Digital Commons Network^™

Leases As Forms, David A. Hoffman, Anton Strezhnev

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We offer the first large scale descriptive study of residential leases, based on a dataset of ~170,000 residential leases filed in support of over ~200,000 Philadelphia eviction proceedings from 2005 through 2019. These leases are highly likely to contain unenforceable terms, and their pro-landlord tilt has increased sharply over time. Matching leases with individual tenant characteristics, we show that unlawful terms are surprisingly likely to be associated with more expensive leaseholds in richer, whiter parts of the city. This result is linked to landlords' growing adoption of shared forms, originally created by non-profit landlord associations, and more recently available online …

Regulating New Tech: Problems, Pathways, And People, Cary Coglianese

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New technologies bring with them many promises, but also a series of new problems. Even though these problems are new, they are not unlike the types of problems that regulators have long addressed in other contexts. The lessons from regulation in the past can thus guide regulatory efforts today. Regulators must focus on understanding the problems they seek to address and the causal pathways that lead to these problems. Then they must undertake efforts to shape the behavior of those in industry so that private sector managers focus on their technologies’ problems and take actions to interrupt the causal pathways. …

Is The Digital Economy Too Concentrated?, Jonathan Klick

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Concentration in the digital economy in the United States has sparked loud criticism and spurred calls for wide-ranging reforms. These reforms include everything from increased enforcement of existing antitrust laws, such as challenging more mergers and breaking up firms, to an abandonment of the consumer welfare standard. Critics cite corruption and more systemic public choice problems, while others invoke the populist origins of antitrust to slay the digital Goliaths. On the other side, there is skepticism regarding these arguments. This chapter continues much of that skepticism.

The Problem With Relying On Profit-Driven Models To Produce Pandemic Drugs, Ana Santos Rutschman

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The longstanding problems of relying on a market response to a pandemic are becoming readily apparent in the United States, which has quickly become the epicenter of the COVID-19 outbreak. The problems are particularly pronounced in pharmaceutical markets, where we are pinning our hopes for both cures and vaccines. In previous work we have shown how characteristics of healthcare markets in the United States create a divergence between the private incentives of for-profit companies and public health needs, leading to sub-optimal health outcomes in what is a uniquely market-driven healthcare system. In this Essay, written as the COVID-19 pandemic unfolds, …

Redefining Leadership In The Age Of The Sdgs: Accelerating And Scaling Up Delivery Through Innovation And Inclusion, Phumzile Mlambo-Ngcuka, Rangita De Silva De Alwis

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In 2015 the United Nations adopted seventeen Sustainable Development Goals (SDGs) to promote prosperity while protecting the environment. Our research examines how the SDGs, considered the grandest vision for sustainable development for the world, can be accelerated by ambitious leaders in the field of innovation. Through careful selection based on the type of industry, scale, impact, and diversity, we study a cohort of bold leaders who are shaping a brave new world. In turn, the urgent charge of the SDGs provides a platform and an innovation lab to incubate new ideas for inclusion and technologies.

Intellectual Property And The Economics Of Product Differentiation, Christopher S. Yoo

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The literature applying the economics of product differentiation to intellectual property has been called the most important development in the economic analysis of IP in years. Relaxing the assumption that products are homogeneous yields new insights by explaining persistent features of IP markets that the traditional approaches cannot, challenging the extent to which IP allows rightsholders to earn monopoly profits, allowing for sources of welfare outside of price-quantity space, which in turn opens up new dimensions along which intellectual property can compete. It also allows for equilibria with different welfare characteristics, making the tendency towards systematic underproduction more contingent and …

Startup Governance, Elizabeth Pollman

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Although previously considered rare, over three hundred startups have reached valuations over a billion dollars. Thousands of smaller startups aim to follow in their paths. Despite the enormous social and economic impact of venture-backed startups, their internal governance receives scant scholarly attention. Longstanding theories of corporate ownership and governance do not capture the special features of startups. They can grow large with ownership shared by diverse participants, and they face issues that do not fit the dominant principal-agent paradigm of public corporations or the classic narrative of controlling shareholders in closely held corporations.

