On Friday, September 18, 2015 Washington and Lee law professor Christopher Seaman spoke to the Virginia State Bar’s Intellectual Property Section on proposed legislation to create a federal civil cause of action for trade secret misappropriation. The presentation built on Professor Seaman’s article, The Case Against Federalizing Trade Secrecy, which was recently published in the April 2015 issue of the Virginia Law Review.
From the abstract:
Trade secrecy is unique among the major intellectual property (IP) doctrines because it is governed primarily by state law. Recently, however, a number of influential actors — including legislators, academics, and organizations representing IP attorneys and owners — have proposed creating a private civil cause of action for trade secret misappropriation under federal law. Proponents assert that federalizing trade secrecy would provide numerous benefits, including substantive uniformity, the availability of a federal forum for misappropriation litigation, and the creation of a unified national regime governing IP rights.
This Article engages in the first systematic critique of the claim that federalizing trade secrecy is normatively desirable. Ultimately, it concludes that there are multiple reasons for trade secrecy to remain primarily the province of state law, including preservation of states’ ability to engage in limited experimentation regarding the scope of trade secret protection and federalization’s potential negative impact on the disclosure of patent-eligible inventions. Finally, it proposes an alternative approach — a modest expansion of federal courts’ jurisdiction over state law trade secret claims — that can help address the issue of trade secret theft without requiring outright federalization.
On September 3, 2015, Washington and Lee law professor Victoria Sahani presented her latest work-in-progress, Reshaping Risk in Third-Party Funding, at the Iowa Innovation, Business & Law Center at the University of Iowa College of Law. Professor Sahani’s talk launched the Innovation, Business, & Law Colloquium (IBL Colloquium) hosted by the Center. The Fall 2015 IBLC Colloquium features six nationally renowned scholars in antitrust, business, and intellectual property law, including Professor Sahani, who will present their work around the theme “Intangible Assets and the Firm.”
From the abstract:
Third-party funding is an arrangement whereby an outside entity finances the legal representation of a party involved in litigation or arbitration. The outside entity – called a “third-party funder” – could be a bank, hedge fund, insurance company, or some other entity or individual that finances the party’s legal representation in return for a profit. Third-party funding is a controversial, dynamic, and evolving phenomenon. The structure of the third-party funding transaction often is depicted as a triangle shape connecting the funder, attorney, and client. The lines between each of the points on the triangle represent signed contracts between those participants in the funding transaction. Academic literature and state legislators have attempted to solve the potential problems of third-party funding while working within the confines of this seemingly immutable triangle structure. As this Article explains, however, the reality is that there is no triangle in third-party funding. Current law allows contracts between only two of the three participants (funder, client, and attorney) in any given third-party funding transaction. Thus, in reality, the existing third-party funding transaction looks more like a V shape, not a triangle.
This Article challenges the paradigmatic triangular or V-shaped representation of the third-party funding transaction between the funder, client, and attorney. It proposes other transaction structures that would be better suited to addressing potential problems, such as conflicts of interest, evidentiary privileges, and the funder’s exercise of control over the process. The Article argues that the uncertainty surrounding the effect of those and other potential problems creates risks for the funder, client, and attorney. Those risks in turn inflate the price of third-party funding capital. Reshaping the structure of the third-party funding transaction to mitigate those risks will reduce the price of third-party funding capital, which will in turn create more competition among funders in the third-party funding market and encourage individual funders to fund a larger number of cases to meet their revenue goals. Increased competition among more funders funding a larger number of cases will give potential clients wider access to third-party funding and more bargaining power to keep a larger share of their winnings while still benefiting from third-party funding capital.
In addition to bringing down prices and expanding access, reshaping the third-party funding transaction will help guide legislative choices by better defining the funder’s role and the legal relationships that the laws aim to regulate and encourage. Furthermore, reshaping the transaction will give guidance to funders regarding appropriate transactional structures and will give attorneys a clearer sense of their obligations under their professional ethics rules. Moreover, clients will be better informed regarding the baseline structural choices that they should make when deciding whether to hire a particular funder. Finally, exploring multiple transaction structures for third-party funding will allow for flexibility in creating bespoke third-party funding arrangements and will better protect less sophisticated clients and parties.
From the abstract:
Property is the law of lists and ledgers. County land records, stock certificate entries, mortgage registries, Uniform Commercial Code filings on personal property, copyright and patent registries of interests in intellectual property, bank accounts, domain name systems, and consumers’ Kindle e-book collections in the cloud are all merely entries in a list, determining who owns what.
Each such list has suffered a traditional limitation. To prevent falsification or duplication, a single entity must maintain the list, and users must trust (and pay) that entity. As a result, transactions must proceed at significant expense and delay. Yet zero or near-zero transaction costs are the fuel of Internet scalability. Property transactions have not yet truly undergone an Internet revolution at least partly because they are constrained by the cost of creating centralized trusted authorities.
This Article reimagines the contours of digital property if that central constraint were removed. There is every reason to believe it can be. Increased interest in cryptocurrencies has driven the development of a series of technologies for creating public, cryptographically secure ledgers of property interests that do not rely on trust in a specific entity to curate the list. Previously, the digital objects that users could buy and sell online were not rivalrous in the same way as offline physical objects, unless some centralized entity such as a social network, digital currency issuer, or game company served the function of trusted list curator. Trustless public ledgers change this dynamic. Counterparties can hand one another digital, rivalrous objects in the same way that they used to hand each other gold bars or dollar bills. No intermediary or curator is needed.
