Volume 164, Issue 4 
April 2016
Articles

The Patent Spiral

Roger Allan Ford

Examination—the process of reviewing a patent application and deciding whether to grant the requested patent—improves patent quality in two ways. It acts as a substantive screen, filtering out meritless applications and improving meritorious ones. It also acts as a costly screen, discouraging applicants from seeking low‐value patents. Yet despite these dual roles, the patent system has a substantial quality problem: it is both too easy to get a patent (because examiners grant invalid patents that should be filtered out by a substantive screen) and too cheap to do so (because examiners grant low‐value nuisance patents that should be filtered out by a costly screen).

This Article argues that these flaws in patent screening are both worse and better than has been recognized. The flaws are worse because they are not static, but dynamic, interacting to reinforce each other. This interaction leads to a vicious cycle of more and more patents that should never have been granted. When patents are too easily obtained, that undermines the costly screen, because even a plainly invalid patent has a nuisance value greater than its cost. And when patents are too cheaply obtained, that undermines the substantive screen, because there will be more patent applications, and the examination system cannot scale indefinitely without sacrificing accuracy. The result is a cycle of more and more applications, being screened less and less accurately, to give more and more low‐quality patents. And although it is hard to test directly if the quality of patent examination is falling, there is evidence suggesting that this cycle is affecting the patent system.

At the same time, these flaws are not as bad as they seem because this cycle may be surprisingly easy to solve. The cycle gives policymakers substantial flexibility in designing patent reforms, because the effect of a reform on one piece of the cycle will propagate to the rest of the cycle. Reformers can concentrate on the easiest places to make reforms (like the litigation system) instead of trying to do the impossible (like eliminating examination errors). Such reforms would not only have local effects, but could help make the entire patent system work better.


Machine Learning, Automated Suspicion Algorithms, and the Fourth Amendment

Michael L. Rich

At the conceptual intersection of machine learning and government data collection lie Automated Suspicion Algorithms, or ASAs, which are created by applying machine learning methods to collections of government data with the purpose of identifying individuals likely to be engaged in criminal activity. The novel promise of ASAs is that they can identify data‐supported correlations between innocent conduct and criminal activity and help police prevent crime. ASAs present a novel doctrinal challenge as well, as they intrude on a step of the Fourth Amendment’s individualized suspicion analysis, previously the sole province of human actors: the determination of when reasonable suspicion or probable cause can be inferred from established facts. This Article analyzes ASAs under existing Fourth Amendment doctrine for the benefit of courts that will soon be asked to deal with ASAs. In the process, this Article reveals the inadequacies of existing doctrine for handling these new technologies and proposes extrajudicial means for ensuring that ASAs are accurate and effective.


The Hidden Costs of Cliff Effects in the Internal Revenue Code

Manoj Viswanathan

Cliff effects in the Internal Revenue Code trigger a sudden increase of federal tax liability when some attribute of a taxpayer—most commonly income—exceeds a particular threshold value. As a result, two taxpayers in nearly identical economic situations can face considerably different tax liabilities depending on which side of the triggering criterion they fall. The magnitude of the equity and efficiency costs associated with cliff effects is significant: cliff effects are attached to tax provisions amounting to hundreds of billions of dollars, the majority of which are targeted at low‐ and moderate‐income taxpayers.

Cliff effects have received little attention in legal academia. Prior scholarship has primarily discussed the relevant tax provisions in isolation, focusing on financial consequences on a single taxpayer or limiting analysis to taxpayers in one geographic area. This Article addresses the void in legal scholarship by first recognizing potential rationales for cliff effects and identifying situations where their definitional clarity might compensate for any equity and efficiency losses. Next, the individual and aggregate costs of cliff effects are quantified and plausible statutory alternatives are identified.

This Article argues that a cliff effect based on income is necessarily problematic on both equity and efficiency grounds because it improperly penalizes taxpayers and disincentivizes the economic empowerment the associated tax provision is intended to promote. A methodology is then provided by which these costs can be compared to the potential savings provided by the bright‐line rule of the cliff effect. This empirical analysis is performed on the two cliff effects of the health premium subsidy of the Affordable Care Act and finds that the cliff effects will, if unchecked, represent a misallocation of over $8.5 billion by 2025.

