Posted by: pgoold | 13th Dec, 2017

Post-Doctorate Fellowships at Tel Aviv University

The Edmond J. Safra Center for Ethics at Tel Aviv University is accepting applications for its 2018-19 post-doctorate fellowship program. The Center offers grants to outstanding researchers who study the ethical, moral and political aspects of markets, both local and global, from all disciplines and fields, including economics, social sciences, business, the humanities, and the law. Further details are available here.

In addition, the Edmond J. Safra Center for Ethics and The Blavatnik Interdisciplinary Cyber Research Center at Tel Aviv University are delighted to announce two new post-doctorate fellowships, focusing on virtual markets, ethics and the law, for the academic year 2018-19. We are looking for candidates who wish to explore the ethical challenges of the market in the increasingly significant cyber environment. Both empirical and normative research projects are welcomed. Further details are available here.

Deadline for submission of all application materials: Feb 15, 2018. Application materials should be sent by e-mail to:  safracen at post.tau.ac.il .

Posted by: Erik Hovenkamp | 12th Dec, 2017

Rakoff on the Five Justices of Contract Law

Post by Erik Hovenkamp.

    In the private law workshop’s final meeting of the fall semester, we were pleased to host Professor Todd Rakoff, who presented his recent article, “The Five Justices of Contract Law.”  Rakoff begins by summarizing the conventional wisdom on the role of justice considerations in contract.  These accounts portray justice as having a fairly narrow ambit, taking a backseat to notions of efficiency and the freedom of exchange.  As an extreme example, Rakoff highlights the tendency of some law professors to regard justice considerations as being relegated entirely to the rarely successfully invoked doctrine of unconscionability.

    In Rakoff’s view, such characterizations markedly understate the extent to which contract law is shaped by the courts’ pursuit of justice.  He contends that justice considerations have had a significant influence on many common law doctrines, including some remedial standards, and that this is borne out in both the case law and the Restatements.  He synthesizes this broader role of justice into five distinct applications, the eponymous “Five Justices.”  Aside from characterizing these applications independently, Rakoff discusses instances in which they may conflict or overlap. Read More…

Post by John Golden

On November 27, the United States Supreme Court heard oral argument in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712, a case that gives prominence to a question flagged in prior posts of May 30 and June 13: namely, whether patents involve public or private rights for purposes of the constitutionality of administrative cancellation of issued patent claims.  Article III of the U.S. Constitution states, “The judicial Power of the United States, shall be vested in one Supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.”  The Supreme Court has held that, despite this assignment of “judicial Power” and the more general principle of separation of powers, “a matter of ‘public right’ … can be decided outside the Judicial Branch.”  Stern v. Marshall, 564 U.S. 462, 488 (2011).  The Court has recognized that this “public rights exception” extends beyond “actions involving the Government as a party” and encompasses “cases in which the claim at issue derives from a federal regulatory scheme, or in which resolution of the claim by an expert government agency is deemed essential to a limited regulatory objective within the agency’s authority.”  Id. at 490.

In Oil States, the Court confronts the question “[w]hether inter partes review—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents [whose claims have been challenged by a third party]—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”  The Petitioner argues that the answer is “Yes” because issued patent rights are private property whose validity “Article III permits only courts to adjudicate.”  Brief for Petitioner 3.  Respondent Greene’s Energy Group argues that the answer is “No” because “[p]atent rights are public rights, that is, derived from a ‘federal regulatory scheme’ and ‘integrally related to particular Federal Government action.’ ”  Brief for Respondent Greene’s Energy Group, LLC 9 (quoting Stern, 564 U.S. at 490–91).  The U.S. government as “Federal Respondent” likewise argues that inter partes review addresses matters of public right and contends that the Petitioner’s “argument confuses the distinct concepts of private property and ‘private rights’—those rights that are not integrally related to federal government action.”  Brief for the Federal Respondent 18, 21

