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Volumn 83, Issue 2, 2008, Pages 337-410

Intellectual property for market experimentation

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EID: 46149088483     PISSN: 00287881     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review
Times cited : (67)

References (283)
  • 1
    • 46149124631 scopus 로고    scopus 로고
    • We have designed the hypothetical Company B to remind readers of the experience with compact fluorescent light bulbs (CFLs, The basic technology associated with the bulbs is now more than a half-century old and thus is in the public domain. See U.S. Patent No. 2,279,635 (filed Jan. 7, 1941, disclosing compact fluorescent bulb with coil-shaped tube and standard socket mount, U.S. Patent No. 2,525,022 (filed Oct. 23, 1946, disclosing light bulb having as its principal object, to provide a compact lighting unit or fixture including a tubular fluorescent lamp of circular shape which is readily mountable in many types of fixtures designed for incandescent lamps, By the 1980s, several companies were engaged in limited manufacturing of this type of bulb. See U.S. Patent No. 4,495,443 col.1 ll.23-24 filed Jan. 27, 1984, noting that compact fluorescent bulbs were already being made by several companies, Yet despite the long availability
    • We have designed the hypothetical Company B to remind readers of the experience with compact fluorescent light bulbs (CFLs). The basic technology associated with the bulbs is now more than a half-century old and thus is in the public domain. See U.S. Patent No. 2,279,635 (filed Jan. 7, 1941) (disclosing compact fluorescent bulb with coil-shaped tube and standard socket mount); U.S. Patent No. 2,525,022 (filed Oct. 23, 1946) (disclosing light bulb having as "its principal object . . . to provide a compact lighting unit or fixture including a tubular fluorescent lamp of circular shape which is readily mountable in many types of fixtures designed for incandescent lamps"). By the 1980s, several companies were engaged in limited manufacturing of this type of bulb. See U.S. Patent No. 4,495,443 col.1 ll.23-24 (filed Jan. 27, 1984) (noting that compact fluorescent bulbs were already being "made by several companies"). Yet despite the long availability of the technology, the bulbs remained for decades only a small fraction of the market. See L.J. SANDAHL ET AL., PAC. NW. NAT'L LAB., COMPACT FLUORESCENT LIGHTING IN AMERICA: LESSONS LEARNED ON THE WAY TO MARKET 5.1 (2006), available at http://www.eere.energy.gov/ buildings/info/documents/pdfs/cfl_lessons_learned_web.pdf (noting that sales of compact fluorescent bulbs in United States remained below 1% of screw-socket bulb market through 2000 and "jump[ed]" to 2.1% market share by end of 2001). The new bulbs faced numerous marketing and consumer-information hurdles. See id. at 2.1-.2 (describing consumer barriers to widespread adoption of CFLs into U.S. residential market). By the late 1990s, the technological problems (which can be the subject of exclusive rights) had been solved in a variety of ways, but the overarching market problems remain unsolved to this day. Perhaps existing market barriers could be overcome with extensive "educational and marketing campaigns," "in-store product demonstrations," and "guarantees or trusted labeling" to back up claims of long-lasting performance, id. at 7.2, but with "hundreds" of competing manufacturers, id. at 5.1 tbl.5.1, no one firm may be able to reap any significant rewards from such efforts, even if they turn out to be successful.
  • 2
    • 46149104598 scopus 로고    scopus 로고
    • In both cases, the producer of the information may receive a small expected profit and, assuming that the demand curve has a downward slope, consumers will collect some surplus. The benefits may not be exactly identical because success and failure might have implications for other projects. For example, success in identifying the better material might give scientists clues about how to search more efficiently for other new materials in the future. There are also possible social benefits to the market experiment: Pioneering the market for more efficient lights might give other businesses more information about the potential market for other products. The social benefits for each type of experiment might differ, but the problems of scientific and market uncertainty are structurally the same
    • In both cases, the producer of the information may receive a small expected profit and, assuming that the demand curve has a downward slope, consumers will collect some surplus. The benefits may not be exactly identical because success and failure might have implications for other projects. For example, success in identifying the better material might give scientists clues about how to search more efficiently for other new materials in the future. There are also possible social benefits to the market experiment: Pioneering the market for more efficient lights might give other businesses more information about the potential market for other products. The social benefits for each type of experiment might differ, but the problems of scientific and market uncertainty are structurally the same.
  • 3
    • 46149100345 scopus 로고    scopus 로고
    • See 35 U.S.C. § 102(a)-(b) (2000) (precluding grant of exclusive rights for non-novel subject matter).
    • See 35 U.S.C. § 102(a)-(b) (2000) (precluding grant of exclusive rights for non-novel subject matter).
  • 4
    • 46149101850 scopus 로고    scopus 로고
    • By market experimentation, we mean the commercial test of a product or service that is new to the market in which it is launched and that has uncertain prospects for commercial success. In using this definition, we mean to distinguish it from technological experimentation, which could occur in a laboratory and which would test feasibility as a matter of science and engineering.
    • By "market experimentation," we mean the commercial test of a product or service that is new to the market in which it is launched and that has uncertain prospects for commercial success. In using this definition, we mean to distinguish it from technological experimentation, which could occur in a laboratory and which would test feasibility as a matter of science and engineering.
  • 5
  • 6
    • 46149125365 scopus 로고    scopus 로고
    • As we show in Part I, infra, the argument has its intellectual roots in the writings of Friedrich Hayek, whose defense of free market principles stressed the ability of unregulated markets to generate information and innovation through constant and pervasive experimentation.
    • As we show in Part I, infra, the argument has its intellectual roots in the writings of Friedrich Hayek, whose defense of free market principles stressed the ability of unregulated markets to generate information and innovation through constant and pervasive experimentation.
  • 7
    • 0036004085 scopus 로고    scopus 로고
    • Unraveling the Patent-Antitrust Paradox, 150
    • arguing that competition and patents are alternative means of fostering innovation and that patent system should be curtailed in industries where competition is successful in fostering sufficient degree of innovation, See generally
    • See generally Michael A. Carrier, Unraveling the Patent-Antitrust Paradox, 150 U. PA. L. REV. 761 (2002) (arguing that competition and patents are alternative means of fostering innovation and that patent system should be curtailed in industries where competition is successful in fostering sufficient degree of innovation).
    • (2002) U. PA. L. REV , vol.761
    • Carrier, M.A.1
  • 8
    • 84888467546 scopus 로고    scopus 로고
    • notes 114-17 and accompanying text
    • See infra notes 114-17 and accompanying text.
    • See infra
  • 9
    • 84888467546 scopus 로고    scopus 로고
    • note 112 and accompanying text
    • See infra note 112 and accompanying text.
    • See infra
  • 10
    • 33847408148 scopus 로고    scopus 로고
    • Part III discussing market experimentation in current intellectual property doctrine
    • See infra Part III (discussing market experimentation in current intellectual property doctrine).
    • See infra
  • 11
    • 46149092329 scopus 로고    scopus 로고
    • See infra notes 218-19 and accompanying text (arguing in favor of restricting existing doctrine that allows innovation's commercial success to support validity of patents). The proposed alternative - limiting the doctrine so that only the patentee's commercial success could be used - may provide a clearer metric for the doctrine and may reduce the number of patents permitted on relatively trivial developments that would have been marketed even without a government grant of exclusive rights.
    • See infra notes 218-19 and accompanying text (arguing in favor of restricting existing doctrine that allows innovation's commercial success to support validity of patents). The proposed alternative - limiting the doctrine so that only the patentee's commercial success could be used - may provide a clearer metric for the doctrine and may reduce the number of patents permitted on relatively trivial developments that would have been marketed even without a government grant of exclusive rights.
  • 12
    • 0000448037 scopus 로고
    • Monopolistic Competition and Optimum Product Diversity, 67
    • noting that because of scale economies, competitive market with free entry will produce suboptimal solution while monopoly power enables firms to pay fixed costs and thus the relationship between monopoly power and the direction of market distortion is no longer obvious, See, e.g
    • See, e.g., Avinash K. Dixit & Joseph E. Stiglitz, Monopolistic Competition and Optimum Product Diversity, 67 AM. ECON. REV. 297, 297, 308 (1977) (noting that because of scale economies, competitive market with free entry will produce " suboptimal" solution while "monopoly power enables firms to pay fixed costs" and thus "the relationship between monopoly power and the direction of market distortion is no longer obvious");
    • (1977) AM. ECON. REV , vol.297 , Issue.297 , pp. 308
    • Dixit, A.K.1    Stiglitz, J.E.2
  • 13
    • 0002113710 scopus 로고
    • Free Entry and Social Inefficiency, 17
    • providing intuitive foundation for appreciating the inefficiencies that can arise from free entry in the presence of fixed set-up costs
    • N. Gregory Mankiw & Michael D. Whinston, Free Entry and Social Inefficiency, 17 RAND J. ECON. 48, 57 (1986) (providing intuitive foundation for appreciating "the inefficiencies that can arise from free entry in the presence of fixed set-up costs");
    • (1986) RAND J. ECON , vol.48 , pp. 57
    • Gregory Mankiw, N.1    Whinston, M.D.2
  • 14
    • 0001549798 scopus 로고
    • Monopolistic Competition with Outside Goods, 10
    • setting forth model demonstrating that, under certain assumptions, optimal policy for regulating industrial entry could be either free entry or entry restricted to the point of each brand having a complete monopoly market
    • Steven C. Salop, Monopolistic Competition with Outside Goods, 10 BELL J. ECON. 141, 154 (1979) (setting forth model demonstrating that, under certain assumptions, optimal policy for regulating industrial entry could be "either free entry or entry restricted to the point of each brand having a complete monopoly market").
    • (1979) BELL J. ECON , vol.141 , pp. 154
    • Salop, S.C.1
  • 15
    • 46149093058 scopus 로고    scopus 로고
    • See, e.g., Roger A. Kerin et al., First-Mover Advantage: A Synthesis, Conceptual Framework, and Research Propositions, 56 J. MARKETING 33, 34-39 (1992) (discussing extensive economic literature about first-mover advantages and disadvantages and identifying areas in which more research is necessary);
    • See, e.g., Roger A. Kerin et al., First-Mover Advantage: A Synthesis, Conceptual Framework, and Research Propositions, 56 J. MARKETING 33, 34-39 (1992) (discussing extensive economic literature about first-mover advantages and disadvantages and identifying areas in which more research is necessary);
  • 16
    • 84989026686 scopus 로고    scopus 로고
    • Marvin B. Lieberman & David B. Montgomery, First-Mover Advantages, 9 STRATEGIC MGMT. J. (SPECIAL ISSUE) 41, 42-47 (1988) (same);
    • Marvin B. Lieberman & David B. Montgomery, First-Mover Advantages, 9 STRATEGIC MGMT. J. (SPECIAL ISSUE) 41, 42-47 (1988) (same);
  • 17
    • 33846964906 scopus 로고    scopus 로고
    • see also Brett M. Frischmann & Mark A. Lemley, Spillovers, 107 COLUM. L. REV. 257, 257-58, 268-70 (2007) (noting that competitors entering market after first mover can benefit from information arising from first mover's decisions, allowing them to apply knowledge obtained from publicly released patent toward more innovative products and processes); Lieberman & Montgomery, supra, at 47-49 (noting that [l]ate-movers may be able to 'free-ride' on a pioneering firm's investments in a number of areas including R&D, buyer education, and infrastructure development and may be able to gain an edge through resolution of market or technological uncertainty).
    • see also Brett M. Frischmann & Mark A. Lemley, Spillovers, 107 COLUM. L. REV. 257, 257-58, 268-70 (2007) (noting that competitors entering market after first mover can benefit from information arising from first mover's decisions, allowing them to apply knowledge obtained from publicly released patent toward more innovative products and processes); Lieberman & Montgomery, supra, at 47-49 (noting that "[l]ate-movers may be able to 'free-ride' on a pioneering firm's investments in a number of areas including R&D, buyer education, and infrastructure development" and may be able to "gain an edge through resolution of market or technological uncertainty").
  • 18
    • 84916152688 scopus 로고    scopus 로고
    • See generally Michael Waldman, Noncooperative Entry Deterrence, Uncertainty, and the Free Rider Problem, 54 REV. ECON. STUD. 301 (1987) (considering uncertainty about demand in context in which members of existing oligopoly are considering whether to take actions that might deter subsequent entry). Waldman's analysis, however, does not consider the problem of the first entrant into a new market.
    • See generally Michael Waldman, Noncooperative Entry Deterrence, Uncertainty, and the Free Rider Problem, 54 REV. ECON. STUD. 301 (1987) (considering uncertainty about demand in context in which members of existing oligopoly are considering whether to take actions that might deter subsequent entry). Waldman's analysis, however, does not consider the problem of the first entrant into a new market.
  • 19
    • 0346406668 scopus 로고    scopus 로고
    • F. Scott Kieff observes that patent law may promote commercialization of new technologies by offsetting second-mover advantages, though he does not address the possibility that intellectual property might promote commercialization in the absence of technological innovation. See F. Scott Kieff, Property Rights and Property Rules for Commercializing Inventions, 85 MINN. L. REV. 697, 708-10 (2001) (The patent right to exclude competitors who have not shared in bearing [the] initial costs provides incentives for [the first mover] to . . . incur all costs necessary to facilitate commercialization of the patented invention.).
    • F. Scott Kieff observes that patent law may promote commercialization of new technologies by offsetting second-mover advantages, though he does not address the possibility that intellectual property might promote commercialization in the absence of technological innovation. See F. Scott Kieff, Property Rights and Property Rules for Commercializing Inventions, 85 MINN. L. REV. 697, 708-10 (2001) ("The patent right to exclude competitors who have not shared in bearing [the] initial costs provides incentives for [the first mover] to . . . incur all costs necessary to facilitate commercialization of the patented invention.").
  • 20
    • 46149113311 scopus 로고    scopus 로고
    • Tired of Trolls, A Feisty Chief Fights Back
    • describing patent trolls as firms that, i]nstead of using [their patents] to build a commercial product, extract licensing fees from companies that are making and selling real products, and asserting that such firms are responsible for patent litigation becoming part of the dark underbelly of American business, See, e.g, Sept. 16, at
    • See, e.g., Joe Nocera, Tired of Trolls, A Feisty Chief Fights Back, N.Y. TIMES, Sept. 16, 2006, at C1 (describing "patent trolls" as firms that, "[i]nstead of using [their patents] to build a commercial product, . . . extract licensing fees from companies that are making and selling real products," and asserting that such firms are responsible for patent litigation becoming "part of the dark underbelly of American business");
    • (2006) N.Y. TIMES
    • Nocera, J.1
  • 21
    • 46149088097 scopus 로고    scopus 로고
    • The Myth of the
    • see also, Patent Troll: An Alternative View of the Function of Patent Dealers in an Idea Economy, 56 EMORY L.J. 189, 189-90 2006, collecting criticisms of patent trolls, which are defined as firms that acquire, ownership of a patent without the intention of actually using it to produce a product, For a historical analysis showing that patent trolls are nothing new
    • see also James F. McDonough III, Comment, The Myth of the Patent Troll: An Alternative View of the Function of Patent Dealers in an Idea Economy, 56 EMORY L.J. 189, 189-90 (2006) (collecting criticisms of patent trolls, which are defined as firms that "acquire[] ownership of a patent without the intention of actually using it to produce a product"). For a historical analysis showing that patent trolls are nothing new,
    • James, F.1    McDonough III, C.2
  • 22
    • 34547440204 scopus 로고    scopus 로고
    • BlackBerries and Barnyards
    • see generally, Patent Trolls and the Perils of Innovation, 82 NOTRE DAME L. REV. 1809 2007, For the argument that trolls are merely traders in property rights who increase liquidity and decrease transaction costs, see McDonough, supra, at 204, 211-20
    • see generally Gerard N. Magliocca, BlackBerries and Barnyards: Patent Trolls and the Perils of Innovation, 82 NOTRE DAME L. REV. 1809 (2007). For the argument that trolls are merely traders in property rights who increase liquidity and decrease transaction costs, see McDonough, supra, at 204, 211-20.
    • Magliocca, G.N.1
  • 23
    • 46149112209 scopus 로고    scopus 로고
    • J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., 534 U.S. 124, 142 (2001) (The disclosure required by the Patent Act is 'the quid pro quo of the right to exclude.' (quoting Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 484 (1974))).
    • J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., 534 U.S. 124, 142 (2001) ("The disclosure required by the Patent Act is 'the quid pro quo of the right to exclude.'" (quoting Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 484 (1974))).
  • 24
    • 46149092322 scopus 로고    scopus 로고
    • See State St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368, 1375 (Fed. Cir. 1998) (upholding business method patent and concluding that, [s]ince the 1952 Patent Act, business methods have been, and should have been, subject to the same legal requirements for patentability as applied to any other process or method); see also Carrier, supra note 7, at 826 (arguing that patents are not necessary for Internet business methods because they generally reflect simple ideas easily conceived). The availability of pure business method patents has recently been placed in doubt by the decision in In re Comiskey, 499 F.3d 1365 (Fed. Cir. 2007). See infra note 20.
    • See State St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368, 1375 (Fed. Cir. 1998) (upholding business method patent and concluding that, "[s]ince the 1952 Patent Act, business methods have been, and should have been, subject to the same legal requirements for patentability as applied to any other process or method"); see also Carrier, supra note 7, at 826 (arguing that patents are not necessary for Internet business methods because they generally reflect "simple ideas easily conceived"). The availability of pure business method patents has recently been placed in doubt by the decision in In re Comiskey, 499 F.3d 1365 (Fed. Cir. 2007). See infra note 20.
  • 25
    • 46149111969 scopus 로고    scopus 로고
    • See, e.g., Method and System for Placing a Purchase Order Via a Communications Network, U.S. Patent No. 5,960,411 (filed Sept. 12,1997) (disclosing patent for making of online purchases with single mouse click); see also Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1347, 1364-66 (Fed. Cir. 2001) (finding that Amazon.com demonstrated likely literal infringement of '411 Patent, but remanding for determination of whether patent met requirement of nonobviousness).
    • See, e.g., Method and System for Placing a Purchase Order Via a Communications Network, U.S. Patent No. 5,960,411 (filed Sept. 12,1997) (disclosing patent for making of online purchases with single mouse click); see also Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1347, 1364-66 (Fed. Cir. 2001) (finding that Amazon.com demonstrated likely literal infringement of '411 Patent, but remanding for determination of whether patent met requirement of nonobviousness).
  • 26
    • 46149120170 scopus 로고    scopus 로고
    • Comiskey, 499 F.3d at 1378-79 (It is thus clear that the present statute does not allow patents to be issued on particular business systems - such as a particular type of arbitration - that depend entirely on the use of mental processes.). The Federal Circuit's decision in Comiskey also states, in dicta, that computer-implemented business methods may remain unpatentable due to obviousness if the computerization of the business method is merely [t]he routine addition of modern electronics to an otherwise unpatentable invention. Id. at 1380. The court was willing to disallow issuance of the patent even if the applicant could demonstrate a long-felt need for the unpatentable mental process. Id.
    • Comiskey, 499 F.3d at 1378-79 ("It is thus clear that the present statute does not allow patents to be issued on particular business systems - such as a particular type of arbitration - that depend entirely on the use of mental processes."). The Federal Circuit's decision in Comiskey also states, in dicta, that computer-implemented business methods may remain unpatentable due to obviousness if the computerization of the business method is merely "[t]he routine addition of modern electronics to an otherwise unpatentable invention." Id. at 1380. The court was willing to disallow issuance of the patent even if the applicant could demonstrate a "long-felt need for the unpatentable mental process." Id.
  • 27
    • 46149091125 scopus 로고    scopus 로고
    • The best recounting of this epic struggle is in DANIEL YERGIN & JOSEPH STANISLAW, THE COMMANDING HEIGHTS: THE BATTLE FOR THE WORLD ECONOMY (2002). As Yergin and Stanislaw note, by the middle of the twentieth century, [t]he Soviet Union enjoyed an economic prestige and respect in the West that is hard to reconstruct today: Admiration came even from conservatives, for [t]he limitations and rigidity of central planning - and, ultimately, its fatal flaw, its inability to innovate - were still decades away from being evident. Id. at 4.
    • The best recounting of this epic struggle is in DANIEL YERGIN & JOSEPH STANISLAW, THE COMMANDING HEIGHTS: THE BATTLE FOR THE WORLD ECONOMY (2002). As Yergin and Stanislaw note, by the middle of the twentieth century, "[t]he Soviet Union enjoyed an economic prestige and respect in the West that is hard to reconstruct today": Admiration came "even from conservatives," for "[t]he limitations and rigidity of central planning - and, ultimately, its fatal flaw, its inability to innovate - were still decades away from being evident." Id. at 4.
  • 28
    • 4344570007 scopus 로고
    • Socialism: The Nature of the Problem, 50
    • Frank H. Knight, Socialism: The Nature of the Problem, 50 ETHICS 253, 285 (1940).