This Article presents several options for replacing problematic cliff effects, including those in the health care subsidy. The most novel of these strategies awards a credit based on the severity of the cliff effect and ensures that no taxpayer is made worse off post‐tax by virtue of earning more pre‐tax income. The Article concludes by extending the analysis to cliff effects associated with state and local tax regimes and direct transfer programs.


Comments

Devising an Artful Tax: An Appraisal of Payment‐in‐Kind Income Taxes in Mexico and the United Kingdom

Julia L.M. Bogdanovich

Now in effect for almost sixty years, Pago en Especie allows Mexican artists to satisfy their annual income taxes by giving the government a certain number of their paintings, sculptures, drawings, photographs, or other visual works each year. Although no cash payment occurs, the government sees tremendous value in these acquisitions. Endowed each year with more artwork, the government now boasts the world’s premier collection of Mexican contemporary art, with close to 7000 works. Artists also view the scheme favorably. Relieved of paperwork, audits, and counting pesos, an artist can devote himself completely to his creativity and take pride in knowing that the work he submits on tax day will become part of a national repository.

While no other country has gone as far as Mexico in adopting a payment‐in‐kind tax program for art, in 2012 the United Kingdom passed legislation authorizing the Cultural Gifts Scheme (CGS), which allows all taxpayers—not just artists—to donate a preeminent object to a qualifying institution in the United Kingdom. As in Mexico, individual taxpayers and the government both reap significant benefits from this program. For a taxpayer, the tax reduction earned for donating a preeminent object may significantly decrease the income taxes owed. For the United Kingdom, CGS ensures that important cultural and artistic works remain in the country and continue to enrich the nation’s cultural landscape.

As Pago en Especie and CGS have gained more attention, there have been rumblings that the United States should consider implementing a similar payment‐in‐kind income tax program for contemporary artwork and other forms of cultural property. Simplifying tax payments, accommodating artists’ needs, accumulating a national collection, and promoting tourism are common justifications for adopting such programs. However, while Pago en Especie and CGS initially appear attractive to artists and art lovers alike, an in‐depth examination of each reveals numerous administrative, fiscal, and precedential shortcomings that could undermine—rather than enhance—a larger income tax system.


When Is a Tweet Not an Admissible Tweet? Closing the Authentication Gap in the Federal Rules of Evidence

Siri Carlson

The proliferation of social media has naturally led to the increased use of information found on social media to resolve legal disputes. In criminal and civil cases, evidence obtained from social media helps the parties tell their stories and provides proof of disputed facts. As with all evidence, concerns over relevance, authenticity, prejudice, and reliability arise. However, evidence from social media and other digital communications create distinct admissibility concerns. Debates over authenticity of digital evidence fall into two distinct yet overlapping categories of inquiry: normative and procedural.

On a normative level, the debate centers on whether the threshold inquiry for authentication should be more than the minimal showing currently required under the Federal Rules of Evidence (Rules) 901 and 104. Even if one accepts the current, minimal threshold for authentication, a procedural question still exists under the current Rules: Can the suggested modes of authentication provided in Rule 901 adequately guide courts in admitting these new forms of evidence, or do concerns over digital evidence authenticity require specific guidance?

While the Rules provide multiple, nonexhaustive illustrations for authenticating evidence, application of these examples has divided both state and federal courts over the appropriate authentication method and the sufficient threshold authenticity requirement for social media and other digital communications. The inconsistencies in application and outcome suggest that modifications specifically addressing these new forms of communication would better promote uniform and consistent admissibility rulings to a greater degree than continued, albeit creative, application of the current authentication examples under Rule 901.

Social media communication is only part of the larger field of digital communications, including email and text messaging, and the even broader field of electronically stored information such as computer files. However, the growing use of social media—combined with courts’ differing approaches to authentication—provides a good lens for viewing the shortcomings of applying the current Rules to newer communication formats. The Rules’ authentication requirements have not changed since the inception of now‐widely utilized advances in communication technology. Yet many scholars and even courts do not advocate for revising authentication requirements. They point to the current Rules’ nonexhaustive nature, the ability to combine examples to authenticate digital evidence, the challenge of creating an effective Rule, and the inevitability of a cohesive approach once courts apply the current Rules in a similar fashion. However, the increasing need for and the continued inconsistencies in admitting social media and other digital communications support modifying the Rules to contain explicit procedures for authenticating these types of evidence.


