Law Commons^™

Antitrust Interoperability Remedies, Herbert J. Hovenkamp

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Compelled interoperability can be a useful remedy for dominant firms, including large digital platforms, who violate the antitrust laws. They can address competition concerns without interfering unnecessarily with the structures that make digital platforms attractive and that have contributed so much to economic growth.

Given the wide variety of structures and business models for big tech, “interoperability” must be defined broadly. It can realistically include everything from “dynamic” interoperability that requires real time sharing of data and operations, to “static” interoperability which requires portability but not necessarily real time interactions. Also included are the compelled sharing of intellectual property or …

Selling Antitrust, Herbert J. Hovenkamp

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Antitrust enforcers and its other defenders have never done a good job of selling their field to the public. That is not entirely their fault. Antitrust is inherently technical, and a less engaging discipline to most people than, say, civil rights or criminal law. The more serious problem is that when the general press does talk about antitrust policy it naturally gravitates toward the fringes, both the far right and the far left. Extreme rhetoric makes for better press than the day-to-day operations of a technical enterprise. The extremes are often stated in overdramatized black-and-white terms that avoid the real …

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. …

Antitrust And Platform Monopoly, Herbert J. Hovenkamp

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Are large digital platforms that deal directly with consumers “winner take all,” or natural monopoly, firms? That question is surprisingly complex and does not produce the same answer for every platform. The closer one looks at digital platforms the less they seem to be winner-take-all. As a result, competition can be made to work in most of them. Further, antitrust enforcement, with its accommodation of firm variety, is generally superior to any form of statutory regulation that generalizes over large numbers.

Assuming that an antitrust violation is found, what should be the remedy? Breaking up large firms subject to extensive …

Addressing The Divisions In Antitrust Policy, Herbert J. Hovenkamp

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This is the text of an interview conducted in writing by Professor A. Douglas Melamed, Stanford Law School.

Appreciating The Overlooked Contributions Of The New Harvard School, Christopher S. Yoo

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My colleague, Herbert Hovenkamp, is almost universally recognized as the most cited and the most authoritative US antitrust scholar. Among his many honors, his status as the senior author of the authoritative Areeda and Hovenkamp treatise makes him the unquestioned leader of the New Harvard School, which has long served as the bellwether for how courts are likely to resolve emerging issues in modern antitrust doctrine. Unfortunately, its defining tenets and its positions on emerging issues remain surprisingly obscure. My contribution to this festschrift explores the core commitments that distinguish the New Harvard School from other approaches to antitrust. It …

Propertizing Fair Use, Abraham Bell, Gideon Parchomovsky

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In its current form, fair use doctrine provides a personal defense that applies narrowly to the specific use by the specific user. The landmark case of Google v. Oracle, currently pending before the Supreme Court, illustrates why this is problematic. Even if the Court were to rule that Google’s use of Oracle’s Java API’s was fair, the ruling would not protect the numerous parties that developed Java applications for the Android operating system; it would only shelter Google and Google’s particular use. This is not an isolated problem; the per use/per user rule cuts across fair uses of copyrighted …

Did The America Invents Act Change University Technology Transfer?, Cynthia L. Dahl

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University technology transfer offices (TTOs) are the gatekeepers to groundbreaking innovations sparked in research laboratories around the U.S. With a business model reliant on patenting and licensing out for commercialization, TTOs were positioned for upheaval when the America Invents Act (AIA) transformed U.S. patent law in 2011. Now almost ten years later, this article examines the AIA’s actual effects on this patent-centric industry. It focuses on the five key areas of most interest to TTOs: i) first to file priority; ii) broadening of the universe of prior art; iii) carve-out to the prior commercial use defense; iv) micro-entity fees; and …

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.

Network Effects In Action, Christopher S. Yoo

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This Chapter begins by examining and exploring the theoretical and empirical limits of the possible bases of network effects, paying particular attention to the most commonly cited framework known as Metcalfe’s Law. It continues by exploring the concept of network externalities, defined as the positive external consumption benefits that the decision to join a network creates for the other members of the network, which is more ambiguous than commonly realized. It then reviews the structural factors needed for models based on network effects to have anticompetitive effects and identifies other factors that can dissipate those effects. Finally, it identifies alternative …

Competitive Harm From Vertical Mergers, Herbert J. Hovenkamp

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The antitrust enforcement Agencies' 2020 Vertical Merger Guidelines introduce a nontechnical application of bargaining theory into the assessment of competitive effects from vertical acquisitions. The economics of such bargaining is complex and can produce skepticism among judges, who might regard its mathematics as overly technical, its game theory as excessively theoretical or speculative, or its assumptions as unrealistic.