Over fifty amicus curiae briefs were filed in Oil States.  These briefs are, in general, too numerous to have their contents described in this blog posting, but you can find discussions of various amicus briefs in separate postings by Dennis Crouch on the Patently-O blog dated August 20, August 28, September 1, and November 1.  For purposes of disclosure, I should note that I participated in the filing of an amicus brief in support of the Respondents contending that questions of patent claims’ validity are matters of public right.  Brief of Amici Curiae Professors of Administrative Law, Federal Courts, and Intellectual Property Law in Support of Respondent 18–26.  This brief also noted a long-held (albeit not unanimously held) scholarly view that, under the Court’s precedents, even questions of “private right” may, generally speaking, be subjected to administrative adjudication as long as the rights in question are creatures of federal statutory law and as long as the results of administrative adjudication are subject to judicial review that is de novo on questions of law and at least in the nature of substantial-evidence review on questions of fact.  Id. at 28–29.  Under this view, Article III constraints seem satisfied by the Patent Act’s provision of a right to appeal the results of inter partes review to the U.S. Court of Appeals for the Federal Circuit.  Id. at 29–31.
Read More…

Post by B. Palle, Graduate Fellow and SJD Candidate at Harvard Law School

In the most recent Private Law Workshop, Professor Maureen Brady presented her fascinating historical study of the development of metes and bounds demarcation in property law in pre-Revolution New Haven.

New England colonies mandated land recording at least from the early decades of the Seventeenth Century. But these requirements did not specify that the recording be in any standardized form. And when landowners in colonial New Haven (in the 1690’s, say) transferred land or recorded deeds, they relied on a peculiar system to demarcate boundaries: the system of metes and bounds. Under this system, landowners would demarcate boundaries by referring to geographical features such as creeks, orchards, boulders, and trees, as well as neighbors who owned adjacent parcels of land. One might suppose that such a system would impose “astronomical” information costs: the effort required in interpreting and understanding such an idiosyncratic system would seem prohibitively high. Nevertheless, the system worked well for a time. There was very little litigation over property in New Haven before 1700: Brady says that her research revealed just three such disputes. But why did the residents of New Haven (and, indeed, in New England more generally) choose to adopt such an apparently costly mode of demarcating boundaries? And how and why did such a system function so smoothly. In analyzing these questions, Brady looks beyond paper records (such as land deeds) to the social context in which the system operated.

Until the 18th Century, the residents of New Haven constituted a “small,” “homogenous” and a “cohesive” group. Within this close-knit community, residents established a set of social practices that helped them identify the boundaries of their land holdings with reasonable certainty. Brady mentions two: perambulations and land distribution programs. Read More…

Posted by: pgoold | 27th Nov, 2017

Apply to be a Private Law Fellow at Harvard Law School

The Project on the Foundations of Private Law at Harvard Law School is seeking applicants for the Postdoctoral Fellowship in Private Law.

The Fellowship is a two-year, residential postdoctoral program specifically designed to identify, cultivate, and promote promising scholars early in their careers with a primary interest in private law. Private law embraces traditional common law subjects (property, contracts, and torts), as well as adjacent statutory areas such as intellectual property and commercial law. It also includes resurgent areas, such as unjust enrichment, restitution, equity, and remedies. Fellows have been selected from among recent graduates, young academics, and mid-career practitioners who are committed to pursuing publishable research likely to make a significant contribution to private law scholarship.

Fellows devote their full time to scholarly activities in furtherance of their individual research agendas. In addition, fellows contribute to the intellectual life of the Project and the Harvard Law School community through mentoring students, presenting their research in and attending faculty workshops and seminars, helping to organize and participating in Center events and projects, and blogging.

More information and application details can be found here.