This Article offers an original, comprehensive framework …

Intellectual Property: Ownership And Protection In A University Setting, Cynthia L. Dahl

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Before an academic entrepreneur may protect or commercialize an invention, they must understand if they own the rights to it. This short chapter helps the inventor to consider the various scenarios that occur in a university setting. It advises the inventor how to seek a waiver from the university if they believe they are the true owner of the invention. If the facts indicate that the invention should be owned by the university, the chapter also discusses how a university decides to formally protect the invention through patent or copyright. Finally, the chapter advises the inventor how to stay involved …

Intellectual Property: Commercializing In A University Setting, Cynthia L. Dahl

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If an academic entrepreneur wants to commercialize their invention, they must first clarify who owns the invention, and then decide on the best commercialization possibility. This short chapter describes the various scenarios that might occur in a university setting. In most cases, a university will own the invention created by its researchers and faculty because of their employment. A university may then either license out the entrepreneur’s invention to a third-party company to further develop and commercialize, or may license the invention back to the entrepreneur so that they may commercialize it themselves through a start-up. Such license agreements will …

Tech, Regulatory Arbitrage, And Limits, Elizabeth Pollman

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Regulatory arbitrage refers to structuring activity to take advantage of gaps or differences in regulations or laws. Examples include Facebook modifying its terms and conditions to reduce the exposure of its user data to strict European privacy laws, and Uber and other platform companies organizing their affairs to categorize workers as non-employees. This essay explores the constraints and limits on regulatory arbitrage through the lens of the technology industry, known for its adaptiveness and access to strategic resources. Specifically, the essay explores social license and the bundling of laws and resources as constraining forces on regulatory arbitrage, and the legal …

Corporate Disobedience, Elizabeth Pollman

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Corporate law has long taken a dim view of corporate lawbreaking. Corporations can be chartered only for lawful activity. Contemporary case law characterizes intentional violations of law as a breach of the fiduciary duties of good faith and loyalty. While recognizing that rule breaking raises significant social and moral concerns, this Article suggests that corporate law and academic debate have overlooked important aspects of corporate disobedience. This Article provides an overview of corporate disobedience and illuminates the role that it has played in entrepreneurship and legal change. Corporations violate laws for a variety of reasons, including as part of efforts …

In The Shadow Of The Law: The Role Of Custom In Intellectual Property, Jennifer E. Rothman

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Custom, including industry practices and social norms, has a tremendous influence on intellectual property (“IP”) law, from affecting what happens outside of the courts in the trenches of the creative, technology, and science-based industries, to influencing how courts analyze infringement and defenses in IP cases. For decades, many scholars overlooked or dismissed the impact of custom on IP law in large part because of a belief that the dominant statutory frameworks that govern IP left little room for custom to play a role. In the last ten years, however, the landscape has shifted and more attention has been given to …

Crowdfunding Capital In The Age Of Blockchain Based Tokens, Patricia H. Lee

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Less than three years ago, the Securities and Exchange Commission (“SEC”) adopted investment crowdfunding regulations (“Reg. CF”) to facilitate small companies’ efforts to raise capital and jumpstart employment, providing companies potentially one of the most disruptive transformations in capital markets.

As the lion share of securities are offered under public offerings or Reg. D safe harbor exemptions, outcomes and impacts of Reg. CF offerings are not studied or monitored to the same extent. One line of inquiry is the scope of Reg. CF, including questions about the level of company participation, the types of businesses seeking capital formation, and the …

Antitrust And The Design Of Production, Herbert J. Hovenkamp

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Both economics and antitrust policy have traditionally distinguished “production” from “distribution.” The former is concerned with how products are designed and built, the latter with how they are placed into the hands of consumers. Nothing in the language of the antitrust laws suggests much concern with production as such. Although courts do not view it that way, even per se unlawful naked price fixing among rivals is a restraint on distribution rather than production. Naked price fixing assumes a product that has already been designed and built, and the important cartel decision is what should be each firm’s output, or …

Reasonable Patent Exhaustion, Herbert J. Hovenkamp

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A lengthy tug of war between the Supreme Court and the Federal Circuit Court of Appeals may have ended when the Supreme Court held that the sale of a patented article exhausts the patentee seller’s rights to enforce restrictions on that article through patent infringement suits. Further, reversing the Federal Circuit, the parties cannot bargain around this rule through the seller’s specification of conditions stated at the time of sale, no matter how clear. No inquiry need be made into the patentee’s market power, anticompetitive effects, or other types of harms, whether enforcement of the condition is socially costly or …

