Property and Contract at a Legal Acme? Stare Decisis and the Supreme Court — John Golden

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Post by John M. Golden

In Kimble v. Marvel Entertainment, LLC, No. 13-720, slip op. (U.S. S. Ct. June 22, 2015), the U.S. Supreme Court kicked off a momentous week with an opinion highlighting the importance of stare decisis.  More particularly, the justices grappled with whether to overrule a half-century-old holding “that a patent holder cannot charge royalties for the use of his invention after its patent term has expired.”  Id. at 1.  A six-justice majority chose to stick with the prior holding despite what the majority conceded to be a “broad scholarly consensus” criticizing this precedent on economic grounds.  Id. at 13.  In explanation of the decision, Justice Kagan wrote, inter alia, that (1) “[r]especting stare decisis means sticking to some wrong decisions”; (2) precedent involving interpretation of a statute has “enhanced force” compared to, say, precedent involving an interpretation of the U.S. Constitution; and (3) precedent involving property or contract rights, such as the patent law precedent in question, is further “superpowered” “because parties are especially likely to rely on such precedents when ordering their affairs.”  Id. at 7-10.  Indeed, according to the Court, “considerations favoring stare decisis are ‘at their acme’” in “‘cases involving property and contract rights.’”   Id. at 9 (quoting Payne v. Tennessee, 501 U.S. 808, 811 (1991) (Rehnquist, C.J.)).

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We’re all connected! Regulating Contracts for Electricity — Aditi Bagchi

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Post by Aditi Bagchi

The Supreme Court has agreed to review a federal appellate court decision overturning demand response regulation from the Federal Energy Regulatory Commission.  The issue on appeal is not one of private law but of federal jurisdiction.  The federal agency has authority to regulate the wholesale market but states retain authority over retail markets.  The problem is that there is no clear line between those markets.  The FERC regulation is designed to reduce wholesale prices but it does so by way of rebates for reduced retail demand.  The question is whether the regulation technically governs wholesale sales (whose prices are reduced) or retail sales (that don’t happen as a result of its incentives).

The jurisdictional lines in the Federal Power Act force the analytically unfortunate question of whether FERC Rule 745 governs wholesale or retail markets.  But the exercise of jurisdictional line-drawing may offer a lesson for common law regulation of contract as well.

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How Should We Understand Private Law Concepts? — Andrew Gold

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Post by Andrew Gold Given the recent blog debate about the distinctiveness of private law, I would like to raise a separate but related issue.  Often, when we talk about what private law is, we are concerned with what separates private law from other fields – how do we distinguish private law from public law?  … Read more

The Dark Side of Creativity — Janet Freilich

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Post by Janet Freilich

Work-arounds (innovations that arise in the course of designing a technology to avoid another inventor’s patent claim) are a long-standing feature of the patent system. The conventional wisdom is that work-arounds are good:

“We have often noted that one of the benefits of the patent system is the incentive it provides for “designing around” patented inventions, thus creating new innovation.”

Read Corp. v. Porter, Inc., 970 F.2d 816, 823 (Fed. Cir. 1992)

But are they? 

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SIOE (ISNIE) 2015: Institutions, Organizations, Economics — Yonathan Arbel

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Post by: Yonathan Arbel

As Dan Kelly noted in his last post, this weekend the SIOE (previously known as ISNIE) conference was held at Harvard Law School. The conference was, in my slightly biased judgment (I was assisting the president-elect Henry Smith and Janet Freilich with its organization), very successful, with about 200 paper presentations and about 250 participants. It was also very international, with participants hailing from 29 countries worldwide. The program can be found here; as the program shows, there is a great richness in the topics, methodologies, and institutional affiliations of speakers. This is a by-product of the ambitious goal the society set out for itself of studying the “nature, behavior, and governance of organizations and institutions.”

