Mindlessness and the Law

No less an authority than Milton Friedman has argued that improving the realism of assumptions in economic theory, although hardly essential to establishing the absolute validity of the theory (purely an empirical question), may offer several benefits. First, a “restructuring” (to use Posner\u27s term) of an assumption may help explain divergences between predicted and observed results. Second, an explanation of why a seemingly unrealistic assumption does not destroy the predictive value of a theory may strengthen the theory by connecting it to “a more general theory that applies to a wider variety of phenomena . . . and has failed to be contradicted under a wider variety of circumstances.” Also, a different and more “realistic” explanation of an assumption may facilitate an indirect test of the hypothesis by its implications. We hope this Article will make economic theory more attractive in all three of the above ways and will constitute an effective response to critics of law and economics. Part I of this Article reviews several behavior-based criticisms of economic analysis of law. In order to answer the criticisms discussed in Part I, we have included an introduction to psychological “script theory” in Part II. A brief description of the theory might have sufficed, but we hope that a fuller exposition, including some reference to empirical data, may more effectively provoke investigation and application to legal scholarship. Thus, in Part II we examine relevant models of human decisionmaking developed recently in the fields of psychology and social science, and these models are based on evidence that unconscious information gathering and assessment play an important role in human decisionmaking. Part III will use the models to suggest why economists\u27 seemingly unrealistic notions concerning human behavior need not blunt the value of their insight into the efficient deterrence rationale of the tort system. Section A of Part III accepts the validity of the handful of empirical studies demonstrating that people react to legal rules in the manner predicted by law and economics. We use the models described in Part II to suggest the mechanism by which those rules affect behavior. We conclude by defusing potential attacks that could be made on our explanation by researchers who demonstrate the existence of “cognitive illusions.” In Section B, we relax the assumptions underlying the economic model and consider Robert Ellickson\u27s claim that legal rules are frequently a less important determinant of behavior than cultural norms. We conclude that even if the assumptions underlying the economic model are faulty, law and economics remains a powerful tool for explaining the common law

Transaction Costs and Patent Reform

This article considers current proposals for patent law reform in light of a simple theory about intellectual property law: In a world without transactions costs, the assignment of property rights is not necessary to stimulate the optimal production of creative goods. Because potential users of inventions could contract for their creation, a compelling justification for granting property rights in these intangibles is the reduction of real-world transaction and information costs that hinder, or make impossible, contract formation between users and creators. Proposals for patent law reform, therefore, should be evaluated by whether a change in legal rights, or in the regulatory process increases or lowers these costs

Testing the Over- and Under-Exploitation Hypothesis: Bestselling Musical Compositions (1913-32) and Their Use in Cinema (1968-2007)

Some economists assert that as valuable works transition from copyrighted status and fall into the public domain they will be underexploited and their value dissipated. Others insist instead that without an owner to control their use, valuable public domain works will be overexploited or otherwise debased. This study of the most valuable musical compositions from 1913-32 demonstrates that neither hypothesis is true as it applies to the exploitation of songs in movies from 1968-2007. When compositions fall into the public domain, they are just as likely to be exploited in movies, suggesting no under-exploitation. And the rate of exploitation of these public domain songs is no greater than that of copyrighted songs, indicating no congestion externality. The absence of market failure is likely due to producer and consumer self-regulation

Mindlessness and Nondurable Precautions

Assuming initially that negligence law does not make the distinction between durable and nondurable precautions, this Article will first explain in economic terms why the failure of courts to take into account the cost of remembering may nonetheless be efficient. A substantial body of research on the phenomenon of mindless decisionmaking ( scripting ) suggests that most remembering is automatic--a nonconscious response to frequently encountered patterns of stimuli. Script theory suggests that once the behavioral script is in place, an automatic response operates at a very low cost. If so, the failure of courts to account for the cost of remembering would not be so startling. An examination of the case law in Part II of this Article, however, reveals that courts do consider the cost of remembering. The common law recognizes that not all forgetfulness is negligent and authorizes juries to find that reasonable people can forget. A close look at the case law reveals the sensitivity of the common law to the vagaries of human memory and the phenomenon of mindless decisionmaking. Nonetheless, Part III suggests that a focus on nondurable precautions may help explain the existence of negligence cases. Although the case law articulates efficient rules governing negligence in cases of forgetting, high information costs of the jury system may explain why negligence cases persists

Resolving Priority Disputes in Intellectual Property Collateral

Although a goodly amount of recent commentary provides guidance to practitioners on the pitfalls of perfecting a security interest in intellectual property collateral, and another body of work has undertaken the laudable task of proposing reform in the area, no comprehensive attempt has yet been made to help judges resolve the complex priority disputes that arise under existing law. In light of the increased use of intellectual property as collateral and the concomitant rise in litigation, guidance on the resolution of priority disputes in intellectual property collateral is sorely needed. For example, recent cases find Article 9 of the Uniform Commercial Code (U.C.C.) to be broadly preempted by federal intellectual property law and create significant differences between the way copyright and patent priority disputes are addressed, without providing a detailed analysis of the Supreme Court\u27s most recent pronouncement on intellectual property preemption. This Article criticizes these and other cases, provides guidelines for resolving the puzzling priority disputes that arise when intellectual property is taken as collateral, and clearly defines the proper contours of federal preemption. Part I of the Article will review well-established preemption principles, determine whether federal or state rules of decision apply to familiar patterns of dispute involving copyright collateral, and suggest the appropriate result in each case. The conclusions contradict recent academic and judicial discussion of the preemption issue that suggests an inappropriately broad preemptive scope for federal law. The key is not to examine preemption questions in the abstract, but to identify the precise disputes that federal law settles and leave for state law the disputes for which federal law provides no answer. Part II applies the same method of analysis to priority disputes involving patents as collateral and examines whether the current disparate treatment of patents and copyrights is warranted. To round out the discussion, Part III evaluates the effect of the Lanham Act on disputes over security interests taken in trademarks

Law and Literature Defining Itself

Earlier this spring, the University of Chicago Law School convinced Martha Nussbaum, University Professor of Philosophy, Comparative Literature, and Classics at Brown University, to join its faculty to teach law and literature. At Michigan and Duke, James B. White and Stanley Fish have long held joint appointments in their respective law schools and English departments. What use can law schools possibly have for literary critics? Although over 60 law schools, including Georgia, currently offer a class in law and literature, the focus of this interdisciplinary enterprise remains somewhat fuzzy