Teva And The Process Of Claim Construction, Lee Petherbridge Ph.D., R. Polk Wagner

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In Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., the Supreme Court addressed an oft-discussed jurisprudential disconnect between itself and the U.S. Court of Appeals for the Federal Circuit: whether patent claim construction was “legal” or “factual” in nature, and how much deference is due to district court decisionmaking in this area. In this Article, we closely examine the Teva opinion and situate it within modern claim construction jurisprudence. Our thesis is that the Teva holding is likely to have only very modest effects on the incidence of deference to district court claim construction but that for unexpected reasons the …

Razing The Patent Bar, William Hubbard

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Innovation is vital to economic prosperity, and lawmakers consequently strive to craft patent laws that efficiently promote the discovery and commercialization of new inventions. Commentators have long recognized that legal fees are a significant cost affecting innovation, but remarkably a crucial driver of these costs has largely escaped scrutiny: the Patent Bar. Every year innovators spend billions of dollars on legalfees for representation in the U.S. Patent and Trademark Office ("USPTO"), where inventors apply for patents and potential infringers seek to invalidate issued patents. Supply in this essential legal services market, however, is sharply limited because patent law requires innovators …

Patent Pools And Related Technology Sharing, Erik Hovenkamp, Herbert J. Hovenkamp

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A patent "pool" is an arrangement under which patent holders in a common technology commit their patents to a single holder, who then licenses them out to the original patentees and perhaps also to outsiders. The payoffs include both revenue earned as a licensor, and technology acquired by pool members as licensees. Public effects can also be significant. For example, technology sharing of complementary patents can improve product quality and variety. In some information technology markets pools can prevent patents from becoming a costly obstacle to innovation by clearing channels of technology transfer. By contrast, a pool's aggregate output reduction …

Standing Voting Instructions: Empowering The Excluded Retail Investor, Jill E. Fisch

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Despite the increasing importance of shareholder voting, regulators have paid little attention to the rights of retail investors who own approximately 30% of publicly traded companies but who vote less than 30% of their shares. A substantial factor contributing to this low turnout is the antiquated mechanism by which retail investors vote. The federal proxy voting rules place primary responsibility for facilitating retail voting in the hands of custodial brokers who have limited incentives to develop workable procedures, and current regulatory restrictions impede market-based innovation that incorporate technological innovations.

One of the most promising such innovations is standing voting instructions …

Solving Ethical Puzzles To Unlock University Technology Transfer Client Work For An Intellectual Property Legal Clinic, Cynthia L. Dahl

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Intellectual property (IP) and technology legal clinics are experiencing an unprecedented surge in popularity. Before 2000 there were only five such clinics, but by 2016 there were seventy-four, with fifty added since 2010 alone. As law schools are approving new IP clinics and as practitioners are developing syllabi, there is an increasing need to share knowledge about models that work and how to avoid pitfalls.

One potentially fertile – but traditionally underutilized -- source of client work for an IP and technology clinic is the university technology transfer office (“TTO”), the department that protects, markets, and licenses all university intellectual …

Open Source, Modular Platforms, And The Challenge Of Fragmentation, Christopher S. Yoo

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Open source and modular platforms represent two powerful conceptual paradigms that have fundamentally transformed the software industry. While generally regarded complementary, the freedom inherent in open source rests in uneasy tension with the strict structural requirements required by modularity theory. In particular, third party providers can produce noncompliant components, and excessive experimentation can fragment the platform in ways that reduce its economic benefits for end users and app providers and force app providers to spend resources customizing their code for each variant. The classic solutions to these problems are to rely on some form of testing to ensure that the …

Telecommunications: Competition Policy In The Telecommunications Space, Gene Kimmelman, Maureen K. Ohlhausen, Michael O’Rielly, Christopher S. Yoo, Stephen F. Williams

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In today’s rapidly evolving telecommunications landscape, the development of new technologies and distribution platforms are driving innovation and growth at a breakneck speed across the Internet ecosystem. Broadband connectivity is increasingly important to our civil discourse, our economy, and our future. What is the proper role of government in facilitating robust investment and competition in this critical sector? When technology companies constantly have to reinvent themselves and adapt to survive – what role should government play? This panel of experts at the Federalist Society’s 2014 National Lawyers Convention discussed the current regulatory environment and how government policies – particularly regarding …

