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Irrational Ignorance At The Patent Office, Michael D. Frakes, Melissa F. Wasserman Jan 2019

Irrational Ignorance At The Patent Office, Michael D. Frakes, Melissa F. Wasserman

Faculty Scholarship

There is widespread belief that the Patent Office issues too many bad patents that impose significant harms on society. At first glance, the solution to the patent quality crisis seems straightforward: give patent examiners more time to review applications so they grant patents only to those inventions that deserve them. Yet the answer to the harms of invalid patents may not be that easy. It is possible that the Patent Office is, as Mark Lemley famously wrote, “rationally ignorant.” In Rational Ignorance at the Patent Office, Lemley argued that because so few patents are economically significant, it makes sense to ...


Central Clearing Of Financial Contracts: Theory And Regulatory Implications, Steven L. Schwarcz Jan 2018

Central Clearing Of Financial Contracts: Theory And Regulatory Implications, Steven L. Schwarcz

Faculty Scholarship

To protect economic stability, post-crisis regulation requires financial institutions to clear and settle most of their derivatives contracts through central counterparties, such as clearinghouses associated with securities exchanges. This Article asks whether regulators should expand the central clearing requirement to non-derivative financial contracts, such as loan agreements. The Article begins by theorizing how and why central clearing can reduce systemic risk. It then examines the theory’s regulatory and economic efficiency implications, first for current requirements to centrally clear derivatives contracts and thereafter for deciding whether to extend those requirements to non-derivative contracts. The inquiry has real practical importance because ...


A Better Calculus For Regulators: From Cost-Benefit Analysis To The Social Welfare Function, Matthew D. Adler Jan 2017

A Better Calculus For Regulators: From Cost-Benefit Analysis To The Social Welfare Function, Matthew D. Adler

Faculty Scholarship

The “social welfare function” (SWF) is a powerful tool that originates in theoretical welfare economics and has wide application in economic scholarship, for example in optimal tax theory and environmental economics. This Article provides a comprehensive introduction to the SWF framework. It then shows how the SWF framework can be used as the basis for regulatory policy analysis, and why it improves upon cost-benefit analysis (CBA).

Two types of SWFs are especially plausible: the utilitarian SWF, which sums individual well-being numbers, and the prioritarian SWF, which gives extra weight to the well-being of the worse off. Either one of these ...


Risk Regulation And Innovation: The Case Of Rights-Encumbered Biomedical Data Silos, Arti K. Rai Jan 2017

Risk Regulation And Innovation: The Case Of Rights-Encumbered Biomedical Data Silos, Arti K. Rai

Faculty Scholarship

Recent Supreme Court cases on patent-eligible subject matter are likely to exacerbate the longstanding problem of biomedical data fragmentation. For each data silo, multiple overlapping legal claims and claimants must be addressed to achieve the benefits of pooling.

Commentators who have discussed the data aggregation challenge have generally focused on possibilities created through public funding, through collective action by research participants, or through pressure by payers. This Article emphasizes the important role of risk regulators, most notably the precedent offered by risk regulation in the area of clinical trial data.

While U.S. risk regulators have taken some positive steps ...


Signing Statements And Presidentializing Legislative History, John De Figueiredo, Edward H. Stiglitz Jan 2017

Signing Statements And Presidentializing Legislative History, John De Figueiredo, Edward H. Stiglitz

Faculty Scholarship

Presidents often attach statements to the bills they sign into law, purporting to celebrate, construe, or object to provisions in the statute. Though long a feature of U.S. lawmaking, the President has avowedly attempted to use these signing statements as tool of strategic influence over judicial decision making since the 1980s — as a way of creating “presidential legislative history” to supplement and, at times, supplant the traditional congressional legislative history conventionally used by the courts to interpret statutes. In this Article, we examine a novel dataset of judicial opinion citations to presidential signing statements to conduct the most comprehensive ...