However, we have been there before. The introduction of concentration indexes, particularly the HHI, in the Merger Guidelines was initially met with skepticism but gradually they were accepted as judges became more comfortable with them. The same thing very largely happened again …

When Standards Collide With Intellectual Property: Teaching About Standard Setting Organizations, Technology, And Microsoft V. Motorola, Cynthia L. Dahl

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Technology lawyers, intellectual property (IP) lawyers, or even any corporate lawyer with technology clients must understand standard essential patents (SEPs) and how their licensing works to effectively counsel their clients. Whether the client’s technology is adopted into a voluntary standard or not may be the most important factor in determining whether the company succeeds or is left behind in the market. Yet even though understanding SEPs is critical to a technology or IP practice, voluntary standards and specifically SEPs are generally not taught in law school.

This article aims to address this deficiency and create more practice-ready law school graduates. …

An Essay On Pluralism In Financial Market Infrastructure Design: The Case Of Securities Holding In The United States, Charles W. Mooney Jr.

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This essay will appear as a chapter in a forthcoming edited volume published by Oxford University Press. It builds on the earlier article, Beyond Intermediation: A New (FinTech) Model for Securities Holding Infrastructures, 22 U. Pa. J. Bus. L. 386 (2020), which argues that serious consideration should be given to modifications of the deeply intermediated securities holding systems in the United States and elsewhere. Many of the costs and risks imposed by the intermediated holding systems fall within the domain of the regulation of securities markets (internal costs), such as impairments of shareholder voting and bondholder claims against issuers. …

Justice Department's New Position On Patents, Standard Setting, And Injunctions, Herbert J. Hovenkamp

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A deep split in American innovation policy has arisen between new economy and old economy innovation. In a recent policy statement, the Antitrust Division of the Justice Department takes a position that tilts more toward the old economy. Its December, 2019, policy statement on remedies for Standard Essential Patents issued jointly with the U.S. Patent and Trademark Office and the National Institute of Standards and Technology reflects this movement.

The policy statement as a whole contains two noteworthy problems: one is a glaring omission, and the other is a mischaracterization of the scope of antitrust liability. Both positions are strongly …

Regulation Of Algorithmic Tools In The United States, Christopher S. Yoo, Alicia Lai

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Policymakers in the United States have just begun to address regulation of artificial intelligence technologies in recent years, gaining momentum through calls for additional research funding, piece-meal guidance, proposals, and legislation at all levels of government. This Article provides an overview of high-level federal initiatives for general artificial intelligence (AI) applications set forth by the U.S. president and responding agencies, early indications from the incoming Biden Administration, targeted federal initiatives for sector-specific AI applications, pending federal legislative proposals, and state and local initiatives. The regulation of the algorithmic ecosystem will continue to evolve as the United States continues to search …

Reviewing Inter Partes Review Five Years In: The View From University Technology Transfer Offices, Cynthia L. Dahl

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With the implementation of the inter partes review (IPR) proceeding under the America Invents Act in 2012, university technology transfer offices (TTOS) were worried that the value of their patents might be irreparably harmed. With IPR proceedings making patent challenges easy, relatively inexpensive, and a threat extending over the lifetime of a patent, TTOs wondered if IPRs might do nothing short of undermining their licensing business model.

However, although IPRs have irreparably changed the patent infringement landscape outside of the university setting, the effect on university patents has not been nearly as severe. This chapter explores why that might be …

Frand And Antitrust, Herbert J. Hovenkamp

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This paper considers when a patentee’s violation of a FRAND commitment also violates the antitrust laws. It warns against two extremes. First, is thinking that any violation of a FRAND obligation is an antitrust violation as well. FRAND obligations are contractual, and most breaches of contract do not violate antitrust law. The other extreme is thinking that, because a FRAND violation is a breach of contract, it cannot also be an antitrust violation.

Every antitrust case must consider the market environment in which conduct is to be evaluated. SSOs operated by multiple firms are joint ventures. Antitrust’s role is to …

Beyond Intermediation: A New (Fintech) Model For Securities Holding Infrastructures, Charles W. Mooney Jr.

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Publicly traded securities generally are held by investors in securities accounts with intermediaries such as stockbrokers and central securities depositories—intermediated securities. For many investors this is the only practical means of holding and dealing with securities. These intermediated holding systems (IHSs) impose a variety of risks and costs. Investors are exposed to intermediary risk (default or insolvency of an intermediary holding securities) as well as impediments to the exercise of rights such as voting and asserting claims against securities issuers. The nontransparency of IHSs imposes other social costs, such as obstacles to anti-money laundering enforcement. The emergence of FinTech and …

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.

