Alice in Wonderland Meets the U.S. Patent System

Among the joys of being a professor, as distinguished from practicing law, are the leisure and incentive to think and write about the big picture. Another joy is being able to say what you really think. We professors don\u27t have to focus on attracting clients or maintaining an impression of studied understatement and moderation for judges and juries. In this talk, I\u27m going to exercise both of these prerogatives. I\u27ve been thinking about the big picture in patents for over a quarter century, and I\u27m more worried than I\u27ve ever been. Let me begin by making my usual (and truthful) disclaimer. I\u27m not one of those academics who delights in being a gadfly and finding cause for alarm in every new law and every twist and turn of legal history. I\u27m the author of three treatises--on intellectual property generally, licensing, and cyberlaw. I\u27ve spent much of the last thirteen years of my life writing and revising them. Like treatises generally, each largely describes and explains our current intellectual property system, and each finds much to like in what both recent and earlier history have wrought. More fundamentally, I strongly subscribe to the view that the robust intellectual property system of Anglo-American society is in part responsible for our society\u27s extraordinary economic success over the last four centuries. But the warning signs of excess are everywhere. One need look no farther than the Federal Trade Commission\u27s White Paper that is the subject of today\u27s discussion. Think about it. Congress has clipped the FTC\u27s policy wings so often that it\u27s a wonder the agency can fly at all. Moreover, for the first time in decades, the executive and legislative branches of our government are controlled by Republicans, who have not generally been zealous advocates for aggressive antitrust enforcement and “pruning” the IP laws. Yet even in this very conservative political environment, the FTC--a much-chastened agency--has proposed ten recommendations (fourteen, if you count the subheads) for reining in the patent system. If that isn\u27t a clear sign that something desperately needs attention, I don\u27t know what is. Therefore I\u27m going to take the premise of my talk--that something is wrong-- for granted. In the short time that I have, I\u27d like to explore three further questions. First, what is wrong? Second, how can we fix it? And third, how important is it that we do so

Bush v. Boumediene: The Court is Back

This short article is a follow-up to a piece I wrote two years ago on Hamdan v. Rumsfeld, SSRN No. 913822. While applauding the result in Hamdan, I critiqued the Supreme Court for missing a “teachable moment” and obscuring the great issues at stake in prolixity and mind-numbing technical detail.In this article, I applaud the Boumediene v. Bush Court not only for its result—that the Constitution’s Suspension Clause can require habeas corpus for aliens held abroad under certain circumstances—but for its reasoning and style as well. This time, the majority of five did not miss its “teachable moment,” but placed its decision squarely on the bedrock of Anglo-American rule of law, going back to the Magna Carta. I outline how the majority did so. I also analyze how the dissenters misapplied the key precedent of Johnson v. Eisentrager, ignoring enormous factual distinctions. Finally, I analyze how the dissenters belittled the majority’s real deference to the executive and wrongfully accused the majority of a judicial activism that better characterized their own approach. In the footnotes, I analyze what guidance the Court provided on three factual issues underlying application of the Suspension Clause: (1) when it applies; (2) when it has been invoked; and (3) when an alternative to habeas corpus is an adequate substitute for it. I conclude that the Court provided significant general guidance only on issue (1)

Alice in Wonderland Meets the U.S. Patent System

The attached article outlines in some detail why I think it matters in two particular fields—software and business methods—in which the PTO has issued, and the Federal Circuit has upheld, what I think are too many patents on non-inventions. The following remarks take a broader and longer-range view of patents generally. The first reason why having a properly balanced patent system matters relates to the historical period in which we find ourselves. The world is now in the process of transferring the self-evident benefits of robust innovation, free markets, and free trade from Anglo-American and other advanced societies to the rest of the planet. This transfer, often pejoratively termed “globalization” by “multinational corporations,” involves far more than mere globalized marketing of American products and far more than just the largest industrial combines. It is an extremely complex, far-reaching process. In the long run, it is likely not only to improve the standard of living in, but also to democratize, much of the planet. When the history of this period has been written, this transition may be as important as—or even more important than—the Industrial Revolution. Innovation and the patent laws that encourage it are, of course, a vital part of this process. The second reason why patents and laws governing innovation are so important is seldom stated but perhaps most fundamental. The patent system and those laws affect a value we Americans perhaps hold most dear: liberty. Liberty is not only a matter of human rights or freedom from tyranny. There is such a thing as economic liberty. Indeed, as raw tyranny of the type exemplified by Saddam Hussein recedes from the world stage, economic liberty no doubt will become more and more important