    • (1940) ETHICS , vol.253 , pp. 285
    • Knight, F.H.1
  • 29
    • 46149127627 scopus 로고    scopus 로고
    • FRANK H. KNIGHT, RISK, UNCERTAINTY, AND PROFIT 361 (Sentry Press 1964) (1921).
    • FRANK H. KNIGHT, RISK, UNCERTAINTY, AND PROFIT 361 (Sentry Press 1964) (1921).
  • 30
    • 0001073135 scopus 로고
    • The Use of Knowledge in Society, 35
    • F.A. Hayek, The Use of Knowledge in Society, 35 AM. ECON. REV. 519, 524 (1945).
    • (1945) AM. ECON. REV , vol.519 , pp. 524
    • Hayek, F.A.1
  • 31
    • 46149111774 scopus 로고    scopus 로고
    • JOSEPH A. SCHUMPETER, CAPITALISM, SOCIALISM, AND DEMOCRACY 84 (2d ed. 1947, Schumpeter was an unusual defender of capitalism because he believed that the success of capitalism would ultimately lead to its demise. There are various theories as to why he took that position. It is possible that he was seeking to influence young economists who at the time widely believed that capitalism would soon be replaced by socialism. His prediction of capitalism's demise could then be seen as bait, leading leftist intellectuals who would never pick up or take seriously the work of a more overt defender of capitalism to bite into the book. JERRY Z. MULLER, THE MIND AND THE MARKET: CAPITALISM IN MODERN EUROPEAN THOUGHT 307 2002, Another possibility is that Schumpeter truly believed that socialism would prevail, even though it would not be as efficient as cap
    • JOSEPH A. SCHUMPETER, CAPITALISM, SOCIALISM, AND DEMOCRACY 84 (2d ed. 1947). Schumpeter was an unusual defender of capitalism because he believed that the success of capitalism would ultimately lead to its demise. There are various theories as to why he took that position. It is possible that he was seeking to influence young economists who at the time widely believed that capitalism would soon be replaced by socialism. His prediction of capitalism's demise could then be seen as "bait, leading leftist intellectuals who would never pick up or take seriously the work of a more overt defender of capitalism to bite into the book." JERRY Z. MULLER, THE MIND AND THE MARKET: CAPITALISM IN MODERN EUROPEAN THOUGHT 307 (2002). Another possibility is that Schumpeter truly believed that socialism would prevail, even though it would not be "as efficient as capitalism," because it would offer society other advantages such as "higher public morale."
  • 32
    • 46149125603 scopus 로고    scopus 로고
    • ROBERT L. HEILBRONER, THE WORLDLY PHILOSOPHERS 324 (5th ed. 1980). Finally, Schumpeter's prediction of doom may have been a call to arms for the defenders of capitalism - a position seemingly supported by his preface to the second edition of Capitalism, Socialism, and Democracy. See SCHUMPETER, supra, at xi (remarking that prediction of doom on sinking ship may spur crew to rush to the pumps).
    • ROBERT L. HEILBRONER, THE WORLDLY PHILOSOPHERS 324 (5th ed. 1980). Finally, Schumpeter's prediction of doom may have been a call to arms for the defenders of capitalism - a position seemingly supported by his preface to the second edition of Capitalism, Socialism, and Democracy. See SCHUMPETER, supra, at xi (remarking that prediction of doom on sinking ship may spur crew to "rush to the pumps").
  • 33
    • 46149089738 scopus 로고    scopus 로고
    • See Hayek, supra note 24, at 523 (disparaging idea that changes . . . have become less important in modern times and bemoaning that economists are increasingly apt to forget about the constant small changes which make up the whole economic picture).
    • See Hayek, supra note 24, at 523 (disparaging idea that "changes . . . have become less important in modern times" and bemoaning that "economists are increasingly apt to forget about the constant small changes which make up the whole economic picture").
  • 34
    • 46149086416 scopus 로고    scopus 로고
    • See id. at 524 (listing pedestrian adjustments such as firm's decisions to buy tiles for its roof and stationery for its forms).
    • See id. at 524 (listing pedestrian adjustments such as firm's decisions to buy "tiles for its roof" and "stationery for its forms").
  • 35
    • 46149108423 scopus 로고    scopus 로고
    • While Knight and Schumpeter wrote during the first half of the twentieth century, the scope of intellectual property law remains similar today. See infra Part III discussing current state of intellectual property law
    • While Knight and Schumpeter wrote during the first half of the twentieth century, the scope of intellectual property law remains similar today. See infra Part III (discussing current state of intellectual property law).
  • 36
    • 46149092572 scopus 로고    scopus 로고
    • KNIGHT, supra note 23, at 372. The desire to encourage investment in invention, Knight believed, led society to permit, an inventor or his assigns to keep his idea secret as long as possible. Id. But because secrecy was often impracticable, the patent system has come into general use establishing and protecting by law a temporary, and rather short-lived, property right in the improvement. Id
    • KNIGHT, supra note 23, at 372. The desire to encourage "investment in invention," Knight believed, led society to "permit[] an inventor or his assigns to keep his idea secret as long as possible." Id. But because secrecy was often "impracticable, " "the patent system has come into general use establishing and protecting by law a temporary, and rather short-lived, property right in the improvement." Id.
  • 37
    • 46149092569 scopus 로고    scopus 로고
    • Knight, supra note 22, at 285
    • Knight, supra note 22, at 285.
  • 38
    • 46149109535 scopus 로고    scopus 로고
    • KNIGHT, supra note 23, at 372-73; see also id. at 341-42 (noting that patents and secrecy are possible only in certain circumstances and that [i]n many cases no direct safeguards are available and the economic profitableness of the idea is limited to the period of time required for competitors to copy the new method).
    • KNIGHT, supra note 23, at 372-73; see also id. at 341-42 (noting that patents and secrecy are possible only in certain circumstances and that "[i]n many cases no direct safeguards are available and the economic profitableness of the idea is limited to the period of time required for competitors to copy the new method").
  • 39
    • 46149124408 scopus 로고    scopus 로고
    • Id. at 372. Knight defined 'invention[s]' . . . in a broad sense to include not only the improvement of technological processes but also improvements to methods of organization, and the like. Id. at 339.
    • Id. at 372. Knight defined "'invention[s]' . . . in a broad sense" to include not only "the improvement of technological processes" but also improvements to "methods of organization, and the like." Id. at 339.
  • 40
    • 46149089963 scopus 로고    scopus 로고
    • Id. at 373
    • Id. at 373.
  • 41
    • 46149123926 scopus 로고    scopus 로고
    • See, e.g., ROBERT P. MERGES, PATENT LAW AND POLICY 155 (2d ed. 1997) ([T]he relatively frequent innovations in the financial services industry prior to the era of patentability suggest that firms had adequate means to appropriate the value of their new financial innovations.).
    • See, e.g., ROBERT P. MERGES, PATENT LAW AND POLICY 155 (2d ed. 1997) ("[T]he relatively frequent innovations in the financial services industry prior to the era of patentability suggest that firms had adequate means to appropriate the value of their new financial innovations.").
  • 42
    • 46149084043 scopus 로고    scopus 로고
    • Knight speculated that trademark law might provide the solution, that the investment in innovative business might yield a more permanent advantage through the use of distinctive brands and legal protection of trade marks and trade names. KNIGHT, supra note 23, at 373. Indeed, as we will argue, trademark and trade dress law are partially tailored to protect investments in innovative businesses. See infra Part III.A. They may not, however, provide a complete solution to the problem, for trademark and trade dress law have been designed primarily to identify goods to consumers, and the rights conferred provide only a modest barrier preventing later entrants from copying a first mover's success. Knight's speculation about trademark law concluded his examination of the problem, and even in his later writing he left unanswered the interesting question, of why individuals would make sacrifices to promote progress where the resulting advances fel
    • Knight speculated that trademark law might provide the solution - that the investment in innovative business might "yield a more permanent advantage through the use of distinctive brands and legal protection of trade marks and trade names." KNIGHT, supra note 23, at 373. Indeed, as we will argue, trademark and trade dress law are partially tailored to protect investments in innovative businesses. See infra Part III.A. They may not, however, provide a complete solution to the problem, for trademark and trade dress law have been designed primarily to identify goods to consumers, and the rights conferred provide only a modest barrier preventing later entrants from copying a first mover's success. Knight's speculation about trademark law concluded his examination of the problem, and even in his later writing he left unanswered the "interesting question[]" of why individuals would make sacrifices to promote progress where the resulting advances fell into the lacunae between the various protections of intellectual property. KNIGHT, supra note 23, at 372-73. For example, in his 1940 critique of socialism, Knight asserted: Inventions and technical improvements of other sorts, whether patentable or not, are in fact private property under the law of modern industrial nations, or they certainly are such for the purposes of economic analysis as long as the person who makes an innovation is in a position to derive any income from it in excess of the necessary remuneration of the productive agencies employed in putting it into effect. Knight, supra note 22, at 283-84. Yet he did not explain how a person would obtain that necessary remuneration if the invention were not legally protected. See Frank H. Knight, Discussion, 44 AM. ECON. REV. 63, 65 (1954) (recognizing that any "new product or other departure" from status quo "involves risk" and therefore "must yield an excess, a monopoly return, over some period to cover costs," but failing to investigate whether existing legal structures afforded monopoly return to successful novelties over optimal period).
  • 43
    • 46149086830 scopus 로고    scopus 로고
    • SCHUMPETER, supra note 25, at 88. A similar theme can be found in some of Knight's later writings. See, e.g., Frank H. Knight, Free Society: Its Basic Nature and Problem, 57 PHIL. REV. 39, 52 (1948) (asserting that a great deal of other monopoly is essentially of the same nature as patent system because monopoly provides a stimulus to devising and introducing useful innovations).
    • SCHUMPETER, supra note 25, at 88. A similar theme can be found in some of Knight's later writings. See, e.g., Frank H. Knight, Free Society: Its Basic Nature and Problem, 57 PHIL. REV. 39, 52 (1948) (asserting that "a great deal of other monopoly is essentially of the same nature" as patent system because monopoly provides "a stimulus to devising and introducing useful innovations").
  • 44
    • 46149105034 scopus 로고    scopus 로고
    • SCHUMPETER, supra note 25, at 88
    • SCHUMPETER, supra note 25, at 88.
  • 45
    • 46149113533 scopus 로고    scopus 로고
    • Id. at 101
    • Id. at 101.
  • 46
    • 46149105502 scopus 로고    scopus 로고
    • RICHARD R. NELSON & SIDNEY G. WINTER, AN EVOLUTIONARY THEORY OF ECONOMIC CHANGE 367 (1982).
    • RICHARD R. NELSON & SIDNEY G. WINTER, AN EVOLUTIONARY THEORY OF ECONOMIC CHANGE 367 (1982).
  • 47
    • 0030482026 scopus 로고    scopus 로고
    • The empirical support for a correlation between industrial concentration and innovation has always been viewed as problematic. See, e.g, Wesley M. Cohen & Steven Klepper, A Reprise of Size and R & D, 106 ECON. J. 925, 925-26 (1996, noting long-standing controversy over whether large firms are more innovative than small firms);
    • The empirical support for a correlation between industrial concentration and innovation has always been viewed as problematic. See, e.g., Wesley M. Cohen & Steven Klepper, A Reprise of Size and R & D, 106 ECON. J. 925, 925-26 (1996) (noting long-standing controversy over whether large firms are more innovative than small firms);
  • 48
    • 46149094704 scopus 로고    scopus 로고
    • F.M. Scherer, Market Structure and the Employment of Scientists and Engineers, 57 AM. ECON. REV. 524, 530 (1967) (concluding that relationship between industrial concentration and innovation is complex and that where industry concentration becomes too high, further concentration is probably not conducive to more vigorous technological efforts and may be downright stultifying).
    • F.M. Scherer, Market Structure and the Employment of Scientists and Engineers, 57 AM. ECON. REV. 524, 530 (1967) (concluding that relationship between industrial concentration and innovation is "complex" and that where industry concentration becomes too high, further concentration "is probably not conducive to more vigorous technological efforts and may be downright stultifying").
  • 49
    • 46149105500 scopus 로고    scopus 로고
    • For example, Richard Nelson and Sidney Winter extensively discuss the role of market structure in facilitating innovation and economic evolution, and yet they barely mention intellectual property or the patent system. See NELSON & WINTER, supra note 39, at 273-351. Neither rates an entry in their book's index. See id. at 433-35. Patent policy is mentioned only as one variable affecting the rate of industrial imitation. See id. at 332 noting that patent policy can make imitation hard or easy, Nelson and Winter view patent policy as indirectly affecting market structure and market structure as affecting appropriability and, consequently, innovation. Id. at 332. A wide swath of literature takes a similar approach, considering industry structure to be one of the most important determinants of innovation. See, e.g, Morton I. Kamien & Nancy L. Schwartz, Market Structure and Innovation: A Survey
    • For example, Richard Nelson and Sidney Winter extensively discuss the role of market structure in facilitating innovation and economic evolution, and yet they barely mention intellectual property or the patent system. See NELSON & WINTER, supra note 39, at 273-351. Neither rates an entry in their book's index. See id. at 433-35. Patent policy is mentioned only as one variable affecting the rate of industrial imitation. See id. at 332 (noting that patent policy can make imitation "hard or easy"). Nelson and Winter view patent policy as "indirectly" affecting market structure and market structure as affecting appropriability and, consequently, innovation. Id. at 332. A wide swath of literature takes a similar approach, considering industry structure to be one of the most important determinants of innovation. See, e.g., Morton I. Kamien & Nancy L. Schwartz, Market Structure and Innovation: A Survey, 13 J. ECON. LITERATURE 1, 2-3 (1975) (noting that "[f]ew, if any, economists maintain that perfect competition efficiently allocates resources for technical advance" and that among those "who contend that an imperfectly competitive market system is the best alternative" for encouraging innovation, literature tends to focus on "relationship[] between R&D activity and firm size");
  • 50
    • 84963107529 scopus 로고    scopus 로고
    • Glenn C. Loury, Market Structure and Innovation, 93 Q.J. ECON. 395, 395 (1979) (Both theoretical and empirical studies have suggested the existence of a degree of concentration intermediate between pure monopoly and atomistic (perfect) competition that is best in terms of R&D performance. (footnotes omitted));
    • Glenn C. Loury, Market Structure and Innovation, 93 Q.J. ECON. 395, 395 (1979) ("Both theoretical and empirical studies have suggested the existence of a degree of concentration intermediate between pure monopoly and atomistic (perfect) competition that is best in terms of R&D performance." (footnotes omitted));
  • 51
    • 0001563855 scopus 로고
    • Size of Firm, Market Structure, and Innovation, 71
    • noting that [i]n recent years economists have become interested in determining the effects of an industry's market structure on its rate of technical progress
    • Edwin Mansfield, Size of Firm, Market Structure, and Innovation, 71 J. POL. ECON. 556, 556 (1963) (noting that "[i]n recent years economists have become interested" in determining "the effects of an industry's market structure on its rate of technical progress");
    • (1963) J. POL. ECON , vol.556 , pp. 556
    • Mansfield, E.1
  • 52
    • 0242543942 scopus 로고
    • Innovation and Market Structure, 73
    • focusing attention on reasons that firm size might be thought to affect innovative performance, The alternative, which this Article attempts to address, is to consider intellectual policy as a direct means of addressing the appropriability problem
    • Oliver E. Williamson, Innovation and Market Structure, 73 J. POL. ECON. 67, 67-68 (1965) (focusing attention on reasons that firm size might be thought to affect innovative performance). The alternative, which this Article attempts to address, is to consider intellectual policy as a direct means of addressing the appropriability problem.
    • (1965) J. POL. ECON , vol.67 , pp. 67-68
    • Williamson, O.E.1
  • 54
    • 46149098742 scopus 로고    scopus 로고
    • Id. at 221
    • Id. at 221.
  • 55
    • 46149109322 scopus 로고    scopus 로고
    • Id
    • Id.
  • 56
    • 46149125108 scopus 로고    scopus 로고
    • Id
    • Id.
  • 58
    • 46149122587 scopus 로고    scopus 로고
    • Id
    • Id.
  • 59
    • 46149112211 scopus 로고    scopus 로고
    • Id. at 246
    • Id. at 246.
  • 60
    • 46149105503 scopus 로고    scopus 로고
    • Id. at 82
    • Id. at 82.
  • 61
    • 46149112432 scopus 로고    scopus 로고
    • Id. at 82-84
    • Id. at 82-84.
  • 62
    • 2942702904 scopus 로고    scopus 로고
    • See, e.g., Kirsten Foss & Nicolai J. Foss, Organizing Economic Experiments: Property Rights and Firm Organization, 15 REV. AUSTRIAN ECON. 297, 297-99 (2002) (seeking to understand nature of firm given insight that market process is experimental).
    • See, e.g., Kirsten Foss & Nicolai J. Foss, Organizing Economic Experiments: Property Rights and Firm Organization, 15 REV. AUSTRIAN ECON. 297, 297-99 (2002) (seeking to understand nature of firm given insight that market process is experimental).
  • 63
    • 0141925287 scopus 로고    scopus 로고
    • Economic Development as Self-Discovery, 72
    • Ricardo Hausmann & Dani Rodrik, Economic Development as Self-Discovery, 72 J. DEV. ECON. 603, 606 (2003).
    • (2003) J. DEV. ECON , vol.603 , pp. 606
    • Hausmann, R.1    Rodrik, D.2
  • 64
    • 46149088078 scopus 로고    scopus 로고
    • Id
    • Id.
  • 65
    • 46149101838 scopus 로고    scopus 로고
    • Id
    • Id.
  • 66
    • 46149126961 scopus 로고    scopus 로고
    • Id. at 629
    • Id. at 629.
  • 67
    • 46149119257 scopus 로고    scopus 로고
    • Abrams v. United States, 250 U.S. 616, 630 (1919) (Holmes, J., dissenting).
    • Abrams v. United States, 250 U.S. 616, 630 (1919) (Holmes, J., dissenting).
  • 68
    • 46149124624 scopus 로고    scopus 로고
    • SCHUMPETER, supra note 25, at 83
    • SCHUMPETER, supra note 25, at 83.
  • 69
    • 46149102313 scopus 로고    scopus 로고
    • See supra note 12 and accompanying text. For an analysis of the implications of inefficient entry in the copyright context, see generally Michael Abramowicz, An Industrial Organization Approach to Copyright Law, 46 WM. & MARY L. REV. 33 (2004).
    • See supra note 12 and accompanying text. For an analysis of the implications of inefficient entry in the copyright context, see generally Michael Abramowicz, An Industrial Organization Approach to Copyright Law, 46 WM. & MARY L. REV. 33 (2004).
  • 70
    • 46149083066 scopus 로고    scopus 로고
    • To simplify the diagrams, our model allows a fractional number of additional firms to enter the market once one firm has entered. This can be conceived of in expected value terms, so that the entry of 2.5 firms could be interpreted as equal probabilities that 2 or 3 firms will enter the market. The step function discontinuity would needlessly complicate the analysis, and allowing for only integral entry would not change any of our conclusions. A spreadsheet that can be modified to view the graphs here, as well as variations on each of them in the absence of fractional entry, is available. Michael Abramowicz & John T. Duffy, Experimentation Model (2007) (unpublished spreadsheet, on file with authors and the New York University Law Review).
    • To simplify the diagrams, our model allows a fractional number of additional firms to enter the market once one firm has entered. This can be conceived of in expected value terms, so that the entry of 2.5 firms could be interpreted as equal probabilities that 2 or 3 firms will enter the market. The step function discontinuity would needlessly complicate the analysis, and allowing for only integral entry would not change any of our conclusions. A spreadsheet that can be modified to view the graphs here, as well as variations on each of them in the absence of fractional entry, is available. Michael Abramowicz & John T. Duffy, Experimentation Model (2007) (unpublished spreadsheet, on file with authors and the New York University Law Review).
  • 71
    • 46149119008 scopus 로고    scopus 로고
    • In referring to rents here, we mean to include all returns that exceed the firms' operating costs, including opportunity costs, once they have entered the market. These rents may include quasi rents, which represent merely ordinary economic returns on the sunk-cost investments necessary to enter the market
    • In referring to "rents" here, we mean to include all returns that exceed the firms' operating costs, including opportunity costs, once they have entered the market. These rents may include quasi rents, which represent merely ordinary economic returns on the sunk-cost investments necessary to enter the market.
  • 72
    • 46149108183 scopus 로고    scopus 로고
    • A perfect price discriminator charges each customer the maximum that the customer is willing to pay. Even a monopolist cannot ordinarily price discriminate perfectly, because no firm can know this amount precisely
    • A perfect price discriminator charges each customer the maximum that the customer is willing to pay. Even a monopolist cannot ordinarily price discriminate perfectly, because no firm can know this amount precisely.