Fiduciary Contours: Perspectives On Mutual Funds And Private Funds, Deborah A. Demott Jan 2016

Fiduciary Contours: Perspectives On Mutual Funds And Private Funds, Deborah A. Demott

Faculty Scholarship

The thesis of this essay, written as a chapter in a forthcoming book, is that in the mutual fund context, the specifics of fiduciary duty reflect the distinctive qualities of this form of investment in securities. The particular contours that shape fiduciary duty reflect many factors, including the highly prescriptive regulatory context distinctively applicable to mutual funds. To sharpen its depiction of the fiduciary distinctiveness of mutual funds, I draw contrasts with two other avenues through which an investor may delegate investment choice: (1) "private" funds, that is, vehicles for pooled investments that are not subject to the full regulatory ...


Procrastination In The Workplace: Evidence From The U.S. Patent Office, Michael D. Frakes, Melissa F. Wasserman Jan 2016

Procrastination In The Workplace: Evidence From The U.S. Patent Office, Michael D. Frakes, Melissa F. Wasserman

Faculty Scholarship

Despite much theoretical attention to the concept of procrastination and much exploration of this phenomenon in laboratory settings, there remain few empirical investigations into the practice of procrastination in real world contexts, especially in the workplace. In this paper, we attempt to fill these gaps by exploring procrastination among U.S. patent examiners. We find that nearly half of examiners’ first substantive reports are completed immediately prior to the operable deadlines. Moreover, we find a range of additional empirical markers to support that this “end-loading” of reviews results from a model of procrastination rather than various alternative time-consistent models of ...


Empirical Scholarship On The Prosecution Process At The Pto, Michael D. Frakes, Melissa F. Wasserman Jan 2016

Empirical Scholarship On The Prosecution Process At The Pto, Michael D. Frakes, Melissa F. Wasserman

Faculty Scholarship

In this book chapter, we summarize empirical scholarship examining the patent prosecution process at the United States Patent and Trademark Office.


Is The Time Allocated To Review Patent Applications Inducing Examiners To Grant Invalid Patents?: Evidence From Micro-Level Application Data, Michael D. Frakes, Melissa F. Wasserman Jan 2016

Is The Time Allocated To Review Patent Applications Inducing Examiners To Grant Invalid Patents?: Evidence From Micro-Level Application Data, Michael D. Frakes, Melissa F. Wasserman

Faculty Scholarship

We explore how examiner behavior is altered by the time allocated for reviewing patent applications. Insufficient examination time may hamper examiner search and rejection efforts, leaving examiners more inclined to grant invalid applications. To test this prediction, we use application-level data to trace the behavior of individual examiners over the course of a series of promotions that carry with them reductions in examination-time allocations. We find evidence demonstrating that such promotions are associated with reductions in examination scrutiny and increases in granting tendencies, as well as evidence that those additional patents being issued on the margin are of below-average quality.


Strategic Decision Making In Dual Ptab And District Court Proceedings, Saurabh Vishnubhakat, Arti K. Rai, Jay P. Kesan Jan 2016

Strategic Decision Making In Dual Ptab And District Court Proceedings, Saurabh Vishnubhakat, Arti K. Rai, Jay P. Kesan

Faculty Scholarship

The post-grant review proceedings set up at the U.S. Patent and Trademark Office’s Patent and Trial Appeal Board by the America Invents Act of 2011 have transformed the relationship between Article III patent litigation and the administrative state. Not surprisingly, such dramatic change has itself yielded additional litigation possibilities: Cuozzo Speed Technologies v. Lee, a case addressing divergence between the manner in which the PTAB and Article III courts construe patent claims, will soon be argued at the U.S. Supreme Court.

Of the three major new PTAB proceedings, two have proven to be popular as well as ...


Environmental Regulation Going Retro: Learning Foresight From Hindsight, Jonathan B. Wiener, Daniel L. Ribeiro Jan 2016

Environmental Regulation Going Retro: Learning Foresight From Hindsight, Jonathan B. Wiener, Daniel L. Ribeiro

Faculty Scholarship

No abstract provided.


Patent Institutions: Shifting Interactions Between Legal Actors, Arti K. Rai Jan 2016

Patent Institutions: Shifting Interactions Between Legal Actors, Arti K. Rai

Faculty Scholarship

This contribution to the Research Handbook on Economics of Intellectual Property Rights (Vol. 1 Theory) addresses interactions between the principal legal institutions of the U.S. patent system. It considers legal, strategic, and normative perspectives on these interactions as they have evolved over the last 35 years. Early centralization of power by the U.S. Court of Appeals for the Federal Circuit, newly created in 1982, established a regime dominated by the appellate court's bright-line rules. More recently, aggressive Supreme Court and Congressional intervention have respectively reinvigorated patent law standards and led to significant devolution of power to inferior ...


