Regulation

This short contribution updates through 2018 the author’s prior empirical study on global innovation trends as indicated by USPTO patenting data during 1965-2015. The principal trends identified previously have largely continued, with the exception of a slight universal decline in annual patenting volume in 2018. First, non-U.S. inventors continued to receive a slight majority (53% as of 2018) of all utility patents issued annually at the USPTO, with East Asia representing the largest regional group. Second, when normalized to adjust for population size, three smaller countries continue to outperform in terms of annually issued utility patents: as of 2018, Israel, Taiwan and South Korea occupied the first, second and fourth positions on a per capita basis. Third, these same countries continue to occupy leading positions internationally in terms of several standard innovation metrics, including (among other indicators) total R&D spending as a percentage of GDP. Robust investment in intellectual and human capital, together with other qualitative factors, suggest that these countries’ high patenting output principally reflects significant innovation inputs, rather than non-innovation-related strategic objectives.

Judicial decisions, agency actions and legislative enactments have promoted a creeping reversion toward the weak patent regime that prevailed for several decades preceding the establishment of the Court of Appeals for the Federal Circuit. The pending Supreme Court case, Oil States Energy Services v. Greene’s Energy Group, provides an opportunity to reflect upon the choice between a “property rights” vision of the patent system in which resource allocation is principally directed by market signals and an administrative vision of the patent system in which resource allocation is perpetually subject to adjustment by courts and regulators. A growing body of empirical research raises doubts concerning the social costs that have been attributed to a robustly enforced patent system and, by implication, poses a challenge to policy actions that have targeted property-like attributes of that system.

Ethicists who oppose compensating kidney donors claim they do so because kidney donation is risky for the donor’s health, donors may not appreciate the risks and may be cognitively biased in other ways, and donors may come from disadvantaged groups and thus could be exploited. However, few ethical qualms are raised about professional football players, who face much greater health risks than kidney donors, have much less counseling and screening concerning that risk, and who often come from racial and economic groups deemed disadvantaged. It thus seems that either ethicists—and the law—should ban both professional football and compensated organ donation, allow both, or allow compensated organ donation but prohibit professional football. The fact that we choose none of those options raises questions about the wisdom of the compensation ban.

Of all the federal regulatory regimes, many would argue that the U.S. securities laws reign supreme, both in their design and function. They are widely touted as the country’s first line of defense against a repeat of the Great Depression. (It is no coincidence that the federal government first began regulating securities immediately following the Depression.) While the recent financial crisis calls into question just how much protection the securities laws actually offer, the widespread view is that matters would only have been worse with unregulated, anything-goes capital markets. Indeed, the market for credit default swaps, perhaps the most notorious contributor to the financial crisis, was not subject to securities regulation at the time. But what do we actually know about whether the securities laws work? Given the trillions of dollars at stake in the financial markets and the dramatic economic consequences of getting it wrong, figuring out whether the securities laws are actually doing their job is absolutely crucial. Surprisingly, we lack a definitive answer to this question, even after eight decades of federal securities regulation.

Some states prohibit mortuaries from offering cemetery services and cemeteries from offering mortuary services. This prohibition is justified as being in the interest of the consumer, out of concern that a few firms could come to dominate the death-care industry. This paper uses multivariate regression to empirically test this justification. It finds great diversity, competition, and lower costs in areas without this prohibition vs. areas with the prohibition.

| Fall 2013 F requent outbreaks of food-borne illness and an endless parade of new food labels that misrepresent processed foods high in fat and/or sugar as “natural,” “fresh,” and “healthy” highlight the shortcomings of government food regulation and the inadequacy of industry self-regulation. By contrast, kosher food certification by independent private firms is highly reliable, assuring compliance with religious standards of food production and preventing deceptive marketing. The success of kosher food certification offers a model of independent, private certification that could improve food safety and labeling and point the way toward regulatory reform in other areas such as finance and health care. The successful development of the kosher food certification system is no small matter. Kosher food is big business. There are more than 10,000 kosher-producing companies in the United States alone, making over 135,000 kosher products for over 12 million American consumers who purchase kosher food because it is kosher. Only 8 percent of kosher consumers are religious Jews; the rest choose kosher food for reasons related to health, food safety, taste, vegetarianism, lactose intolerance, or halal. The U.S. kosher market is worth over $12 billion in annual retail sales and more products are labeled kosher than are labeled organic, natural, or premium.

There is a growing consensus that new financial reform legislation may be in order. The Dodd-Frank Act of 2010, while well-intended, is now widely viewed to be at best insufficient, at worst a costly misfire. Members of Congress are considering new and different measures. Some have proposed substantially higher capital requirements for the largest financial firms; others favor an updated version of the old Glass-Steagall regime. This paper offers up a simpler approach, one that centers around the financial sector’s short-term funding. The simpler approach would be compatible with other financial stability reforms, but it is better understood as a substitute for Dodd-Frank and other measures.

In previous work with Mark Lemley I have discussed the critical role played by the courts in fitting patent law to the ongoing needs of innovation. Careful scrutiny of the recently enacted America Invents Act (AIA), which legislatively reforms American patent law, underscores the need for robust judicial involvement in fostering a healthy patent system. In many instances during the development of the AIA, an initially perceived need for legislative reform was superseded by ameliorative judicial action. In other instances, Congress addressed issues of patent doctrine and procedure that can and should only be addressed by legislative action. But in many respects, the AIA introduces into the statute new lacunae that the courts will now be called upon to resolve. Ironically, legislative reform of patent law has set the stage for decades of fresh judicial interpretation and gap-filling to rehabilitate a statute newly riddled with uncertainty.

State corporate law requires that "natural persons" provide director services. This Article puts this obligation to scrutiny, and concludes that there are significant gains that could be realized by permitting firms (be they partnerships, corporations, or other business entities) to provide board services. We call these firms "board service providers" (BSPs). We argue that hiring a BSP to provide board services instead of a loose group of sole proprietorships will increase board accountability, both from markets and from courts. The potential economies of scale and scope in the board services industry (including vertical integration of consultants and other board member support functions), as well as the benefits of risk pooling and talent allocation, mean that large professional director services firms may arise, and thereby create a market for corporate governance distinct from the market for corporate control. More transparency about board performance, including better pricing of governance by the market, as well as increased reputational assets at stake in board decisions, means improved corporate governance, all else being equal. But our goal in this Article is not necessarily to increase shareholder control over firms; we show how a firm providing board services could be used to increase managerial power as well. This shows the neutrality of our proposed reform, which can therefore be thought of as a reconceptualization of what a board is rather than a claim about the optimal locus of corporate power.