  • 73
    • 0021500315 scopus 로고    scopus 로고
    • Venture capitalists select investments with a high possibility of return but also take large risks with the investments. See Tyzoon T. Tyebjee & Albert V. Bruno, A Model of Venture Capitalist Investment Activity, 30 MGMT. SCI. 1051, 1052 1984, noting that venture capital funds have higher rate of return than S&P 500 but are considerably riskier, Because venture capitalists invest in businesses that are in or close to the start-up phase, they cannot use prior histories to evaluate the possibility of success of each business. Id. at 1051. Venture capitalists are willing to accept the fact that many of their investments fail because the investments that succeed make huge profits. Id. at 1052
    • Venture capitalists select investments with a high possibility of return but also take large risks with the investments. See Tyzoon T. Tyebjee & Albert V. Bruno, A Model of Venture Capitalist Investment Activity, 30 MGMT. SCI. 1051, 1052 (1984) (noting that venture capital funds have higher rate of return than S&P 500 but are considerably riskier). Because venture capitalists invest in businesses that are in or close to the start-up phase, they cannot use prior histories to evaluate the possibility of success of each business. Id. at 1051. Venture capitalists are willing to accept the fact that many of their investments fail because the investments that succeed make huge profits. Id. at 1052.
  • 74
    • 46149093294 scopus 로고    scopus 로고
    • See, e.g., Augustin Landier, Entreprenuership and the Stigma of Failure 6 (Dec. 13, 2004) (unpublished manuscript, on file with the New York University Law Review), available at http://www1.worldbank.org/finance/ assets/images/stigma9_augustinlandier.pdf (Silicon Valley's entrepreneurship is characterized by an exceptional climate of tolerance for failure . . . .).
    • See, e.g., Augustin Landier, Entreprenuership and the Stigma of Failure 6 (Dec. 13, 2004) (unpublished manuscript, on file with the New York University Law Review), available at http://www1.worldbank.org/finance/ assets/images/stigma9_augustinlandier.pdf ("Silicon Valley's entrepreneurship is characterized by an exceptional climate of tolerance for failure . . . .").
  • 75
    • 46149083064 scopus 로고    scopus 로고
    • This result is in contrast to an existing dynamic model of sequential entry in a growing market. See David E. Mills, Untimely Entry, 39 J. INDUS. ECON. 659, 660 (1991, outlining model and noting its prediction that entry tends to be premature, In Mills's model, a firm will enter when it anticipates that entry will be profitable, taking into account all of the decisions by subsequent entrants. Id. at 662-63. Mills's model shows that from a social perspective, entry can be premature or tardy. Id. at 660. The intuition underlying premature entry is that an entering firm knows that no other firm will enter until demand has grown sufficiently to make entry worthwhile. While the firm might wait if it had a property right that allowed it to do so, the benefit of deterring entry by other firms may make early entry worthwhile. See id. at 660 discussing trade-off between early entry and being preempted, The entrant accepts early losses for
    • This result is in contrast to an existing dynamic model of sequential entry in a growing market. See David E. Mills, Untimely Entry, 39 J. INDUS. ECON. 659, 660 (1991) (outlining model and noting its prediction that entry tends to be premature). In Mills's model, a firm will enter when it anticipates that entry will be profitable, taking into account all of the decisions by subsequent entrants. Id. at 662-63. Mills's model shows that from a social perspective, entry can be premature or tardy. Id. at 660. The intuition underlying premature entry is that an entering firm knows that no other firm will enter until demand has grown sufficiently to make entry worthwhile. While the firm might wait if it had a property right that allowed it to do so, the benefit of deterring entry by other firms may make early entry worthwhile. See id. at 660 (discussing trade-off between early entry and being preempted). The entrant accepts early losses for higher profits in a later period. Mills's analysis assumes, however, that potential entrants know the level of demand. See id. at 661 (defining inverse demand function). At least when demand is highly uncertain, premature entry seems unlikely to occur, though the benefit of deterring subsequent entrants for a time in the event of modest success may, to some extent, reduce the wedge between the private and social benefits of entry.
  • 76
    • 18144362124 scopus 로고    scopus 로고
    • The argument that intellectual property generally creates deadweight losses is well accepted in the literature. See, e.g., Mark A. Lemley, Property, Intellectual Property, and Free Riding, 83 TEX. L. REV. 1031, 1059 (2005) (By definition . . . the intellectual property system permits owners to raise price above marginal cost, creating deadweight losses by raising the price to consumers.).
    • The argument that intellectual property generally creates deadweight losses is well accepted in the literature. See, e.g., Mark A. Lemley, Property, Intellectual Property, and Free Riding, 83 TEX. L. REV. 1031, 1059 (2005) ("By definition . . . the intellectual property system permits owners to raise price above marginal cost, creating deadweight losses by raising the price to consumers.").
  • 77
    • 46149087823 scopus 로고    scopus 로고
    • Richard Posner has argued that political rent-seeking can be a larger source of social costs than private monopoly. Richard A. Posner, The Social Costs of Monopoly and Regulation, 83 J. POL. ECON. 807, 807 (1975). For the classic articles introducing the problem of rent-seeking,
    • Richard Posner has argued that political rent-seeking can be "a larger source of social costs than private monopoly." Richard A. Posner, The Social Costs of Monopoly and Regulation, 83 J. POL. ECON. 807, 807 (1975). For the classic articles introducing the problem of rent-seeking,
  • 78
    • 0000367973 scopus 로고
    • The Political Economy of the Rent-Seeking Society, 64
    • see generally
    • see generally Anne O. Krueger, The Political Economy of the Rent-Seeking Society, 64 AM. ECON. REV. 291 (1974),
    • (1974) AM. ECON. REV , vol.291
    • Krueger, A.O.1
  • 79
    • 84979190207 scopus 로고
    • The Welfare Costs of Tariffs, Monopolies, and Theft, 5 W
    • and Gordon Tullock, The Welfare Costs of Tariffs, Monopolies, and Theft, 5 W. ECON. J. 224 (1967).
    • (1967) ECON. J , vol.224
    • Tullock, G.1
  • 80
    • 46149106879 scopus 로고    scopus 로고
    • Critics of the current patent system argue that the rising cost of litigation and the declining quality of patents issued by the U.S. Patent and Trademark Office have resulted in uncertainty and have therefore deterred investment in innovation and intellectual property. See COMM. ON INTELLECTUAL PROP. RIGHTS IN THE KNOWLEDGE-BASED ECON, NAT'L RESEARCH COUNCIL OF THE NAT'L ACADEMIES, A PATENT SYSTEM FOR THE 21ST CENTURY 95 Stephen A. Merrill et al. eds, 2004
    • Critics of the current patent system argue that the rising cost of litigation and the declining quality of patents issued by the U.S. Patent and Trademark Office have resulted in uncertainty and have therefore deterred investment in innovation and intellectual property. See COMM. ON INTELLECTUAL PROP. RIGHTS IN THE KNOWLEDGE-BASED ECON., NAT'L RESEARCH COUNCIL OF THE NAT'L ACADEMIES, A PATENT SYSTEM FOR THE 21ST CENTURY 95 (Stephen A. Merrill et al. eds., 2004).
  • 81
    • 0000745494 scopus 로고    scopus 로고
    • See, e.g., David de Meza & Clive Southey, The Borrower's Curse: Optimism, Finance and Entrepreneurship, 106 ECON. J. 375, 377 (1996) (reporting extremely high drop out rates for new entrepreneurs in both United States and Britain).
    • See, e.g., David de Meza & Clive Southey, The Borrower's Curse: Optimism, Finance and Entrepreneurship, 106 ECON. J. 375, 377 (1996) (reporting "extremely high drop out rates" for new entrepreneurs in both United States and Britain).
  • 82
    • 46149110625 scopus 로고    scopus 로고
    • See, e.g., Avishalom Tor, The Fable of Entry: Bounded Rationality, Market Discipline, and Legal Policy, 101 MICH. L. REV. 482, 490-92 (2002) (arguing that high attrition rates and poor market penetration by new entrants cause negative net economic impact).
    • See, e.g., Avishalom Tor, The Fable of Entry: Bounded Rationality, Market Discipline, and Legal Policy, 101 MICH. L. REV. 482, 490-92 (2002) (arguing that high attrition rates and poor market penetration by new entrants cause negative net economic impact).
  • 83
    • 46149111517 scopus 로고    scopus 로고
    • See de Meza & Southey, supra note 68, at 375 (noting that banks may have better access to unbiased information than do entrepreneurs); id. at 377 (citing data showing that firms having financing - especially unsecured financing - fail less frequently than businesses self-financed by entrepreneurs); see also Gary Rivlin, Relax, Bill Gates; It's Google's Turn as the Villain, N.Y. TIMES, Aug. 24, 2005, at A1 (When I meet with venture capitalists, or if I'm engaged in a conversation about going into partnership with someone, inevitably the question is, 'Why couldn't Google do what you're doing?');
    • See de Meza & Southey, supra note 68, at 375 (noting that banks may have better access to unbiased information than do entrepreneurs); id. at 377 (citing data showing that firms having financing - especially unsecured financing - fail less frequently than businesses self-financed by entrepreneurs); see also Gary Rivlin, Relax, Bill Gates; It's Google's Turn as the Villain, N.Y. TIMES, Aug. 24, 2005, at A1 ("When I meet with venture capitalists, or if I'm engaged in a conversation about going into partnership with someone, inevitably the question is, 'Why couldn't Google do what you're doing?'");
  • 84
    • 46149094478 scopus 로고    scopus 로고
    • Rob Landley, A Look at Microsoft's Record: Can It Continue This Way?, THE MOTLEY FOOL, Nov. 18, 1998, http://www.fool.com/CashKing/1998/CashKingPort981118.htm (These days, even venture capital is drying up for any new projects that might, conceivably, someday compete Microsoft [sic].).
    • Rob Landley, A Look at Microsoft's Record: Can It Continue This Way?, THE MOTLEY FOOL, Nov. 18, 1998, http://www.fool.com/CashKing/1998/CashKingPort981118.htm ("These days, even venture capital is drying up for any new projects that might, conceivably, someday compete Microsoft [sic].").
  • 85
    • 33947409220 scopus 로고    scopus 로고
    • Copyright and Public Good Economics: A Misunderstood Relation, 155
    • defining demand diversion as surplus cannibalized from other producers already in the market, See, e.g
    • See, e.g., Christopher S. Yoo, Copyright and Public Good Economics: A Misunderstood Relation, 155 U. PA. L. REV. 635, 697 (2005) (defining "demand diversion" as "surplus cannibalized from other producers already in the market").
    • (2005) U. PA. L. REV , vol.635 , pp. 697
    • Yoo, C.S.1
  • 86
    • 46149117568 scopus 로고    scopus 로고
    • See, e.g., Abramowicz, supra note 58, at 39 (defining business stealing as equivalent to demand diversion).
    • See, e.g., Abramowicz, supra note 58, at 39 (defining "business stealing" as equivalent to demand diversion).
  • 87
    • 84963456897 scopus 로고    scopus 로고
    • note 12 and accompanying text
    • See supra note 12 and accompanying text.
    • See supra
  • 88
    • 84963456897 scopus 로고    scopus 로고
    • note 12 and accompanying text
    • See supra note 12 and accompanying text.
    • See supra
  • 89
    • 46149090182 scopus 로고    scopus 로고
    • Does the Kid Stay in the Picture?
    • For background on Netflix, the company Hastings launched and the basis for this example, see generally, Feb. 22, at
    • For background on Netflix, the company Hastings launched and the basis for this example, see generally Gary Rivlin, Does the Kid Stay in the Picture?, N.Y. TIMES, Feb. 22, 2005, at G1.
    • (2005) N.Y. TIMES
    • Rivlin, G.1
  • 90
    • 46149089013 scopus 로고    scopus 로고
    • Critics have argued that Michael Dell, Dell's founder, succeeds by identifying the best business models and then simply executing them better than the models' originators. See Andrew Park & Peter Burrows, Dell, the Conqueror, Bus. WK, Sept. 24, 2001, at 92, 94 noting that Dell's brilliance is in identifying innovative business models and executing them to perfection, not in creating whiz-bang inventions, Improving execution of existing ideas is an important type of innovation in itself, but such business practices may discourage others from creating new business models at all. If property rights in new business models existed, then those with the best ideas could consolidate their efforts with those best capable of conducting experiments and with those best able to execute the models that have proven, at least preliminarily, to be successful
    • Critics have argued that Michael Dell, Dell's founder, succeeds by identifying the best business models and then simply executing them better than the models' originators. See Andrew Park & Peter Burrows, Dell, the Conqueror, Bus. WK., Sept. 24, 2001, at 92, 94 (noting that Dell's "brilliance" is in "identifying innovative business models" and "executing them to perfection," not in creating "whiz-bang inventions"). Improving execution of existing ideas is an important type of innovation in itself, but such business practices may discourage others from creating new business models at all. If property rights in new business models existed, then those with the best ideas could consolidate their efforts with those best capable of conducting experiments and with those best able to execute the models that have proven, at least preliminarily, to be successful.
  • 91
    • 46149100109 scopus 로고    scopus 로고
    • Netflix Uses Speed to Fend Off Wal-Mart Challenge
    • noting entry of Wal-Mart into market but noting that Netflix enjoys a big lead in customers, revenue and brand recognition, See, Sept. 29, at
    • See Nicholas Thompson, Netflix Uses Speed to Fend Off Wal-Mart Challenge, N.Y. TIMES, Sept. 29, 2003, at C1 (noting entry of Wal-Mart into market but noting that Netflix enjoys "a big lead in customers, revenue and brand recognition");
    • (2003) N.Y. TIMES
    • Thompson, N.1
  • 92
    • 46149105044 scopus 로고    scopus 로고
    • Associated Press, A Second Look: Netflix Peaks for 2nd Day, BUS. WK., Feb. 28, 2008, http://www.businessweek.com/ap/ financialnews/D8V3G7601.htm (explaining Netflix's recent rise in stock price by noting that the company may be seeing a tipping point in terms of brand recognition and subscriber growth);
    • Associated Press, A Second Look: Netflix Peaks for 2nd Day, BUS. WK., Feb. 28, 2008, http://www.businessweek.com/ap/ financialnews/D8V3G7601.htm (explaining Netflix's recent rise in stock price by noting that "the company may be seeing a tipping point in terms of brand recognition and subscriber growth");
  • 93
    • 46149107959 scopus 로고    scopus 로고
    • Jennifer Bayot, Netflix Takes Over Wal-Mart's Online DVD Rental Business, N.Y. TIMES, May 19, 2005, http://www.nytimes.com/2005/05/ 19/business/media/19cnd-movie.html (observing that Wal-Mart had copied Netflix's business model but documenting that Netflix had nonetheless triumphed).
    • Jennifer Bayot, Netflix Takes Over Wal-Mart's Online DVD Rental Business, N.Y. TIMES, May 19, 2005, http://www.nytimes.com/2005/05/ 19/business/media/19cnd-movie.html (observing that Wal-Mart had "copied" Netflix's business model but documenting that Netflix had nonetheless triumphed).
  • 94
    • 46149123773 scopus 로고    scopus 로고
    • Netflix is the largest online movie rental subscription service with over 6,300,000 subscribers. Netflix, Inc., Annual Report (Form 10-K), at 1 (Feb. 28, 2007).
    • Netflix is the "largest online movie rental subscription service" with over 6,300,000 subscribers. Netflix, Inc., Annual Report (Form 10-K), at 1 (Feb. 28, 2007).
  • 95
    • 46149107735 scopus 로고    scopus 로고
    • For example, having more customers may have enabled Netflix to develop a better database from which to make product recommendations for future customers based on collaborative filtering
    • For example, having more customers may have enabled Netflix to develop a better database from which to make product recommendations for future customers based on collaborative filtering.
  • 96
    • 46149116405 scopus 로고    scopus 로고
    • See Nicholas Thompson, Netflix's Patent May Reshape DVD-Rental Market, N.Y. TIMES, June 26, 2003, at C4 (noting that some analysts question whether Netflix's innovation was obvious and thus unpatentable); see also Method and Apparatus for Renting Items, U.S. Patent No. 6,584,450 (filed Apr. 28, 2000); Approach for Renting Items to Customers, U.S. Patent No. 7,024,381 (filed May 14, 2003).
    • See Nicholas Thompson, Netflix's Patent May Reshape DVD-Rental Market, N.Y. TIMES, June 26, 2003, at C4 (noting that "some analysts question whether Netflix's innovation" was obvious and thus unpatentable); see also Method and Apparatus for Renting Items, U.S. Patent No. 6,584,450 (filed Apr. 28, 2000); Approach for Renting Items to Customers, U.S. Patent No. 7,024,381 (filed May 14, 2003).
  • 97
    • 46149121594 scopus 로고    scopus 로고
    • Blockbuster?, http://www.legalzoom.com/legal-articles/netflix-suing-blockbuster.html (last visited Jan. 21, 2008) (discussing lawsuit). The companies settled the dispute in 2007. Reuters, Blockbuster Settles Fight with Netflix
    • See, June 28, at
    • See Monica Sanders, Why Is Netflix Suing Blockbuster?, http://www.legalzoom.com/legal-articles/netflix-suing-blockbuster.html (last visited Jan. 21, 2008) (discussing lawsuit). The companies settled the dispute in 2007. Reuters, Blockbuster Settles Fight with Netflix, N.Y. TIMES, June 28, 2007, at C12.
    • (2007) N.Y. TIMES
    • Sanders, M.1    Netflix Suing, W.I.2
  • 98
    • 46149091810 scopus 로고    scopus 로고
    • See, e.g., KSR Int'l Co. v. Teleflex Inc., 127 S. Ct. 1727, 1734-35, 1741 (2007) (over-turning Federal Circuit's more liberal teaching, suggestion, or motivation test for obviousness); In re Comiskey, 499 F.3d 1365, 1380-82 (Fed. Cir. 2007) (holding that business methods may be obvious and therefore unpatentable where they merely combine unpatentable business methods with computers or other well-known technology).
    • See, e.g., KSR Int'l Co. v. Teleflex Inc., 127 S. Ct. 1727, 1734-35, 1741 (2007) (over-turning Federal Circuit's more liberal "teaching, suggestion, or motivation" test for obviousness); In re Comiskey, 499 F.3d 1365, 1380-82 (Fed. Cir. 2007) (holding that business methods may be obvious and therefore unpatentable where they merely combine unpatentable business methods with computers or other well-known technology).
  • 99
    • 46149094031 scopus 로고    scopus 로고
    • Netflix Screens
    • See, Patent Controversy, INTERNET L. & STRATEGY, May 2006, http://www. lawjournalnewsletters.com/issues/ljn_internetlaw/4_5/news/146548-1.html noting that Netflix-Blockbuster patent suit highlights the ongoing debate over Internet business-method patents
    • See Xenia P. Kobylarz, Netflix Screens Patent Controversy, INTERNET L. & STRATEGY, May 2006, http://www. lawjournalnewsletters.com/issues/ljn_internetlaw/4_5/news/146548-1.html (noting that Netflix-Blockbuster patent suit "highlights the ongoing debate over Internet business-method patents").
    • Kobylarz, X.P.1
  • 100
    • 46149090193 scopus 로고    scopus 로고
    • See Reed Hastings as told to Patrick J. Saver, How I Did It: Reed Hastings; The Envelope, Please, INC., Dec. 2005, at 118, 119 (disclosing that Hastings sold his prior startup company in 1997 for $750 million, giving him the means to start Netflix); see also Rivlin, supra note 75 (reporting that many venture capitalists rejected entreaties of Netflix's founder, Reed Hastings, for funding).
    • See Reed Hastings as told to Patrick J. Saver, How I Did It: Reed Hastings; The Envelope, Please, INC., Dec. 2005, at 118, 119 (disclosing that Hastings sold his prior startup company in 1997 for $750 million, giving him "the means to start Netflix"); see also Rivlin, supra note 75 (reporting that many venture capitalists rejected entreaties of Netflix's founder, Reed Hastings, for funding).
  • 101
    • 60749107144 scopus 로고    scopus 로고
    • Blockbuster Set To Offer Movies by Mail - Rental Giant's Shift in Approach Expected To Keep Prices Low; A Netflix Binge for $19.95
    • noting that Blockbuster poses considerable threat to Netflix due to convenience of its stores, E.g, Feb. 11, at
    • E.g., Martin Peers & Nick Wingfield, Blockbuster Set To Offer Movies by Mail - Rental Giant's Shift in Approach Expected To Keep Prices Low; A Netflix Binge for $19.95, WALL ST. J., Feb. 11, 2004, at D1 (noting that Blockbuster poses considerable threat to Netflix due to convenience of its stores);
    • (2004) WALL ST. J
    • Peers, M.1    Wingfield, N.2
  • 102
    • 46149118712 scopus 로고    scopus 로고
    • Wal-Mart To Start Subscription Plan for Renting DVDs
    • reporting that analysts expect price wars once Blockbuster and Wal-Mart enter market, Oct. 16, at
    • Ann Zimmerman et al., Wal-Mart To Start Subscription Plan for Renting DVDs, WALL ST. J., Oct. 16, 2002, at D12 (reporting that analysts expect price wars once Blockbuster and Wal-Mart enter market).
