The Choice Between Implied Warranty and Tort Liability for Recovery of Pure Economic Loss in Contract-Torts : A Comparison of Judicial and Private Ordering in the Real Property Market

The Supreme Court\u27s decision in Winnipeg Condo. Corp. No. 36 v. Bird Construction expanded recovery for pure economic loss in tort by allowing a subsequent purchaser to recover the cost of repairing a dangerous defect arising out of negligence in the construction of a building. This article outlines the theoretical justifications for extended tort liability when the parties are linked by a contractual chain but are not in privity, and concludes that it is not possible to determine whether extended liability is desirable without considering the details of the market in question. A comparison between tort liability and the protection afforded by the warranties offered by the New Home Warranty Corporations across the country indicates that the private warranties offer a better trade-off between protection and cost than does tort liability. The article further argues that while the builder\u27s liability should be extended, it should be accomplished through a contractually implied third-party beneficiary warranty of fitness for habitation rather than through expansion of tort recovery for pure economic loss. Among other factors, the article considers the view that indeterminacy of recovery militates against expanded tort recovery and argues that indeterminacy per se is not as important as increased litigation and transaction costs that accompany expanded tort recovery

Demystifying Patent Holdup

Patent holdup can arise when circumstances enable a patent owner to extract a larger royalty ex post than it could have obtained in an arms length transaction ex ante. While the concept of patent holdup is familiar to scholars and practitioners—particularly in the context of standard-essential patent (SEP) disputes—the economic details are frequently misunderstood. For example, the popular assumption that switching costs (those required to switch from the infringing technology to an alternative) necessarily contribute to holdup is false in general, and will tend to overstate the potential for extracting excessive royalties. On the other hand, some commentaries mistakenly presume that large fixed costs are an essential ingredient of patent holdup, which understates the scope of the problem. In this Article, we clarify and distinguish the most basic economic factors that contribute to patent holdup. This casts light on various points of confusion arising in many commentaries on the subject. Path dependence—which can act to inflate the value of a technology simply because it was adopted first—is a useful concept for understanding the problem. In particular, patent holdup can be viewed as opportunistic exploitation of path dependence effects serving to inflate the value of a patented technology (relative to the alternatives) after it is adopted. This clarifies that factors contributing to holdup are not static, but rather consist in changes in economic circumstances over time. By breaking down the problem into its most basic parts, our analysis provides a useful blueprint for applying patent holdup theory in complex cases

The Effect of FRAND Commitments on Patent Remedies

This chapter addresses a special category of cases in which an asserted patent is, or has been declared to be, essential to the implementation of a collaboratively-developed voluntary consensus standard, and the holder of that patent has agreed to license it to implementers of the standard on terms that are fair, reasonable and non-discriminatory (FRAND). In this chapter, we explore how the existence of such a FRAND commitment may affect a patent holder’s entitlement to monetary damages and injunctive relief. In addition to issues of patent law, remedies law and contract law, we consider the effect of competition law on this issue

The Choice Between Implied Warranty and Tort Liability for Recovery of Pure Economic Loss in Contract-Torts : A Comparison of Judicial and Private Ordering in the Real Property Market

The Supreme Court\u27s decision in Winnipeg Condo. Corp. No. 36 v. Bird Construction expanded recovery for pure economic loss in tort by allowing a subsequent purchaser to recover the cost of repairing a dangerous defect arising out of negligence in the construction of a building. This article outlines the theoretical justifications for extended tort liability when the parties are linked by a contractual chain but are not in privity, and concludes that it is not possible to determine whether extended liability is desirable without considering the details of the market in question. A comparison between tort liability and the protection afforded by the warranties offered by the New Home Warranty Corporations across the country indicates that the private warranties offer a better trade-off between protection and cost than does tort liability. The article further argues that while the builder\u27s liability should be extended, it should be accomplished through a contractually implied third-party beneficiary warranty of fitness for habitation rather than through expansion of tort recovery for pure economic loss. Among other factors, the article considers the view that indeterminacy of recovery militates against expanded tort recovery and argues that indeterminacy per se is not as important as increased litigation and transaction costs that accompany expanded tort recovery