Volume 164, Issue 3 
February 2016
Articles

An Economic Understanding of Search and Seizure Law

Orin S. Kerr

This Article uses economic concepts to understand search and seizure law, the law governing government investigations that is most often associated with the Fourth Amendment. It explains search and seizure law as a way to increase the efficiency of law enforcement by accounting for external costs of investigations. The police often discount negative externalities caused by their work. Search and seizure law responds by prohibiting investigative steps when external costs are excessive and not likely to be justified by corresponding public benefits. The result channels government resources into welfare-enhancing investigative paths instead of welfare-reducing steps that would occur absent legal regulation. This perspective on search and seizure law is descriptively helpful, it provides a useful analytical language to describe the role of different Fourth Amendment doctrines, and it facilitates fresh normative insights about recurring debates in Fourth Amendment law.


How Corporate Governance Is Made: The Case of the Golden Leash

Matthew D. Cain, Jill E. Fisch, Sean J. Griffith, and Steven Davidoff Solomon

This Article presents a case study of a corporate governance innovation: the incentive compensation arrangement for activist‐nominated director candidates colloquially known as the “golden leash.” Golden leash compensation arrangements are a potentially valuable tool for activist shareholders in election contests. In response to their use, a number of issuers adopted bylaw provisions banning incentive compensation arrangements. Investors, in turn, viewed director adoption of golden leash bylaws as problematic and successfully pressured issuers to repeal them.

This study demonstrates how corporate governance provisions are developed and deployed, the sequential responses of issuers and investors, and the central role played by governance intermediaries—activist investors, institutional advisors, and corporate law firms.

The golden leash also presents an opportunity to test the response of share prices to governance innovation. We conducted two cross‐sectional event studies around key dates that affected the availability of the golden leash. Our core finding is that share prices of firms facing activist intervention reacted positively to events that make golden leashes more available and negatively to events that make golden leashes less available. Moreover, we found that this governance innovation did not affect every firm in an identical manner. Only the share prices of those firms most likely to be subject to activist attention experienced statistically significant share price reactions.

Our research contributes to the debate over how corporate governance is made and its economic significance. Although we found that corporate governance provisions may be priced, at least in some circumstances, our study also suggests that corporate governance is a complex story involving the actions and reactions not merely of the firm and its shareholders but of a variety of intermediaries and interest groups that have agendas of their own.


The Gravitational Force of Federal Law

Scott Dodson

In the American system of dual sovereignty, states have primary authority over matters of state law. In nonpreemptive areas in which state and federal regimes are parallel—such as matters of court procedure, certain statutory law, and even some constitutional law—states have full authority to legislate and interpret state law in ways that diverge from analogous federal law. But, in large measure, they do not. It is as if federal law exerts a gravitational force that draws states to mimic federal law even when federal law does not require state conformity. This Article explores the widespread phenomenon of federal law's gravitational pull. The Article begins by identifying the existence of a gravitational force throughout a range of procedural and substantive law felt by a host of state actors, including state rulemakers, legislators, judges, and even the people themselves. It then excavates some explanatory vectors to help understand and appreciate why federal law exerts a gravitational force. Finally, the Article considers some normative concerns with state acquiescence to the federal gravitational pull.


Comments

What to Do When Main Street Is Legal Again: Regional Land Value Taxation as a New Urbanist Tool

Nathan Farris

For most of the twentieth century, Americans left urban centers for suburban landscapes.

[O]ver the last one hundred years, American land use policy [was] designed to segregate uses of land, reduce population density, and facilitate the use of automobiles . . . . [S]uburban sprawl has come to represent the American dream, where citizens can own a home, two‐car garage, both back and front yards, and if you are truly lucky, a pool.

Indeed, an antiurban attitude is ingrained in the American psyche. Americans' deeply rooted desire for independence coupled with an abundant supply of low‐priced land created a low‐density land use pattern. The growth of affordable automobiles in the twentieth century allowed for satisfaction of the deeply ingrained American desire to spread out. Consequently, Americans fled urban areas for the suburbs. The proliferation of low‐density development typified by post–World War II suburbs is called sprawl. Unfortunately, this low‐density development is inefficient and causes a host of social and environmental problems.