    • (2002) WALL ST. J
    • Zimmerman, A.1
  • 103
    • 46149125595 scopus 로고    scopus 로고
    • See Matthew Boyle, Questions for . . . Reed Hastings, FORTUNE, May 28, 2007, at 30, 30 (noting that Hastings regrets taking Netflix public in 2002 because by publishing our financials we let Blockbuster see that this was a profitable business, and it entered two years later); Rivlin, supra note 75 (same).
    • See Matthew Boyle, Questions for . . . Reed Hastings, FORTUNE, May 28, 2007, at 30, 30 (noting that Hastings regrets taking Netflix public in 2002 because "by publishing our financials we let
  • 104
    • 46149121580 scopus 로고
    • A Micro-Microeconomic Approach to Antitrust Law: Games Managers Play, 86
    • noting that consumers may not choose lower price option for any number of reasons, such as acting on instinct instead of on calculation or due to personal attachment to product, See, e.g
    • See, e.g., Harry S. Gerla, A Micro-Microeconomic Approach to Antitrust Law: Games Managers Play, 86 MICH. L. REV. 892, 922-23 (1988) (noting that consumers may not choose lower price option for any number of reasons, such as acting on instinct instead of on calculation or due to personal attachment to product).
    • (1988) MICH. L. REV , vol.892 , pp. 922-923
    • Gerla, H.S.1
  • 105
    • 46149126480 scopus 로고    scopus 로고
    • No civil aircraft may exceed Mach 1 unless authorized for testing, and no sonic boom may reach the surface of the United States. 14 C.F.R. § 91.817 (2007); id. pt. 91, app. B.
    • No civil aircraft may exceed Mach 1 unless authorized for testing, and no sonic boom may reach the surface of the United States. 14 C.F.R. § 91.817 (2007); id. pt. 91, app. B.
  • 106
    • 46149090646 scopus 로고
    • Is Advertising Wasteful?
    • summarizing and discussing both sides of debate over efficiency of advertising, One argument against the efficiency of advertising is that monopolists may use it to protect their market positions. See, e.g, Jan, at
    • See, e.g., Jules Backman, Is Advertising Wasteful?, J. MARKETING, Jan. 1968, at 2 (summarizing and discussing both sides of debate over efficiency of advertising). One argument against the efficiency of advertising is that monopolists may use it to protect their market positions.
    • (1968) J. MARKETING , pp. 2
    • Backman, J.1
  • 107
    • 84925979610 scopus 로고
    • Excessive Advertising: An Empirical Analysis, 30
    • discussing literature on use of advertising to create barriers to entry, Our argument indicates that such advertising could be efficient in some cases, though perhaps second-best relative to a regime in which government directly protects market innovators. See
    • See Jeffry M. Netter, Excessive Advertising: An Empirical Analysis, 30 J. INDUS. ECON. 361, 361 (1982) (discussing literature on use of advertising to create barriers to entry). Our argument indicates that such advertising could be efficient in some cases, though perhaps second-best relative to a regime in which government directly protects market innovators.
    • (1982) J. INDUS. ECON , vol.361 , pp. 361
    • Netter, J.M.1
  • 108
    • 46149115459 scopus 로고    scopus 로고
    • See, e.g., Phillip Nelson, Information and Consumer Behavior, 78 J. POL. ECON. 311, 321-23 (1970) (noting that advertising can provide consumers with useful information).
    • See, e.g., Phillip Nelson, Information and Consumer Behavior, 78 J. POL. ECON. 311, 321-23 (1970) (noting that advertising can provide consumers with useful information).
  • 109
    • 46149103250 scopus 로고    scopus 로고
    • The practical transition to wheeled suitcases began in the 1970s but was not accomplished fully until the early 1990s. See, e.g., Betsy Wade, Luggage Takes New Turns, N.Y. TIMES, Sept. 17, 1995, § 5, at 4 (Five years ago . . . only flight attendants wheeled their luggage, but now a majority of passengers do.);
    • The practical transition to wheeled suitcases began in the 1970s but was not accomplished fully until the early 1990s. See, e.g., Betsy Wade, Luggage Takes New Turns, N.Y. TIMES, Sept. 17, 1995, § 5, at 4 ("Five years ago . . . only flight attendants wheeled their luggage, but now a majority of passengers do.");
  • 110
    • 46149091801 scopus 로고    scopus 로고
    • see also ROBERT J. SHILLER, THE NEW FINANCIAL ORDER: RISK IN THE 21ST CENTURY 101-02 (2003) (noting that although transition to wheeled suitcases began in 1970s, it took many years before feature achieved wide acceptance); Samsonite Corporation, History, http://www.samsonite.com/ samsonite/about/history/ (last visited Mar. 12, 2008) (noting that Samsonite first roll[ed] out suitcases on wheels in the 1970s and claiming that Samsonite was responsible for the first wheeled suitcases).
    • see also ROBERT J. SHILLER, THE NEW FINANCIAL ORDER: RISK IN THE 21ST CENTURY 101-02 (2003) (noting that although transition to wheeled suitcases began in 1970s, it took many years before feature achieved wide acceptance); Samsonite Corporation, History, http://www.samsonite.com/ samsonite/about/history/ (last visited Mar. 12, 2008) (noting that Samsonite first "roll[ed] out suitcases on wheels" in the 1970s and claiming that Samsonite was responsible for "the first wheeled suitcases").
  • 111
    • 46149119943 scopus 로고    scopus 로고
    • U.S. Patent No. 1,099,933 filed Sept. 6, 1913, issued June 16,1914
    • U.S. Patent No. 1,099,933 (filed Sept. 6, 1913) (issued June 16,1914).
  • 112
    • 46149086192 scopus 로고    scopus 로고
    • Professor Shiller documents this point through an interview with Bernard Sadow, a pioneer in bringing wheeled luggage to market in the 1970s: Sadow recalled . . . that the idea of his wheeled suitcase encountered much resistance at first, and buyers at all the major department stores rejected the idea as unsaleable. They did not argue that the wheeled suitcase was a bad idea, only that no one would buy it. SHILLER, supra note 91, at 101.
    • Professor Shiller documents this point through an interview with Bernard Sadow, a pioneer in bringing wheeled luggage to market in the 1970s: "Sadow recalled . . . that the idea of his wheeled suitcase encountered much resistance at first, and buyers at all the major department stores rejected the idea as unsaleable. They did not argue that the wheeled suitcase was a bad idea, only that no one would buy it." SHILLER, supra note 91, at 101.
  • 113
    • 46149096527 scopus 로고    scopus 로고
    • See Leonard Sloane, The Latest in Luggage: Lightweight and Mobile, N.Y. TIMES, Dec. 16, 1989, at 52 (describing luggage with wheels as popular trend for holiday travelers and buyers in 1989); Wade, supra note 91 (noting addition of wheels to traditional forms of luggage).
    • See Leonard Sloane, The Latest in Luggage: Lightweight and Mobile, N.Y. TIMES, Dec. 16, 1989, at 52 (describing luggage with wheels as popular trend for holiday travelers and buyers in 1989); Wade, supra note 91 (noting addition of wheels to traditional forms of luggage).
  • 114
    • 46149098164 scopus 로고    scopus 로고
    • From the 1960s to the 1980s, scientific research was inconsistent as to the effects of trans fatty acids on overall health. See Marian Burros, Now What? U.S. Study Says Margarine May Be Harmful, N.Y. TIMES, Oct. 7, 1992, at A1 (For years, studies about trans fatty acids were conflicting: evidence showed that they both raised and lowered cholesterol levels.). In 1990, a study published in the New England Journal of Medicine found that diets high in trans fatty acids had unfavorable effects on cholesterol levels.
    • From the 1960s to the 1980s, scientific research was inconsistent as to the effects of trans fatty acids on overall health. See Marian Burros, Now What? U.S. Study Says Margarine May Be Harmful, N.Y. TIMES, Oct. 7, 1992, at A1 ("For years, studies about trans fatty acids were conflicting: evidence showed that they both raised and lowered cholesterol levels."). In 1990, a study published in the New England Journal of Medicine found that diets high in trans fatty acids had unfavorable effects on cholesterol levels.
  • 115
    • 0025314240 scopus 로고    scopus 로고
    • Ronald P. Mensink & Martijn B. Katan, Effect of Dietary Trans Fatty Acids on High-Density and Low-Density Lipoprotein Cholesterol Levels in Healthy Subjects, 323 NEW ENG. J. MED. 439, 439, 444 (1990). This finding was confirmed by follow-up studies throughout the 1990s.
    • Ronald P. Mensink & Martijn B. Katan, Effect of Dietary Trans Fatty Acids on High-Density and Low-Density Lipoprotein Cholesterol Levels in Healthy Subjects, 323 NEW ENG. J. MED. 439, 439, 444 (1990). This finding was confirmed by follow-up studies throughout the 1990s.
  • 116
    • 34247489673 scopus 로고    scopus 로고
    • See Robert H. Eckel et al., Understanding the Complexity of Trans Fatty Acid Reduction in the American Diet: Report of the Trans Fat Conference Planning Group, 115 CIRCULATION 2231, 2232 (2007) (providing history of trans fatty acids in health).
    • See Robert H. Eckel et al., Understanding the Complexity of Trans Fatty Acid Reduction in the American Diet: Report of the Trans Fat Conference Planning Group, 115 CIRCULATION 2231, 2232 (2007) (providing "history of trans fatty acids in health").
  • 117
    • 46149106651 scopus 로고
    • Low-Fat Food: Feeding Frenzy for Marketers
    • discussing difficulty of profiting from low-fat fast-food products, See, e.g, Sept. 27, at
    • See, e.g., Glenn Collins, Low-Fat Food: Feeding Frenzy for Marketers, N.Y. TIMES, Sept. 27, 1995, at D1 (discussing difficulty of profiting from low-fat fast-food products);
    • (1995) N.Y. TIMES
    • Collins, G.1
  • 118
    • 46149089966 scopus 로고
    • Fast Food Lightens Up but Sales Are Often Thin
    • describing McDonald's McLean Deluxe sales as modest to disappointing and reporting mixed success of various healthy fast-food products, Mar. 19, at
    • Anthony Ramirez, Fast Food Lightens Up but Sales Are Often Thin, N.Y. TIMES, Mar. 19, 1991, at D1 (describing McDonald's McLean Deluxe sales as "modest to disappointing" and reporting mixed success of various healthy fast-food products).
    • (1991) N.Y. TIMES
    • Ramirez, A.1
  • 119
    • 0037325316 scopus 로고    scopus 로고
    • See, e.g., Note, The Elephant in the Room: Evolution, Behavioralism, and Counter-advertising in the Coming War Against Obesity, 116 HARV. L. REV. 1161, 1182 (2003) (describing government efforts to educate consumers about nutrition through food labeling regulations); see also Food & Nutrition Info. Ctr., Nat'l Agric. Library/USDA, Dietary Guidelines for Americans: A Historical Overview (Mar. 2003), http://www.nal.usda.gov/fnic/pubs/bibs/gen/DGA.html (describing federal government publications on nutrition guidance policy and nutrition education).
    • See, e.g., Note, The Elephant in the Room: Evolution, Behavioralism, and Counter-advertising in the Coming War Against Obesity, 116 HARV. L. REV. 1161, 1182 (2003) (describing government efforts to educate consumers about nutrition through food labeling regulations); see also Food & Nutrition Info. Ctr., Nat'l Agric. Library/USDA, Dietary Guidelines for Americans: A Historical Overview (Mar. 2003), http://www.nal.usda.gov/fnic/pubs/bibs/gen/DGA.html (describing federal government publications on nutrition guidance policy and nutrition education).
  • 120
    • 46149107594 scopus 로고    scopus 로고
    • A popular book that reflects this literature is ROBERT SLATER, JACK WELCH AND THE GE WAY: MANAGEMENT INSIGHTS AND LEADERSHIP SECRETS OF THE LEGENDARY CEO (1999).
    • A popular book that reflects this literature is ROBERT SLATER, JACK WELCH AND THE GE WAY: MANAGEMENT INSIGHTS AND LEADERSHIP SECRETS OF THE LEGENDARY CEO (1999).
  • 121
    • 46149094010 scopus 로고    scopus 로고
    • For a description of this competition, see JOHN ROBERTS, THE MODERN FIRM: ORGANIZATIONAL DESIGN FOR PERFORMANCE AND GROWTH 4-12 (2004).
    • For a description of this competition, see JOHN ROBERTS, THE MODERN FIRM: ORGANIZATIONAL DESIGN FOR PERFORMANCE AND GROWTH 4-12 (2004).
  • 122
    • 46149094692 scopus 로고    scopus 로고
    • Id. at 6-10
    • Id. at 6-10.
  • 123
    • 46149121099 scopus 로고    scopus 로고
    • Id. at 4-6
    • Id. at 4-6.
  • 124
    • 46149126962 scopus 로고    scopus 로고
    • See generally ALFRED D. CHANDLER, JR., THE VISIBLE HAND: THE MANAGERIAL REVOLUTION IN AMERICAN BUSINESS (1977) (arguing that management in large business enterprises, not market forces, has primary role in coordinating economic activity and allocating economic resources).
    • See generally ALFRED D. CHANDLER, JR., THE VISIBLE HAND: THE MANAGERIAL REVOLUTION IN AMERICAN BUSINESS (1977) (arguing that management in large business enterprises, not market forces, has primary role in coordinating economic activity and allocating economic resources).
  • 125
    • 0035993899 scopus 로고    scopus 로고
    • Why a Board? Group Decisionmaking in Corporate Governance, 55
    • explaining advantages of board in corporate governance, See
    • See Stephen M. Bainbridge, Why a Board? Group Decisionmaking in Corporate Governance, 55 VAND. L. REV. 1, 12-41 (2002) (explaining advantages of board in corporate governance).
    • (2002) VAND. L. REV , vol.1 , pp. 12-41
    • Bainbridge, S.M.1
  • 126
    • 46149115224 scopus 로고    scopus 로고
    • See Michael Abramowicz, Speeding Up the Crawl to the Top, 20
    • assessing possibility that patenting corporate law innovations might speed up competition and innovation, Innovation in corporate law also may occur too slowly
    • Innovation in corporate law also may occur too slowly. See Michael Abramowicz, Speeding Up the Crawl to the Top, 20 YALE J. ON REG. 139, 194-205 (2003) (assessing possibility that patenting corporate law innovations might speed up competition and innovation).
    • (2003) YALE J. ON REG , vol.139 , pp. 194-205
  • 127
    • 46149095590 scopus 로고    scopus 로고
    • See THOMAS W. MALONE, THE FUTURE OF WORK: HOW THE NEW ORDER OF BUSINESS WILL SHAPE YOUR ORGANIZATION, YOUR MANAGEMENT STYLE AND YOUR LIFE 3-11 (2004) (asserting that new information technologies decrease communication costs and create further opportunities for corporate decentralization). For an assessment of how increased reliance on prediction markets could transform corporate governance,
    • See THOMAS W. MALONE, THE FUTURE OF WORK: HOW THE NEW ORDER OF BUSINESS WILL SHAPE YOUR ORGANIZATION, YOUR MANAGEMENT STYLE AND YOUR LIFE 3-11 (2004) (asserting that "new information technologies" decrease communication costs and create further opportunities for corporate decentralization). For an assessment of how increased reliance on prediction markets could transform corporate governance,
  • 128
    • 34250678936 scopus 로고    scopus 로고
    • Prediction Markets for Corporate Governance, 82
    • see generally
    • see generally Michael Abramowicz & M. Todd Henderson, Prediction Markets for Corporate Governance, 82 NOTRE DAME L. REV. 1343 (2007).
    • (2007) NOTRE DAME L. REV , vol.1343
    • Abramowicz, M.1    Todd Henderson, M.2
  • 129
    • 46149113544 scopus 로고    scopus 로고
    • See Jeff Howe, The Rise of Crowdsourcing, WIRED, June 2006, at 176, 178-79 (coining term crowdsourcing to describe business models that rely on unpaid amateur contributions of content and other work).
    • See Jeff Howe, The Rise of Crowdsourcing, WIRED, June 2006, at 176, 178-79 (coining term "crowdsourcing" to describe business models that rely on unpaid amateur contributions of content and other work).
  • 130
    • 84881815286 scopus 로고    scopus 로고
    • See, e.g., YOCHAI BENKLER, THE WEALTH OF NETWORKS: HOW SOCIAL PRODUCTION TRANSFORMS MARKETS AND FREEDOM 3-7 (2006) (arguing that networked information economy has lead to rise of effective, large-scale cooperative projects). Benkler generally describes projects in which the participants are not compensated financially, but social production could also take place within compensation schemes.
    • See, e.g., YOCHAI BENKLER, THE WEALTH OF NETWORKS: HOW SOCIAL PRODUCTION TRANSFORMS MARKETS AND FREEDOM 3-7 (2006) (arguing that "networked information economy" has lead to "rise of effective, large-scale cooperative" projects). Benkler generally describes projects in which the participants are not compensated financially, but social production could also take place within compensation schemes.
  • 131
    • 46149097481 scopus 로고    scopus 로고
    • For example, the supply-chain operations of Western companies in China are shrouded in intense secrecy. See James Fallows, China Makes, the World Takes, ATLANTIC MONTHLY, July/Aug. 2007, at 49, 60 In decades of reporting, I have rarely encountered people as concerned about keeping secrets as the buyers and suppliers who meet in Shenzhen and similar cities, Asking a Western company to specify its Chinese suppliers is like asking a reporter to hand over a list of his best sources, Fallows explains: It is not easy to find the right factory, work out the right manufacturing system, ensure the right supply of parts and raw material, impose the right quality standards, and develop the right relationship of trust and reliability. Companies that have solved these problems don't want to tell their competitors how they did so. Id. As Liam Casey, a businessman who specializes in Chinese supply chains, explains, Supply chain
    • For example, the supply-chain operations of Western companies in China are shrouded in intense secrecy. See James Fallows, China Makes, the World Takes, ATLANTIC MONTHLY, July/Aug. 2007, at 49, 60 ("In decades of reporting . . . , I have rarely encountered people as concerned about keeping secrets as the buyers and suppliers who meet in Shenzhen and similar cities. . . . Asking a Western company to specify its Chinese suppliers is like asking a reporter to hand over a list of his best sources."). Fallows explains: It is not easy to find the right factory, work out the right manufacturing system, ensure the right supply of parts and raw material, impose the right quality standards, and develop the right relationship of trust and reliability. Companies that have solved these problems don't want to tell their competitors how they did so. Id. As Liam Casey, a businessman who specializes in Chinese supply chains, explains, "Supply chain is intellectual property." Id.
  • 132
    • 46149103735 scopus 로고    scopus 로고
    • These players may, in turn, be deterred from innovation by competition from other software providers. See supra Part II.C.1-2 (discussing issues of innovation in product and feature development).
    • These players may, in turn, be deterred from innovation by competition from other software providers. See supra Part II.C.1-2 (discussing issues of innovation in product and feature development).
  • 133
    • 33846467857 scopus 로고    scopus 로고
    • notes 114-17 and accompanying text discussing British and American treatment of patents of importation
    • See infra notes 114-17 and accompanying text (discussing British and American treatment of patents of importation).
    • See infra
  • 134
    • 23144465153 scopus 로고    scopus 로고
    • We accept that much of the uncertainty associated with new restaurants is uncertainty about the quality of the management and the chef, but the restaurant business is not as unpredictable as commonly believed. See, e.g, H.G. Parsa et al, Why Restaurants Fail, 46 CORNELL HOTEL & RESTAURANT ADMIN. Q. 304, 311 2005, reporting that from 1996 to 1999, restaurant failure rate within first year was about 26, not 90% as reported, and that restaurant failure rate after three years did not exceed 60, Kerry Miller, The Restaurant-Failure Myth, BUS. WK, Apr. 16, 2007, reporting that 90% failure figure is myth and that 60% is more accurate
    • We accept that much of the uncertainty associated with new restaurants is uncertainty about the quality of the management and the chef, but the restaurant business is not as unpredictable as commonly believed. See, e.g., H.G. Parsa et al, Why Restaurants Fail, 46 CORNELL HOTEL & RESTAURANT ADMIN. Q. 304, 311 (2005) (reporting that from 1996 to 1999, restaurant failure rate within first year was about 26%, not 90% as reported, and that restaurant failure rate after three years did not exceed 60%); Kerry Miller, The Restaurant-Failure Myth, BUS. WK., Apr. 16, 2007, http://www.businessweek.com/smallbiz/ content/apr2007/sb20070416_296932.htm (reporting that 90% failure figure is myth and that 60% is more accurate).
