Erik Hovenkamp

Don’t Talk about Him: Sir Cliff Richard OBE v. BBC

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Post by Samuel Beswick.

Sir Cliff Richard is the latest celebrity to win substantial damages for invasion of privacy by a news organization in England. In the summer of 2014, the BBC broke the story that Sir Cliff was under Police investigation in relation to an alleged historic sex offence. It broadcast with “colour and sensationalism” [¶55] the police search of his Berkshire home: dispatching reporters and a helicopter to the area, as well as to Sir Cliff’s other known residences in Europe. The singer was holidaying in Portugal with friends at the time. The Police dropped the investigation 22 months later. They brought no charges.

Sir Cliff sued the Police (who settled for £700,000 and a public apology) and the BBC. On July 18, the High Court of England and Wales found against the BBC and ordered payment of general, aggravated and special damages: Richard v. British Broadcasting Corporation [2018] EWHC 1837 (Ch).

Earlier this year my co-author and I made the argument that English privacy law is heading down a divergent path from other common law countries by embracing a framework that in practice favors privacy interests above conventional freedoms of speech and of the press. Mr Justice Mann’s judgment would appear to be a further illustration of our thesis. 

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AALS Section on Remedies – Call for Papers [Updated]

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Post by Erik Hovenkamp. The AALS Section on Remedies will host a program entitled, “Intellectual Property Remedies at the Supreme Court and Worldwide,” to be held on January 4 at this year’s Annual Meeting in New Orleans (Jan. 2-6). The Call for Papers is below. AALS Remedies Section – Call for Papers UPDATE: The deadline … Read more

Rakoff on the Five Justices of Contract Law

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Post by Erik Hovenkamp.

    In the private law workshop’s final meeting of the fall semester, we were pleased to host Professor Todd Rakoff, who presented his recent article, “The Five Justices of Contract Law.”  Rakoff begins by summarizing the conventional wisdom on the role of justice considerations in contract.  These accounts portray justice as having a fairly narrow ambit, taking a backseat to notions of efficiency and the freedom of exchange.  As an extreme example, Rakoff highlights the tendency of some law professors to regard justice considerations as being relegated entirely to the rarely successfully invoked doctrine of unconscionability.

    In Rakoff’s view, such characterizations markedly understate the extent to which contract law is shaped by the courts’ pursuit of justice.  He contends that justice considerations have had a significant influence on many common law doctrines, including some remedial standards, and that this is borne out in both the case law and the Restatements.  He synthesizes this broader role of justice into five distinct applications, the eponymous “Five Justices.”  Aside from characterizing these applications independently, Rakoff discusses instances in which they may conflict or overlap.

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Patents and the Public-versus-Private-Rights Distinction: Oral Argument in Oil States Energy Services v. Greene’s Energy Group

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Post by John Golden

On November 27, the United States Supreme Court heard oral argument in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712, a case that gives prominence to a question flagged in prior posts of May 30 and June 13: namely, whether patents involve public or private rights for purposes of the constitutionality of administrative cancellation of issued patent claims.  Article III of the U.S. Constitution states, “The judicial Power of the United States, shall be vested in one Supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.”  The Supreme Court has held that, despite this assignment of “judicial Power” and the more general principle of separation of powers, “a matter of ‘public right’ … can be decided outside the Judicial Branch.”  Stern v. Marshall, 564 U.S. 462, 488 (2011).  The Court has recognized that this “public rights exception” extends beyond “actions involving the Government as a party” and encompasses “cases in which the claim at issue derives from a federal regulatory scheme, or in which resolution of the claim by an expert government agency is deemed essential to a limited regulatory objective within the agency’s authority.”  Id. at 490.

In Oil States, the Court confronts the question “[w]hether inter partes review—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents [whose claims have been challenged by a third party]—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”  The Petitioner argues that the answer is “Yes” because issued patent rights are private property whose validity “Article III permits only courts to adjudicate.”  Brief for Petitioner 3.  Respondent Greene’s Energy Group argues that the answer is “No” because “[p]atent rights are public rights, that is, derived from a ‘federal regulatory scheme’ and ‘integrally related to particular Federal Government action.’ ”  Brief for Respondent Greene’s Energy Group, LLC 9 (quoting Stern, 564 U.S. at 490–91).  The U.S. government as “Federal Respondent” likewise argues that inter partes review addresses matters of public right and contends that the Petitioner’s “argument confuses the distinct concepts of private property and ‘private rights’—those rights that are not integrally related to federal government action.”  Brief for the Federal Respondent 18, 21. 