Post by Patrick Goold

Avner Greif’s study of Maghribi Jewish traders in the eleventh century is a seminal work in the literature on private ordering. In a couple of highly influential articles (here and here), Greif documented how this group of merchants created elaborate trading networks across the Islamic Mediterranean. Greif argued that the Maghribi formed a close-knit “coalition” that could eschew enforcement of agreements by lawsuits and the threat of liability and instead rely on reputation-based community enforcement. However, in recent years, historians of the period, including  Jessica Goldberg, as well as Jeremy Edwards and Sheilagh Ogilvie, have questioned Greif’s thesis, suggesting that there is little evidence of Maghribi traders boycotting members for misconduct, and some evidence that they relied on courts.

At this week’s HLS Private Law Workshop, Lisa Bernstein presented a draft essay that revisits this topic (Revisiting the Maghribi Traders (Again): A Social Network and Relational Contracting Perspective). Bernstein proposes to revise Greif’s analysis by swapping out the notion of “coalition” on which he relied for social network analysis and relational contract theory. While this is an alternative account of the Maghribi activities, it nonetheless supports Greif’s central thesis.

Although Maghribi merchants sometimes formed partnerships with one another, they more commonly used each other as reciprocal agents under a legally unenforceable agreement known as a Suhba. Under a Suhba, a merchant who asked his agent to perform a task (for example, travel to a foreign city to sell the merchant’s flax) would become obligated to perform a task of equal value (for example, introduce the agent to other important merchants). This system enabled the traders to diversify their trading portfolios and reach many markets across the Mediterranean without needing to travel with their goods. The center of this trading activity was Fustat, today part of Old Cairo, and it is a cache of documents in the Cairo Geniza that serve as the main historical record of the merchants’ activities.

Bernstein argues that the Maghribi traders were organized as a “semi-closed bridge and cluster network with small-world properties.” Within trading centers (cities like Fustat), most trade was conducted in the open with witnesses. Meanwhile, business and social interactions resulted in a dense network of ties that enabled reputation information to spread easily. These “network clusters” were then “bridged” by a number of social institutions and organizations. Postal routes between trading centers enabled information about reputation to flow between clusters. A handful of dominant traders also had personal and family ties spreading across a number of cities. In addition, an institutional functionary known as the “merchant’s representative” had an incentive to insure accurate information about dealings was transmitted between merchants. The merchant’s representative was a trader from a foreign city who established himself in a trade outpost. The representative’s stature in his new city depended on his ability to entice foreign merchants to do business there, which in turn depended on his ability to ensure that traders in the city kept their obligations. This structure of these bridges and clusters enabled reputational information to flow across the Islamic Mediterranean in such a way that network governance could potentially play a major role in supporting Maghribi trade.    Read More…

Post by Patrick Goold

In the most recent HLS Private Law Workshop, Professor Eric Claeys presented a chapter of his forthcoming monograph, Natural Law, Natural Rights, and the Foundations of American Property Law. This monograph presents a natural law theory of American property law. The monograph argues that individuals have pre-political rights to use tangible resources in ways that promote human flourishing. Contemporary property doctrine embodies this logic and, in form and substance, upholds those rights.

The chapter Claeys presented discussed and responded to criticisms of common law property doctrine frequently made by law and economics scholars. Economists, starting with Ronald Coase, tend to view property law as an instrument for settling disputes about incompatible uses of resources (what Claeys labels the “incompatible use framework” of property).  When a rancher’s cattle strays onto a farmer’s wheat fields, or a railroad emits sparks onto a farmer’s hay bales, a Coasian treats the respective parties’ “rights” as the conclusion of, rather than a component of, its analysis.