  • 135
    • 0035295079 scopus 로고    scopus 로고
    • Pierre Azoulay and Scott Shane observe that territorial exclusivity provisions are common in franchising agreements and that they lead to a lower failure rate for new franchising systems. Pierre Azoulay & Scott Shane, Entrepreneurs, Contracts, and the Failure of Young Firms, 47 MGMT. SCI. 337, 355 2001, Azoulay and Shane conclude that the failure to adopt such exclusive arrangements by some new franchisors is best explained by their limited knowledge of contracting [which] leads them to overlook the importance of the franchisor encroachment problem when designing their contracts. Id. at 356;
    • Pierre Azoulay and Scott Shane observe that territorial exclusivity provisions are common in franchising agreements and that they lead to a lower failure rate for new franchising systems. Pierre Azoulay & Scott Shane, Entrepreneurs, Contracts, and the Failure of Young Firms, 47 MGMT. SCI. 337, 355 (2001). Azoulay and Shane conclude that the failure to adopt such exclusive arrangements by some new franchisors is best explained by "their limited knowledge of contracting [which] leads them to overlook the importance of the franchisor encroachment problem when designing their contracts." Id. at 356;
  • 136
    • 46149099176 scopus 로고    scopus 로고
    • see also Arthur H. Travers, Jr., & Thomas D. Wright, Note, Restricted Channels of Distribution Under the Sherman Act, 75 HARV. L. REV. 795, 796 (1962) (The three broad types of contractual arrangement by which manufacturers have traditionally sought to channel the activity of their distributing outlets are the exclusive franchise, the territorial restriction, and the customer restriction.).
    • see also Arthur H. Travers, Jr., & Thomas D. Wright, Note, Restricted Channels of Distribution Under the Sherman Act, 75 HARV. L. REV. 795, 796 (1962) ("The three broad types of contractual arrangement by which manufacturers have traditionally sought to channel the activity of their distributing outlets are the exclusive franchise, the territorial restriction, and the customer restriction.").
  • 137
    • 58149364688 scopus 로고    scopus 로고
    • Although Thomas Jefferson famously biased the issue by referring to the embarrassment of an exclusive patent, Letter from Thomas Jefferson to Isaac M'Pherson (Aug. 13, 1813, in 6 THE WRITINGS OF THOMAS JEFFERSON 175, 181 (H.A. Washington ed, Washington, D.C, Taylor & Maury 1854, commentators have frequently recognized that intellectual property protections can be justified if the benefits exceed the costs. See, e.g, J.A.K. Huntley & Frank H. Stephen, Unfair Competition, Consumer Deception, and Brand Copying: An Economic Perspective, 15 INT'L REV. L. & ECON. 443, 451 (1995, finding trademark protection justified so long as such expenditure is less than alternative consumer search-and-testing costs);
    • Although Thomas Jefferson famously biased the issue by referring to "the embarrassment of an exclusive patent," Letter from Thomas Jefferson to Isaac M'Pherson (Aug. 13, 1813), in 6 THE WRITINGS OF THOMAS JEFFERSON 175, 181 (H.A. Washington ed., Washington, D.C., Taylor & Maury 1854), commentators have frequently recognized that intellectual property protections can be justified if the benefits exceed the costs. See, e.g., J.A.K. Huntley & Frank H. Stephen, Unfair Competition, Consumer Deception, and Brand Copying: An Economic Perspective, 15 INT'L REV. L. & ECON. 443, 451 (1995) (finding trademark protection justified so "long as such expenditure is less than alternative consumer search-and-testing costs");
  • 138
    • 0027903044 scopus 로고    scopus 로고
    • Steven R. Salbu, AIDS and Drug Pricing: In Search of a Policy, 71 WASH. U. L.Q. 691, 699-700 (1993) (arguing that patents are necessary for encouraging research and development).
    • Steven R. Salbu, AIDS and Drug Pricing: In Search of a Policy, 71 WASH. U. L.Q. 691, 699-700 (1993) (arguing that patents are necessary for encouraging research and development).
  • 139
    • 0043194017 scopus 로고    scopus 로고
    • The early British patent system began with the granting of letters patent by King Edward III to foreigners who wished to come to England to teach their trades to the English. Adam Mossoff, Rethinking the Development of Patents: An Intellectual History, 1550-1800, 52 HASTINGS L.J. 1255, 1259 2001, In the sixteenth century, the Crown began to offer letters patent to English citizens as well for manufacturing monopolies in England. See id. at 1260-61. Though the Crown's power to grant letters patent was circumscribed substantially in 1623 by the Statute of Monopolies, 1623, 21 Jac, c. 3, that statute continued to allow patents on any novel process or manufacture, and a process or other technology was considered novel if it was new to the country. Mossoff, supra, at 1271-73
    • The early British patent system began with the granting of letters patent by King Edward III to foreigners who wished to come to England to teach their trades to the English. Adam Mossoff, Rethinking the Development of Patents: An Intellectual History, 1550-1800, 52 HASTINGS L.J. 1255, 1259 (2001). In the sixteenth century, the Crown began to offer letters patent to English citizens as well for manufacturing monopolies in England. See id. at 1260-61. Though the Crown's power to grant letters patent was circumscribed substantially in 1623 by the Statute of Monopolies, 1623, 21 Jac, c. 3, that statute continued to allow patents on any novel process or manufacture, and a process or other technology was considered "novel" if it was new to the country. Mossoff, supra, at 1271-73.
  • 140
    • 46149118510 scopus 로고    scopus 로고
    • See Edward C. Walterscheid, Charting a Novel Course: The Creation of the Patent Act of 1790, 25 AIPLA Q.J. 445, 502 1997, referring to absence of patents of importation in United States as radical, departure from the European patent custom
    • See Edward C. Walterscheid, Charting a Novel Course: The Creation of the Patent Act of 1790, 25 AIPLA Q.J. 445, 502 (1997) (referring to absence of "patents of importation" in United States as "radical . . . departure from the European patent custom").
  • 141
    • 46149121820 scopus 로고    scopus 로고
    • See, e.g., EDWARD C. WALTERSCHEID, THE NATURE OF THE INTELLECTUAL PROPERTY CLAUSE: A STUDY IN HISTORICAL PERSPECTIVE 374-75 (2002) (arguing that discoveries or inventions that are non-novel - as those which are granted patents of importation inherently must be - fail to promote the progress of useful arts);
    • See, e.g., EDWARD C. WALTERSCHEID, THE NATURE OF THE INTELLECTUAL PROPERTY CLAUSE: A STUDY IN HISTORICAL PERSPECTIVE 374-75 (2002) (arguing that discoveries or inventions that are non-novel - as those which are granted patents of importation inherently must be - fail to "promote the progress of useful arts");
  • 142
    • 0037292351 scopus 로고    scopus 로고
    • Patently Unconstitutional: The Geographical Limitation on Prior Art in a Small World, 87
    • arguing that patent system constitutionally is obligated not to grant patents for old ideas and that patents of importation and even geographic restrictions on prior art considered in evaluating patents are unconstitutional
    • Margo A. Bagley, Patently Unconstitutional: The Geographical Limitation on Prior Art in a Small World, 87 MINN. L. REV. 679, 685, 696 (2003) (arguing that patent system constitutionally is obligated not to grant patents for old ideas and that patents of importation and even geographic restrictions on prior art considered in evaluating patents are unconstitutional);
    • (2003) MINN. L. REV , vol.679 , Issue.685 , pp. 696
    • Bagley, M.A.1
  • 143
    • 28044441562 scopus 로고    scopus 로고
    • Thomas B. Nachbar, Monopoly, Mercantilism, and the Politics of Regulation, 91 VA. L. REV. 1313, 1338 (2005) (arguing that both patents of importation and exclusive trading charters were facets of mercantilist policy that are not consistent with modern U.S. legal norms);
    • Thomas B. Nachbar, Monopoly, Mercantilism, and the Politics of Regulation, 91 VA. L. REV. 1313, 1338 (2005) (arguing that both patents of importation and exclusive trading charters were facets of mercantilist policy that are not consistent with modern U.S. legal norms);
  • 144
    • 46149120880 scopus 로고    scopus 로고
    • Still Patently Unconstitutional: A Reply to Professor Nard, 88
    • restating argument that patents of importation are unconstitutional, see also
    • see also Margo A. Bagley, Still Patently Unconstitutional: A Reply to Professor Nard, 88 MINN. L. REV. 239, 241-42 (2003) (restating argument that patents of importation are unconstitutional).
    • (2003) MINN. L. REV , vol.239 , pp. 241-242
    • Bagley, M.A.1
  • 145
    • 46149095591 scopus 로고    scopus 로고
    • See WALTERSCHEID, supra note 116, at 314 (explaining that professed goal of patents of importation was minimization of risk involved in importation of European manufacturing technology to nascent United States, Alexander Hamilton similarly was drawn to the argument that to the extent that importation benefits society to the same degree that invention does, it ought to be rewarded by exclusive rights in a similar manner. Edward C. Walterscheid, Patents and Manufacturing in the Early Republic, 80 J. PAT. & TRADEMARK OFF. SOC'Y 855, 865 (1998, Nonetheless, early American patent statutes were not seen, even by Hamilton, as authorizing patents of importation. Id. at 864. Indeed, the legislative history of early congressional debates reveals that a provision that would have authorized patents of importation was deleted. Walterscheid, supra note 115, at 501-02, 502 n.206 1997, noting that Unite
    • See WALTERSCHEID, supra note 116, at 314 (explaining that professed goal of patents of importation was minimization of risk involved in importation of European manufacturing technology to nascent United States). Alexander Hamilton similarly was drawn to the argument that "to the extent that importation benefits society to the same degree that invention does, it ought to be rewarded by exclusive rights in a similar manner." Edward C. Walterscheid, Patents and Manufacturing in the Early Republic, 80 J. PAT. & TRADEMARK OFF. SOC'Y 855, 865 (1998). Nonetheless, early American patent statutes were not seen, even by Hamilton, as authorizing patents of importation. Id. at 864. Indeed, the legislative history of early congressional debates reveals that a provision that would have authorized patents of importation was deleted. Walterscheid, supra note 115, at 501-02, 502 n.206 (1997) (noting that United States was first country not to allow patents of importation).
  • 146
    • 36849088920 scopus 로고    scopus 로고
    • WILLIAM ALDOUS ET AL, TERRELL ON THE LAW OF PATENTS § 3.05 (13th ed. 1982, noting that in Britain, as of 1977 Patent Act, a patent is no longer validly granted to the first importer of the invention into this country, see also id. § 5.136 (noting that one major difference, between United Kingdom's 1949 and 1977 Patent Acts is that latter considers prior art published worldwide rather than prior art published only within Britain, thus making it so that no imported inventions could be novel, cf. GUY ALDOUS ET AL, TERRELL ON THE LAW OF PATENTS §§ 77-78 (11th ed. 1965, stating that mere importer may obtain patent even though 'in the popular sense he had invented nothing, quoting Plimpton v. Malcolmson, 1876) 3 Ch.D. 531, 555 (U.K.), Nevertheless, because of technical and legal developments, patents of importat
    • WILLIAM ALDOUS ET AL., TERRELL ON THE LAW OF PATENTS § 3.05 (13th ed. 1982) (noting that in Britain, as of 1977 Patent Act, "a patent is no longer validly granted to the first importer of the invention into this country"); see also id. § 5.136 (noting that one "major difference[]" between United Kingdom's 1949 and 1977 Patent Acts is that latter considers prior art published "worldwide" rather than prior art published only within Britain, thus making it so that no imported inventions could be novel); cf. GUY ALDOUS ET AL., TERRELL ON THE LAW OF PATENTS §§ 77-78 (11th ed. 1965) (stating that mere importer may obtain patent even though "'in the popular sense he had invented nothing'" (quoting Plimpton v. Malcolmson, (1876) 3 Ch.D. 531, 555 (U.K.))). Nevertheless, because of technical and legal developments, patents of importation had become much less common and important even by the end of the nineteenth century. Late in the nineteenth century, the British patent system began to require inventions to be technologically nonobvious, which limited the class of patentable invention to those having some technological significance. See John F. Duffy, Inventing Invention: A Case Study of Legal Innovation, 86 TEX. L. REV. 1, 53-58 (2007) (tracing the rise of British nonobviousness doctrine to judicial developments in 1889 and 1890). Increasing legal sophistication and better communications also meant that foreign developers of significant new technologies would know that, to preserve their rights, they should "import" their technologies into the U.K. by communicating the information to an English patent agent who would then seek patent rights for the foreign inventor. Even early twentieth-century British patent treatises, in discussing patents of importation, devoted their main attention to the practice of patents being obtained by "[communicators of [f]oreign [i]nventions," who were typically "agent[s] of the foreign inventor."
  • 147
    • 46149115697 scopus 로고    scopus 로고
    • See 1 ROBERT FROST, TREATISE ON THE LAW AND PRACTICE RELATING TO LETTERS PATENT FOR INVENTIONS 22, 26 4th ed. 1912, Under the Paris Convention and provisions of the U.K. Patent Act of 1907, foreign inventors were also given a right of priority if they had sought foreign patent rights and then sought U.K. patent rights within one year of their first foreign application. Id. at 24 Thus, long before 1977, reasonably vigilant foreign inventors could effectively eliminate the possibility of anyone else obtaining a U.K. patent of importation on their inventions
    • See 1 ROBERT FROST, TREATISE ON THE LAW AND PRACTICE RELATING TO LETTERS PATENT FOR INVENTIONS 22, 26 (4th ed. 1912). Under the Paris Convention and provisions of the U.K. Patent Act of 1907, foreign inventors were also given a right of priority if they had sought foreign patent rights and then sought U.K. patent rights within one year of their first foreign application. Id. at 24 Thus, long before 1977, reasonably vigilant foreign inventors could effectively eliminate the possibility of anyone else obtaining a U.K. patent of importation on their inventions.
  • 148
    • 46149091353 scopus 로고    scopus 로고
    • For example, U.S. patent law has long eschewed any requirement that the patentee engage in any efforts, commercial or otherwise, to work the patented technology. See Cont'l Paper Bag Co. v. E. Paper Bag Co, 210 U.S. 405, 429 (1908, noting that since 1836, Congress has chosen not to impose any working requirement in U.S. patent law and holding that patentees may use or not use their inventions without losing their rights to enforce their patents, John M. Golden, Commentary, Patent Trolls and Patent Remedies, 85 TEX. L. REV. 2111, 2123 n.50 2007, noting that, in contrast to early British law, United States has avoided imposing working requirement on patents, This aspect of patent law cannot be justified by the goal of encouraging market experimentation
    • For example, U.S. patent law has long eschewed any requirement that the patentee engage in any efforts, commercial or otherwise, to "work" the patented technology. See Cont'l Paper Bag Co. v. E. Paper Bag Co., 210 U.S. 405, 429 (1908) (noting that since 1836, Congress has chosen not to impose any working requirement in U.S. patent law and holding that patentees may "use or not use" their inventions without losing their rights to enforce their patents); John M. Golden, Commentary, "Patent Trolls" and Patent Remedies, 85 TEX. L. REV. 2111, 2123 n.50 (2007) (noting that, in contrast to early British law, United States has avoided imposing "working" requirement on patents). This aspect of patent law cannot be justified by the goal of encouraging market experimentation.
  • 149
    • 46149113059 scopus 로고    scopus 로고
    • See infra Part III.D.
    • See infra Part III.D.
  • 150
    • 0007175370 scopus 로고    scopus 로고
    • The Modern Lanham Act and the Death of Common Sense, 108
    • noting that trademark law's principal justification is to enable easier source identification, which is different from [justifications] for other forms of intellectual property, See, e.g
    • See, e.g., Mark A. Lemley, The Modern Lanham Act and the Death of Common Sense, 108 YALE L.J. 1687, 1695 (1999) (noting that trademark law's principal justification is to enable easier source identification, which is "different from [justifications] for other forms of intellectual property").
    • (1999) YALE L.J , vol.1687 , pp. 1695
    • Lemley, M.A.1
  • 151
    • 46149098165 scopus 로고    scopus 로고
    • Once consumers associate a particular trademark with a particular source, preventing competitors from using that trademark allows consumers to purchase goods or services associated with the mark without having to engage in further investigation to confirm the quality of the source. See WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY LAW 167-68 (2003) (noting that branding conveys information about quality to consumers); see also Lemley, supra note 121, at 1690 ([T]rademarks and advertising communicate useful information to consumers, and thereby reduce consumer search costs.).
    • Once consumers associate a particular trademark with a particular source, preventing competitors from using that trademark allows consumers to purchase goods or services associated with the mark without having to engage in further investigation to confirm the quality of the source. See WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY LAW 167-68 (2003) (noting that branding conveys information about quality to consumers); see also Lemley, supra note 121, at 1690 ("[T]rademarks and advertising communicate useful information to consumers, and thereby reduce consumer search costs.").
  • 152
    • 46149086193 scopus 로고    scopus 로고
    • This effect might occur even if the law allowed the true or original Netflix to identify itself uniquely in some way so that consumers could distinguish, with minimal effort, the original from the copycat. For example, trademark law might be limited only to protecting the use of the word original, a word that occasionally has led to legal disputes. Cf. John Tierney, In a Pizza War, It's 3 Rays Against the Rest, N.Y. TIMES, Mar. 25, 1991, at A1 discussing dispute among many original Ray's pizzerias
    • This effect might occur even if the law allowed the "true" or "original" Netflix to identify itself uniquely in some way so that consumers could distinguish, with minimal effort, the original from the copycat. For example, trademark law might be limited only to protecting the use of the word "original," a word that occasionally has led to legal disputes. Cf. John Tierney, In a Pizza War, It's 3 Rays Against the Rest, N.Y. TIMES, Mar. 25, 1991, at A1 (discussing dispute among many "original" Ray's pizzerias).
  • 153
    • 34948856731 scopus 로고
    • Trademark Law: An Economic Perspective, 30
    • arguing that trademark protection encourages producers to invest in quality and consistency in order to reap benefits of reduced consumer search costs, See
    • See William M. Landes & Richard A. Posner, Trademark Law: An Economic Perspective, 30 J.L. & ECON. 265, 269-70 (1987) (arguing that trademark protection encourages producers to invest in quality and consistency in order to reap benefits of reduced consumer search costs).
    • (1987) J.L. & ECON , vol.265 , pp. 269-270
    • Landes, W.M.1    Posner, R.A.2
  • 154
    • 46149103954 scopus 로고
    • The Rational Basis of Trademark Protection, 40
    • arguing that owner of mark should be able to expand trade to other areas while using mark as indicat[or] to the public [of] a constant and uniform source of satisfaction, See
    • See Frank I. Schechter, The Rational Basis of Trademark Protection, 40 HARV. L. REV. 813, 823 (1926) (arguing that owner of mark should be able to expand trade to other areas while using mark as "indicat[or] to the public [of] a constant and uniform source of satisfaction").
    • (1926) HARV. L. REV , vol.813 , pp. 823
    • Schechter, F.I.1
  • 155
    • 46149096791 scopus 로고    scopus 로고
    • Landes & Posner, supra note 124, at 274
    • Landes & Posner, supra note 124, at 274.
  • 156
    • 46149120178 scopus 로고    scopus 로고
    • Id
    • Id.
  • 157
    • 46149109539 scopus 로고    scopus 로고
    • See id. at 275 (The fact that two goods have the same chemical formula does not make them of equal quality to even the most coolly rational consumer.). Landes and Posner also note that the concerns over deadweight costs actually have not influenced trademark doctrine, although they have influenced antitrust doctrine. Id. at 274-75.
    • See id. at 275 ("The fact that two goods have the same chemical formula does not make them of equal quality to even the most coolly rational consumer."). Landes and Posner also note that the concerns over deadweight costs actually have not influenced trademark doctrine, although they have influenced antitrust doctrine. Id. at 274-75.
  • 158
    • 46149123517 scopus 로고    scopus 로고
    • The Food and Drug Administration requires that, to be approved for use, a generic drug meet standards showing that it is equivalent to a brand-name drug that already has gone through the regulatory process. See 21 U.S.C. § 355j, 2000 & Supp. IV 2006, providing mandatory standards for generic drugs
    • The Food and Drug Administration requires that, to be approved for use, a generic drug meet standards showing that it is equivalent to a brand-name drug that already has gone through the regulatory process. See 21 U.S.C. § 355(j) (2000 & Supp. IV 2006) (providing mandatory standards for generic drugs).
  • 159
    • 46149107958 scopus 로고    scopus 로고
    • Landes and Posner suggest that trademark law is justified because consumers are willing to pay more for a known brand in order to save search costs. See LANDES & POSNER, supra note 122, at 167-68 (describing savings in search costs as economic benefit of trademark law). Trademark law provides the needed legal protection to prevent free riding, thereby ensuring that consumers can rely on the brand name. Id. at 168. Landes and Posner do not discuss the possibility that consumers irrationally overestimate the value of trademarked goods. See id. at 167-68.
    • Landes and Posner suggest that trademark law is justified because consumers are willing to pay more for a known brand in order to save search costs. See LANDES & POSNER, supra note 122, at 167-68 (describing savings in search costs as economic benefit of trademark law). Trademark law provides the needed legal protection to prevent free riding, thereby ensuring that consumers can rely on the brand name. Id. at 168. Landes and Posner do not discuss the possibility that consumers irrationally overestimate the value of trademarked goods. See id. at 167-68.