Regulatory Exit, J.B. Ruhl, James Salzman Jan 2015

Regulatory Exit, J.B. Ruhl, James Salzman

Faculty Scholarship

Exit is a ubiquitous feature of life, whether breaking up in a marriage, dropping a college course, or pulling out of a venture capital investment. In fact, our exit options often determine whether and how we enter in the first place. While legal scholarship is replete with studies of exit strategies for businesses and individuals, the topic of exit has barely been touched in administrative law scholarship. Yet exit plays just as central a role in the regulatory state as elsewhere – welfare support ends; government steps out of rate-setting. In this article, we argue that exit is a fundamental feature ...


Quitting In Protest: A Theory Of Presidential Policy Making And Agency Response, Charles M. Cameron, John M. De Figueiredo, David E. Lewis Jan 2015

Quitting In Protest: A Theory Of Presidential Policy Making And Agency Response, Charles M. Cameron, John M. De Figueiredo, David E. Lewis

Faculty Scholarship

This paper examines the effects of centralized presidential policy-making, implemented through unilateral executive action, on the willingness of bureaucrats to exert effort and stay in the government. Extending models in organizational economics, we show that policy initiative by the president is a substitute for initiative by civil servants. Yet, total effort is enhanced when both work. Presidential centralization of policy often impels policy-oriented bureaucrats ("zealots") to quit rather than implement presidential policies they dislike. Those most likely to quit are a range of moderate bureaucrats. More extreme bureaucrats may be willing to wait out an opposition president in the hope ...


Does The U.S. Patent And Trademark Office Grant Too Many Bad Patents?: Evidence From A Quasi-Experiment, Michael D. Frakes, Melissa F. Wasserman Jan 2015

Does The U.S. Patent And Trademark Office Grant Too Many Bad Patents?: Evidence From A Quasi-Experiment, Michael D. Frakes, Melissa F. Wasserman

Faculty Scholarship

Many believe the root cause of the patent system’s dysfunction is that the U.S. Patent and Trademark Office (PTO or Agency) is issuing too many invalid patents that unnecessarily drain consumer welfare. Concerns regarding the Agency’s overgranting tendencies have recently spurred the Supreme Court to take a renewed interest in substantive patent law and have driven Congress to enact the first major patent reform act in over sixty years. Policymakers, however, have been modifying the system in an effort to increase patent quality in the dark. As there exists little to no compelling empirical evidence the PTO ...


Democratic Rulemaking, John M. De Figueiredo, Edward H. Stiglitz Jan 2015

Democratic Rulemaking, John M. De Figueiredo, Edward H. Stiglitz

Faculty Scholarship

This paper examines to what extent agency rulemaking is democratic. It reviews theories of administrative rulemaking in light of two normative benchmarks: a “democratic” benchmark based on voter preferences, and a “republican” benchmark based on the preferences of elected representatives. It then evaluates how the empirical evidence lines up in light of these two approaches. The paper concludes with a discussion of avenues for future research.


The Volcker Rule: A Brief Political History, Kimberly D. Krawiec, Guangya Liu Jan 2015

The Volcker Rule: A Brief Political History, Kimberly D. Krawiec, Guangya Liu

Faculty Scholarship

Today, more than five years after Dodd-Frank was first signed into law, uncertainty surrounds many aspects of the Volcker Rule’s application and ultimate impact on financial markets and bank stability. Many more years will likely pass before that uncertainty is resolved. We demonstrate through a quantitative and qualitative analysis that these difficulties were presaged by the Volcker Rule’s political history. The Volcker Rule -- originally rejected by Congressional lawmakers and economists within the Obama administration as unworkable -- arose as a political concession designed to quiet critics who contended that Dodd-Frank did not do enough to control risky bank activity ...