Optimizing Government For An Optimizing Economy, Cary Coglianese

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Much entrepreneurial growth in the United States today emanates from technological advances that optimize through contextualization. Innovations as varied as Airbnb and Uber, fintech firms and precision medicine, are transforming major sectors in the economy by customizing goods and services as well as refining matches between available resources and interested buyers. The technological advances that make up the optimizing economy create new challenges for government oversight of the economy. Traditionally, government has overseen economic activity through general regulations that aim to treat all individuals equally; however, in the optimizing economy, business is moving in the direction of greater individualization, not …

Motivating Without Mandates: The Role Of Voluntary Programs In Environmental Governance, Cary Coglianese, Jennifer Nash

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For the last several decades, governments around the world have tried to use so-called voluntary programs to motivate private firms to act proactively to protect the environment. Unlike conventional environmental regulation, voluntary programs offer businesses flexibility to adopt cost-effective measures to reduce environmental impacts. Rather than prodding firms to act through threats of enforcement, they aim to entice firms to move forward by offering various kinds of positive incentives, ranging from public recognition to limited forms of regulatory relief. Despite the theoretical appeal of voluntary programs, their proper role in government’s environmental toolkit depends on the empirical evidence of how …

The Actavis Inference: Theory And Practice, Aaron S. Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro

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In FTC v. Actavis, Inc., the Supreme Court considered "reverse payment" settlements of patent infringement litigation. In such a settlement, a patentee pays the alleged infringer to settle, and the alleged infringer agrees not to enter the market for a period of time. The Court held that a reverse payment settlement violates antitrust law if the patentee is paying to avoid competition. The core insight of Actavis is the Actavis Inference: a large and otherwise unexplained payment, combined with delayed entry, supports a reasonable inference of harm to consumers from lessened competition.

This paper is an effort to assist courts …

The Green Option, Gideon Parchomovsky, Endre Stavang

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We introduce an innovative market-based mechanism that may be used to advance environmental goals. Our mechanism employs option theory to give established businesses a financial stake in the success of green technologies. We show why and how green companies should be given an option to transfer a block of their shares to any corporation of their choice, incentivize them to switch to environmentally friendly technologies and to use their political clout to alleviate legal, regulatory and political barriers to the adoption of such technologies. In short, giving established corporations a stake in green companies will give them a stake in …

Teece's Competing Through Innovation, Herbert J. Hovenkamp

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This essay reviews David J. Teece's book, Competing Through Innovation: Technological Strategies and Antitrust Policies (2013).

Actavis And Error Costs: A Reply To Critics, Aaron S. Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro

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The Supreme Court’s opinion in Federal Trade Commission v. Actavis, Inc. provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. In our previous article, Activating Actavis, we identified and operationalized the essential features of the Court’s analysis. Our analysis has been challenged by four economists, who argue that our approach might condemn procompetitive settlements.

As we explain in this reply, such settlements are feasible, however, only under special circumstances. Moreover, even where feasible, the parties would not actually choose such a settlement in equilibrium. These considerations, and others discussed in the reply, serve to …

The Debilitating Effect Of Exclusive Rights: Patents And Productive Inefficiency, William Hubbard

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Are we underestimating the costs of patent protection? Scholars have long recognized that patent law is a double-edged sword. While patents promote innovation, they also limit the number of people who can benefit from new inventions. In the past, policy makers striving to balance the costs and benefits of patents have analyzed patent law through the lens of traditional, neoclassical economics. This Article argues that this approach is fundamentally flawed because traditional economics rely on an inaccurate oversimplification: that individuals and firms always maximize profits. In actuality, so-called "productive inefficiencies" often prevent profit maximization. For example, cognitive biases, bounded rationality, …

U.S. Vs. European Broadband Deployment: What Do The Data Say?, Christopher S. Yoo

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As the Internet becomes more important to the everyday lives of people around the world, commentators have tried to identify the best policies increasing the deployment and adoption of high-speed broadband technologies. Some claim that the European model of service-based competition, induced by telephone-style regulation, has outperformed the facilities-based competition underlying the US approach to promoting broadband deployment. The mapping studies conducted by the US and the EU for 2011 and 2012 reveal that the US led the EU in many broadband metrics.

• High-Speed Access: A far greater percentage of US households had access to Next Generation Access (NGA) …