Buying Teams

The Sixth Annual Berle Symposium reflects on Margaret Blair and Lynn Stout’s classic article: A Team Production Theory of Corporate Law. Blair and Stout recast the modern law of public corporations through the lens of the team production theory of the firm. Here, I apply Blair and Stout’s insights—emphasizing the value of team production, independent monitors, and intellectual property rights—to a novel corporate transaction structure: the acqui-hire. In an acqui-hire, a publicly owned technology firm wants to add a start-up’s engineers. Instead of simply hiring them, though, it buys the start-up, discards most of its assets, and retains the start-up’s engineers. These transactions are puzzling because, even though the buyer is ostensibly interested only in hiring the start-up’s engineers, some of the compensation is nonetheless diverted to the start-up’s investors. The only existing analysis of acqui-hires in the legal literature argues that cooperative norms in Silicon Valley are the primary driver of these transactions. While that analysis sheds useful light on important aspects of these deals, it underplays the importance of intellectual property, especially patents. Patents can facilitate the organization of team production in several ways, including by increasing the costs to team members of leaving the team. Large technology firms cannot acquire those patent rights by simply hiring the start-up’s engineers; instead, they must buy the start-up itself. Patent law is therefore a partial driver of the choice to pursue an acqui-hire because it enables the buyer to obtain assets useful in team production. A preliminary investigation using a novel dataset of sixty-three acqui-hires during the years 2011 and 2012 supports this proposition. The investigation reveals that, contrary to the pattern for all of the start-up’s other assets, existing and future patent rights typically follow the engineers to the buyer

A View of Copyright from the Digital Ground

This brief Response to Cathay Smith's Beware the Slender Man: Intellectual Property and Internet Folklore identifies how Professor Smith's article contributes to our understanding of the relationship between IP and creativity. Professor Smith conducted a granular case study of the process by which decentralized contributors developed the Slender Man mythology. The details she uncovers illustrate the complex motivations that lead people to contribute to collaborative creative projects. Her work also emphasizes the need to better understand how individuals organize creative collaborations, especially with respect to the mechanisms by which groups respond to creative failures. Finally, the Slender Man myth puts a fine point on the need to articulate a normative basis for copyright law independent of individual preference satisfaction elicited through market mechanisms

Better Mistakes in Patent Law

This Article analyzes patent mistakes—that is, mistakes made by the patent system when it decides whether a particular invention has met the patentability requirements. These mistakes are inevitable. Given resource constraints, some might even be desirable. This Article evaluates the relative costs of patent mistakes, so that we can make better ones. Three characteristics drive the costs of mistakes: their type (false positive or false negative), timing (early or late), and doctrinal basis (utility, novelty, nonobviousness, and so on). These characteristics make some mistakes more troubling than others. Consider, for example, the disclosure rules, which require that a patent reveal technical information about the invention. An early false positive on the disclosure rules occurs when the patent system wrongly grants a patent that does not adequately describe the invention. This kind of mistake forces the public to waste resources duplicating the inventor\u27s achievement. By the time of a late false positive, however, that wasteful duplication has already occurred. If we want to avoid the costs of false positives on disclosure, we will have to do so early. The Article analyzes the trade-offs involved in making mistakes of different types, at different times, and on different doctrinal bases. The conclusions here have important implications for persistent issues in patent law, including how closely courts should scrutinize the validity of issued patents and how the PTO should allocate scarce enforcement resources

