Volume 167

Essays

In September 2017, an American citizen known as John Doe, who had been fighting for ISIL in Syria, was turned over to the American military. With the support of the ACLU, he challenged his detention and filed a habeas petition in the District Court of the District of Columbia. Faced with the prospect of defending in court its contention that the fight against ISIL was authorized by either Congress or the President’s inherent constitutional authority, the government elected to release an ISIL fighter it had been holding in military custody in Iraq.

While many factors likely played into this decision by the government, the significant risk of defeat in the courts was almost certainly a major one. This Comment seeks to address the full scope of the justifications put forward for the fight against ISIL and evaluate the likely outcome the government would have considered if it had to defend its justification for the war against ISIL in court.

Patent trolls account for most patent assertions and are often blamed for the increased costs of patent litigation. Congress and the courts have tried to wrangle the abusive practices of trolls. Through a post‐grant review system, Congress tried to combat the growing litigation costs by streamlining invalidity challenges. The Supreme Court has also tackled the patent‐troll problem in seminal remedy and venue cases, hampering trolls’ ability to get injunctions and use certain venues. Yet the problem persists. Although Congress and federal courts recognize and sometimes try to alleviate the patent‐troll problem, what can states do to protect small‐ and medium‐sized businesses from these pesky trolls? For now, probably nothing. The Federal Circuit, through a preemption analysis influenced by the First Amendment’s Petition Clause, often invalidates state laws that could regulate the problem. Still, states continue to try: most states have passed statutes regulating demand letters asserting patent infringement. These state anti‐patent laws’ goal is to protect companies and consumers from patent trolls. Regardless of whether the current state anti‐patent laws will effectively deter egregious patent‐troll behavior, the Federal Circuit’s current preemption doctrine doesn’t seem to let states promote a legitimate state interest— protecting businesses from bad‐faith behavior so that the businesses can innovate.

But is the Federal Circuit properly reading Supreme Court precedent on preemption and the Petition Clause? Or are they unnecessarily developing a rigid rule to help ex ante patentholder decisionmaking? As this Comment argues, even though the Federal Circuit has improperly morphed the Noerr test into conflict preemption and doesn’t effectively analyze whether Noerr applies to prelitigation communication and non‐antitrust claims, the Federal Circuit’s results aren’t far off. There’s good reason for petition immunity to apply to prelitigation activity, like demand letters, but the analysis should be separate from conflict preemption. It turns out that the Supreme Court’s rigid approach to the sham exception is partly to blame.

This Comment makes three contributions. The first contribution is putting a state anti‐patent law through a full implied‐preemption analysis in accordance with Supreme Court precedent. The second contribution is giving and applying a proper framework to determine whether the Petition Clause applies to prelitigation communication and non‐antitrust claims. The third contribution is suggesting a flexible petitioning‐immunity framework that will leave states room to regulate patent‐troll demand letters.

Responses

Bankruptcy scholars spend too much time thinking about distributional norms and not enough assessing the impact of bankruptcy rules on the quality of governance in Chapter 11. That, in short, is the thesis of The Bankruptcy Partition, the contribution of Professors Baird, Casey, and Picker to this symposium. Of course, the authors being who they are, the Article is about much, much more. This brief response seeks to draw out some of the article’s themes and, in the last Part, to suggest an approach to thinking about the nature of the bankrupt firm that could deepen and extend a conversation the authors usefully begin.

In his book, The Logic and Limits of Bankruptcy Law, Thomas Jackson asserts that bankruptcy law should approximate the bargain creditors would strike at the initiation of the firm (T1) regarding the possibility that the firm might later fail and default on its debts (T2). Jackson reasons that the firm’s creditors would choose a collective remedy that limits the power of individual creditors to force an inefficient liquidation. They would agree to stop the race of diligence.

In his thoughtful and provocative contribution to this symposium, The Creditors’ Bargain Revisited, Barry Adler asks whether, in the current world of finance and bankruptcy, creditors would choose the same collective remedy? His answer is, “No.” As he sees it, creditors would prefer the unfettered right to exercise their negotiated remedies. Barry offers three pieces of evidence: (1) sophisticated creditors frequently say that they would prefer to opt out of collective bankruptcy in favor of individual collection; (2) creditors frequently seek to adopt bankruptcy remote structures such as securitization through special purpose vehicles to avoid the bankruptcy process; and (3) blanket (often second) lien financing is frequently used by undersecured creditors to control and implement an all asset sale. Instead, he posits his preferred, noncollective, approach to insolvency: an express bargain based in creditor autonomy, or as he puts it, “a contractual alternative to bankruptcy.”

My response proceeds in three steps. First, I channel Inigo Montoya from The Princess Bride to suggest that the “Creditors’ Bargain” does not mean what Barry thinks it means. Second, I situate Barry’s contractualism in relation to the alternate “collective” theories of bankruptcy value distribution: the relativism of Baird and Casey; and a more rigorous version of the creditors’ bargain articulated by me and Melissa Jacoby in previous work. Third, I argue for the normative superiority of the collective approach, both for its fidelity to the Creditors’ Bargain heuristic and because of its consistency with a broader set of corporate governance norms that seek to encourage adequate capitalization and risk internalization.

In Settling the Staggered Board Debate published in the University of Pennsylvania Law Review, we concluded that the staggered board is not in and of itself value-increasing or decreasing and that "[t]he staggered board debate is . . . not about per se rules but whether the staggered board is right for individual firms." We thought our conclusions settled the debate. We may have spoken too soon. In a response published in the University of Pennsylvania Law Review Online, Professors Cremers, Sepe, and Masconale assert that our analysis is flawed for two reasons: First, that our results are "based on statistical tests that have 'poor power,'" claiming that the methodology we used in Settling the Staggered Board lacked robustness and was predisposed to its conclusions; Second, that "the adoption of a staggered board is associated with a positive increase in firm value," even taking into account the results in Settling the Staggered Board Debate. In this Response (our response to the response) we reject the argument that our previous results were driven by poor power. And as to the argument that the staggered board is, on average, still associated with an increase in firm value, these conclusions rely on suspension of the efficient market hypothesis, since our responders' results only occur years after the publicly announced adoption of the staggered board. Ultimately, our results again support the conclusion that the staggered board in and of itself has no effect on average firm value, reaffirming our original conclusion that it is firm characteristics which drive prior studies with respect to staggered board value.
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