For-Profit Public Enforcement, Margaret H. Lemos, Max Minzner Jan 2014

For-Profit Public Enforcement, Margaret H. Lemos, Max Minzner

Faculty Scholarship

This Article investigates an important yet undertheorized phenomenon: financial incentives in public enforcement. Each year, public enforcers assess billions of dollars in penalties and other financial sanctions for violations of state and federal law. Why? If the awards in question were the result of private lawsuits, the answer would be obvious. We expect that private enforcers—the victims of law violations and their fee-seeking attorneys—will attempt to maximize financial recoveries. Record recoveries come as no surprise in private class actions, for example. But dollar signs are harder to explain in the context of public enforcement. Unlike private attorneys, public ...


The Failed Promise Of User Fees: Empirical Evidence From The United States Patent And Trademark Office, Michael D. Frakes, Melissa F. Wasserman Jan 2014

The Failed Promise Of User Fees: Empirical Evidence From The United States Patent And Trademark Office, Michael D. Frakes, Melissa F. Wasserman

Faculty Scholarship

In an attempt to shed light on the impact of user-fee financing structures on the behavior of administrative agencies, we explore the relationship between the funding structure of the Patent and Trademark Office (PTO) and its examination practices. We suggest that the PTO’s reliance on prior grantees to subsidize current applicants exposes the Agency to a risk that its obligatory costs will surpass incoming fee collections. When such risks materialize, we hypothesize, and thereafter document, that the PTO will restore financial balance by extending preferential examination treatment—i.e., higher granting propensities and/or shorter wait times—to some ...


Cheating On Their Taxes: When Are Tax Limitations Effective At Limiting State Taxes, Expenditures, And Budgets?, Colin H. Mccubbins, Mathew D. Mccubbins Jan 2014

Cheating On Their Taxes: When Are Tax Limitations Effective At Limiting State Taxes, Expenditures, And Budgets?, Colin H. Mccubbins, Mathew D. Mccubbins

Faculty Scholarship

No abstract provided.


The Impact Of Income Disparity On Financial Regulation, Steven L. Schwarcz Jan 2014

The Impact Of Income Disparity On Financial Regulation, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.


Responding To Agency Avoidance Of Oira, Nina A. Mendelson, Jonathan B. Wiener Jan 2014

Responding To Agency Avoidance Of Oira, Nina A. Mendelson, Jonathan B. Wiener

Faculty Scholarship

Concerns have recently been raised that US federal agencies may sometimes avoid regulatory review by the White House Office of Information and Regulatory Affairs (OIRA). In this article, we assess the seriousness of such potential avoidance, and we recommend a framework for evaluating potential responses. After summarizing the system of presidential regulatory oversight through OIRA review, we analyze the incentives for agencies to cooperate with or avoid OIRA. We identify a wider array of agency avoidance tactics than has past scholarship, and a wider array of corresponding response options available to OIRA, the President, Congress, and the courts. We argue ...


Completing The Energy Innovation Cycle: The View From The Public Utility Commission, Jonas J. Monast, Sarah K. Adair Jan 2014

Completing The Energy Innovation Cycle: The View From The Public Utility Commission, Jonas J. Monast, Sarah K. Adair

Faculty Scholarship

Achieving widespread adoption of innovative electricity generation technologies involves a complex system of research, development, demonstration, and deployment, with each phase then informing future developments. Despite a number of non-regulatory programs at the federal level to support this process, the innovation premium—the increased cost and technology risk often associated with innovative generation technologies—creates hurdles in the state public utility commission (“PUC”) process. These state level regulatory hurdles have the potential to frustrate federal energy goals and prevent the learning process that is a critical component to technology innovation. This Article explores how and why innovative energy technologies face ...


Designing Co2 Performance Standards For A Transitioning Electricity Sector: A Multi-Benefits Framework, Jonas J. Monast, David Hoppock Jan 2014

Designing Co2 Performance Standards For A Transitioning Electricity Sector: A Multi-Benefits Framework, Jonas J. Monast, David Hoppock

Faculty Scholarship

A significant transition is underway within the electricity sector due to several market forces, retirement of certain plants, and regulatory pressures. There is notable overlap between available strategies for mitigating electricity sector risks and potential compliance strategies for states under the Clean Power Plan. This overlap presents regulators with an opportunity to pursue strategies that help manage the transition occurring in the electricity sector and achieve greenhouse gas reductions required under the Clean Power Plan, particularly in the areas of end-use energy efficiency and additional renewable power generation.


