STUART J. H. GRAHAM, Georgia Institute of Technology - College of Management, University of California, Berkeley School of Law - BCLT
Email: stuart.graham@mgt.gatech.edu
DIETMAR HARHOFF, University of Munich - Munich School of Management, Centre for Economic Policy Research (CEPR), Center for European Economic Research (ZEW), Institute for Fiscal Studies (IFS), CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Email: harhoff@bwl.uni-muenchen.de

This paper assesses the impact in the US of adopting a patent post-grant review procedure (opposition). By employing novel methods for matching US patents to their non-US counterparts, we find that the opposition rate is about three times higher among the European Patent Office (EPO) equivalents of a sample of US litigated patents as against control-group (unlitigated) patents. Contingent upon reaching final judgment in EPO opposition, about 70 percent of these equivalent patents are either completely revoked or narrowed. Using these findings to inform a series of welfare estimates, we calculate a range of net social benefits that would accrue to the US from adopting a patent post-grant review. We discover that large social benefits would result primarily from the elimination of unwarranted market power, and less so from litigation cost savings per se. Our results provide evidence that the US could benefit substantially from adopting an administrative patent post-grant review, provided the mechanism is not too costly.

PATRICIA W. HATAMYAR, St. Thomas University School of Law
Email: phatamyar@stu.edu

This article is an empirical study of the effect of Bell Atlantic Corp. vs. Twombly, 550 U.S. 544 (2007), and Ashcroft vs. Iqbal, 129 S. Ct. 1937 (2009), two recent Supreme Court cases that portend the decline of “notice pleading� in federal civil practice.

The article analyzes how Twombly and Iqbal have begun to dismantle the regime of notice pleading by not only discarding the “no set of facts� standard of Conley vs. Gibson, 355 U.S. 41 (1957), but by changing or ignoring other principles that federal courts have followed for decades on 12(b)(6) motions. The statistical study then examines how Twombly and Iqbal may have affected federal district court rulings on 12(b)(6) motions in practice.

The statistical analysis of 1,039 cases shows that 49% of 12(b)(6) motions were granted (with or without leave to amend) in the cases selected (from May 2005 to August 2009). Further, the rate of granting such motions increased from 46% of motions decided under Conley, to 48% of motions decided under Twombly, to 56% of motions decided under Iqbal. A multinomial logistic regression indicates that under Twombly/Iqbal, the odds of a 12(b)(6) motion being granted rather than denied are 1.5 times greater than under Conley, holding all other variables constant.

Moreover, the largest category of cases in which 12(b)(6) motions are filed was constitutional civil rights. Motions to dismiss in constitutional civil rights cases were granted at a higher rate (53%) than in cases overall (49%), and the rate of granting 12(b)(6) motions in constitutional civil rights cases increased in the cases selected from Conley (50%) to Twombly (55%) to Iqbal (60%).

The article concludes that Twombly and Iqbal have resulted in a noticeable increase in the granting of 12(b)(6) motions by district courts, and suggests that such a result, if desirable, should be accomplished by the normal rule-amendment process.

SAM YOSPE, Columbia University - Law School
Email: syospe@gmail.com

In class action settlements, residual funds often remain after the class members have been compensated. If parties have not contemplated the allocation of the residual funds in their settlements, the judge has a great amount of discretion. The court can (a) order that the funds be returned to the defendant; (b) apply the funds prospectively for the indirect benefit of the class; (c) distribute the funds pro rata to the class members; or (d) declare that the funds escheat to the state or to the United States treasury.

This paper is primary concerned with the most controversial of these options, applying the funds prospectively for the indirect benefit of the class. This is called the cy pres doctrine, an equitable doctrine that has its origins in trust law. While courts have wide latitude to determine how to distribute cy pres funds, the most common method is to give the residual funds to a third party, generally a charity.

This paper will argue that, while cy pres is a valuable process, the total discretion afforded judges often makes distributions arbitrary and unpredictable. The paper addresses two broad problems with the current approach. Often, the cy pres approach suffers from distribution problems: The lack of “nexus� between the chosen cy pres beneficiaries and the underlying litigation, and the potential for bias that exists when judges have complete discretion. Additionally, the cy pres approach, as currently implemented by the courts, often causes efficiency problems.

This paper proposes some solutions to the current situation. These solutions include using the other distributive mechanisms at the court’s disposal, limiting the role of the judge to that of an arbiter, limiting the role of the lawyers involved in the process, and encouraging parties to contemplate residual funds in their settlement agreements. An additional solution is that Congress could enact a statute to control cy pres procedure, modeling the statute after one of the several state statutes that have recently been enacted.

JEFFREY A. PARNESS, Northern Illinois University - College of Law
Email: jparness@niu.edu

In 2009 in Grafner v. Department of Employment Security, an Illinois appellate court considered whether a nonlawyer hired from an employer services company could represent a former employer in an administrative proceeding before the Department of Employment Security in a case involving disputed employment compensation benefits allegedly owed a former employee. Relying, in part, on a Pennsylvania precedent, the majority found the nonlawyer could serve “as an adjunct,� especially where nothing was “intended to be intensely litigated�; minimal dollar amounts were at stake; “informal, speedy and low cost� proceedings were desired; there was a “long history of participation� by nonlawyer representatives; the proceedings were “largely routine� as there were no “complex and intricate legal problems;� and a relevant statute stated an individual or entity may be represented by a union or a duly authorized agent. A concurrer noted “the appropriate remedy� lies with the General Assembly or Supreme Court. Important questions remain after Grafner involving what Professor Stephen Gillers calls “fear of the other.� First, who should write any new laws on nonlawyer representation: the legislature, the high court, or the agency? In many states, including Illinois, (exclusive or primary) regulatory authority over the practice of law is vested in the high court. As well, should any nonlawyer representation standards vary between administrative agencies? For example, only some agencies have a “long history� of nonlawyer representation, while other agencies (like human rights commissions) routinely hear “complex and intricate legal problems.� Finally, to what extent should opportunities for nonlawyer representation differ before adjudications commence? If insurance adjusters regularly settle prelawsuit claims, other nonlawyers in similar settings may be equally qualified, though they could still be held to lawyer conduct standards as were certain adjusters in Jones v. Allstate Insurance, 45 P.3d 1068 (Wash. 2002).