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

Fair Division

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

Fair Division

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

Business Method Patents and Patent Floods

The decline of the business method exception to patentability will increase the frequency of patent floods. By patent flood, I mean a dramatic jump in the number of patents filed covering a specific class of inventions, as we now observe in e-commerce. Floods are likely to become more frequent as future entrepreneurs respond to the appearance of a new market with a spate of business method patent applications claiming new methods tailored to the new market. In Part II of this Essay, I recount the story of the recent demise of the business method exception to patentability and categorize different business method patents. Some “method patents,” as defined by patent law, really protect product features. These ersatz “method patents” pose the greatest risk of patent floods and threat to competition. In Part III, I predict that as markets open in the future, we will often see a flood of business method patents. In Part IV, I describe the problems that follow from a patent flood: low quality patents, increased litigation, exclusionary conduct, and delay of cumulative innovation. In Part V, I address the history of patent pools and cross-licensing agreements that emerged in response to previous patent floods as well as the benefits of pools compared to the risk that pools may facilitate cartelization or other antitrust problems. Finally, in Part VI, I discuss the patentable subject matter requirement and the nonboviousness standard in determining the validity of business method patents and regulating future patent floods

Comments on Open Source Genomics

I am going to make a few comments in the spirit of those made by Josh. I think the topic of Dan\u27s paper is very interesting. It covers a lot of ground, and I do not have time to talk about more than a single issue. Josh\u27s began discussing the similarity between academic research and open source, and then analyzed GPL. I want to go back to the first issue Josh raised and argue that, unlike Josh, I see some fairly significant differences between open source software and genomics. I want to talk about the cooperative ethic in the open source movement and compare it to the cooperative ethic in bioinformatics and argue that I do not see the ethic being as sustainable in the genomics world as it is in the open source world

Inventors, Entrepreneurs, and Intellectual Property Law

I am not sure why small business concerns have not had more influence on IP law. Perhaps the sentiment prevailing in antitrust law spilled over into IP law. American antitrust law has reached a near consensus that small firms get no special treatment under a law designed to protect competition, not competitors. ° In contrast, European competition law regulators are more likely to protect small business, and European patent policymakers openly fret about how to reform their patent law to promote small business.2 Regardless, my concern in this Article is mostly with the normative question: Should IP law favor small firms or give them any special attention? I will limit my discussion mainly to features of the law that are especially important to research intensive firms. My analysis distinguishes invention in small firms from innovation by small firms. I argue that IP law should do little to aid small firms as inventors, but possibly some favoritism toward small firms as innovators is appropriate. I lack the necessary empirical evidence to make a solid case for any sort of favoritism, but there are some good arguments for using IP law, not antitrust law, to protect small, high-tech firms from opportunistic and anticompetitive IP lawsuits. In contrast, I find little reason to put a thumb on the scale in favor of small firms when considering patent reform. I assess favoritism in terms of traditional notions of economic efficiency. Thus, I will not consider arguments about distribution, localism, or democracy that might support intervention on behalf of small firms. None of these arguments seem especially strong in this context

Patent Examination Priorities

Measures that discourage excessive patenting and claiming, propose shared examination responsibilities, and increase staffing all have potential to raise examination quality and alleviate the patent application backlog. So far these measures have been too limited to have much impact, and there is insufficient evidence to reliably judge their effectiveness. In this Article, I consider a different approach to examination reform. I take as given a significant scarcity of examiner time, and I ask how the PTO should set examination priorities. In other words, how much of their eighteen hours should examiners devote to the various tasks they are expected to conduct before allowing a patent to issue