development process within standards organizations. The second part of the analysis considers significant variables that affect the impact of open standards. Our results show that the length of the standard document (as measured by the number of words) is a crucial factor affecting the impact of a standard. The length of a standard often reflects the fact that there are multiple participants, divisiveness in opinions, and overall technical complexity, all of which suggest greater interest during the development process of the standard, likely resulting in a higher impact once the standard is promulgated. We also find that the duration of the development process does not affect the impact of an open standard. This finding carries significant policy implications as reforms are underway to shorten the IETF development process.
Abstract: This paper analyzes the evolution of property rights legislation in Argentina with respect to new seed varieties. In comparison to the United States, Argentina has weak protection and enforcement of property rights for new seeds. These weak property rights affect the registration and commercialization of new soybean seeds. We show how private producers of seeds react to differences in property rights between Argentina and the United States and also between corn and soybeans. As we show, investment efforts will concentrate on those crops with more secure property rights at the expense of the markets in which property rights are less secure. This effect has important consequences for a developing market producing in a global market.
Argentina, agricultural biotechnology, market regulation, property rights, seed markets
Abstract: In 2003, Massachusetts embarked on a policy to transition to open standards for information technology. This policy led Massachusetts to switch the format of its electronic documents for its public records from a proprietary standard to an open standard. This article documents this historic process because Massachusetts was the first government to switch its information technology over to open standards. In the process, we develop a set of lessons learned from the Massachusetts experience. These lessons are invaluable for other governments as well as scholars studying the adoption of standards. The Massachusetts policy towards open standards is being careful watched by many governments. A number of other governments including several states in the United States, such as Minnesota and New York, as well as other national governments such as Belgium, Finland, France, Japan, and South Africa are moving towards or considering open standards policies. These policies are led by a desire to save money and have greater flexibility with respect to IT. However, the switch towards open standards can be fraught with difficulties that encompass economic, socio-political, technological, and institutional issues. Our analysis offers a number of lessons from the Massachusetts experience for other governments considering a similar policy switch. The first lesson is the need for government to consider the impact of their policy on both direct and indirect stakeholders. Support from stakeholders is essential for a seamless transfer to open standards. The second set of lessons focus on several decisions around setting up an open standard policy, such as establishing how principled (e.g., avoid vendor lock-in or promote public autonomy) or how practical (e.g., save money or increase efficiency) a policy initiative should be. There are also lessons for addressing a "close call" decision between an open standard and a proprietary standard, and how to handle proprietary standards that are "dressed up" as open standards. The third set of lessons is the need for government to look for support both from within the government as well as the open standards community. The support can consist of financial, logistical, technical and political resources. The lessons are applicable, not only for open document standards, but also for open standards policies for other technologies. In addition, these lessons are relevant for any policy shift to open standards in general. The paper ends by considering two main lessons for other governments considering open standards for document formats. Indeed, open standards for document formats was the principal area of controversy for the open standards policy in Massachusetts.
Abstract: This work analyzes the extensive organizational and performance-related information submitted in annual reports from 1996-2003 by ninety-four universities' technology transfer offices (TTOs) to the Association of University Technology Managers (AUTM).
My analysis shows that university technology transfer activities continue to be predominantly patent-centric and revenue-driven with a single-minded focus on generating licensing income and obtaining reimbursement for legal expenses. University technology transfer activities do not extend far beyond this narrow focus; commercialization activities (e.g., number of start-up companies) and strategies to transfer innovation, more broadly, do not figure prominently. In fact, universities do not engage in a broad range of activities that might result successfully in a transfer of university-originating innovation to different sectors in society.
In this work, I urge that universities must go beyond generating revenue and actively pursue entrepreneurial and commercialization activities, and readily embrace alternative technology transfer methods, such as open collaborations, free participant use agreements, and royalty-free licensing. Such steps would likely result in the adoption and dissemination throughout society of university-originating innovations. In order to embrace this comprehensive approach to transferring innovation, university TTOs need to substantively broaden their business models and restructure themselves within the university hierarchy so that the structural incentives that are implemented are compatible with a broader vision of technology transfer.
Technology, Transfor, Patent, Entrepreneurship, Innovation, Universities, Bayh-Dole
Abstract: Research and development in agricultural biotechnology is closely related to property rights protection. Scholars have urged that the increasing participation of the private sector in this area requires a higher degree of protection than in previous decades, where government and universities were the main providers of new seed varieties. Most developing countries have been pressured into improving their formal framework for property rights protection by implementing the International Union for the Protection of New Plant Varieties (UPOV) standards. Multinational companies in biotechnology and seeds pushed for new legislation and the adoption of international regulations as a condition for new investment in the farming sector. In this paper, we show that the adoption of any regulatory framework for intellectual property rights is not going to be effective if it is not accompanied by a general framework that fosters business investment. The empirical evidence presented in this paper shows that countries with better institutional framework have attracted more investors and traders into the local seed market.