  • 160
    • 46149118287 scopus 로고    scopus 로고
    • Theoretical economic models recognize, but sometimes may understate, the extent of brand-name preferences. For example, under one model, the first mover will have greater market share only proportional to the customer base that was established prior to the second mover's entry. See Jean Gabszewicz et al., Sequential Entry with Brand Loyalty Caused by Consumer Learning-by-Using, 40 J. INDUS. ECON. 397, 400-01 (1992) (arguing that in circumstances where consumer learning is not brand-specific, entry by first mover may expand second mover's available market). In many contexts, it is possible that new customers will prefer the established product even absent evidence of superior quality.
    • Theoretical economic models recognize, but sometimes may understate, the extent of brand-name preferences. For example, under one model, the first mover will have greater market share only proportional to the customer base that was established prior to the second mover's entry. See Jean Gabszewicz et al., Sequential Entry with Brand Loyalty Caused by Consumer Learning-by-Using, 40 J. INDUS. ECON. 397, 400-01 (1992) (arguing that in circumstances where consumer learning is not brand-specific, entry by first mover may expand second mover's available market). In many contexts, it is possible that new customers will prefer the established product even absent evidence of superior quality.
  • 161
    • 46149098752 scopus 로고    scopus 로고
    • See, e.g., Lieberman & Montgomery, supra note 13, at 46 (noting that consumers' loyalty toward brands may help to create first-mover advantage).
    • See, e.g., Lieberman & Montgomery, supra note 13, at 46 (noting that consumers' loyalty toward brands may help to create first-mover advantage).
  • 162
    • 0036864474 scopus 로고    scopus 로고
    • Towards an Integrated Theory of Intellectual Property, 88
    • Gideon Parchomovsky & Peter Siegelman, Towards an Integrated Theory of Intellectual Property, 88 VA. L. REV. 1455, 1458, 1473 (2002).
    • (2002) VA. L. REV , vol.1455 , Issue.1458 , pp. 1473
    • Parchomovsky, G.1    Siegelman, P.2
  • 163
    • 46149108661 scopus 로고    scopus 로고
    • Parchomovsky and Siegelman argue that allowing trademark protection to extend beyond patent life encourages companies to create brand loyalty and, therefore, to reduce monopolistic prices. Id. at 1473-74. If products were not trademark protected after patent life, any company could produce a copy and market the product under the same name. Id. Thus, without trademark protection, the first mover would have no incentive to price competitively while the product is patent protected. Id
    • Parchomovsky and Siegelman argue that allowing trademark protection to extend beyond patent life encourages companies to create brand loyalty and, therefore, to reduce monopolistic prices. Id. at 1473-74. If products were not trademark protected after patent life, any company could produce a copy and market the product under the same name. Id. Thus, without trademark protection, the first mover would have no incentive to price competitively while the product is patent protected. Id.
  • 164
    • 46149121593 scopus 로고    scopus 로고
    • at
    • Id. at 1473-81.
  • 165
    • 46149089242 scopus 로고    scopus 로고
    • Id. at 1464. The Supreme Court has stated repeatedly that a product's functional features cannot be trademarked. See, e.g, TrafFix Devices, Inc. v. Mktg. Displays, Inc, 532 U.S. 23, 29-30 (2001, finding that prior patenting provides strong evidence of functionality, which precludes trademark protection, Qualitex Co. v. Jacobson Prods. Co, 514 U.S. 159, 164 (1995, noting that functionality doctrine prevents trademarks from, inhibiting legitimate competition by allowing a producer to control a useful product feature, Inwood Labs, Inc. v. Ives Labs, Inc, 456 U.S. 844, 863 (1982, White, J, concurring in result, A functional characteristic is 'an important ingredient in the commercial success of the product, and, after expiration of a patent, it is no more the property of the originator than the product itself, quoting Ives Labs, Inc. v. Darby Drug Co, 601 F.2d 631, 643 (2d Cir. 1979), We do not necessarily agree with Parchomovsk
    • Id. at 1464. The Supreme Court has stated repeatedly that a product's functional features cannot be trademarked. See, e.g., TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 29-30 (2001) (finding that prior patenting provides strong evidence of functionality, which precludes trademark protection); Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 164 (1995) (noting that functionality doctrine prevents trademarks "from . . . inhibiting legitimate competition by allowing a producer to control a useful product feature"); Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 863 (1982) (White, J., concurring in result) ("A functional characteristic is 'an important ingredient in the commercial success of the product,' and, after expiration of a patent, it is no more the property of the originator than the product itself." (quoting Ives Labs., Inc. v. Darby Drug Co., 601 F.2d 631, 643 (2d Cir. 1979))). We do not necessarily agree with Parchomovsky and Siegelman's criticism of the functionality doctrine because, if trademark law were to cover functional aspects of a product, then the trademark might create more significant deadweight loss by foreclosing the possibility that competitors could market equally viable alternative products.
  • 166
    • 46149111971 scopus 로고    scopus 로고
    • Previous commentators have recognized some forms of market experimentation that trademark protection encourages, but they have not paid adequate attention to the risks associated with costly market entry. For example, Landes and Posner note that trademark protection creates incentives to invest in new words or symbols or . . . design features. LANDES & POSNER, supra note 122, at 169 (footnote omitted).
    • Previous commentators have recognized some forms of market experimentation that trademark protection encourages, but they have not paid adequate attention to the risks associated with costly market entry. For example, Landes and Posner note that trademark protection creates incentives to invest in "new words or symbols or . . . design features." LANDES & POSNER, supra note 122, at 169 (footnote omitted).
  • 167
    • 46149089243 scopus 로고    scopus 로고
    • See infra Part III.C (discussing copyright); infra Part III.D (discussing patents).
    • See infra Part III.C (discussing copyright); infra Part III.D (discussing patents).
  • 168
    • 84963456897 scopus 로고    scopus 로고
    • notes 126, 131 and accompanying text discussing deadweight loss
    • See supra notes 126, 131 and accompanying text (discussing deadweight loss).
    • See supra
  • 169
    • 46149087824 scopus 로고    scopus 로고
    • The rationale for [the initial interest] rule is that the defendant should not be allowed even to get his foot in the door by means of deception. Once in, he may stay and thereby profit from his wrongdoing. 4 LOUIS ALTMAN & MALLA POLLACK, CALLMANN ON UNFAIR COMPETITION, TRADEMARKS AND MONOPOLIES § 22:11.50, at 19 (4th ed. Supp. 2007).
    • "The rationale for [the initial interest] rule is that the defendant should not be allowed even to get his foot in the door by means of deception. Once in, he may stay and thereby profit from his wrongdoing." 4 LOUIS ALTMAN & MALLA POLLACK, CALLMANN ON UNFAIR COMPETITION, TRADEMARKS AND MONOPOLIES § 22:11.50, at 19 (4th ed. Supp. 2007).
  • 170
    • 46149102314 scopus 로고    scopus 로고
    • See, e.g., Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002, 1007 (9th Cir. 2004) (Initial interest confusion exists as a matter of law as to Nissan Computer's automobile-related use of 'nissan.com' because use of the mark for automobiles captures the attention of consumers interested in Nissan vehicles.); Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 259 (2d Cir. 1987) (noting that district court had found a likelihood of confusion not in the fact that a third party would do business with Pegasus Petroleum believing it related to Mobil, but rather in the likelihood that Pegasus Petroleum would gain crucial credibility during the initial phases of a deal).
    • See, e.g., Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002, 1007 (9th Cir. 2004) ("Initial interest confusion exists as a matter of law as to Nissan Computer's automobile-related use of 'nissan.com' because use of the mark for automobiles captures the attention of consumers interested in Nissan vehicles."); Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 259 (2d Cir. 1987) (noting that district court had found "a likelihood of confusion not in the fact that a third party would do business with Pegasus Petroleum believing it related to Mobil, but rather in the likelihood that Pegasus Petroleum would gain crucial credibility during the initial phases of a deal").
  • 171
    • 46149121810 scopus 로고    scopus 로고
    • Mobil, 818 F.2d at 259.
    • Mobil, 818 F.2d at 259.
  • 172
    • 46149091365 scopus 로고    scopus 로고
    • See, e.g., Robert N. Klieger, Trademark Dilution: The Whittling Away of the Rational Basis for Trademark Protection, 58 U. PITT. L. REV. 789, 795 (1997) (describing dilution law as a radical and imprudent alternative to the consumer protection model of trademark rights); Lemley, supra note 121, at 1704-05 (criticizing new trademark dilution doctrine as being used to serve other purposes, ones that trademark theory does not support). In criticizing the initial interest confusion doctrine, commentators have sometimes noted that an argument in favor of the doctrine is that it protects businesses' investments in goodwill.
    • See, e.g., Robert N. Klieger, Trademark Dilution: The Whittling Away of the Rational Basis for Trademark Protection, 58 U. PITT. L. REV. 789, 795 (1997) (describing dilution law as "a radical and imprudent alternative to the consumer protection model of trademark rights"); Lemley, supra note 121, at 1704-05 (criticizing new trademark dilution doctrine as "being used to serve other purposes, ones that trademark theory does not support"). In criticizing the initial interest confusion doctrine, commentators have sometimes noted that an argument in favor of the doctrine is that it protects businesses' investments in goodwill.
  • 173
    • 33747461394 scopus 로고    scopus 로고
    • See, e.g., Robert G. Bone, Hunting Goodwill: A History of the Concept of Goodwill in Trademark Law, 86 B.U. L. REV. 547, 613-14 (2006) (explaining argument of many courts that use of initial interest confusion in Internet-based trademark infringement cases does not fit with trademark law's functional goals but prevents infringers from free riding on others' goodwill). But commentators have not explained that the reason to protect goodwill is that such protection might encourage market experimentation, and they have generally found the goodwill argument to be wanting.
    • See, e.g., Robert G. Bone, Hunting Goodwill: A History of the Concept of Goodwill in Trademark Law, 86 B.U. L. REV. 547, 613-14 (2006) (explaining argument of many courts that use of initial interest confusion in Internet-based trademark infringement cases does not fit with trademark law's functional goals but prevents infringers from free riding on others' goodwill). But commentators have not explained that the reason to protect goodwill is that such protection might encourage market experimentation, and they have generally found the "goodwill" argument to be wanting.
  • 174
    • 33749684035 scopus 로고    scopus 로고
    • Initial Interest Confusion: Standing at the Crossroads of Trademark Law, 27
    • calling goodwill argument [a] visceral reaction [that] flies in the face of basic free market principles which allow, and in fact demand, that competitors be able to benefit from value created by others, See, e.g
    • See, e.g., Jennifer E. Rothman, Initial Interest Confusion: Standing at the Crossroads of Trademark Law, 27 CARDOZO L. REV. 105, 162 (2005) (calling goodwill argument "[a] visceral reaction [that] flies in the face of basic free market principles which allow, and in fact demand, that competitors be able to benefit from value created by others").
    • (2005) CARDOZO L. REV , vol.105 , pp. 162
    • Rothman, J.E.1
  • 175
    • 0347018527 scopus 로고    scopus 로고
    • See, e.g., Coca-Cola Co. v. Overland, Inc., 692 F.2d 1250, 1254-55 (9th Cir. 1982) (holding that Coke is not generic); In re America Online, Inc., 77 U.S.P.Q.2d (BNA) 1618, 1625 (T.T.A.B. 2006) (deciding that INSTANT MESSENGER is not generic). In general, the courts have interpreted the legal doctrine so as to keep genericide a rare event. See Gerard N. Magliocca, One and Inseparable: Dilution and Infringement in Trademark, 85 MINN. L. REV. 949, 979 n.155 (2001) (The doctrine revokes the rights of very few mark owners . . . .).
    • See, e.g., Coca-Cola Co. v. Overland, Inc., 692 F.2d 1250, 1254-55 (9th Cir. 1982) (holding that "Coke" is not generic); In re America Online, Inc., 77 U.S.P.Q.2d (BNA) 1618, 1625 (T.T.A.B. 2006) (deciding that "INSTANT MESSENGER" is not generic). In general, the courts have interpreted the legal doctrine so as to keep genericide "a rare event." See Gerard N. Magliocca, One and Inseparable: Dilution and Infringement in Trademark, 85 MINN. L. REV. 949, 979 n.155 (2001) ("The doctrine revokes the rights of very few mark owners . . . .").
  • 176
    • 46149116388 scopus 로고    scopus 로고
    • See, e.g., Q-Tips, Inc. v. Johnson & Johnson, 206 F.2d 144, 146-47 (3d Cir. 1953) (holding that Q-Tips constitutes protectable trademark); Deborah R. Gerhardt, The 2006 Trademark Dilution Revision Act Rolls Out a Luxury Claim and a Parody Exemption, 8 N.C. J.L. & TECH. 205, 214 (2007) (citing Rollerblade as trademark that owner must protect diligently so it does not become generic).
    • See, e.g., Q-Tips, Inc. v. Johnson & Johnson, 206 F.2d 144, 146-47 (3d Cir. 1953) (holding that "Q-Tips" constitutes protectable trademark); Deborah R. Gerhardt, The 2006 Trademark Dilution Revision Act Rolls Out a Luxury Claim and a Parody Exemption, 8 N.C. J.L. & TECH. 205, 214 (2007) (citing "Rollerblade" as trademark that owner must protect diligently so it does not become generic).
  • 177
    • 46149125357 scopus 로고    scopus 로고
    • i46 See, e.g., Deven R. Desai & Sandra L. Rierson, Confronting the Genericism Conundrum, 28 CARDOZO L. REV. 1789, 1844 (2007) (arguing that law of genericism should focus on whether the putative mark is functioning as a source identifier in the . . . marketplace and that, if it is not, mark should be viewed as generic and unprotectable);
    • i46 See, e.g., Deven R. Desai & Sandra L. Rierson, Confronting the Genericism Conundrum, 28 CARDOZO L. REV. 1789, 1844 (2007) (arguing that law of genericism should focus on "whether the putative mark is functioning as a source identifier in the . . . marketplace" and that, if it is not, mark should be viewed as generic and unprotectable);
  • 178
    • 46149105740 scopus 로고    scopus 로고
    • Ralph H. Folsom & Larry L. Teply, Trademarked Generic Words, 89 YALE L.J. 1323, 1358-59 (1980) (noting that [c]onsumers can face enhanced search costs and risks as a result of the claim of exclusive rights to generic words and arguing that legal tests of genericness . . . do not adequately take into account relevant economic considerations ); see also Lemley, supra note 121, at 1696 n.40 (Creating circumlocutions to avoid [generic] trademarks is costly.).
    • Ralph H. Folsom & Larry L. Teply, Trademarked Generic Words, 89 YALE L.J. 1323, 1358-59 (1980) (noting that "[c]onsumers can face enhanced search costs and risks as a result of the claim of exclusive rights to generic words" and arguing that "legal tests of genericness . . . do not adequately take into account relevant economic considerations" ); see also Lemley, supra note 121, at 1696 n.40 ("Creating circumlocutions to avoid [generic] trademarks is costly.").
  • 179
    • 46149126237 scopus 로고    scopus 로고
    • See Folsom & Teply, supra note 146, at 1340-44 (noting that many consumers may use trademarked words such as Plexiglass, Thermopane, and Formica when they actually want any product from generic category, and that competitors to trademarked good may have difficult time competing because they first need to educate consumers that generic product is same as trademarked product).
    • See Folsom & Teply, supra note 146, at 1340-44 (noting that many consumers may use trademarked words such as "Plexiglass," "Thermopane," and "Formica" when they actually want any product from generic category, and that competitors to trademarked good may have difficult time competing because they first need to educate consumers that generic product is same as trademarked product).
  • 180
    • 46149120395 scopus 로고    scopus 로고
    • See, e.g., Lemley, supra note 121, at 1700-01 (noting expansion of law in this respect and arguing that, under recent court decisions, the link between product configuration and consumer source identification has all but disappeared); Glynn S. Lunney, Jr., Trademark Monopolies, 48 EMORY L.J. 367, 387 (1999) (asserting that trade dress cases, coupled with other recent developments, have created an environment that welcomes claims based on little more than a defendant's imitation of a successful product).
    • See, e.g., Lemley, supra note 121, at 1700-01 (noting expansion of law in this respect and arguing that, under recent court decisions, "the link between product configuration and consumer source identification has all but disappeared"); Glynn S. Lunney, Jr., Trademark Monopolies, 48 EMORY L.J. 367, 387 (1999) (asserting that trade dress cases, coupled with other recent developments, "have created an environment that welcomes claims based on little more than a defendant's imitation of a successful product").
  • 181
    • 46149084738 scopus 로고    scopus 로고
    • See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769-70 (1992) (holding that inherently distinctive trade dress is subject to protection under Lanham Act § 43(a), 15 U.S.C. § 1125(a) (2000), without any proof that trade dress has acquired secondary meaning - i.e., without proof that consumers uniquely associate trade dress with specific source).
    • See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769-70 (1992) (holding that "inherently distinctive" trade dress is subject to protection under Lanham Act § 43(a), 15 U.S.C. § 1125(a) (2000), without any proof that trade dress has acquired "secondary meaning" - i.e., without proof that consumers uniquely associate trade dress with specific source).
  • 182
    • 33644687173 scopus 로고    scopus 로고
    • The dilution cause of action explicitly protects branding, barring activities that may dilute a trademark even in the absence of any evidence that such dilution will cause consumer confusion. Trademark Dilution Revision Act of 2006 § 2, 15 U.S.C.A. § 1125(c)(1) (West Supp. 2007); see also Julie Manning Magid et al., Quantifying Brand Image: Empirical Evidence of Trademark Dilution, 43 AM. BUS. L.J. 1, 5-6 (2006) (This notion of protecting the inherent value of the trademark from dilution was singularly antithetical to the consumer confusion emphasis of trademark law.).
    • The dilution cause of action explicitly protects branding, barring activities that may dilute a trademark even in the absence of any evidence that such dilution will cause consumer confusion. Trademark Dilution Revision Act of 2006 § 2, 15 U.S.C.A. § 1125(c)(1) (West Supp. 2007); see also Julie Manning Magid et al., Quantifying Brand Image: Empirical Evidence of Trademark Dilution, 43 AM. BUS. L.J. 1, 5-6 (2006) ("This notion of protecting the inherent value of the trademark from dilution was singularly antithetical to the consumer confusion emphasis of trademark law.").
  • 183
    • 46149097722 scopus 로고    scopus 로고
    • A junior user is one who enters the market after the trademark holder. Consistent with our theory, dilution law does not apply to senior users, who enter the market before the user whose use makes the mark famous
    • A junior user is one who enters the market after the trademark holder. Consistent with our theory, dilution law does not apply to senior users, who enter the market before the user whose use makes the mark famous.
  • 184
    • 46149111058 scopus 로고    scopus 로고
    • See Ronda AG v. Harley-Davidson, Inc., No. 96-1297, 1997 WL 85809, at *1 (Fed. Cir. Feb. 27, 1997) (affirming cancellation of mark Harley for watches even though appellant Ronda had been using mark on its watches for several years).
    • See Ronda AG v. Harley-Davidson, Inc., No. 96-1297, 1997 WL 85809, at *1 (Fed. Cir. Feb. 27, 1997) (affirming cancellation of mark "Harley" for watches even though appellant Ronda had been using mark on its watches for several years).
  • 185
    • 46149111518 scopus 로고    scopus 로고
    • See, e.g., Lemley, supra note 121, at 1698, 1714 (describing dilution doctrine as most obvious example of doctrinal creep in trademark law and calling on courts to impose[] significant limitations on marks eligible for dilution protection); Kathleen B. McCabe, Note, Dilution-by-Blurring: A Theory Caught in the Shadow of Trademark Infringement, 68 FORDHAM L. REV. 1827, 1830 (2000) (discussing judicial skepticism toward dilution cause of action).
    • See, e.g., Lemley, supra note 121, at 1698, 1714 (describing dilution doctrine as "most obvious example of doctrinal creep in trademark law" and calling on courts to "impose[] significant limitations" on marks eligible for dilution protection); Kathleen B. McCabe, Note, Dilution-by-Blurring: A Theory Caught in the Shadow of Trademark Infringement, 68 FORDHAM L. REV. 1827, 1830 (2000) (discussing judicial skepticism toward dilution cause of action).
  • 186
    • 46149118281 scopus 로고    scopus 로고
    • See Lemley, supra note 121, at 1698 ([B]ecause consumers need not be confused for dilution to occur, dilution laws represent a fundamental shift in the nature of trademark protection.). For example, no one seems likely to purchase Harley footballs based on a belief that the brand necessarily identifies the source of the goods, and the existence of such footballs made by an entity other than the motorcycle manufacturer would not seem likely to make it more difficult for Harley-Davidson to convey to the public any improvement in its motorcycles.
    • See Lemley, supra note 121, at 1698 ("[B]ecause consumers need not be confused for dilution to occur, dilution laws represent a fundamental shift in the nature of trademark protection."). For example, no one seems likely to purchase "Harley" footballs based on a belief that the brand necessarily identifies the source of the goods, and the existence of such footballs made by an entity other than the motorcycle manufacturer would not seem likely to make it more difficult for Harley-Davidson to convey to the public any improvement in its motorcycles.