Liability And Admission Of Wrongdoing In Public Enforcement Of Law, Samuel W. Buell Jan 2014

Liability And Admission Of Wrongdoing In Public Enforcement Of Law, Samuel W. Buell

Faculty Scholarship

Some judges and scholars have questioned the social value of the standard form in which the Securities and Exchange Commission settles its corporate enforcement actions, including the agency’s use of essentially unreviewed consent decrees that include no admission of liability or wrongdoing. This essay for a symposium on SEC enforcement provides an analysis of the deterrent effects of the three main components of settlements in public enforcement of law: liability, admission, and remedy. The conclusions are the following. All three components have beneficial deterrent effects. Cost considerations nonetheless justify some settlements that dispense with liability or admission, or even ...


The Diffusion Of Regulatory Oversight, Jonathan B. Wiener Jan 2013

The Diffusion Of Regulatory Oversight, Jonathan B. Wiener

Faculty Scholarship

The idea of cost-benefit analysis has been spreading internationally for centuries — at least since an American named Benjamin Franklin wrote a letter in 1772 to his British friend, Joseph Priestley, recommending that Priestley weigh the pros and cons of a difficult decision in what Franklin dubbed a “moral or prudential algebra” (Franklin 1772) (more on this letter below). Several recent studies show that the use of benefit-cost analysis (BCA), for both public projects and public regulation of private activities, is now unfolding in countries on every habitable continent around the world (Livermore and Revesz 2013; Quah and Toh 2012; De ...


Improving (Software) Patent Quality Through The Administrative Process, Arti K. Rai Jan 2013

Improving (Software) Patent Quality Through The Administrative Process, Arti K. Rai

Faculty Scholarship

The available evidence indicates that patent quality, particularly in the area of software, needs improvement. This Article argues that even an agency as institutionally constrained as the U.S. Patent and Trademark Office (“PTO”) could implement a portfolio of pragmatic, cost-effective quality improvement strategies. The argument in favor of these strategies draws upon not only legal theory and doctrine but also new data from a PTO software examination unit with relatively strict practices. Strategies that resolve around Section 112 of the patent statute could usefully be deployed at the initial examination stage. Other strategies could be deployed within the new ...


The Crucial But (Potentially) Precarious Position Of The Chief Compliance Officer, Deborah A. Demott Jan 2013

The Crucial But (Potentially) Precarious Position Of The Chief Compliance Officer, Deborah A. Demott

Faculty Scholarship

This Article, written for a symposium on compliance issues in financial-services firms, focuses on the role of the chief compliance officer (“CCO”). Contrasting the position with that held by a firm’s general counsel or Chief Legal Officer (CLO), the article argues that a CCO’s position holds distinct challenges. Additionally, although internal compliance systems and personnel may be characterized as functional substitutes for external regulation, assessing the strengths and weaknesses of internal compliance requires a willingness to look deep within firms. The article argues that the law and regulation may enhance firms’ incentives to invest in effective internal compliance ...


Don’T ‘Screw Joe The Plummer’: The Sausage-Making Of Financial Reform, Kimberly D. Krawiec Jan 2013

Don’T ‘Screw Joe The Plummer’: The Sausage-Making Of Financial Reform, Kimberly D. Krawiec

Faculty Scholarship

This Article examines agency-level activity during the preproposal rulemaking phase—a time period about which little is known despite its importance to policy outcomes—through an analysis of federal agency activity in connection with section 619 of the Dodd–Frank Act, popularly known as the Volcker Rule. By capitalizing on transparency efforts specific to Dodd–Frank, I am able to access information on agency contacts whose disclosure is not required by the Administrative Procedure Act and, therefore, not typically available to researchers.

I analyze the roughly 8,000 public comment letters received by the Financial Stability Oversight Council in advance ...


Internal Compliance Officers In Jeopardy?, Deborah A. Demott Jan 2013

Internal Compliance Officers In Jeopardy?, Deborah A. Demott

Faculty Scholarship

No abstract provided.