Henry Smith presents Harold Demsetz with the Elinor Ostrom Lifetime Achievement Award

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Let me note a few highlights and themes:

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ISNIE 2015 — Dan Kelly

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Post by Dan Kelly

The International Society for New Institutional Economics (ISNIE), soon to be renamed The Society for Institutional and Organizational Economics (SIOE), is hosting its 19th Annual Conference this weekend, June 18-20, at Harvard Law School.  The conference website includes details on this year’s program and papers.

The conference is sponsored by Harvard Law School through the Project on the Foundations of Private Law.  In addition to keynotes by Martin Nowak (Harvard) on “The Evolution of Cooperation” and Michael Whinston (MIT) on “Property Rights and the Efficiency of Bargaining,” the program includes a number of panels that intersect with private law topics, including agency and fiduciary law, contracts, intellectual property, and property rights.     

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A Frolic Of His Own — Anthony J. Sebok

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Post by Anthony J. Sebok

As I noted in my last post, some common law jurisdictions are still guided by an anachronistic hostility to the sale of lawsuits to strangers.  But some, like Wisconsin, are much more liberal.  For a proponent of the free alienability of litigation, liberal regimes pose a special challenge, which has to do with limits.  When should the sale of lawsuits be limited?  How should the rules governing limitations be designed?

Recently Judge Richard Posner decided a case where he found, under Wisconsin law, a reason to set aside the sale of a lawsuit.  The facts led him to quote Karl Marx and William Gaddis, and the case, Carhart v. Carhart-Halaska Int’l, LLC, 2015 U.S. App. LEXIS 9497 (7th Cir., June 8, 2015), is worth reading for Posner’s sly commentary on what appears to be at first just another example of lawyering that is, as the British say, too clever by half.

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Common Law in the Interpretation of Statutes: Akamai v. Limelight at the Federal Circuit — John Golden

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Post by John M. Golden

In patent law, networked technologies have brought to the fore difficult questions about liability in situations involving so-called “divided infringement.”  In a typical such situation, multiple parties contribute to the exploitation of a patented method, but no party performs all steps of the method.  Notably for the purposes of this blog, questions about whether anyone is liable for infringement in such situations have led judges at both the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit to direct attention to common law standards for joint tortfeasor liability.  In the end, more straightforward issues of statutory interpretation might dominate concerns about common law principles.  Cf. John F. Duffy & Richard Hynes, Statutory Domain and the Commercial Law of Intellectual Property, 102 Va. L. Rev. (forthcoming) (contending that “modern commentators are wrong in asserting that [patent and copyright] exhaustion doctrine evolved from common-law decisionmaking” as opposed to statutory interpretation) .  Nonetheless, the current debate highlights the extent to which modern statutory regimes can trigger reference to (and opportunities for academic guidance on) background principles of common law.

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Waiver and Arbitration of Tort Rights (continued) — Keith Hylton

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Post by Keith Hylton

In my last contribution to this blog, I discussed the different implications of waiving legal rights in standard one-on-one litigation and class action scenarios.  I noted predispute waivers can be socially desirable in both settings, but the danger of welfare-reducing waivers is greater in the class action scenario.

Let me take some time to elaborate here.  One of the basic results of the economic theory of litigation is that the private and social incentives to litigate diverge – this point was demonstrated in an article by Steve Shavell. In other words, an individual may have an incentive to file a tort claim in a setting where society’s welfare would be greater if litigation were prohibited.  This proposition does not depend on people being uninformed or suffering from various judgment biases; it holds when litigants are rational and fully informed.

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Private Law is Happening — John Goldberg

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Post by: John Goldberg

Kudos to NPL blogger Daniel Markovits for assembling and hosting last week an excellent two-day conference at Yale Law School as the capstone to his Spring ’15 Private Law Seminar. (It is surely a good sign for the field that Harvard and Yale now both have established programs on private law.) 

Here was the line-up of panelists and readings, which encompassed an appropriately diverse yet overlapping set of topics and methodologies, and gave rise to excellent discussions.