The Central Claiming Renaissance

The Supreme Court has recently reinvigorated the law of patentable subject matter. But beneath the headlines proclaiming the return of limits to patent eligibility, a more profound shift has taken place: central claiming is reborn. The Court\u27s eligibility cases are significant outliers compared to today\u27s run-of-the-mill patent law because claim language plays little role in their analyses. In our modern peripheral claiming system, the claim language is the near exclusive guide to the patent\u27s boundaries. But in its earliest days, our patent system pursued a central claiming approach, in which the inventor\u27s actual work determined the patent\u27s scope. The Court\u27s eligibility cases focus on the inventor\u27s actual contribution to the field, precisely as a central claiming inquiry would. And they can be better understood once this return to central claiming is revealed. Indeed, the shift to central claiming points the way toward a principled approach to eligibility. The eligibility requirement aims to prevent patents from covering certain kinds of prohibited subject matter: laws of nature, natural phenomena, and abstract ideas. But every invention, at some level of abstraction, applies ineligible subject matter. In a peripheral claiming system, this levels-of-abstraction problem could lead courts to simply deem all claims eligible (as occurred for nearly thirty years) or all claims ineligible (as some fear will happen today). Central claiming offers a solution by focusing on what the inventor added to the storehouse of knowledge. It is that conttribution, rather than some abstraction from the claim language, that guides the eligibility analysis. There are several additional payoffs to uncovering the Court\u27s return to central claiming. It helps make sense of the Court\u27s eligibility jurisprudence, revealing two distinct threads in the cases-one focusing on ineligible contributions and another on implausible contributions-with distinct (though uneasy) normative foundations. More robust use of central claiming might also improve other areas of patent law. As a proof of concept, I show that it could provide a better approach to the exhaustion trigger, improve the law of divided infringement, and rehabilitate the written description requirement. These examples illustrate the potential of the central claiming renaissance

Better Mistakes in Patent Law

This Article analyzes patent mistakes-that is, mistakes made by the patent system when it decides whether a particular invention has met the patentability requirements. These mistakes are inevitable. Given resource constraints, some might even be desirable. This Article evaluates the relative costs of patent mistakes, so that we can make better ones. Three characteristics drive the costs of mistakes: their type (false positive or false negative), timing (early or late), and doctrinal basis (utility, novelty, nonobviousness, and so on). These characteristics make some mistakes more troubling than others. This Article compares the costs of making mistakes of different types, at different times, and on different doctrinal bases. These comparisons produce some surprising results-for example, under certain plausible conditions, it will be better to wrongly refuse to grant a patent than to wrongly invalidate a patent that had already been granted. The conclusions here have important implications for persistent issues in patent law, including how closely courts should scrutinize the validity of issued patents and how the Patent and Trademark Office should allocate scarce enforcement resources

The Problem of Creative Collaboration

In this Article, we explore a central problem facing creative industries: how to organize collaborative creative production. We argue that informal rules are a significant and pervasive—but nonetheless underappreciated—tool for solving the problem. While existing literature has focused on how informal rules sustain incentives for producing creative work, we demonstrate how such rules can facilitate and organize collaboration in the creative space. We also suggest that informal rules can be a better fit for creative organization than formal law. On the one side, unique features of creativity, especially high uncertainty and low verifiability, lead to organizational challenges that formal law cannot easily address, as demonstrated by recent high profile cases like Garcia v. Google, Inc. On the other side, certain informal rules can meet these challenges and facilitate organization. These informal rules, functioning through mechanisms like reputation and trust, can sustain organizational solutions without a manager, a hierarchical firm, or formal allocation of control rights. In addition to showing how informal rules can work without (much) formal law, we also sketch out the dynamics involved in more complex cases where informal rules function alongside formal law in organizing collaborative creativity

Patent Law: An Open-Access Casebook

Patent Law: An Open-Access Casebook is a comprehensive casebook covering all the fundamentals of the United States patent system. It is designed to be used as the primary text in a 3-credit or 4-credit patent law course. Any portion of the casebook may also, of course, be used separately. The work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. If you are interested in preparing a derivative work, please contact the authors.The Table of Contents for the book is as follows: 1. Introduction 2. The Invention, the Patent, and the Claim 3. Patentable Subject Matter 4. Utility 5. Disclosure 6. Novelty 7. Nonobviousness 8. Claim Construction 9. Infringement 10. Defenses 11. Plants 12. Designs 13. Post-Grant Proceedings 14. Remedie