Over fifty amicus curiae briefs were filed in Oil States.  These briefs are, in general, too numerous to have their contents described in this blog posting, but you can find discussions of various amicus briefs in separate postings by Dennis Crouch on the Patently-O blog dated August 20, August 28, September 1, and November 1.  For purposes of disclosure, I should note that I participated in the filing of an amicus brief in support of the Respondents contending that questions of patent claims’ validity are matters of public right.  Brief of Amici Curiae Professors of Administrative Law, Federal Courts, and Intellectual Property Law in Support of Respondent 18–26.  This brief also noted a long-held (albeit not unanimously held) scholarly view that, under the Court’s precedents, even questions of “private right” may, generally speaking, be subjected to administrative adjudication as long as the rights in question are creatures of federal statutory law and as long as the results of administrative adjudication are subject to judicial review that is de novo on questions of law and at least in the nature of substantial-evidence review on questions of fact.  Id. at 28–29.  Under this view, Article III constraints seem satisfied by the Patent Act’s provision of a right to appeal the results of inter partes review to the U.S. Court of Appeals for the Federal Circuit.  Id. at 29–31.

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Algorithmic Identification of Property Law Families

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Post by Erik Hovenkamp      In the most recent Private Law Workshop, Yun-Chien Chang discussed his ongoing and very interesting effort (with Nuno Garoupa and Martin Wells) to use machine learning techniques to classify legal systems into families—groupings whose members are similar to each other, but relatively distinct from those in other groups.  The … Read more

Toward a Comprehensive Theory of Antitrust and IP Settlements

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Post by Erik Hovenkamp.

When will private settlements advance the normative objectives espoused by the relevant area of law, as opposed to straying away from them?  One sensible metric is to assess the similarity between (1) the positions the parties maintain post-settlement; and (2) the positions the parties would have maintained had they litigated (accounting for possible post-trial contracting).   Given that the outcome of litigation can rarely be predicted with certainty, we can interpret the second prong as the expected result of litigation—as weighted by the relative likelihoods the parties assign to the different possible outcomes.  To illustrate, suppose my doctor’s treatment of me causes me to suffer $1000 in harm, and there is a 50% chance that he will be held liable for negligence.  Then we will settle for about $500, for we cannot mutually agree on anything else.  This is precisely the expected result of litigation, and hence the settlement is representative of how the courts would apply the law to our dispute.

If we ignore things that might skew negotiations in one party’s favor (e.g. asymmetric ability to cover litigation costs), the above result is essentially a corollary of the Coase theorem.  If the court’s judgment won’t affect the final allocation of rights, then the parties just bargain over the distribution of welfare. Neither party will accept less than it expects to get through litigation, which is a function of the legal standards that would be applied by a court.  Thus, under these circumstances, private settlements will “emulate the law.”

But as I have emphasized previously, one important feature of the IP-antitrust interface is that the parties to a dispute are often prohibited from contracting out of a judgment that fails to maximize their (joint) profits.  Competitors in a patent dispute cannot “undo” a holding that the patent is invalid or noninfringed in order to revive the patent’s exclusionary power; they are obligated to stick with open competition.  The result is that rival firms often have a shared interest in settling an IP dispute on terms that deviate substantially from their expectations about litigation.  Specifically, if they expect litigation to produce a relatively competitive result (e.g. because the patent is likely invalid), they prefer to evade that outcome by settling on terms that restrain competition substantially, resulting in higher prices and larger profits.   The result is that these settlements do a very bad job of promoting IP and antitrust policy objectives; they do not emulate the law.  

In my recent paper with Jorge Lemus, Proportional Restraints and the Patent System, we propose a comprehensive standard for evaluating patent settlements under the antitrust laws, along with a set of economic tools for administering it practicably.  In what follows, I provide an overview of the underlying problem and our proposed solution. 

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