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The Analytic Jurisprudence of the New Private Law — Patrick Goold

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Post by guest blogger Patrick Goold

Backed by an impressive array of renowned legal scholars, and the subject of a Harvard Law Review symposium, the New Private Law (NPL) project has gripped the attention of jurists throughout the common law world. Yet, despite the attention this enterprise has quickly garnered, there is one curious aspect of the development that remains largely unexamined. That is, in challenging us to “understand private law” on its own terms, much of the NPL project falls within the boundaries of “analytic jurisprudence.” This focus on analytic questions is surprising because of the suspicion, and sometimes hostility, the American legal academy has traditionally shown towards this branch of legal scholarship. Therefore, in this post, I intend to demonstrate how analytic jurisprudence lies at the core of the NPL project and thereafter, to defend NPL’s reliance on analytic methods against some common critiques that will surely be presented sooner or later.

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Copyright and Joint Authorship—Lingering Confusion and a Missed Opportunity — Shyam Balganesh

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Post by Shyam Balganesh A few weeks ago, the Ninth Circuit, sitting en banc, decided the much-anticipated copyright case of Google v. Garcia. The case involved an actress, Cindy Lee Garcia, who was led to believe that she was performing for a film titled Desert Warrior. After her performance was recorded, the producer transformed her five-second … Read more

“Taking Turns”: Common Solution, Unusual Remedy — Dan Kelly

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Post by Dan Kelly

To facilitate coordination and mitigate conflicts, a common solution in everyday life is the idea of taking turns.  If two siblings or children are fighting over a toy (say, a ball or doll), a parent or teacher may suggest taking turns.  If drivers are exiting a crowded parking lot after work, church, or a ballgame, the implicit norm is to take turns.  Yet, this strategy of taking turns has received relatively little attention in law and the social sciences.

In “Taking Turns” (forthcoming Florida State University Law Review), Ronen Perry (Haifa) and Tal Z. Zarsky (Haifa) examine turn taking from both a fairness and efficiency perspective.  Their lead example is from a trusts and estates case, In re McDowell, 345 N.Y.S. 2d 828 (Sur. Ct. N.Y. 1973):

Two siblings jointly inherit their late father’s rocking chair. The chair has principally sentimental and no real economic value; it cannot be physically divided between them, and selling it to distribute the proceeds will compensate neither for the sentimental loss. What, then, should become of the disputed property? In a self-confessed “strange” decision in the McDowell case, the Surrogate’s Court of New York ordered that the two siblings take possession of the chair alternately for six-month periods; and that when one passed away, the other would obtain exclusive possession.

Are there other examples of turn taking in law and legal institutions, particularly private law?  Given the prevalence of turn taking as an informal solution to coordination problems, why does the formal law not embrace taking turns more frequently when it comes to remedies? 

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Should There be a Federal Policy on Arbitration? — Aditi Bagchi

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Post by Aditi Bagchi

The Federal Arbitration Act can be read merely to protect arbitration clauses from hostile judges.  That is, it may merely require neutrality with respect to arbitration.  Alternatively, it can be understood, together with the slew of federal cases overturning allegedly ‘hostile’ state decisions, as affirmatively friendly to arbitration.

In the recent 7th Circuit decision, Andermann v. Sprint Spectrum L.P, Judge Posner takes the former view.  He observes that it is not clear that arbitration should be preferred, but more importantly, there is no reason to treat arbitration terms differently than other contract terms.  Whatever Posner’s ultimate view about the utility of arbitration, he appears more committed to a strong default of neutral enforcement of contract without reference to public policies that might favor or disfavor particular terms.  As long as parties formally agree on arbitration, arbitration carries the mantle of freedom of contract.

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The Acrobatics of Usury — Yonathan Arbel

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Post By Yonathan Arbel

Perhaps one of the most plastic of all private law rules is the prohibition on usury. Judges and religious scholars have been pirouetting around this issue more-or-less gracefully for thousands of years. A recent interesting case in this regard is Bisno v. Kahn, 225 Cal. App. 4th 1087, 170 Cal. Rptr. 3d 709 (2014).  This case raises a question that is rarely asked: can a judgment-creditor charge any amount in exchange for delaying the execution of a judgment?