  • 187
    • 46149088079 scopus 로고    scopus 로고
    • Cf. Rolex Watch U.S.A., Inc. v. Canner, 645 F. Supp. 484, 495 (S.D. Fla. 1986) (Others who see the watches bearing the Rolex trademarks on so many wrists might find themselves discouraged from acquiring a genuine [Rolex] because the items have become too common place [sic] and no longer possess the prestige once associated with them.).
    • Cf. Rolex Watch U.S.A., Inc. v. Canner, 645 F. Supp. 484, 495 (S.D. Fla. 1986) ("Others who see the watches bearing the Rolex trademarks on so many wrists might find themselves discouraged from acquiring a genuine [Rolex] because the items have become too common place [sic] and no longer possess the prestige once associated with them.").
  • 188
    • 23744480817 scopus 로고    scopus 로고
    • For a discussion of the requirements necessary to prove that a mark is famous, see Monica Hof Wallace, Using the Past To Predict the Future: Refocusing the Analysis of a Federal Dilution Claim, 73 U. CIN. L. REV. 945, 959-64 (2005).
    • For a discussion of the requirements necessary to prove that a mark is "famous," see Monica Hof Wallace, Using the Past To Predict the Future: Refocusing the Analysis of a Federal Dilution Claim, 73 U. CIN. L. REV. 945, 959-64 (2005).
  • 189
    • 11144287160 scopus 로고    scopus 로고
    • See Jonathan R. Chally, Note, The Law of Trade Secrets: Toward a More Efficient Approach, 57 VAND. L. REV. 1269, 1280 (2004) (Trade secret law enhances exclusivity and thereby increases innovation by supplanting the precautions that an innovator must take to guard the secrecy of her information.).
    • See Jonathan R. Chally, Note, The Law of Trade Secrets: Toward a More Efficient Approach, 57 VAND. L. REV. 1269, 1280 (2004) ("Trade secret law enhances exclusivity and thereby increases innovation by supplanting the precautions that an innovator must take to guard the secrecy of her information.").
  • 190
    • 46149109917 scopus 로고    scopus 로고
    • LANDES & POSNER, supra note 122, at 294-95; see also COMM. ON INTELLECTUAL PROP. RIGHTS IN THE KNOWLEDGE-BASED ECON., supra note 67,
    • LANDES & POSNER, supra note 122, at 294-95; see also COMM. ON INTELLECTUAL PROP. RIGHTS IN THE KNOWLEDGE-BASED ECON., supra note 67, at 41 (arguing that patent system should, inter alia, "accommodate new technologies," reward only nonobvious, novel, or useful inventions, and disseminate technical information).
  • 191
    • 46149113757 scopus 로고    scopus 로고
    • See Painton & Co. v. Bourns, Inc., 442 F.2d 216, 224 (2d Cir. 1971) (Friendly, J.) ([A]nother who makes the invention may be able to secure a patent if he can establish that the earlier inventor suppressed or concealed it.). Other risks include the possibility that the secret may leak or that the inventor will forfeit his right to a patent if he does not apply within a year after the invention was in public use or on sale. Id.; see also Universal Oil Prods. Co. v. Globe Oil & Ref. Co., 322 U.S. 471, 484 (1944) (stating that patents provide monopoly as reward for inventions but that the quid pro quo is disclosure).
    • See Painton & Co. v. Bourns, Inc., 442 F.2d 216, 224 (2d Cir. 1971) (Friendly, J.) ("[A]nother who makes the invention may be able to secure a patent if he can establish that the earlier inventor suppressed or concealed it."). Other risks include the possibility that the secret may leak or that the inventor will forfeit his right to a patent if he does not apply within a year after the invention was "in public use or on sale." Id.; see also Universal Oil Prods. Co. v. Globe Oil & Ref. Co., 322 U.S. 471, 484 (1944) (stating that patents provide monopoly as reward for inventions but that "the quid pro quo is disclosure").
  • 192
    • 46149125788 scopus 로고    scopus 로고
    • See Vincent Chiappetta, Myth, Chameleon or Intellectual Property Olympian? A Normative Framework Supporting Trade Secret Law, 8 GEO. MASON L. REV. 69, 139 1999, Because trade secret law provides cost-efficient, dependable legal rights, it reduces the inventor's incentive to pursue the patent alternative
    • See Vincent Chiappetta, Myth, Chameleon or Intellectual Property Olympian? A Normative Framework Supporting Trade Secret Law, 8 GEO. MASON L. REV. 69, 139 (1999) ("Because trade secret law provides cost-efficient, dependable legal rights, it reduces the inventor's incentive to pursue the patent alternative.").
  • 193
    • 46149090896 scopus 로고    scopus 로고
    • See Michael Risch, Why Do We Have Trade Secrets?, 11 MARQ. INTELL. PROP. L. REV. 1, 27 (2007) ([I]f information can be kept secret through self-help, then owners will spend more money to keep the information secret even in the absence of the law.).
    • See Michael Risch, Why Do We Have Trade Secrets?, 11 MARQ. INTELL. PROP. L. REV. 1, 27 (2007) ("[I]f information can be kept secret through self-help, then owners will spend more money to keep the information secret even in the absence of the law.").
  • 194
    • 46149123933 scopus 로고    scopus 로고
    • Courts do insist, as a prerequisite to trade secret protection, that the owners of a trade secret make some effort to keep it secret. See, e.g., United States v. Lange, 312 F.3d 263, 266 (7th Cir. 2002) (determining, in appeal of criminal conviction for dealing in trade secrets, whether owner of trade secret took reasonable measures to keep information secret); see also 18 U.S.C. § 1839(3)(A) (2000) (providing that, in order to have trade secret, owner must have taken reasonable measures to keep such information secret). But courts do not seek to determine whether self-help would be more efficient than trade secret protection in individual cases.
    • Courts do insist, as a prerequisite to trade secret protection, that the owners of a trade secret make some effort to keep it secret. See, e.g., United States v. Lange, 312 F.3d 263, 266 (7th Cir. 2002) (determining, in appeal of criminal conviction for dealing in trade secrets, whether owner of trade secret took reasonable measures to keep information secret); see also 18 U.S.C. § 1839(3)(A) (2000) (providing that, in order to have trade secret, owner must have "taken reasonable measures to keep such information secret"). But courts do not seek to determine whether self-help would be more efficient than trade secret protection in individual cases.
  • 195
    • 46149092575 scopus 로고    scopus 로고
    • § 552 2000
    • 5 U.S.C. § 552 (2000).
    • 5 U.S.C
  • 196
    • 46149121592 scopus 로고    scopus 로고
    • Such payments are required under the Freedom of Information Act. See id. § 552(a)(4)(A) ([E]ach agency shall promulgate regulations . . . specifying the schedule of fees applicable to the processing of requests under this section . . . .).
    • Such payments are required under the Freedom of Information Act. See id. § 552(a)(4)(A) ("[E]ach agency shall promulgate regulations . . . specifying the schedule of fees applicable to the processing of requests under this section . . . .").
  • 197
    • 46149121819 scopus 로고    scopus 로고
    • See Am. Family Mut. Ins. Co. v. Roth, 485 F.3d 930, 933 (7th Cir. 2007) (holding that customer information was trade secret under Wisconsin's Uniform Trade Secrets Act, WIS. STAT. § 134.90(1)(c) (2005-06)).
    • See Am. Family Mut. Ins. Co. v. Roth, 485 F.3d 930, 933 (7th Cir. 2007) (holding that customer information was trade secret under Wisconsin's Uniform Trade Secrets Act, WIS. STAT. § 134.90(1)(c) (2005-06)).
  • 198
    • 46149103733 scopus 로고    scopus 로고
    • See Securities Act of 1933, 15 U.S.C. §§ 77a-77aa 2000, requiring material disclosure of information about securities offered for public sale
    • See Securities Act of 1933, 15 U.S.C. §§ 77a-77aa (2000) (requiring material disclosure of information about securities offered for public sale).
  • 199
    • 40749125385 scopus 로고    scopus 로고
    • See
    • § 1905 2000 & Supp. V 2005, imposing criminal penalties upon government employees who disclose trade secrets and other proprietary information gleaned during course of their employment
    • See 18 U.S.C. § 1905 (2000 & Supp. V 2005) (imposing criminal penalties upon government employees who disclose trade secrets and other proprietary information gleaned during course of their employment).
    • 18 U.S.C
  • 200
    • 0000098376 scopus 로고
    • The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs, 84
    • Stephen Breyer, The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs, 84 HARV. L. REV. 281, 292 (1970).
    • (1970) HARV. L. REV , vol.281 , pp. 292
    • Breyer, S.1
  • 201
    • 46149125784 scopus 로고    scopus 로고
    • Id
    • Id.
  • 202
    • 46149097014 scopus 로고    scopus 로고
    • Id. at 302
    • Id. at 302.
  • 203
    • 46149121350 scopus 로고    scopus 로고
    • Id. at 312; see also LANDES & POSNER, supra note 122, at 40-41 (noting that because the author's cost of creating the work, and many publishing costs . . . , are incurred before it is even known what the demand for the work will be, copyist may avoid that risk by waiting until he knows whether the work is a success prior to investing in publication).
    • Id. at 312; see also LANDES & POSNER, supra note 122, at 40-41 (noting that because "the author's cost of creating the work, and many publishing costs . . . , are incurred before it is even known what the demand for the work will be," copyist may avoid that risk by waiting "until he knows whether the work is a success" prior to investing in publication).
  • 204
    • 46149107602 scopus 로고    scopus 로고
    • LANDES & POSNER, supra note 122, at 41
    • LANDES & POSNER, supra note 122, at 41.
  • 205
    • 45249095392 scopus 로고    scopus 로고
    • See
    • § 302 2000, Copyright in a work created on or after January 1, 1978, endures for a term consisting of the life of the author and 70 years after the author's death
    • See 17 U.S.C. § 302 (2000) ("Copyright in a work created on or after January 1, 1978 . . . endures for a term consisting of the life of the author and 70 years after the author's death.").
    • 17 U.S.C
  • 206
    • 46149127626 scopus 로고    scopus 로고
    • Sonny Bono Copyright Term Extension Act § 102(b, 17 U.S.C. § 302 2000
    • Sonny Bono Copyright Term Extension Act § 102(b), 17 U.S.C. § 302 (2000).
  • 207
    • 46149099656 scopus 로고    scopus 로고
    • See Brief of George A. Akerlof et al. as Amici Curiae in Support of Petitioners at 5-7, Eldred v. Ashcroft, 537 U.S. 186 (2003) (No. 01-618) (arguing that present value of payments decreases over time, making longer copyright term very small extra incentive for new works).
    • See Brief of George A. Akerlof et al. as Amici Curiae in Support of Petitioners at 5-7, Eldred v. Ashcroft, 537 U.S. 186 (2003) (No. 01-618) (arguing that present value of payments decreases over time, making longer copyright term very small extra incentive for new works).
  • 208
    • 46149092334 scopus 로고    scopus 로고
    • Commentators have argued that the current copyright term is too long. See, e.g., Avishalom Tor & Dotan Oliar, Incentives to Create Under a Lifetime-Plus-Years Copyright Duration: Lessons from a Behavioral Economic Analysis for Eldred v. Ashcroft, 36 LOY. L.A. L. REV. 437, 439-40 (2002) (arguing that although life-plus-years term of Copyright Term Extension Act provides strong incentives to produce copyrighted works, extension-of-years portion of duration does not increase those incentives);
    • Commentators have argued that the current copyright term is too long. See, e.g., Avishalom Tor & Dotan Oliar, Incentives to Create Under a "Lifetime-Plus-Years" Copyright Duration: Lessons from a Behavioral Economic Analysis for Eldred v. Ashcroft, 36 LOY. L.A. L. REV. 437, 439-40 (2002) (arguing that although life-plus-years term of Copyright Term Extension Act provides strong incentives to produce copyrighted works, extension-of-years portion of duration does not increase those incentives);
  • 209
    • 46149103264 scopus 로고    scopus 로고
    • see also Marci A. Hamilton, Copyright Duration Extension and the Dark Heart of Copyright, 14 CARDOZO ARTS & ENT. L.J. 655, 657 (1996) (suggesting that not enough empirical research has been conducted to base justification for copyright term extensions on incentives to create). For a defense of the long copyright term, at least for derivative works,
    • see also Marci A. Hamilton, Copyright Duration Extension and the Dark Heart of Copyright, 14 CARDOZO ARTS & ENT. L.J. 655, 657 (1996) (suggesting that not enough empirical research has been conducted to base justification for copyright term extensions on incentives to create). For a defense of the long copyright term, at least for derivative works,
  • 210
    • 31144432380 scopus 로고    scopus 로고
    • A Theory of Copyright's Derivative Right and Related Doctrines, 90
    • see
    • see Michael Abramowicz, A Theory of Copyright's Derivative Right and Related Doctrines, 90 MINN. L. REV. 317, 371 (2005).
    • (2005) MINN. L. REV , vol.317 , pp. 371
    • Abramowicz, M.1
  • 211
    • 0037872065 scopus 로고    scopus 로고
    • Landes and Posner make a similar point in justifying a system of indefinitely renewable copyrights. See William M. Landes & Richard A. Posner, Indefinitely Renewable Copyright, 70 U. CHI. L. REV. 471, 488-89 (2003) (considering incentives to resurrect works of forgotten novelist whose works have fallen into public domain). They do not, however, acknowledge that the point furnishes a broader argument for intellectual property protection of market experimentation, nor do they note that their point may apply even to new editions or releases of readily remembered works.
    • Landes and Posner make a similar point in justifying a system of indefinitely renewable copyrights. See William M. Landes & Richard A. Posner, Indefinitely Renewable Copyright, 70 U. CHI. L. REV. 471, 488-89 (2003) (considering incentives to resurrect works of forgotten novelist whose works have fallen into public domain). They do not, however, acknowledge that the point furnishes a broader argument for intellectual property protection of market experimentation, nor do they note that their point may apply even to new editions or releases of readily remembered works.
  • 212
    • 46149107956 scopus 로고    scopus 로고
    • See, e.g, 17 U.S.C. § 101 (2000, A 'derivative work' is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted, Pamela Samuelson, Creating a New Kind of Intellectual Property: Applying the Lessons of the Chip Law to Computer Programs, 70 MINN. L. REV. 471, 521 & n.36 (1985, noting that language of § 101 of Copyright Act defines derivative works very broadly, see also Jed Rubenfeld, The Freedom of Imagination: Copyright's Constitutionality, 112 YALE L.J. 1, 55 2002, arguing for different intellectual property regime with greatly reduced protection for derivative rights
    • See, e.g., 17 U.S.C. § 101 (2000) ("A 'derivative work' is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted."); Pamela Samuelson, Creating a New Kind of Intellectual Property: Applying the Lessons of the Chip Law to Computer Programs, 70 MINN. L. REV. 471, 521 & n.36 (1985) (noting that language of § 101 of Copyright Act defines derivative works "very broadly"); see also Jed Rubenfeld, The Freedom of Imagination: Copyright's Constitutionality, 112 YALE L.J. 1, 55 (2002) (arguing for different intellectual property regime with greatly reduced protection for derivative rights).
  • 213
    • 46149083077 scopus 로고    scopus 로고
    • According to Wikipedia, Ishtar, Heaven's Gate, and The Adventures of Pluto Nash are three of the least successful films ever. See List of U.S. Box Office Bombs, in WIKIPEDIA, http://en.wikipedia.org/wiki/List_of_US_box_office_bombs (last visited Jan. 18, 2008). The failure of Heaven's Gate is credited with bankrupting the prominent studio United Artists. See Anita Gates, Final Cut: The Making and Unmaking of Heaven's Gate, N.Y. TIMES, Oct. 8, 2004, at E1 (noting that film destroyed United Artists financially). Ishtar was a fabled disaster[] despite a cast including stars Dustin Hoffman and Warren Beatty.
    • According to Wikipedia, Ishtar, Heaven's Gate, and The Adventures of Pluto Nash are three of the least successful films ever. See List of U.S. Box Office Bombs, in WIKIPEDIA, http://en.wikipedia.org/wiki/List_of_US_box_office_bombs (last visited Jan. 18, 2008). The failure of Heaven's Gate is credited with bankrupting the prominent studio United Artists. See Anita Gates, Final Cut: The Making and Unmaking of "Heaven's Gate," N.Y. TIMES, Oct. 8, 2004, at E1 (noting that film "destroyed United Artists financially"). Ishtar was a "fabled disaster[]" despite a cast including stars Dustin Hoffman and Warren Beatty.
  • 214
    • 46149109327 scopus 로고    scopus 로고
    • Caryn James, The Fireworks of Elaine May, N.Y. TIMES, Feb. 24, 2006, at E1. Pluto Nash is said to hold the current record as the biggest box office loser ever, with a net loss of $95 million. The Adventures of Pluto Nash, http://www.imdb.com/title/tt0180052/ (last visited Jan. 18, 2008).
    • Caryn James, The Fireworks of Elaine May, N.Y. TIMES, Feb. 24, 2006, at E1. Pluto Nash is said to hold the current record as the biggest box office loser ever, with a net loss of $95 million. The Adventures of Pluto Nash, http://www.imdb.com/title/tt0180052/ (last visited Jan. 18, 2008).
  • 216
    • 46149103970 scopus 로고    scopus 로고
    • Shrek 2 grossed $441 million; Shrek the Third, $323 million. Shrek 2, http://www.boxofficemojo.com/movies/?id=shrek2.htm (last visited Mar.6, 2008); Shrek the Third, http://www.boxofficemojo.com/ movies/?id=shrek3.htm (last visited Mar. 6, 2008).
    • Shrek 2 grossed $441 million; Shrek the Third, $323 million. Shrek 2, http://www.boxofficemojo.com/movies/?id=shrek2.htm (last visited Mar.6, 2008); Shrek the Third, http://www.boxofficemojo.com/ movies/?id=shrek3.htm (last visited Mar. 6, 2008).
  • 217
    • 46149084040 scopus 로고    scopus 로고
    • See, e.g., 2 PAUL GOLDSTEIN, COPYRIGHT § 5.3 (2005) (explaining that there will be greater incentives to promote novel if no one else will be able to copy its expressive content).
    • See, e.g., 2 PAUL GOLDSTEIN, COPYRIGHT § 5.3 (2005) (explaining that there will be greater incentives to promote novel if no one else will be able to copy its expressive content).
  • 218
    • 0036332667 scopus 로고    scopus 로고
    • See Raymond Shih Ray Ku, The Creative Destruction of Copyright: Napster and the New Economics of Digital Technology, 69 U. CHI. L. REV. 263, 294-97 (2002) (arguing that recent dramatic decrease in costs of distributing songs partly undermines justification for copyright in that field); see also Breyer, supra note 168, at 299 (accurately predicting that computers will lower costs of initial publishing by eliminating the cost of retyping copy on, for example, a linotype machine and lower[ing] inventory costs by making possible the printing of books 'on demand,' and arguing that such possible developments may weaken justification for copyright).
    • See Raymond Shih Ray Ku, The Creative Destruction of Copyright: Napster and the New Economics of Digital Technology, 69 U. CHI. L. REV. 263, 294-97 (2002) (arguing that recent dramatic decrease in costs of distributing songs partly undermines justification for copyright in that field); see also Breyer, supra note 168, at 299 (accurately predicting that computers will lower costs of initial publishing by "eliminating the cost of retyping copy on, for example, a linotype machine" and "lower[ing] inventory costs by making possible the printing of books 'on demand,'" and arguing that such possible developments may weaken justification for copyright).
  • 219
    • 46149125787 scopus 로고    scopus 로고
    • See Feist Publ'ns., Inc. v. Rural Tel. Serv., 499 U.S. 340, 362-64 (1991) (holding that unoriginal arrangement of factual data, in this case alphabetical listing of names and telephone numbers in telephone book, is not protected by copyright).
    • See Feist Publ'ns., Inc. v. Rural Tel. Serv., 499 U.S. 340, 362-64 (1991) (holding that unoriginal arrangement of factual data, in this case alphabetical listing of names and telephone numbers in telephone book, is not protected by copyright).
  • 220
    • 46149119953 scopus 로고    scopus 로고
    • See, e.g., Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262 (1979) (First, patent law seeks to foster and reward invention . . . . (citing Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480-81 (1974))); see also Dan L. Burk & Mark A. Lemley, Policy Levers in Patent Law, 89 VA. L. REV. 1575, 1576 (2003) (arguing that modern applications of patent law promote innovation nonuniformly between different high-technology industries).
    • See, e.g., Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262 (1979) ("First, patent law seeks to foster and reward invention . . . ." (citing Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480-81 (1974))); see also Dan L. Burk & Mark A. Lemley, Policy Levers in Patent Law, 89 VA. L. REV. 1575, 1576 (2003) (arguing that modern applications of patent law promote innovation nonuniformly between different high-technology industries).
