Efficient Remedies for Breach of Warranty

This article attempts to suggest valuable refinements and extensions of the economic theory of warranty by explicitly considering the choice of remedies for breach of warranty in conjunction with the choice of warranty protection itself. In particular, it offers explanations for the prevalence of replacement terms rather than refund terms in warranties. Economists studying the general issue of breach of contract have noted that the choice of remedy has important implications for risk sharing, renegotiation, transaction-specific investment, and the incentive to breach.5 This article derives much of its insight from the recognition that work on the economics of contract breach has much to say that is relevant to the economics of warranties

Error Propagation Concepts Including Flight Dynamics for Total System Performance Analysis During GBAS based Initial CAT-III Approach and Landing

In order to assess the integrity risk for GBAS based automatic approach and landing, we investigated a total performance concept of a combined system consisting of an ILS look-a-like GBAS landing system (GLS) and a DeHavilland Dash-2 Beaver aircraft. We propagated four basic pseudorange errors to a position error distribution, which was then the source of position uncertainties for the GLS installed in the aircraft. Results show that the vertical total system error (TSE) in the steady state final approach lags behind the vertical navigation system error (NSE). The TSE is smoothed and preserves the general temporal sequence of the error. A reduction of 30\% of the TSE standard deviation with respect to the NSE only occurs during a period of glide slope overshoot, where the autopilot uses large and steadily declining elevator deflections to return to the desired glide path. With minor adaptations this concept can be refined and a possible error reduction may be achieved

Vertical Restraints and Intellectual Property Law: Beyond Antitrust

This Article describes how intellectual property (IP) law regulates six types of vertical restraints: restrictions on the field or location of use; restrictions on sharing; control over the frequency of use; restrictions on repair and modification; packaging requirements; and impediments to a buyer\u27s decision to exit its relationship with a seller. There are three reasons to focus on IP oversight of vertical restraints separately from antitrust oversight. First, IP law covers a broader range of vertical restraints. Second, economic analysis of the antitrust-IP conflict focuses mainly on the potential of vertical restraints to exclude downstream competitors. IP doctrines that regulate vertical restraints raise additional policy concerns including whether IP law should aid a seller\u27s attempt to control: the economic life of a durable good; sharing of copyrighted works and patented technology; arbitrage that undermines price discrimination; or a buyer\u27s exit decision. Third, because IP law uses different policy instruments it possibly offers more effective regulation of vertical restraints, and should be used to complement antitrust regulation. IP doctrines that discourage vertical restraints generally cause smaller rent-seeking problems than antitrust doctrines with a similar effect. IP rules that provide background entitlements are relatively clear compared to antitrust rules which require uncertain rule of reason analysis. Furthermore, IP prohibitions that are implemented through preemption or misuse do not give rise to treble damages, and can only be used defensively. In contrast, broad antitrust regulation of vertical restraints creates a threat of opportunistic suits because of uncertainty, the lure of treble damages, and the possibility of initiating an opportunistic or anti-competitive suit against a vulnerable defendant

Controlling Opportunistic and Anti-Competitive Intellectual Property Litigation

It is useful to think of intellectual property (IP) law both as a system of property rights that promotes the production of valuable information and as a system of government regulation that unintentionally promotes socially harmful rent-seeking. This Article analyzes methods of controlling rent-seeking costs associated with opportunistic and anti-competitive IP lawsuits. My thinking is guided to some extent by the analysis of procedural measures for controlling frivolous litigation, and analysis of antitrust reforms designed to control strategic abuse of antitrust law. These analogies lead me to focus on pre-trial and post-trial control measures that reduce the credibility of weak IP lawsuits. I conclude that intellectual property courts show some awareness of the value of fee-shifting and summary judgment as tools for controlling opportunistic and anti-competitive lawsuits. Courts display less awareness of the need to restrict preliminary injunctions or encourage declaratory judgments as control measures. Antitrust suits have only a limited role in deterring the most egregious anti-competitive conduct. Besides attacking the credibility of weak lawsuits, it is probably desirable to eliminate the threat of some kinds of IP lawsuits entirely. This could be accomplished by eliminating or restricting IP rights such as business method patents, trade dress protection of product configuration and design, and copyright protection of art reproductions. In other words, it may be desirable to curtail the standing of parties who own IP rights that generate a substantial threat of opportunistic or anti-competitive litigation with little corresponding benefit in terms of productive incentives

Invention, Refinement and Patent Claim Scope: A New Perspective on the Doctrine of Equivalents

The doctrine of equivalents (DOE) allows courts to expand the scope of patent rights granted by the Patent Office. The doctrine has been justified on fairness grounds, but it lacks a convincing economic justification. The standard economic justification holds that certain frictions block patent applicants from literally claiming appropriately broad rights, and thus, the DOE is available at trial to expand patent scope and overcome these frictions. The friction theory suffers from three main weaknesses. First, the theory is implausible on empirical grounds. Frictions such as limits of language, mistake, and unforeseeability are missing from the leading cases. Second, there is not a convincing answer to the question of why the doctrine of equivalents, rather than some other doctrinal approach, should be used to overcome the frictions. The frictions can be overcome, or at least mitigated, for example, by astutely amending claims during prosecution; through a reissue proceeding after the patent issues; or through artful claim drafting as an initial matter. Third, proponents of a far-reaching DOE fail to pay adequate attention to the notice function of patent claims and are insufficiently sensitive to patent law\u27s delicate incentive dynamic. We develop a better explanation of why claim breadth falls short of the maximum breadth allowed by patent law. Our explanation replaces the passive patent attorney depicted in the friction theory with an active inventor and attorney who are capable of responding effectively to the frictions mentioned above. Whether an inventor obtains the broadest permissible claim breadth depends mostly on the talent and effort of the inventor and attorney in identifying what has been enabled. A good attorney predicts the embodiments that could be chosen by infringers and finds appropriate language to draft a suitably broad claim. We call this process claim refinement, and we develop a refinement theory of the doctrine of equivalents. We justify the doctrine of equivalents primarily as a tool for promoting efficient investment in claim refinement. Although critics of the DOE contend the doctrine unduly inhibits competition, we show the degree of competition is often unaffected by the presence or absence of the DOE. The inventor can block competition in the absence of the DOE by drafting broad patent claims. The DOE should be used to avoid socially wasteful preemptive refinement. We reject the popular notion that the DOE is especially appropriate in the case of unforeseeable, later-developed technology. We reach this conclusion because in certain cases patent applicants can capture unforeseen embodiments at relatively low cost through clever claim drafting strategies. And in other cases unforeseen equivalents are unattainable no matter the amount of time and money spent on refinement efforts. In the latter cases, patent applicants would not exert much effort refining their claims to cover these equivalents, and inventor\u27s incentives would not be much affected by a minute probability of loss of effective patent protection