City planners, environmentalists, and academics alike widely criticize the proliferation of suburban sprawl. These critics argue that sprawl is fundamentally problematic because it is unsustainable and destroys vibrant neighborhoods and communities. “Evidence of sprawl surrounds us . . . . [S]prawl consume[d] nearly six million acres of farmland annually [from 1954 to 1974] . . . .” Sprawl makes us overly dependent on automobiles, “which imposes enormous costs and degrades our quality of life . . . [by] impos[ing] burdensome infrastructure costs” and creating a society stratified by “income, education, race, and ethnicity.”

This Comment assumes suburban sprawl is inimical to the common good and ought to be slowed and, if possible, reversed. My purpose is not to prove that there is a problem, but to explore a potential solution: Land Value Taxation (LVT). Finding a solution, however, begins with identifying the causes of the problem. Accordingly, Part I briefly examines single‐use zoning's contribution to the problem of sprawl, and concludes that New Urbanists are making tremendous progress toward reforming single‐use zoning. I suggest that our current property tax system is another cause of sprawl and, given the success of zoning reform, ought to be the target of New Urbanist policy advocacy. Part II posits LVT as an alternative to our current single‐rate tax system and explores LVT's dual ability to incentivize denser development and disincentive land speculation at the suburban fringe. Part III concludes that LVT can be most effectively implemented at the regional level.


Unconscionability as a Coherent Legal Concept

Colleen McCullough

“Contracts of adhesion” are those long, complicated, boring contracts that no one reads and everyone signs. For a long time, courts enforced them just like they would a regular contract that both parties negotiated. But in the past fifteen years, courts have begun to recognize that contracts of adhesion pose serious problems: because they create obligations that the consumer may be unaware of, these contracts may not actually be increasing social value. Instead, it is possible that the benefits consumers are getting in these contracts are not worth the rights they are giving up.

In stepping in, courts have had to fashion new tools to use. The most common new tool is the doctrine of unconscionability, an old, nebulous doctrine that had been almost indistinguishable from courts' arguments from public policy. This Comment argues that courts' use of unconscionability in the context of contracts of adhesion is giving the unconscionability doctrine shape and content, and separating it out from the amorphous arguments from public policy. This new shape requires courts to analyze whether the business (the “offeror”) had reason to know that a reasonable consumer (the “offeree”) would not have read or understood the contract. If the court finds that the business did have reason to know this, then it will not impose on the consumer terms that the consumer would not have expected, or terms that impose costs on third parties.

This new meaning is derived by considering recent state court decisions, as well as by looking at the comprehensive web of contract law doctrines and considering where, and how, a new concept can fit in.


Volume 164, Issue 2 
January 2016
Articles

Do the Merits Matter? Empirical Evidence on Shareholder Suits from Options Backdating Litigation

Quinn Curtis & Minor Myers

This Article examines a basic question in corporate law: Do the legal merits matter in stockholder litigation? A connection between engaging in wrongful behavior and liability in a shareholder lawsuit is essential if lawsuits are to play a role in deterring wrongful behavior. Yet skeptics of shareholder litigation have raised doubts about the degree to which such suits track actual malfeasance. The challenge is that managerial wrongdoing is almost never observable. While researchers can identify claims and—to some degree—evaluate their merits, such studies are limited to examining instances of wrongdoing that are actually litigated. We develop a novel approach to overcome this limitation in the context of one of the most notable corporate scandals of the twenty‐first century: stock options backdating. Options backdating involves falsifying incentive option grant dates in order to increase the value of the options to executives. The manipulation of grant dates leaves a measurable statistical fingerprint, which we used to estimate the likelihood of backdating among not only companies sued for the practice, but across a sample of thousands of firms that used option compensation. We compare the likelihood that firms backdated with the incidence and disposition of shareholder derivative and securities class action lawsuits. We find that many firms that likely engaged in backdating were never sued and that even firms publicly named as backdaters in the press were not universally sued. Instead, plaintiffs' attorneys were selective in targeting firms with more egregious patterns of backdating. We also examine the motion to dismiss, settlements, and the use of special litigation committees, and we find that the probability of backdating is important for the latter two. These results are an important contribution to the shareholder litigation literature and are particularly timely and important for the unfolding debate over fee‐shifting bylaws.



