"Reasonable Patent Exhaustion" Free Download
U of Penn, Inst for Law & Econ Research Paper No. 17-29

HERBERT J. HOVENKAMP, University of Pennsylvania

A lengthy tug of war between the Supreme Court and the Federal Circuit Court of Appeals may have ended when the Supreme Court held that the sale of a patented article exhausts the patentee seller’s rights to enforce restrictions on that article through patent infringement suits. Further, reversing the Federal Circuit, the parties cannot bargain around this rule through the seller’s specification of conditions stated at the time of sale, no matter how clear. No inquiry need be made into the patentee’s market power, anticompetitive effects, or other types of harms, whether enforcement of the condition is socially costly or valuable, or has a positive or negative impact on innovation. None of this is relevant.

Lexmark was attempting to use patent law to impose a variable proportion tie – in this case, a requirement that users of its printers also use its own original equipment toner cartridges. The general although not unanimous consensus is that such arrangements are economically beneficial, and largely everyone agrees that they are beneficial when the seller lacks market power, as Lexmark did in this case.

Impression Products reveals an economic deficiency that manifests all too frequently when patent law is brought to bear on market practices. Economic concepts such as market power or output effects which are commonly used in antitrust law are virtually unknown in patent law. This fact has inclined the courts to go to wild extremes – such as equating every patent with monopoly, or concluding that a patent is a mere property right and that anything done within the scope of the patent should therefore be permissible. The result, as in this case, can be draconian rules that are indifferent to effects on innovation, competition, economic efficiency, or any other measure seems relevant to innovation policy.

One thing the Supreme Court did not discuss is the Patent Misuse Reform Act, which provides that no patent owner shall be denied relief in an infringement action because it “conditioned…the sale of the patented product on the…purchase of a separate product…, unless…the patent owner has market power…? That language clearly creates an exception to the exhaustion rule for tying arrangements where the defendant lacks market power. This paper considers whether the Supreme Court was correct to ignore that statute.

The exhaustion rule also produces odd result of giving patentees an incentive to argue that components that they sell do not embody their own patents. If the product is not covered by a patent, then it is not exhausted. At this writing the issue is being litigated in the Apple v. Qualcomm dispute over Qualcomm’s post-sale restrictions on telecommunications components.

The Supreme Court based its patent exhaustion holding on concerns about restraints on alienation, which it presented as rooted in the common law. But the common law’s rules on restraints on alienation are much more complex than the Supreme Court acknowledged. The common law typically upheld restraints that were limited in time, and restraints enforced by patent infringement actions are by definition limited by the life of the patent.

This paper concludes by arguing that the Supreme Court would have been wise to develop a more nuanced exhaustion rule that examined actual effects likely to result from a particular restraint.

"The Definition of 'Emolument' in English Language and Legal Dictionaries, 1523-1806" Free Download

JOHN MIKHAIL, Georgetown University Law Center

In its motion to dismiss in CREW et al. v. Trump, the Department of Justice (DOJ) defines the word “emolument? as “profit arising from office or employ.? DOJ claims that this “original understanding? of “emolument? is both grounded in “contemporaneous dictionary definitions? and justifies an “office-and-employment-specific construction? of that term. On this basis, it argues that the Emoluments Clauses of the Constitution “do not prohibit any company in which the President has any financial interest from doing business with any foreign, federal, or state instrumentality.?

Unfortunately, DOJ’s historical definition of “emolument? is inaccurate, unrepresentative, and misleading. Particularly because the government may seek to utilize its flawed definition in subsequent court filings, this Article seeks to correct the historical record. It does so based on a comprehensive study of how “emolument? is defined in English language dictionaries published from 1604 to 1806, as well as in common law dictionaries published between 1523 and 1792.

Among other things, the Article demonstrates that every English dictionary definition of “emolument? from 1604 to 1806 relies on one or more of the elements of the broad definition DOJ rejects in its brief: “profit,? “advantage,? “gain,? or “benefit.? Furthermore, over 92% of these dictionaries define “emolument? exclusively in these terms, with no reference to “office? or “employment.? By contrast, DOJ’s preferred definition — “profit arising from office or employ? — appears in less than 8% of these dictionaries. Moreover, even these outlier dictionaries always include “gain, or advantage? in their definitions, a fact obscured by DOJ’s selective quotation of only one part of its favored definition from Barclay (1774). The impression DOJ creates in its brief by contrasting four historical definitions of “emolument? — two broad and two narrow — is, therefore, highly misleading.