Abstract: Information technologies affect a variety of fundamental societal concerns, such as privacy and free speech. Policymakers currently analyze each societal concern as sui generis, ignoring commonalities among IT issues. This paper develops a comprehensive descriptive framework to address a variety of IT policy problems. The Information Technology and Societal Interactions (ITSI) framework theorizes how information technology develops, evolves, and influences society. This framework ties together several existing theoretical concepts, while translating them into a practical framework that policymakers can apply to real problems. The framework is illustrated by analyzing wireless security issues. The article seeks to move beyond Lessig's work by providing a clearer and more comprehensive view of how IT interacts with society. An urgent need has arisen for this type of theoretical framework. Unlike other fields, a compelling theoretical approach within IT law and policy does not exist. As a result, each policy issue is treated as unique and policymakers overlook commonalities. This occurs because the existing theoretical approaches, such as structuration and actor-network theory (ANT), fail to provide applicable models for addressing concrete problems. ITSI is inspired by structuration and ANT, but is tailored to the theoretical and practical needs for analyzing the interactions between IT and society. ITSI focuses on four main relationships within ITSI. These relations are: (1) how technology affects individuals, (2) how individuals reconfigure technology, (3) how developers shape technology, and (4) how society, in mass, can intervene and alter how technology operates. ITSI builds upon a large corpus of descriptive and normative scholarship by computer scientists, sociologists, communications scholars, and legal scholars. The contribution here does not define a new set of relationships between society and information technology, but explicates existing relationships and develops a descriptive framework that provides analytical insights. This article illustrates ITSI through an analysis of security issues involved in wireless technology. The analysis found that consumers are not provided with simple and effective security because of the increased reliance on user configuration. ITSI led to this finding; it would not have emerged using conventional policy analysis. ITSI also provides solutions to this problem. Instead of looking toward users to improve security, policymakers should look to manufacturers to develop APs that are secure by design. The analysis ends by pointing out a number of strategies to influence manufacturers to improve the design of wireless APs.
Abstract: This review surveys recent developments in U.S. patent law and patent policy to highlight four trends that will inform the trajectory of developments in U.S. patent law - (a) continued active shaping of patent law doctrine and patent policy by the Federal Circuit; (b) the U.S. Supreme Court's renewed interest in patent law; (c) legislative changes to the patent law including statutory reform and judicial reform; and (d) the ripple effects of these developments (e.g., injunctions at the ITC; increased focus on inter partes reexamination; and the like) on the patent system as a whole.
Recent patent legislative reform illustrates that two clear stakeholders are coming to the fore - large pharmaceutical/biotechnology/life science companies and large information technology companies. Any unitary patent system - the same patent law for all technology sectors - must account for these stakeholders' differential reliance on patent assets in order to appropriate benefits from the marketplace for their innovations lest the motivation for a continued unitary system may be lost.
Abstract: The design of communication technologies is not autonomous, but is shaped by conflicting social groups. As a result, communication technologies may have different properties depending upon their designers. In this paper, we show how communication technologies are differentially designed depending upon their institutional environment. Specifically, we examine how the consideration of societal concerns, such as privacy, differs between universities, firms, consortia, and the open source movement. The results show the biases of each institution, whether it is the flexibility given to university researchers, the emphasis on profitable societal concerns by firms, or influential role given to members within a consortium or in the open source movement. The resulting analysis is useful for policymakers seeking to incorporate a specific societal concern into a communication technology. The analysis shows why a firm may not address or incorporate a societal concern, and as a result, policymakers may then have to look to other institutions to vindicate their preferences. To this end, this paper has highlighted tendencies and biases for each of these institutions when incorporating societal concerns.
Abstract: In recent years, many reform proposals have been presented in Congress for changing the patent system in the United States. Most of these proposals have been normative in nature and based on overcoming the many perceived shortcomings of the United States Patent and Trademark Office’s (“Patent Office”) performance. Nonetheless, actual legislative reforms have failed to materialize. In this Article, we claim that in order to understand the chances of success of any reform to the patent system, we should take a closer look at the patent system’s political economy. In particular, we should be aware of the different pressure groups with a stake in the system and their ability to influence congressional committees through which reform legislation is enacted. We study the different constituencies favoring or opposing the reform and the strength of their bargaining power based on publicly available empirical data on political contributions by different groups and analyze the impact of political contributions to individual congressional representatives on individual floor votes on the Patent Reform Bill of 2007. In addition, we also take into account the effect of the patent system on different technology industries and economic sectors. As we show, each proposal will generate winners and losers who will try to push reforms forward or prevent them from being enacted. In order to succeed, any reform will need a minimum consensus among these stakeholder groups: firms in different technology sectors, inventors, the patent bar (divided separately into patent prosecutors and litigators), the Patent Office, and the courts. Given the political processes, the final result of any reform will depart from any theoretical blueprint. As a consequence, a deeper understanding of this political process allows us to better understand the dynamics of reforms and the resultant characteristics of the patent system. In the end, as in any other institutional device, the characteristics and performance of the patent system, plus its sustainability or reforms over time, depend on the preferences of the polity, specifically on the preferences of the groups with a definite stake in the performance of the system. We also determine that the effects of the patent system on different technology and economic sectors will ultimately shape the different constituencies favoring or opposing the reform. We observe that support for any patent reform will depend on the specific factors that define the structure of each economic sector. Furthermore, in each sector, firms have different preferences depending on their economic power and particular stakes in the patent system.