Food Patents: The Unintended Consequences

This short paper explores the unintended consequences of this strong economic incentive. The underlying assumptions of patent law and its economic incentive are that innovation is good, and newer is better. But is that always so? Science and history suggest maybe not, for some very fundamental reasons. And there are reasons to believe that the risks of unintended consequences of innovation in food may be more hazardous than those in other fields of innovation

Palsgraf, Principles of Tort Law, and the Persistent Need for Common-Law Judgment in IP Infringement Cases

This short paper attempts to show how courts can build-and are building-a rational jurisprudence of secondary liability for IP infringement upon the foundation of these two great common-law principles of tort law: proximate cause and culpability. Besides this introduction (Part I), the paper has four sections. Part II discusses the notion of proximate cause and its application to cases assessing liability for IP infringement. It also explores a modem, economic test for proximate cause: the concept of least-cost avoider. Part III discusses the principle of culpability in cases of secondary liability and how to reconcile it with the traditional strictness of primary liability. Part IV concludes with some observations about how decisions based on the probable consequences of alternative legal rules (Dare I say, policy ?), still lurking in this obscure, nerdy field of IP, might some day re-emerge to give the common law new life

The Supreme Court and the Federal Circuit: A Case of Supervision by Generalists

Many of the general rules that the Federal Circuit developed in its effort to simplify patent law turned out to be too crabbed and formalistic to do the job that Jefferson intended. As a result, the Supreme Court has had to step in. In virtually every case where it has done so, the High Court has rejected a narrow, formulaic rule proposed by the Federal Circuit and opted for something more general and flexible. This paper analyzes some key cases of that sort. In the process, it attempts to answer the question why ? Why did a specialized court fail to solve Jefferson\u27s problem? Are the general rules that Jefferson sought an illusion, or can we find them, and, if so, how

Palsgraf, Principles of Tort Law, and the Persistent Need for Common-Law Judgment in IP Infringement Cases