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“Ideology” or “Situation Sense”? An Experimental Investigation of Motivated Reasoning and Professional Judgment

Dan M. Kahan, David Hoffman, Danieli Evans, Neal Devins, Eugene Lucci, and Katherine Cheng

This Article reports the results of a study on whether political predispositions influence judicial decisionmaking. The study was designed to overcome the two principal limitations on existing empirical studies that purport to find such an influence: the use of nonexperimental methods to assess the decisions of actual judges; and the failure to use actual judges in ideologically‐biased‐reasoning experiments. The study involved a sample of sitting judges (n = 253), who, like members of a general public sample (n = 800), were culturally polarized on climate change, marijuana legalization and other contested issues. When the study subjects were assigned to analyze statutory interpretation problems, however, only the responses of the general‐public subjects and not those of the judges varied in patterns that reflected the subjects' cultural values. The responses of a sample of lawyers (n = 217) were also uninfluenced by their cultural values; the responses of a sample of law students (n = 284), in contrast, displayed a level of cultural bias only modestly less pronounced than that observed in the general‐public sample. Among the competing hypotheses tested in the study, the results most supported the position that professional judgment imparted by legal training and experience confers resistance to identity‐protective cognition—a dynamic associated with politically biased information processing generally—but only for decisions that involve legal reasoning. The scholarly and practical implications of the findings are discussed.



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Adapting Copyright for the Mashup Generation

Peter S. Menell

Growing out of the rap and hip hop genres as well as advances in digital editing tools, music mashups have emerged as a defining genre for post‐Napster generations. Yet the uncertain contours of copyright liability as well as prohibitive transaction costs have pushed this genre underground, stunting its development, limiting remix artists' commercial channels, depriving sampled artists of fair compensation, and further alienating netizens and new artists from the copyright system. In the real world of transaction costs, subjective legal standards, and market power, no solution to the mashup problem will achieve perfection across all dimensions. The appropriate inquiry is whether an allocation mechanism achieves the best overall resolution of the trade‐offs among authors' rights, cumulative creativity, freedom of expression, and overall functioning of the copyright system. By adapting the long‐standing cover license for the mashup genre, Congress can support a charismatic new genre while affording fairer compensation to owners of sampled works, engaging the next generations, and channeling disaffected music fans into authorized markets.



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Comments

Discriminatory Discretion: PTO Procedures and Viewpoint Discrimination under Section 2(a) of the Lanham Act

Emily M. Kustina

The current standards for denying and cancelling trademarks under section 2(a) of the Lanham Act are insufficiently clear to prevent trademark examiners and administrative judges from employing viewpoint‐based discrimination against owners of marks that are perceived to be immoral, scandalous, or disparaging. Since trademark protection is a grant of speech rights to mark owners, the U.S. Patent and Trademark Office's (PTO) discretionary decisions to deny or cancel the registration of marks that represent particular viewpoints under section 2(a) are at odds with the First Amendment protections afforded to both commercial and expressive speech. This Comment proposes that to protect the First Amendment rights of mark owners, the PTO should employ a policy that all allegedly immoral, scandalous, or disparaging marks are presumptively valid and can be denied registration or cancelled only upon a showing that the proposed marks are within the specific categories of speech deemed to be outside the realm of First Amendment protection. Stricter standards for denying and cancelling trademarks under section 2(a) will allow the commercial marketplace and the marketplace of ideas to determine the fate of these so‐called “undesirable” trademarks.

Part I introduces Lanham Act section 2(a), the statute authorizing the denial of registration for trademarks that are immoral, scandalous, or disparaging. I discuss the PTO's procedures for granting and denying trademarks, and compare the PTO's purported procedures with how the office actually makes decisions. I then argue that this process is infused with discretionary decisionmaking that allows examiners to incorporate their own opinions on the propriety of marks into the section 2(a) analysis. In Part II, I analyze the PTO's rates of granting and denying registration to allegedly scandalous and disparaging trademarks under section 2(a) and the evidence used to support such decisions. In Part III, I assess the effects of trademark denial and cancellation on mark owners. In Part IV, I discuss the First Amendment doctrine of viewpoint discrimination, its interaction with the doctrines of commercial speech and administrative discretion, and how it applies to trademark registration and the PTO. I conclude that section 2(a) is a restriction on viewpoint in violation of the First Amendment. In Part V, I analyze how the discretionary procedures in the PTO lead to viewpoint discrimination. Finally, in Part VI, I propose changes to the section 2(a) regime to limit discrimination on the basis of viewpoint. I argue that the PTO should adopt the presumption that potentially scandalous and disparaging trademarks are valid absent section 2(a) challenges from third parties in opposition or cancellation proceedings. I also propose that section 2(a) denials should be limited to traditionally unprotected categories of speech, allowing the marketplaces of commerce and ideas to limit the propagation of trademarks that are seen as scandalous or disparaging.