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Private Law Theory, Honor, and Related Norms — Andrew Gold

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Post by: Andrew Gold Private law theorists usually adopt morality criteria when assessing the plausibility of a given theory.  (For helpful assessment of these criteria, see Stephen A. Smith, Contract Theory 13-24 (2004)).  That said, private law sometimes incorporates concepts that are hard to square with the standard morality-based pictures of private law.  Nathan Oman … Read more

The Supreme Court on Public v. Private Law – John Golden

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Post by: John Golden

While we debate the nature of the distinction—or the lack thereof—between public and private law, perhaps we should take note that the U.S. Supreme Court has recently decided the issue.  Well, not by a long shot, of course, but in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015), justices engaged in spirited debate over the extent to which the interpretation of patent claims should be viewed as more analogous to the interpretation of private “written instruments such as deeds and contracts” than to the interpretation of statutes.  Id. at 840.  The dissenters in Teva explicitly linked this question to a traditional distinction between “‘core’ private rights” and “‘public rights,’” id. at 848 n.2 (Thomas, J., dissenting).  The justices viewed these questions as significant for—if not decisive of—whether the U.S. Court of Appeals for the Federal Circuit was right in viewing patent claim construction as a question of law for which appellate review is uniformly de novo even when a lower court’s claim construction reflects underlying factual findings.  A seven-justice majority rejected the Federal Circuit’s position.  En route to this result, the majority and dissenters produced opinions with snippets that relate to potential ways of distinguishing between public and private law.

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Interpretation in Omnicare v. Laborers District Council Construction Industry Pension Fund – Greg Klass

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Post by Greg Klass

In this first post, I’d like to point readers to opinions in Omnicare v. Laborers District Council Construction Industry Pension Fund, 575 U.S. ___ (2015). Though a securities fraud case, the Omni opinions raise more general questions about the private law of deception.

The issue in Omni was whether a company could be held liable under 15 U.S.C. § 77k(a) for so-called statements of opinion, such as “We believe that our contract arrangements with other healthcare providers, our pharmaceutical suppliers and our pharmacy practices are in compliance with applicable federal and state laws.” Slip op. at 3. The Sixth Circuit had held that such statements were actionable if the company’s beliefs were “objectively false.” The Supreme Court reversed, based on the common law rule that a statement of belief is (in most cases) actionable only if the speaker does not actually hold the belief. It is not enough to show that the belief was false. A plaintiff must show that it was not actually held.

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The Bundle of Sticks: Is There Anything It Can’t Do? — Henry E. Smith

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Post by Henry E. Smith

Last week, the Supreme Court decided Henderson v. United States.  Justice Kagan’s opinion for a unanimous court holds that a court can use its equitable powers to order the government to transfer a convicted felon’s firearms to a third party as long as the court is satisfied that the recipient will not give the felon control over the guns.  (Under 18 U.S.C. § 922(g), it is unlawful for a felon to possess a firearm.)  As reflected in the 9-0 result and the skepticism of the Justices about the government’s arguments for why a flat-out refusal to allow the felon any choice of transferee, the opinion might be regarded as an unremarkable bit of criminal law or statutory construction.

But then there’s this:

Section 922(g) proscribes possession alone, but covers possession in every form. By its terms, §922(g) does not prohibit a felon from owning firearms. Rather, it interferes with a single incident of ownership—one of the proverbial sticks in the bundle of property rights—by preventing the felon from knowingly possessing his (or another person’s) guns. But that stick is a thick one, encompassing what the criminal law recognizes as “actual” and “constructive” possession alike.

Slip Op. at 3-4 (citations omitted).  After gesturing to the bundle of sticks, Justice Kagan goes on to note that the right to sell or otherwise dispose of an item is a distinct incident of ownership and concludes that one can exercise the right to alienate without either actual or constructive possession.