As lawyers, judges and law professors reach retirement age, there is little that we remember of our first-year course in torts. The cases we studied, our professors’ personalities—even the psychological trauma of the first pointed Socratic question directed at us—all are lost in the mists of time. Yet some things remain. Among them are the name and facts of Palsgraf v. Long Island Railroad Co., one of the most memorable cases in all of American common law. A great judge, Benjamin Cardozo, penned the majority opinion. The facts of Palsgraf stick in our minds because Judge Cardozo helpfully outlined them in his very first paragraph. Two men rushed to catch a moving train. One made it easily. The other, carrying a nondescript package covered in newspaper, teetered near the open door. A guard held the door open and reached out to steady him, causing the package to fall on the rails. The package turned out to contain fireworks, which exploded. The resulting shock wave “threw down some scales at the other end of the platform, many feet away.” The falling scales injured the plaintiff, who sued the railroad for negligence. These odd facts—a law professor’s bizarre hypothetical come to life—survive the passage of time and stick in memory. Yet time and custom have distorted Judge Cardozo’s opinion. We remember the case as one about proximate cause. Indeed, casebooks (at least in my student days) used Palsgraf to introduce us to that element of torts. Judge Cardozo, however, apparently thought the case was about duty and culpability, to which he devoted nearly all of his opinion. Cardozo wrote that there could be no duty to plaintiff unless the risk of injury to her was reasonably foreseeable. In other words, the railroad owed the plaintiff no duty unless its employee could reasonably foresee the danger to her and so was culpable in failing to avoid it. Only in dictum, in his penultimate paragraph, did Judge Cardozo address (and dismiss) the issue of proximate cause, writing “[w]e do not go into the question now.” That issue, he opined, was really a matter of damages: the remedy, not liability. Yet, over the years his opinion has become a symbol of the very thing he did not decide. Today we no longer consider proximate cause an element of remedy alone; it has become an element of the tort. Right and remedy are now inextricably intertwined, as befits a legal system that tries to provide no right without a remedy. Although bizarre, the simple facts of Palsgraf are worlds away from the technological complexity of the Internet, on-line file sharing, and Web-spread pornography. But the fundamental things apply. In a world where corporations are still legal abstractions and liability necessarily falls ultimately on people, we are reluctant to impose tort liability without evidence of proximate cause and culpability. Infringement of intellectual property (IP) is just a kind of tort. The “duty” to respect IP falls on the entire world, independent of contract and privity—a breadth of application characteristic of torts. Yet, duties must have their limits. They cannot extend so far outward that tendrils of unforeseen and unforeseeable liability infiltrate every part of our complex, interdependent economy. Judge Cardozo wrestled with how far along a railroad platform liability for dropping a package containing dangerous but hidden items should extend. Just so, courts today must decide how far out on the web of Internet commerce infringement liability must extend. Their decisions inevitably involve proximate cause. Insofar as culpability is concerned, IP infringement cases differ from other tort cases in one important respect. Primary or direct liability for infringement has always been a strict-liability offense, independent of culpability and the infringer’s intent or state of mind. Yet, secondary liability—contributory infringement, inducement liability and vicarious liability—is not so limited. As court after court has addressed novel issues of secondary liability, it has fallen back on the tried and true notion of culpability. The Supreme Court itself did so in creating a cause of action for intentional inducement of copyright infringement out of whole common-law cloth. Even the struggle to reconcile culpability with the strictness of direct liability is not new. Judge Cardozo wrestled with the very same question in Palsgraf. For him, the difficulty was reconciling the notion of culpability with the fact that negligence was and is a non-intentional tort. His decision earned a place in law school casebooks by creating a modified version of culpability for cases of negligence: failure to recognize and avoid foreseeable harm. By introducing the notion of foreseeability, Judge Cardozo recognized the non-deliberate nature of negligence but avoided the unfortunate consequence of unlimited liability for remote and unpredictable harm. His decision has come to stand for a simple but very general principle: prudential judicial reluctance to let liability extend too far. This short paper attempts to show how courts can build—and are building—a rational jurisprudence of secondary liability for IP infringement upon the foundation of these two great common-law principles of tort law: proximate cause and culpability. Besides this introduction (Part I), the paper has four sections. Part II discusses the notion of proximate cause and its application to cases assessing liability for IP infringement. It also explores a modern, economic test for proximate cause: the concept of least-cost avoider. Part III discusses the principle of culpability in cases of secondary liability and how to reconcile it with the traditional strictness of primary liability. Part IV concludes with some observations about how decisions based on the probable consequences of alternative legal rules (Dare I say, “policy”?), still lurking in this obscure, nerdy field of IP, might some day re-emerge to give the common law new life

IP and Health Care: New Drugs Pricing and Medical Mistakes

I propose to address briefly two important IP questions from an economic perspective: patented drug pricing in an international context and trade secret protection for health care outcomes. The first will involve some algebra; the second involves a bit of common sense that so far seems to have eluded us

eBay\u27s Practical Effect: Two Differing Visions

This short paper examines the likely effect of the Court\u27s three opinions on the actual practice of intellectual property cases in their remedial phase. The first part briefly discusses the unanimous opinion and its likely economic effect in increasing the already daunting complexity-and therefore the already considerable cost-of intellectual property litigation. The second part examines the first concurring opinion and the effect of its implicit suggestion that nothing much has really changed. The third part examines the possible practical effect of the second concurring opinion. The conclusion then offers a few general observations on where remedial practice in patent cases might go from here