As Coase acknowledged, this is not how courts have historically resolved such disputes. Rather than resolving the case before them based on transaction-cost analysis, courts tend to ask a series of conceptual questions, including: did the plaintiff have a right to prevent the defendant’s behavior? did the defendant’s actions cause the plaintiffs loss? and, did the plaintiff suffer cognizable harm? Coase and his progeny have viewed such reasoning with skepticism. At the root of this skepticism is the belief that the core concepts, such as “right”, “harm” and “causation,” lack substance and therefore, on their own, cannot tell a judge how to resolve disputes. To use a well-worn example, Coase argued that “causation” is reciprocal; that is, when a railroad’s sparks burn down a nearby farmer’s hay bales, both the railroad and the farmer are “causes” of the loss because both could have taken measures to prevent it.  Accordingly asking whether the defendant’s actions “caused” the plaintiff’s harm is not a cogent way to decide who ought to win in property litigation. Read More…

Posted by: Erik Hovenkamp | 28th Oct, 2017

Algorithmic Identification of Property Law Families

Post by Erik Hovenkamp

     In the most recent Private Law Workshop, Yun-Chien Chang discussed his ongoing and very interesting effort (with Nuno Garoupa and Martin Wells) to use machine learning techniques to classify legal systems into families—groupings whose members are similar to each other, but relatively distinct from those in other groups.  The paper, entitled Redrawing the Legal Family Tree: Empirical Comparative Law Using Data on Property Doctrines, is the first attempt to classify legal regimes into families using advanced statistical methodology. 

     As the authors describe it, research on international legal families has reached an impasse.  Prior efforts to delimit legal families have been challenged as “largely subjective.”  And, although legal families have grown popular within economic research, particularly in development economics, these studies tend to take for granted these prior genealogies.  Because of this, according to the authors, the “economic literature has failed to influence scholarly debate in comparative law.” 

     In keeping with prior work in the field, Chang and his coauthors were interested in delimiting families based on substantive private law.  They ultimately chose to focus exclusively on property law, both for methodological convenience and because, in the authors’ words, it is “neither too local nor too global.”  This ostensibly helps to ensure that there are sufficient international similarities to formulate meaningful groupings, but not so much so that all countries are lumped into just one or two silos.

     The authors hand-coded substantive property law attributes of 154 jurisdictions.  Specifically, each data point describes how a nation’s regime of property law comes out on 73 different issues—for example, whether it recognizes a lease as a property form, or whether it affords a right to abandon real property.  They then used a machine learning clustering algorithm to agglomerate legal systems into families.  And as a robustness check, they applied a technique called “sparse linear discriminant analysis,” which is designed to enable effective grouping when the number of variables is high in relation to the number of observations. 

     The authors’ results comport with some of the prominent distinctions drawn in prior genealogies, such as that between civil and common law systems.  But, at least within these broad categories, the clustering algorithm identifies different legal families.  For example, unlike prior accounts, it does not identify the legal systems of former-Soviet bloc as an independent family; the same is true of East Asia.  With respect to civil law jurisdictions, the authors identify four major families, which they associate with French, German, Spanish, and Scandinavian law.

     The paper was a fun read.  As the authors proceed with this project, it would be helpful to receive a more thorough discussion of how their results relate to the historiographical arguments underpinning prior efforts to classify legal families. In any case, it will be interesting to see how the authors and other comparative-law scholars employ these results in the future.

Posted by: Erik Hovenkamp | 16th Oct, 2017

Toward a Comprehensive Theory of Antitrust and IP Settlements

Post by Erik Hovenkamp.

When will private settlements advance the normative objectives espoused by the relevant area of law, as opposed to straying away from them?  One sensible metric is to assess the similarity between (1) the positions the parties maintain post-settlement; and (2) the positions the parties would have maintained had they litigated (accounting for possible post-trial contracting).   Given that the outcome of litigation can rarely be predicted with certainty, we can interpret the second prong as the expected result of litigation—as weighted by the relative likelihoods the parties assign to the different possible outcomes.  To illustrate, suppose my doctor’s treatment of me causes me to suffer $1000 in harm, and there is a 50% chance that he will be held liable for negligence.  Then we will settle for about $500, for we cannot mutually agree on anything else.  This is precisely the expected result of litigation, and hence the settlement is representative of how the courts would apply the law to our dispute.