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Investor Participation in Initial Public Offerings

Kyle J. Schwartz

During an initial public offering (IPO), shares of a company are sold to the public for the first time. To facilitate a typical IPO in the United States, a group of investment banks gauges demand for the IPO, determines the initial offer price for the shares, and allocates the shares among interested investors. Empirical studies have shown that in the moments after IPO shares begin trading, the market price of the newly public shares often, but not always, climbs above the initial offer price. This phenomenon suggests that many IPOs are “underpriced.” In the typical IPO, however, the only investors who receive shares at the initial offer price are large institutions or well‐connected individual investors. Because these select investors are able to sell the shares they acquire in underpriced IPOs for a quick profit, often at the expense of average individual investors, many commentators have criticized the process as being unfair. This Comment explores various explanations for IPO underpricing, reviews existing legislation regulating IPOs, and proposes that a small percentage of the shares of every IPO be set aside for impartial distribution among interested individual (or retail) investors. This Comment acknowledges that institutions deserve the majority of IPO shares, but suggests that providing retail investors, as a class, with broader access to IPO shares would increase perceptions of fairness in the market without upsetting the existing IPO framework.



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Volume 164, Issue 1 
December 2015
Articles

A National Study of Access to Counsel in Immigration Court

Ingrid V. Eagly & Steven Shafer

Although immigrants have a right to be represented by counsel in immigration court, it has long been the case that the government has no obligation to provide an attorney for those who are unable to afford one. Recently, however, a broad coalition of public figures, scholars, advocates, courts, and philanthropic foundations have begun to push for the establishment of a public defender system for poor immigrants facing deportation. Yet the national debate about appointing defense counsel for immigrants has proceeded with limited information regarding how many immigrants currently obtain attorneys and the efficacy and efficiency of such representation.

This Article presents the results of the first national study of access to counsel in United States immigration courts. Drawing on data from over 1.2 million deportation cases decided between 2007 and 2012, we find that only 37% of all immigrants, and a mere 14% of detained immigrants, secured representation. Only 2% of immigrants obtained pro bono representation from nonprofit organizations, law school clinics, or large law firm volunteer programs. Barriers to representation were particularly severe in immigration courts located in rural areas and small cities, where almost one‐third of detained cases were adjudicated. Moreover, we find that immigrants with attorneys fared far better: among similarly situated removal respondents, the odds were fifteen times greater that immigrants with representation, as compared to those without, sought relief, and five‐and‐a‐half times greater that they obtained relief from removal. In addition, we show that involvement of counsel was associated with certain gains in court efficiency: represented respondents brought fewer unmeritorious claims, were more likely to be released from custody, and, once released, were more likely to appear at their future deportation hearings. This research provides an essential data‐driven understanding of immigration representation that should inform discussions of expanding access to counsel.


Toward a Pigouvian State

Jonathan S. Masur & Eric A. Posner

Most economists believe that the government should impose Pigouvian taxes on firms that produce negative externalities like pollution, yet regulatory agencies hardly ever use their authority to create Pigouvian taxes. Instead, they issue command‐and‐control regulations. Our major point is that, contrary to the conventional wisdom, regulators typically have legal authority to create Pigouvian taxes—they just do not use it. While regulators may hesitate to impose Pigouvian taxes for a range of political and symbolic reasons, we argue that these reasons do not justify this massive failure of regulatory efficiency. It is time for the regulatory state to take a Pigouvian turn.


Antitrust in Zero-Price Markets: Foundations

John M. Newman

“Zero‐price markets,” wherein firms set the price of their goods or services at $0, have exploded in quantity and variety. Creative content, software, search functions, social media platforms, mobile applications, travel booking, navigation and mapping systems, and myriad other goods and services are now widely distributed at zero prices. But despite the exponential increase in the volume of zero‐price products being consumed, antitrust institutions and analysts have failed to provide an adequate response to markets without prices.