Pharmacogenomics, Genetic Tests, and Patent-Based Incentives

Pharmacogenomics promises to revolutionize medicine by using genetic information to guide drug therapy. Genetic tests will help doctors improve drug safety and efficacy by better matching patients and drugs. This Article evaluates the effectiveness of patent-based incentives to create genetic tests, and the optimal mix of public and private sector pharmacogenomic R&D. Drug patent owners have a strong incentive to develop genetic tests that predict adverse drug reactions and allow them to market drugs that otherwise would be shelved. Incentives are also strong for genetic tests that are created as part of the drug development process. Incentives tend to be weaker for genetic tests that are used in conjunction with existing drugs. Drug patent owners might gain or lose profit from introduction of genetic tests into existing drug markets. Profits may fall because of lost sales; or profits may rise because drugs are more valuable to appropriate patients, and because drugs become more differentiated. Public sector R&D should target genetic tests that are likely to be underprovided by the private sector because private returns are low relative to social returns or private costs are high relative to social costs. Private returns are relatively low when the rate of adoption of a genetic test is apt to be low, when test results increase consumer heterogeneity and consumer bargaining power, and when a test reveals information relevant to the use of more than one drug. Private costs are relatively high when test innovators need to obtain costly patent and trade secret licenses

Business Method Patents and Patent Floods

Technological breakthroughs occasionally set off floods of inventions and associated patents. The decline of the business method exception to patentability is likely to increase the frequency of patent floods. Future technological breakthroughs might now cause two different patent floods: a flood of patents covering the relevant technology, and a flood of patents covering business methods in the new market opened by the breakthrough. Furthermore, a technological breakthrough is no longer a precondition for a patent flood. Any factor that opens a new market might cause a future flood of business method patents. A flood of related patents in a new market creates special problems for competition in addition to the usual problems that arise from market power associated with individual patents. Patent floods strain the resources of the Patent Office and adversely affect the quality of issued patents. Of particular concern, reduced patent quality increases uncertainty about the scope and validity of patents and increases the frequency of patent litigation. The fragility of the many start-ups in new markets makes them vulnerable to strategic patent litigation. Furthermore, a thicket of patents may stultify development of technology because of the cost of securing patent licenses from the large numbers of patent owners. Cross-license agreements and patent pools mitigate problems caused by floods, but such agreements could be difficult to reach in response to future business method patent floods. The heightened risk of patent floods is a problem unique to business method patents, and justifies exceptional treatment of business method inventions. It is probably socially desirable to use the subject matter and nonobviousness standards for patentability to restrict grants of business method patents

Fair Division

Book review of Hervé Moulin\u27s Cooperative Microeconomics: A Game-Theoretic Introduction and H. Peyton Young\u27s Equity: In Theory and Practic

Network Narrative: Prose Narrative Fiction and Participatory Cultural Production in Digital Information and Communication Networks

In this study of prose narrative created explicitly for participatory network communications environments I argue that network narratives constitute an important, born-networked form of literary and cultural expression. In the first half of the study I situate network narratives within a rich, dynamic process of reciprocity and codependence between the technological, material and formal properties of communication media on the one hand, and the uses of these media in cultural practices and forms of expression on the other. I point out how the medial and cultural flows that characterize contemporary network culture promote a codependent relation between narrative and information. This relation supports literary cultural expressions that invoke everyday communication practices increasingly shaped by mobile, networked computing devices. In the second half of this study, I extend theoretical work in the field of electronic literature and digital media to propose a set of four characteristics through which network narratives may be understood as distinct modes of networked, literary cultural expression. Network narratives, I suggest, are multimodal, distributed, participatory, and emergent. These attributes are present in distinct ways, within distinct topological layers of the narratives: in the story, discourse, and character networks of the narrative structure; in the formal and navigational structures; and in the participatory circuits of production, circulation and consumption. Attending to these topological layers and their interrelationships by using concepts derived from graph theory and network analysis offers a methodology that links the particular, closely read attributes and content of network narratives to a more distant understanding of changing patterns in broader, networked cultural production. Finally, I offer readings of five examples of network narratives. These include Kate Pullinger and Chris Joseph’s Flight Paths, Penguin Books and De Montfort University’s collaborative project A Million Penguins, the Apple iOS application The Silent History, Tim Burton’s collaboration with TIFF, BurtonStory, and a project by NFB Interactive, Out My Window. Each of these works incorporates user participation into its production circuits using different strategies, each with different implications for narrative and navigational structures. I conclude by describing these distinct strategies as additive participation – participation that becomes embedded within the work itself – and delineating different approaches that are employed independently or in combination by the authors and producers