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Naked Came the Assignment — Anthony J. Sebok

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Post by Anthony J. Sebok

Here is a simple question: why should it matter who brings a valid claim in private law?  Standing, of course, is an important mechanism that insures that courts spend their time only on cases that matter to someone, especially in public law.  But what if the party who was the victim of a genuine harm chooses to assign that claim to a stranger, in order (let’s assume) to let them bring it to the courts.  Why not let that happen?

It is commonly assumed that almost all legal rights are freely assignable:  contract rights, property rights, and even certain causes in action for damages.  But the law in both the United States and England is grappling with how far to take the principle of fee assignability when it comes to “naked” assignments – that is, the assignment of causes of action for the redress of a wrong, not the collection of a debt or the performance of a contract.

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Arbitration and Opportunism — Aditi Bagchi

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Post by Aditi Bagchi

A few weeks ago the Sixth Circuit decided Shy v. Navistar Int’l, Corp., in which a retiree trust fund sued Navistar for allegedly manipulating its corporate structure to avoid payments to the fund required under a consent decree. Navistar paid large sums to the fund for several years, culminating in a $71.6 million payment in 1999. Thereafter the payments abruptly stopped. The fund claims Navistar created a variety of entities to shield its substantial profits from the reach of the consent decree.

At issue in the federal case was not the merits of the fund’s breach of contract claim but its right to pursue the claim in court, given an arbitration provision that covered disputes over the “information or calculation[s]” provided by Navistar. The district court had found that the arbitration term applied but that Navistar had waived its right to insist on arbitration as a result of its conduct in litigation. The appellate court agreed that the arbitration term applied but reversed the finding of waiver. A dissenting judge argued that the arbitration term did not apply, but that even if it did, Navistar waived arbitration by failing to raise it until its prospects in litigation began to fade.

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A Hohfeldian Take on the Public-Private Law Divide — Ted Sichelman

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Post by Ted Sichelman

One aim of New Private Law is to reinvigorate the notion of “private law” in the face of realist and critical legal studies (CLS) critiques of the proverbial “public-private” law distinction.

These critiques center on three claims. First, the State often regulates in areas thought to be within the realm of private law, such as real property and contracts. Second, the State is necessary to enforce private economic relationships, such as those governing real property and contracts. Third, the State is a vague and ambiguous concept, and it is often difficult to characterize what does and doesn’t fall within its scope. In this regard, some contend that many private actors wield “power” in ways similar to those of the State.

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How Many Patents? — Janet Freilich

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Post by Janet Freilich

I often get asked how many U.S. patents exist and are in force. People’s instinct on this varies wildly. So, to celebrate the achievement of a milestone patent number, I wanted to write about the nine millionth U.S. patent, which issued on April 7th, 2015. Dennis Crouch from Patently-O estimates that three million U.S. patents are currently in force, which seems about right to me.

U.S. Patent No. 9,000,000 is titled “Windshield Washer Conditioner” and claims “a system and method of collecting and conditioning rainwater and other moisture, such as dew, from a windshield of a vehicle and utilizing the collected fluid to replenish the fluids in the windshield washer reservoir.” The familiarity and ordinariness of the technology’s application exemplifies the message in John Golden’s recent article that, although we perceive patents as predominantly high-tech,

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Law and the Big Oops — Henry E. Smith

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Post by Henry Smith

vossMost of the time when we think building encroachments, we’re talking about an inch here or there. But what happens when someone builds an expensive house on the wrong lot? That could never happen, could it?

Oh yes, it can and it does. In one recent example, Mark and Brenda Voss mistakenly had their vacation home (pictured above) built at a construction value of $680,000 on the lot next to the one they actually own. Mr. Voss owns a real estate company (!), but the mistake and the ultimately responsibility appear to be the builder’s. Bargaining is inevitably going to be tough in what amounts to the ultimate bilateral monopoly situation. (Merrill and I have a case in our casebook in which the frustrated mistaken improver demolishes the house – and winds up having to pay for it!)

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