Intermediated Securities Holding Systems Revisited: A View Through The Prism Of Transparency, Thomas Keijser, Charles W. Mooney Jr.

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This chapter explains several benefits of adopting transparent information technology systems for intermediated securities holding infrastructures. Such transparent systems could ameliorate various prevailing problems that confront existing tiered, intermediated holding systems, including those related to corporate actions (dividends, voting), claims against issuers and upper-tier intermediaries, loss sharing and set-off in insolvency proceedings, money laundering and terrorist financing, and privacy, data protection, and confidentiality. Moreover, transparent systems could improve the functions of intermediated holding systems even without changes in laws or regulations. They also could provide a catalyst for law reform and a roadmap for substantive content of reforms. Among potential …

Coin-Operated Capitalism, Shaanan Cohney, David A. Hoffman, Jeremy Sklaroff, David A. Wishnick

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This Article presents the legal literature’s first detailed analysis of the inner workings of Initial Coin Offerings. We characterize the ICO as an example of financial innovation, placing it in kinship with venture capital contracting, asset securitization, and (obviously) the IPO. We also take the form seriously as an example of technological innovation, where promoters are beginning to effectuate their promises to investors through computer code, rather than traditional contract. To understand the dynamics of this shift, we first collect contracts, “white papers,” and other contract-like documents for the fifty top-grossing ICOs of 2017. We then analyze how such projects’ …

Intellectual Property And Competition, Herbert J. Hovenkamp

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A legal system that relies on private property rights to promote economic development must consider that profits can come from two different sources. First, both competition under constant technology and innovation promote economic growth by granting many of the returns to the successful developer. Competition and innovation both increase output, whether measured by quantity or quality. Second, however, profits can come from practices that reduce output, in some cases by reducing quantity, or in others by reducing innovation.

IP rights and competition policy were traditionally regarded as in conflict. IP rights create monopoly, which was thought to be inimical to …

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 …

Back To The Future Of Cyber Insurance, Tom Baker

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Written for an insurance trade publication, this brief essay identifies five ways that insurers manage uncertainty in selling cyber insurance: (1) providing valuable services beyond risk transfer; (2) contract design, (3) rapid iteration of pricing and forms, (4) limits management and reinsurance, and (5) claims disputing. Cyber insurers provide easy-to-price loss prevention and mitigation services so that the value proposition includes more than the (difficult to price) risk transfer. Cyber insurers design their contracts to include narrowly defined categories of coverage, typically with separate limits and with claims-made coverage for liability risks, and traditional insurers design their contracts to limit …

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 …

Behavioral Finance, Decumulation, And The Regulatory Strategy For Robo-Advice, Tom Baker, Benedict Dellaert

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This working paper surveys the decumulation services offered by investment robo-advisors as a case study with which to examine regulatory and market structure issues raised by automated financial advice. We provide a short introduction to decumulation, describing some of the uncertainties involved in identifying optimal decumulation strategies and sketching a few of the ‘rules of thumb’ that financial advisors have developed in this area in the face of this uncertainty. Next we describe behavioral effects that could inhibit consumers from following an optimal decumulation strategy, concluding that, left to their own devices, consumers are likely to make sub-optimal decumulation decisions. …

Regulation And The Marginalist Revolution, Herbert J. Hovenkamp

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The marginalist revolution in economics became the foundation for the modern regulatory State with its “mixed” economy. Marginalism, whose development defines the boundary between classical political economy and neoclassical economics, completely overturned economists’ theory of value. It developed in the late nineteenth century in England, the Continent and the United States. For the classical political economists, value was a function of past averages. One good example is the wage-fund theory, which saw the optimal rate of wages as a function of the firm’s ability to save from previous profits. Another is the theory of corporate finance, which assessed a corporation’s …

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 …

Copyright As Market Prospect, Shyamkrishna Balganesh

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For many decades now, copyright jurisprudence and scholarship have looked to the common law of torts—principally trespass and negligence—in order to understand copyright’s structure of entitlement and liability. This focus on property- and harm-based torts has altogether ignored an area of tort law with significant import for our understanding of copyright law: tortious interference with a prospective economic advantage. This Article develops an understanding of copyright law using tortious interference with a prospect as a homology. Tortious interference with a prospect allows a plaintiff to recover when a defendant's volitional actions interfere with a potential economic benefit that was likely …