If we ignore things that might skew negotiations in one party’s favor (e.g. asymmetric ability to cover litigation costs), the above result is essentially a corollary of the Coase theorem.  If the court’s judgment won’t affect the final allocation of rights, then the parties just bargain over the distribution of welfare. Neither party will accept less than it expects to get through litigation, which is a function of the legal standards that would be applied by a court.  Thus, under these circumstances, private settlements will “emulate the law.”

But as I have emphasized previously, one important feature of the IP-antitrust interface is that the parties to a dispute are often prohibited from contracting out of a judgment that fails to maximize their (joint) profits.  Competitors in a patent dispute cannot “undo” a holding that the patent is invalid or noninfringed in order to revive the patent’s exclusionary power; they are obligated to stick with open competition.  The result is that rival firms often have a shared interest in settling an IP dispute on terms that deviate substantially from their expectations about litigation.  Specifically, if they expect litigation to produce a relatively competitive result (e.g. because the patent is likely invalid), they prefer to evade that outcome by settling on terms that restrain competition substantially, resulting in higher prices and larger profits.   The result is that these settlements do a very bad job of promoting IP and antitrust policy objectives; they do not emulate the law.  

In my recent paper with Jorge Lemus, Proportional Restraints and the Patent System, we propose a comprehensive standard for evaluating patent settlements under the antitrust laws, along with a set of economic tools for administering it practicably.  In what follows, I provide an overview of the underlying problem and our proposed solution.  Read More…

Samuel Beswick, Frank Knox Memorial Fellow, SJD candidate, Harvard Law School

One of the major catalysts behind the resurgence in England and Wales of the law of unjust enrichment has been the influence of fundamental rights jurisprudence of the European Union. Where a member state levies charges on persons contrary to EU law (such as discriminatory taxes), the European Court of Justice (ECJ) recognizes an entitlement to repayment. While the right to restitution arises from EU law, the content of the remedy is grounded in the domestic law of each member state. This dynamic is intended to preserve the respective competencies and autonomy of national courts and the ECJ.

In England, the private law of unjust enrichment has been the vehicle for vindicating the EU restitutionary right. The challenges of integrating EU principles into the recognized domestic causes of action—the ‘unjust factors’ of an ultra vires charge (Woolwich EBS v IRC) and mistake of law (Kleinwort Benson v Lincoln CC)—have in turn influenced the ECJ’s growing “remedies jurisprudence.”

In her paper on The European Court of Justice’s ‘Remedies Jurisprudence’ and the Role of Domestic Courts—How to Transfer Principle alongside Competence, presented at last Wednesday’s Private Law Workshop, Rebecca Williams contends that the law defining the EU restitutionary right faces a coherence problem. The right is grounded in the ECJ’s two primary limiting principles on member state procedural autonomy: the principle of equivalence (by which the rules governing disputes with an EU law dimension “cannot be less favourable” than those governing similar domestic disputes), and the principle of effectiveness (by which the exercise of EU rights may not be rendered “virtually impossible or excessively difficult” by rules of national procedural law). Ultimately, it is the ECJ that determines whether the remedies provided in national law satisfy these primary principles.

The general trend in the unjust enrichment cases has been toward EU-level intervention. Yet, in contrast to its member state damages liability jurisprudence, the ECJ has generally shown reluctance to specify the content and bounds of the restitutionary right. This has injected considerable ambiguity and unpredictability into the restitutionary jurisprudence. In distilling the relatively abstract principles and, in some cases, inconsistent holdings into their domestic actions, the English courts have come to develop more expansive remedies against the state than what subsequent ECJ guidance suggests is necessary.

Williams proposes that both the ECJ and national courts could take steps to improve matters. At the member state level, courts should not take too deferential a line when referring questions of law up to the ECJ, and when they do they should articulate their view of the law so as constructively to influence the content of private law principles at the European level. At the European level, the ECJ should recognize that the more it becomes involved in developing an EU remedies jurisprudence, the greater responsibility it holds for comprehensive and principled reasoning.

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