The suggestion that “emolument? was a legal term of art at the founding, with a sharply circumscribed “office-and-employment-specific? meaning, is also inconsistent with the historical record. A vast quantity of evidence already available in the public domain suggests that the founding generation used the word “emolument? in broad variety of contexts, including private commercial transactions. This Article adds to that emerging historical consensus by documenting that none of the most significant common law dictionaries published from 1523 to 1792 even includes “emolument? in its list of defined terms. In fact, this term is mainly used in these legal dictionaries to define other, less familiar words and concepts. These findings reinforce the conclusion that “emolument? was not a term of art at the founding with a highly restricted meaning.

Finally, the Article calls attention to the fact that the government’s dictionary-based argument is flawed in another, more fundamental respect. Little or no evidence indicates that the two historical dictionaries — Barclay (1774) and Trusler (1766) — on which DOJ relies in its brief to defend its “office-and-employment-specific? definition of “emolument? were owned, possessed, or used by the founders, let alone had any impact on them or on the American people who debated and ratified the Constitution. For example, neither of these dictionaries is mentioned in the more than 178,000 searchable documents in the Founders Online database, which makes publicly available the papers of the six most prominent founders. Nor do these volumes appear in other pertinent databases, such as the Journals of the Continental Congress, Letters of Delegates to Congress, Farrand’s Records, Elliot’s Debates, or the Documentary History of the Ratification of the Constitution. By contrast, all of the dictionaries that the founding generation did possess and use regularly — e.g., Johnson, Bailey, Dyche & Pardon, Ash, and Entick — define “emolument? in the broad manner favoring the plaintiffs: “profit,? “gain,? “advantage,? or “benefit.?

To document its primary claims, the Article includes over 100 original images of English language and legal dictionaries from 1523 to 1806, as well as complete transcripts and easy-to-read tables of the definitions contained therein. A second study is currently underway of dictionaries from 1806 to the present, which seeks to determine how and why definitions of “emolument? may have changed over time. Collectively, these inquiries are designed to accomplish more than simply aiding judges and holding lawyers’ feet to the fire in the emoluments cases now pending in three federal courts. They also provide a basis for educating members of Congress, government officials, journalists, and the broader public about the historical meaning of this important yet obscure constitutional term.

"The Background of Modern American Business Law" Free Download
2017 J. Juris. 93

WILLIAM J. CARNEY, Emory University School of Law

This is an attempt to introduce lawyers trained in the civil law tradition about the unique features of the common law and equity traditions that influence American business entity law. The approach is historical, and traces the development of equitable ownership and equitable duties to the 14th century. It also introduces the uniquely English notion of the Internal Affairs Rule as the source of jurisdictional competition and innovation in the American system. It then proceeds with a more conventional discussion of the operation of American laws governing business entities.

"Sovereignty and Normative Conflict: International Legal Realism as a Theory of Uncertainty" Free Download
Harvard International Law Journal, Vol. 58, No. 2, 2017 (Forthcoming)

RYAN MITCHELL, The Chinese University of Hong Kong (CUHK) - Faculty of Law

“Realist? critical views on international law discount the idea that external norms determine the behavior and objectives of states. However, they risk replicating the very positions they criticize as a result of two common errors. First, they frequently assume that legal norms have clear and uncontested meanings that all observers will agree upon. Second, they assume the preexistence of the state as a rational, self-interested actor. The uncertain content of norms, and the uncertainty and fragility of the state’s stability, power, and rationality thus go unrecognized.

This Article proposes an agenda for further International Legal Realist theory premised on pragmatic analysis of the concept of state sovereignty. To this end, it develops the thought of the legal and political philosopher Carl Schmitt, arguably the most thorough and influential Realist critic of modern international law. For Schmitt, drawing on Thomas Hobbes, the sovereign power of the state is itself justified by the essential epistemic uncertainty of all disputes over norms and values. Only conscious institution of the sovereign authority could solve the conflict resulting when there is no agreement as to “who decides? how to define and apply contested norms — as is still the case today in many disputes among states.

Reemphasizing this centrality of epistemic uncertainty to the institution of sovereignty helps to set a new agenda for Realist international law theory. Neither states nor international norms and their interpreters should be taken as unproblematic elements of a unified order: rather both are heuristic tools that can be evaluated on the basis of their utility in procuring certain judgments on normative conflicts. From the North Korean nuclear weapons issue to the UK’s Brexit decision, this approach can potentially help legal scholars and practitioners to make more accurate determinations of the stakes and possible outcomes of many of today’s most pressing international legal disputes — and even help in conceiving alternatives to the current status quo.


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This eJournal distributes working and accepted paper abstracts on the history of law and legal institutions, as well as other historical inquiries that relate to current legal issues.

Editor: Reva B. Siegel, Yale University


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Legal History eJournal

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University of Chicago (Deceased) , University of Chicago - Department of Political Science