In addition, the advent of this technology provides an opportunity to discuss property interests in information environments. Property online is currently anemic. Consumers control few online resources and own even fewer. This is in no small part due to antiquated notions of property as the law of physical, tangible resources. Given new technology that can create digital, scarce, and rival intangible assets, these basic assumptions should be reexamined and replaced with a theory of property as an information communication and storage system. That is the project of this piece.
Washington and Lee law professor Christopher Seaman’s new paper Permanent Injunctions in Patent Litigation After eBay: An Empirical Study, was recently posted on SSRN and is listed in numerous Top Ten lists of most downloaded new articles, including Intellectual Property Law, Innovation Law and Policy, Experimental and Empirical Studies, and Judgments and Remedies.
The article was also recently featured in posts on Patently-O, an influential patent law blog, Written Description, Legal Theory Blog, Empirical Legal Studies Blog, and Comparative Patent Remedies Blog.
From the abstract:
The Supreme Court’s 2006 decision in eBay v. MercExchange is widely regarded as one of the most important patent law rulings of the past decade. Historically, patent holders who won on the merits in litigation nearly always obtained a permanent injunction against infringers. In eBay, the Court unanimously rejected this “general rule” that a prevailing patentee is entitled to an injunction, instead holding that lower courts must apply a four-factor test before granting such relief. Almost ten years later, however, significant questions remain regarding how this four-factor test is being applied, as there has there has been little rigorous empirical examination of eBay’s actual impact in patent litigation.
This Article helps fill this gap in the literature by reporting the results of an original empirical study of contested permanent injunction decisions in district courts for a 7½ year period following eBay. It finds that eBay has effectively created a bifurcated regime for patent remedies, where operating companies who compete against an infringer still obtain permanent injunctions in the vast majority of cases that are successfully litigated to judgment. In contrast, non-practicing entities almost always are denied injunctive relief. These findings are robust even after controlling for the field of patented technology and the particular court that decided the injunction request. It also finds that permanent injunction rates vary significantly based on patented technology and forum. Finally, this Article considers some implications of these findings for both participants in the patent system and policy makers.
A review of Washington and Lee law professor Christopher Bruner’s book, Corporate Governance in the Common-Law World: The Political Foundations of Shareholder Power, has been published by the Business Ethics Quarterly. The review was authored by Anita Anand, Professor of Law and Academic Director of the Centre for the Legal Profession at the University of Toronto Faculty of Law, and William Muir, a former Editor-in-Chief of the University of Toronto Faculty of Law Review who was a research assistant for Professor Anand.
Professor Bruner’s book, published in 2013 by Cambridge University Press, examines the corporate governance powers possessed by shareholders in the U.S. and other common-law countries. Bruner finds, contrary to popular belief, that shareholders in the U.K. and other common-law jurisdictions are both more powerful and more central to the aims of the corporation than are shareholders in the U.S. Bruner’s theory is that relatively robust social welfare protections in countries like the U.K., Australia and Canada have freed up their corporate legal systems to focus more intently on shareholder interests without giving rise to “political backlash” – because other legal structures accommodate the interests of employees.
In their review, Anand and Muir conclude that Bruner’s book “offers a unique and welcomed approach to the study of comparative corporate governance,” elaborating that:
Christopher Bruner is to be commended for his thorough survey of corporate governance theories and the wealth of historical information about the sociopolitical circumstances surrounding the formation of each of the four common-law countries’ governance regimes. Bruner’s explanation and historical analysis of the pivotal position of labor is an original lens through which to examine corporate governance in common-law countries…. Without doubt, Corporate Governance in the Common-Law World is a highly commendable work and provides an excellent counterpart for further empirical investigation.
On August 4, 2015 Washington and Lee law professor Christopher Seaman presented his work on empirical studies on the presumption of validity in patent law at Northwestern University School of Law. The school hosted the conference which precedes the publication of the Research Handbook on the Economics of Intellectual Property Law. Professor Seaman is writing a chapter in the volume to be published next year by Edward Elgar Publishing.
Conference website: http://www.law.northwestern.edu/research-faculty/conferences/ip-handbook/
Professor Sahani Presents Works-in-Progress at Vanderbilt Law School and Seattle University School of Law
On July 9-12, Professor Sahani presented her latest work-in-progress, Reshaping Third-Party Funding, at the Ninth Annual Lutie Lytle Black Women Law Faculty Writing Workshop hosted by Vanderbilt Law School. This article challenges the traditional triangular representation of the third-party funding transaction between the funder, client, and attorney and proposes other transaction structures that would be better suited to addressing potential problems, such as conflicts of interest, evidentiary privileges, and the funder’s exercise of control over the case.
On July 15-18, Professor Sahani presented her forthcoming article, Judging Third-Party Funding, at the First Annual Civil Procedure Workshop, hosted by Seattle University School of Law. This article proposes revisions to and reinterpretations of the Federal Rules of Civil Procedure, evidentiary privileges, and international arbitration procedures to address issues relating to third-party funding such as disclosures, evidentiary privileges, conflicts of interest, cost allocation, sanctions, and class actions. The full text of the current draft is available here. The article will be published in the UCLA Law Review in early 2016.