Abstract: The American public realizes the growing scarcity of petroleum and the desirability of the development of alternative fuels. In 2005 and 2007, the U.S. Congress passed laws that aim to promote the consumption of renewable biofuels. The Environmental Protection Agency then designed the Renewable Fuel Standard Program (RFS) that mandates a certain volume of renewable biofuel consumption over the period of 2006-2022. The current policy discussions and analyses regarding the RFS have focused heavily on environmental issues, but we know very little about the U.S. ethanol industry itself. In this study, we examine the potential impact of the RFS on the development process of the U.S. ethanol industry from the viewpoint of industrial policy using firm-level, ethanol plant data and analysis together with economic modeling to explain our statistical results. Our analysis suggests that the RFS is unlikely to contribute to improving cost conditions, even though successful development of the U.S. ethanol industry hinges on this factor. Other incentive schemes therefore need to be enacted in order to realize the full potential of the RFS. Otherwise, ethanol will not emerge as a viable fuel alternative to conventional fossil fuel.
Biofuel regulation, Innovation, Technological progress
Abstract: Should the law permit hackback? How should the law on self-defense in cyberspace be designed? In this paper, we use game-theoretic analysis to develop criteria that determine whether police enforcement, litigation, or hackback is best, and under what circumstances. Our model suggests that the law should permit hackback only if: (1) other alternatives, such as police enforcement and resort to courts, would be ineffective; (2) there is a serious prospect of hitting the hacker instead of innocent third parties; and (3) the damages that can be potentially mitigated to the defender's systems outweigh the potential damages to third parties. The law should require that counterstrikers use only force that is necessary to avoid damage to their own systems. Also, proper liability rules will induce counterstrikers to internalize the damages of third parties in their decision-making. Finally, better intrusion detection systems (IDS) and traceback technology improve the deterrent effect and efficacy of hackback.
Abstract: This report is in response to a request from the Federal Judicial Center to perform a study of the use of special masters in patent litigation. The analysis is based on 116 patent cases terminated in 2005 and 2006 that were identified by the Federal Judicial Center as having involved special masters. Our findings are as follows: 1. The individuals appointed as special masters are, on the whole, highly qualified with substantial legal experience and strong professional credentials. They are almost exclusively specialists in patent law. 2. The orders appointing special masters universally specify the scope of work of the master and usually describe how he or she will be compensated. However, the orders are less compliant with the other requirements of Federal Rule of Civil Procedure 53(b). 3. Special masters tend to be appointed in the most complex (i.e., long duration) of patent cases. These cases are the least likely to be resolved through a negotiated settlement and are among the most expensive and long-lived cases. Masters tend to be appointed after the case has already endured longer than the average case, suggesting that the court and parties have recognized the complexity of the issues at hand and seek expert help. 4. Special masters are most likely to be employed to oversee the discovery process or to conduct claim construction. They usually write a report recommending how to handle these issues. Sometimes they preside over the Markman hearing. 5. The reports and recommendations produced by the special masters are nearly always adopted by the court, usually with no modification. 6. The appeal rate among cases in which special masters were employed was comparable to that of the total population of patent cases, as was the reversal rate. 7. Since special masters are most often appointed in complex, long-duration patent cases, it is meaningful to compare the appeal rate and the reversal rate of special-master-appointed patent cases with other complex patent cases. The appeal rate among cases in which special masters were employed was half that of other complex patent cases. The reversal rate is also lower for patent cases with special masters when compared to the reversal rate for all complex patent cases. 8. The most common area in which special masters worked - claim construction - is less likely to be the subject of an appeal when compared to the appeal rate for claim construction in all complex patent cases.
Abstract: Governments around the world are considering implementing or even mandating open standards policies. They believe these policies will generate economic, socio-political, and technical benefits. In this article, we analyze the failure of Massachusetts’s open standards policy as applied to document formats. We argue that it failed due to the lack of “running code.” Running code refers to multiple, independent, interoperable implementations of an open standard. With running code, users have a choice in their adoption of a software product, and consequently, gain from the economic and technological benefits that accrue and which were, at the outset, the objectives behind the creation of the open standard. Hence, we urge governments to incorporate a “running code” requirement when adopting an open standards policy.
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