Modern antitrust law is firmly grounded in neoclassical economics, which is in turn centered on price theory. Steeped in price theory, preeminent antitrust theorists have urged that without prices there can be no markets, and consequently no market power. This heavy methodological dependence on positive prices has led antitrust courts and enforcement agencies to overlook potentially massive welfare harms. Unfortunately, recent empirical research confirms that such harms have already occurred.

These failures to conceive of zero‐price markets as antitrust “markets” indicate how fundamentally zero prices challenge traditional theories and analytical frameworks. This Article establishes a novel taxonomy of customer‐facing costs, distinguishing “market‐signaling” from “non‐market‐signaling” costs. Crucially, it demonstrates that market‐signaling costs are present in many zero‐price contexts. The absence of positive prices thus does not foreclose antitrust scrutiny; “trade,” for purposes of the Sherman and Clayton Acts, encompasses zero‐price transactions. To continue ignoring welfare harms in these markets would be both unjust and inefficient. The Article concludes by identifying antitrust law's proper role within—and stance toward—zero‐price markets.


Time to Drop the Infield Fly Rule and End a Common Law Anomaly

Andrew J. Guilford & Joel Mallord

I begin with a hypothetical. It's the seventh game of the World Series at Wrigley Field, Mariners vs. Cubs. The Mariners lead one to zero in the bottom of the ninth, but the Cubs are threatening with no outs and the bases loaded. From the hopeful Chicago crowd there rises a lusty yell, for the team's star batter is advancing to the bat. The pitcher throws a nasty rising fastball, and the batter barely makes contact. It's a high pop‐up to the second baseman, who backpedals onto the right field grass. He settles under the ball and shields his eyes from the blazing sun. What happens next at this key moment in Cubs history, with fans everywhere on the edge of their seats in anticipation? As all baseball fans know, an old man in a blue coat will run out, arms waving, and the play is over. The Cubs are charged with an automatic out and the bases remain loaded. This is the result of the Infield Fly Rule, an outdated rule of baseball whose time must end.

The development of the Infield Fly Rule was explored forty years ago in an Aside, The Common Law Origins of the Infield Fly Rule, in the University of Pennsylvania Law Review. The Aside describes how the Infield Fly Rule developed by accretion—like the common law—at a time when people hoped to preserve a kinder, gentler America. It describes how people considered it uncivil for an infielder to purposely drop a ball to turn a double play on runners taught not to advance until the ball is caught. The result was that the audacious, risky possibilities of infield flies were eliminated by protectionist rulemaking. This antiquated rule, reflecting the gentility of ages past, has no place in the rude coarseness of the twenty‐first century, an era that embraces both risk and subterfuge. Baseball rulemakers should correct this error of common law accretion by dropping the Infield Fly Rule.


Comments

The Limitations of Tradition: How Modern Choice of Law Doctrine Can Help Courts Resolve Conflicts within the New York Convention and the Federal Arbitration Act

Alexander Sevan Bedrosyan

The difficulties faced by parties trying to enforce rights secured through international arbitration stem from the fact that countries have enacted different barriers to the enforcement of international arbitral awards. These cross‐national differences in barriers persist today, despite the fact that the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (“New York Convention” or “Convention”) attempted to eliminate such differences. Through the New York Convention, the international community sought to limit and standardize the grounds on which countries could refuse to enforce arbitral awards.

The lack of international uniformity does not arise because countries that have ratified the New York Convention are intentionally violating the treaty; rather, the problem lies within the treaty itself—the New York Convention contains a choice of law problem. It establishes that two sets of laws will govern actions to enforce international arbitration awards: its own provisions and the national laws of state‐parties. National courts have adopted traditional choice of law methods in order to choose whether they will use their own national laws or the treaty provisions to decide a particular issue. However, this divergence has brought to enforcement actions the same two problems it has brought to other more conventional civil litigations—absurd and nonuniform outcomes. The lack of uniformity is particularly vexing, as the New York Convention's very purpose was to ensure the uniform treatment of a given arbitration award across countries.

This Comment proposes that just as courts have abandoned the traditional choice of law approach in conventional litigation, they should also abandon it in arbitral enforcement litigation. Courts should instead use modern choice of law doctrine. Employing modern choice of law doctrine to enforcement actions would produce sensible results and bring uniformity to the enforcement of international arbitral awards. This Comment focuses on the United States and the Federal Arbitration Act as a case study. It suggests that applying modern American choice of law doctrine to the Federal Arbitration Act, mainly by limiting the application of the statute of limitations contained in section 207 of the Act, would help the United States better implement the New York Convention.


Special Domestic Violence Criminal Jurisdiction for Indian Tribes: Inherent Tribal Sovereignty versus Defendants' Complete Constitutional Rights

Margaret H. Zhang

Special domestic violence criminal jurisdiction for Indian tribes took effect nationally on March 7, 2015, and it was a historic moment for the tribes. Ever since the Supreme Court's 1978 decision in Oliphant v. Suquamish Indian Tribe, tribes had been powerless to exercise criminal jurisdiction over non‐Indian defendants. Because the Court held that “Indian tribes do not have inherent jurisdiction to try and punish non‐Indians,” an unfortunate gap in enforcement resulted: for crimes committed in Indian country, where states' criminal jurisdiction is limited and where the federal government lacks the resources to prosecute crimes effectively, non‐Indian offenders regularly escaped prosecution. This problem was particularly disturbing in the context of domestic violence and related crimes. For example, sixty‐seven percent of the sexual abuse and related offenses committed in Indian country and charged in fiscal years 2005–2009 were left unprosecuted by the federal government.

Enter VAWA 2013 and special domestic violence criminal jurisdiction for Indian tribes. Recognizing that “much of the violence against Indian women is perpetrated by non‐Indian men” who “regularly go unpunished,” Congress intended special domestic violence criminal jurisdiction to fill the prosecutorial enforcement gap for domestic violence offenses. Codified at 13 U.S.C. § 1304, the new provisions recognize tribes' “inherent power . . . to exercise special domestic violence criminal jurisdiction over all persons”—including non‐Indians.

Although tribes and their advocates have celebrated VAWA 2013's partial override of the Oliphant decision, special domestic violence criminal jurisdiction has yet to withstand constitutional scrutiny at the Supreme Court. In the debates before VAWA 2013's passage, tribal jurisdiction over non‐Indians sparked controversy because legislators and commentators understood that non‐Indian defendants prosecuted and tried in tribal court would not receive the full protection of the federal Constitution. This constitutional question—whether the Constitution applies in full force in prosecutions brought under special domestic violence criminal jurisdiction—turns on whether the expanded tribal jurisdiction is an exercise of “inherent” tribal sovereignty or delegated federal authority. If the new jurisdiction is an exercise of inherent tribal sovereignty, then tribes are not obligated to provide non‐Indian defendants with the full protection of the federal Constitution. But if the new jurisdiction is delegated federal authority, then non‐Indian defendants would be entitled to the full panoply of rights under the federal Constitution—including, potentially, the right to an Article III judge appointed by the President and confirmed by the Senate under Article II of the Constitution. The bounds of inherent tribal sovereignty could thus determine whether special domestic violence criminal jurisdiction lives or dies.

This Comment begins in Part I by outlining the history of tribal criminal jurisdiction in Indian country, with a focus on the law most relevant to analyzing the bounds of tribes' inherent sovereignty to adjudicate crimes over non‐Indians. Part II explains VAWA 2013's special domestic violence criminal jurisdiction in more detail and summarizes how it has been implemented since the statute's enactment. Part III discusses the arguments for and against finding that tribes have inherent tribal sovereignty to exercise special domestic violence criminal jurisdiction, and why the outcome matters for both tribes and non‐Indian defendants. Part IV takes an aside to note the lurking influence of the congressional plenary power doctrine, which gives Congress broad authority to legislate in the realm of Indian affairs. And Part V outlines how courts' ultimate rulings (and their underlying reasoning) would affect special domestic violence criminal jurisdiction's future. The Conclusion addresses the underlying questions: What are the bounds of tribes' inherent sovereignty? From what does that sovereignty derive? The answer will affect not just special domestic violence criminal jurisdiction under VAWA 2013, but also possible future expansions of tribal criminal jurisdiction by Congress.


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