  • 221
    • 46149104444 scopus 로고    scopus 로고
    • Patent Act of 1952 § 112, 35 U.S.C. § 112 (2000); see also J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., 534 U.S. 124, 142 (2001) (The disclosure required by the Patent Act is 'the quid pro quo of the right to exclude.' (quoting Kewanee, 416 U.S. at 484)).
    • Patent Act of 1952 § 112, 35 U.S.C. § 112 (2000); see also J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., 534 U.S. 124, 142 (2001) ("The disclosure required by the Patent Act is 'the quid pro quo of the right to exclude.'" (quoting Kewanee, 416 U.S. at 484)).
  • 222
    • 84868892071 scopus 로고    scopus 로고
    • See
    • § 102 (2000, novelty, id. § 103 nonobviousness
    • See 35 U.S.C. § 102 (2000) (novelty); id. § 103 (nonobviousness).
    • 35 U.S.C
  • 223
    • 46149120877 scopus 로고    scopus 로고
    • See id. § 271(d)(4) (stating that patent holder cannot be denied enforcement for refus[ing] to license or use any rights to the patent); Cont'l Paper Bag Co. v. E. Paper Bag Co., 210 U.S. 405, 429 (1908) (holding that patent is not unenforceable merely because patentee neglected to put it to commercial use).
    • See id. § 271(d)(4) (stating that patent holder cannot be denied enforcement for "refus[ing] to license or use any rights to the patent"); Cont'l Paper Bag Co. v. E. Paper Bag Co., 210 U.S. 405, 429 (1908) (holding that patent is not unenforceable merely because patentee neglected to put it to commercial use).
  • 224
    • 46149083573 scopus 로고    scopus 로고
    • See State St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368, 1375 (Fed. Cir. 1998) (clarifying that business methods are subject to same patentability requirements as other processes or methods).
    • See State St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368, 1375 (Fed. Cir. 1998) (clarifying that business methods are subject to same patentability requirements as other processes or methods).
  • 225
    • 46149089251 scopus 로고    scopus 로고
    • See, e.g., Glynn S. Lunney, Jr., E-obviousness, 7 MICH. TELECOMM. & TECH. L. REV. 363, 373-74 (2001) (asserting that, before creation of Federal Circuit, patents were invalidated on basis of obviousness in two-thirds or more of cases where patent was found invalid, but that proportion dropped to as low as one-fifth following creation of Federal Circuit, suggesting that obviousness is much less central in appellate determinations of patent validity under the Federal Circuit). But see KSR Int'l Co. v. Teleflex Inc., 127 S. Ct. 1727, 1739 (2007) (rejecting Federal Circuit's approach to determining whether patent is obvious).
    • See, e.g., Glynn S. Lunney, Jr., E-obviousness, 7 MICH. TELECOMM. & TECH. L. REV. 363, 373-74 (2001) (asserting that, before creation of Federal Circuit, patents were invalidated on basis of obviousness in two-thirds or more of cases where patent was found invalid, but that proportion dropped to as low as one-fifth following creation of Federal Circuit, suggesting that "obviousness is much less central in appellate determinations of patent validity under the Federal Circuit"). But see KSR Int'l Co. v. Teleflex Inc., 127 S. Ct. 1727, 1739 (2007) (rejecting Federal Circuit's approach to determining whether patent is obvious).
  • 226
    • 46149113327 scopus 로고    scopus 로고
    • The Relation Between
    • Patent Practices and the Anti-monopoly Laws, Part II, 24 J. PAT. OFF. SOC'Y 159, 177 1942
    • Giles S. Rich, The Relation Between Patent Practices and the Anti-monopoly Laws, Part II, 24 J. PAT. OFF. SOC'Y 159, 177 (1942).
    • Rich, G.S.1
  • 227
    • 46149119270 scopus 로고    scopus 로고
    • Id
    • Id.
  • 228
    • 46149126253 scopus 로고    scopus 로고
    • 149 F.3d 1368
    • 149 F.3d 1368.
  • 229
    • 85015692260 scopus 로고
    • The Pricing of Options and Corporate Liabilities, 81
    • proposing theoretical valuation formula for options, See
    • See Fischer Black & Myron Scholes, The Pricing of Options and Corporate Liabilities, 81 J. POL. ECON. 637 (1973) (proposing theoretical valuation formula for options);
    • (1973) J. POL. ECON , vol.637
    • Black, F.1    Scholes, M.2
  • 230
    • 1642587169 scopus 로고    scopus 로고
    • Random Walks, Non-cooperative Games, and the Complex Mathematics of
    • see also, Patent Pricing, 55 RUTGERS L. REV. 1175, 1176 n.6 2003, describing history and utility of Black-Scholes formula
    • see also F. Russell Denton & Paul J. Heald, Random Walks, Non-cooperative Games, and the Complex Mathematics of Patent Pricing, 55 RUTGERS L. REV. 1175, 1176 n.6 (2003) (describing history and utility of Black-Scholes formula).
    • Russell Denton, F.1    Heald, P.J.2
  • 231
    • 46149105284 scopus 로고    scopus 로고
    • Ex parte Lundgren, 76 U.S.P.Q.2d (BNA) 1385, 1387-88 (B.P.A.I. 2005, We note that the Board of Patent Appeals and Interferences has recently changed course on this issue. See Ex parte Bilski, Appeal No. 2002-2257, slip op. at 57-58 (B.P.A.I. heard Mar. 8, 2006, available at http://www.uspto.gov/web/offices/dcom/bpai/its/fd022257.pdf (asserting that Lundgren was not stated or intended to eliminate] a 'technology' requirement for patents, The Federal Circuit also seems to be trying to cut back on State Street and to curtail the availability of business method patents. See supra notes 18, 20. Our point in the text is merely that, for some period of time, the U.S. PTO was willing to issue business method patents without necessarily demanding that the patents disclosed nonobvious technical information broadly construed, The Federal Circuit's apparent willingness to cut back on all method patents, including those that of
    • Ex parte Lundgren, 76 U.S.P.Q.2d (BNA) 1385, 1387-88 (B.P.A.I. 2005). We note that the Board of Patent Appeals and Interferences has recently changed course on this issue. See Ex parte Bilski, Appeal No. 2002-2257, slip op. at 57-58 (B.P.A.I. heard Mar. 8, 2006), available at http://www.uspto.gov/web/offices/dcom/bpai/its/fd022257.pdf (asserting that Lundgren was not "stated or intended" to "eliminate] a 'technology' requirement for patents"). The Federal Circuit also seems to be trying to cut back on State Street and to curtail the availability of business method patents. See supra notes 18, 20. Our point in the text is merely that, for some period of time, the U.S. PTO was willing to issue business method patents without necessarily demanding that the patents disclosed nonobvious technical information (broadly construed). The Federal Circuit's apparent willingness to cut back on all method patents - including those that offer nonobvious insights into complex arts such as finance, arbitration, and risk management - raises other issues that are beyond the scope of this Article.
  • 232
    • 46149107376 scopus 로고    scopus 로고
    • By economically nonobvious business methods, we mean methods of doing business that can be launched without any new information but that have uncertain prospects as to whether they could possibly succeed. For example, in 1998, no one would have needed any additional information to create a business like Netflix; the reason it was not created was because its chances of market success were so uncertain.
    • By "economically nonobvious" business methods, we mean methods of doing business that can be launched without any new information but that have uncertain prospects as to whether they could possibly succeed. For example, in 1998, no one would have needed any additional information to create a business like Netflix; the reason it was not created was because its chances of market success were so uncertain.
  • 233
    • 46149084042 scopus 로고    scopus 로고
    • See, e.g., Lunney, supra note 190, at 370-94 (discussing vitiation of nonobviousness requirement in Federal Circuit).
    • See, e.g., Lunney, supra note 190, at 370-94 (discussing vitiation of nonobviousness requirement in Federal Circuit).
  • 234
    • 46149091364 scopus 로고    scopus 로고
    • See U.S. 1, 11-18 (1966, holding that Patent Act of 1952 embraces objective doctrine of Hotchkiss v. Greenwood, 52 U.S, 11 How, 248 1850, for establishing nonobviousness, which requires that, in comparison with previous art, patent must evince some innovation beyond foresight of person having ordinary skill in pertinent art
    • See Graham v. John Deere Co., 383 U.S. 1, 11-18 (1966) (holding that Patent Act of 1952 embraces objective doctrine of Hotchkiss v. Greenwood, 52 U.S. (11 How.) 248 (1850), for establishing nonobviousness, which requires that, in comparison with previous art, patent must evince some innovation beyond foresight of person having ordinary skill in pertinent art).
    • John, G.V.1    Co, D.2
  • 235
    • 46149126722 scopus 로고    scopus 로고
    • See, e.g, Pro-Mold & Tool Co. v. Great Lakes Plastics, 75 F.3d 1568,1573 (Fed. Cir. 1996, applying this test, In re Sernaker, 702 F.2d 989, 995-96 (Fed. Cir. 1983, same, Scholarly commentary roundly criticized this teaching-suggestion-motivation test as too lax on patent invalidation. See, e.g, Lunney, supra note 190, at 379 (describing suggestion test as contributing to vitiation of nonobviousness requirement, The Supreme Court ultimately held that this test of obviousness was too constrained. KSR Int'l Co. v. Teleflex Inc, 127 S. Ct. 1727, 1741 2007, The obviousness analysis cannot be confined by a formalistic conception of the words teaching, suggestion, and motivation, or by overemphasis on the importance of published articles and the explicit content of issued patents, see also John F. Duffy, Commentary, KSR v. Teleflex: Predictable Reform of Patent Substance and Procedure in the Judiciary, 106 M
    • See, e.g., Pro-Mold & Tool Co. v. Great Lakes Plastics, 75 F.3d 1568,1573 (Fed. Cir. 1996) (applying this test); In re Sernaker, 702 F.2d 989, 995-96 (Fed. Cir. 1983) (same). Scholarly commentary roundly criticized this teaching-suggestion-motivation test as too lax on patent invalidation. See, e.g., Lunney, supra note 190, at 379 (describing "suggestion test" as contributing to vitiation of nonobviousness requirement). The Supreme Court ultimately held that this test of obviousness was too constrained. KSR Int'l Co. v. Teleflex Inc., 127 S. Ct. 1727, 1741 (2007) ("The obviousness analysis cannot be confined by a formalistic conception of the words teaching, suggestion, and motivation, or by overemphasis on the importance of published articles and the explicit content of issued patents."); see also John F. Duffy, Commentary, KSR v. Teleflex: Predictable Reform of Patent Substance and Procedure in the Judiciary, 106 MICH. L. REV. FIRST IMPRESSIONS 34 (2007), http://www.michiganlawreview.org/ firstimpressions/vol106/duffy.pdf (discussing author's involvement in KSR litigation and describing importance of KSR in reforming patent doctrine).
  • 236
    • 46149084265 scopus 로고    scopus 로고
    • See generally George M. Sirilla, 35 U.S.C. § 103: From Hotchkiss to Hand to Rich, the Obvious Patent Law Hall-of-Famers; 32 J. MARSHALL L. REV. 437, 509-58 1999, discussing Judge Rich's deep contributions to evolution and application of nonobviousness doctrine in U.S. courts
    • See generally George M. Sirilla, 35 U.S.C. § 103: From Hotchkiss to Hand to Rich, the Obvious Patent Law Hall-of-Famers; 32 J. MARSHALL L. REV. 437, 509-58 (1999) (discussing Judge Rich's deep contributions to evolution and application of nonobviousness doctrine in U.S. courts).
  • 237
    • 46149095339 scopus 로고    scopus 로고
    • See supra note 188
    • See supra note 188.
  • 238
    • 46149099874 scopus 로고    scopus 로고
    • See eBay Inc. v. MercExchange, L.L.C, 547 U.S. 388, 393-94 (2006, holding that MercExchange's lack of commercial activity did not preclude its right to injunction after finding of willful infringement, Further, the Federal Circuit did not consider the lack of commercial use when considering validity of the patents in question in NTP, Inc. v. Research in Motion, Ltd, 418 F.3d 1282 (Fed. Cir. 2005, cert. denied, 546 U.S. 1157 (2006, in which NTP was the patent-holding company; in MercExchange, L.L.C. v. eBay, Inc, 401 F.3d 1323 (Fed. Cir. 2005, vacated, 547 U.S. 388 (2006, in which MercExchange no longer used patented technology; and in Eolas Technologies Inc. v. Microsoft Corp, 399 F.3d 1325 Fed. Cir. 2005, in which Eolas was not commercializing patented technology
    • See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393-94 (2006) (holding that MercExchange's lack of commercial activity did not preclude its right to injunction after finding of willful infringement). Further, the Federal Circuit did not consider the lack of commercial use when considering validity of the patents in question in NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005), cert. denied, 546 U.S. 1157 (2006), in which NTP was the patent-holding company; in MercExchange, L.L.C. v. eBay, Inc., 401 F.3d 1323 (Fed. Cir. 2005), vacated, 547 U.S. 388 (2006), in which MercExchange no longer used patented technology; and in Eolas Technologies Inc. v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005), in which Eolas was not commercializing patented technology.
  • 239
    • 46149113999 scopus 로고    scopus 로고
    • Using Stock and Stock Options to Minimize
    • See, e.g, Patent Royalty Payment Risks After Medimmune v. Genentech, 3 N.Y.U. J.L. & BUS. 381, 386 2007, describing operation of patent trolls, who do not commercialize their patents and instead wait until another party infringes them
    • See, e.g., Sean M. O'Connor, Using Stock and Stock Options to Minimize Patent Royalty Payment Risks After Medimmune v. Genentech, 3 N.Y.U. J.L. & BUS. 381, 386 (2007) (describing operation of "patent trolls," who do not commercialize their patents and instead wait until another party infringes them).
    • O'Connor, S.M.1
  • 240
    • 46149122593 scopus 로고    scopus 로고
    • NTP, 418 F.3d 1282; see also Ian Austen, BlackBerry Service to Continue, N.Y. TIMES, Mar. 4, 2006, at C1 (providing brief history of litigation, which culminated in settlement award to NTP of $612.5 million).
    • NTP, 418 F.3d 1282; see also Ian Austen, BlackBerry Service to Continue, N.Y. TIMES, Mar. 4, 2006, at C1 (providing brief history of litigation, which culminated in settlement award to NTP of $612.5 million).
  • 241
    • 46149121108 scopus 로고    scopus 로고
    • For a description of NTP's patents-in-suit, which contemplate the receipt of electronic mail by a portable wireless receiver, see NTP, 418 F.3d at 1288-90. No particular wireless network (beyond the source and receiver) is contemplated in NTP's patents, nor do the patents detail a method for sending messages from the receiver. Id. The court compared this to Research in Motion's more particularized system, which incorporates server-end software, nationwide mobile wireless networks, and a method for sending messages from the RF receiver. Id.
    • For a description of NTP's patents-in-suit, which contemplate the receipt of electronic mail by a portable wireless receiver, see NTP, 418 F.3d at 1288-90. No particular wireless network (beyond the source and receiver) is contemplated in NTP's patents, nor do the patents detail a method for sending messages from the receiver. Id. The court compared this to Research in Motion's more particularized system, which incorporates server-end software, nationwide mobile wireless networks, and a method for sending messages from the RF receiver. Id.
  • 242
    • 46149124417 scopus 로고    scopus 로고
    • The PTO decided to reconsider the validity of NTP's patents while the litigation was pending. Teresa Riordan, The Battle over Blackberry Heads to a Crucial Court Date, and a Challenge of More Patents
    • Feb. 17, at
    • The PTO decided to reconsider the validity of NTP's patents while the litigation was pending. Teresa Riordan, The Battle over Blackberry Heads to a Crucial Court Date, and a Challenge of More Patents, N.Y. TIMES, Feb. 17, 2003, at C2.
    • (2003) N.Y. TIMES
  • 243
    • 27844465509 scopus 로고    scopus 로고
    • See Sofy Carayannopoulos, Research in Motion: A Small Firm Commercializing a New Technology, 29 ENTREPRENEURSHIP THEORY & PRAC. 219, 219-25 (2005) (providing history of RIM and notes on development, production, and marketing of BlackBerry system).
    • See Sofy Carayannopoulos, Research in Motion: A Small Firm Commercializing a New Technology, 29 ENTREPRENEURSHIP THEORY & PRAC. 219, 219-25 (2005) (providing history of RIM and notes on development, production, and marketing of BlackBerry system).
  • 244
    • 46149126013 scopus 로고    scopus 로고
    • See note 204 reporting that RIM settled infringement suit for $612.5 million
    • See Austen, supra note 204 (reporting that RIM settled infringement suit for $612.5 million).
    • supra
    • Austen1
  • 245
    • 46149084744 scopus 로고    scopus 로고
    • See Mike Hughlett, Blurry on Blackberry, CHI. TRIB, Feb. 19, 2006, § 5, at 1 explaining that Thomas Campana Jr, inventor of patents-at-suit, founded NTP merely in order to work out licensing agreements for [his] patents
    • See Mike Hughlett, Blurry on Blackberry, CHI. TRIB., Feb. 19, 2006, § 5, at 1 (explaining that Thomas Campana Jr., inventor of patents-at-suit, founded NTP merely in order to "work out licensing agreements for [his] patents").
  • 246
    • 46149113775 scopus 로고    scopus 로고
    • Before the settlement, the PTO indicated that, upon review, it would likely find several, if not all, of NTP's patents to be invalid. See Ian Austen, U.S. Patent Office Likely To Back BlackBerry Maker, N.Y. TIMES, Dec. 20, 2005, at C5 (reporting that PTO notified companies that it expected to reject several NTP patents, Indeed, the PTO found two of the nine disputed patents to be invalid before RIM ultimately settled with NTP. See Bloomberg News, Ruling for Maker of BlackBerry, N.Y. TIMES, Dec. 2, 2005, at C2 (reporting nonfinal ruling by PTO that one of NTP's patents was invalid, Bloomberg News, Ruling May Help BlackBerry Maker, N.Y. TIMES, Feb. 23, 2006, at C18 reporting two final actions by PTO that found two NTP patents invalid, Yet RIM remained under tremendous practical pressure to settle the litigation because it faced the strong likelihood that the district court would issue an injunction shutting down its servic
    • Before the settlement, the PTO indicated that, upon review, it would likely find several, if not all, of NTP's patents to be invalid. See Ian Austen, U.S. Patent Office Likely To Back BlackBerry Maker, N.Y. TIMES, Dec. 20, 2005, at C5 (reporting that PTO notified companies that it expected to reject several NTP patents). Indeed, the PTO found two of the nine disputed patents to be invalid before RIM ultimately settled with NTP. See Bloomberg News, Ruling for Maker of BlackBerry, N.Y. TIMES, Dec. 2, 2005, at C2 (reporting nonfinal ruling by PTO that one of NTP's patents was invalid); Bloomberg News, Ruling May Help BlackBerry Maker, N.Y. TIMES, Feb. 23, 2006, at C18 (reporting two final actions by PTO that found two NTP patents invalid). Yet RIM remained under tremendous practical pressure to settle the litigation because it faced the strong likelihood that the district court would issue an injunction shutting down its service prior to the government's final resolution of the patent reexamination proceedings. See NTP, Inc. v. Research in Motion, Ltd., 397 F. Supp. 2d 785, 786-89 (E.D. Va. 2005) (noting that District Court and Federal Circuit had denied three previous attempts by RIM to stay proceedings during reexamination of NTP's patents and denying fourth such attempt).
  • 247
    • 46149086883 scopus 로고    scopus 로고
    • 547 U.S. 388, 394 (2006).
    • 547 U.S. 388, 394 (2006).
  • 248
    • 46149091587 scopus 로고    scopus 로고
    • Id. at 396 (Kennedy, J., concurring).
    • Id. at 396 (Kennedy, J., concurring).
  • 249
    • 46149125601 scopus 로고    scopus 로고
    • See, e.g., MercExchange, L.L.C. v. eBay, Inc., 500 F. Supp. 2d 556, 582 (E.D. Va. 2007) (quoting Justice Kennedy's concurring opinion, 547 U.S. at 396, in course of denying MercExchange's request for injunction).
    • See, e.g., MercExchange, L.L.C. v. eBay, Inc., 500 F. Supp. 2d 556, 582 (E.D. Va. 2007) (quoting Justice Kennedy's concurring opinion, 547 U.S. at 396, in course of denying MercExchange's request for injunction).
  • 250
    • 46149088768 scopus 로고    scopus 로고
    • See, e.g., Am. Cyanamid Co. v. Hercules Inc., 260 F. Supp. 368, 377 & n.32 (D. Del. 1966) (citing cases supporting paper patent doctrine); see also In re Holladay, 584 F.2d 384, 386-87 (C.C.P.A. 1978) (holding that in choosing prior art to compare with claimed invention, applicant should be permitted to select commercialized patent over paper patent that is equally close to claimed invention).
    • See, e.g., Am. Cyanamid Co. v. Hercules Inc., 260 F. Supp. 368, 377 & n.32 (D. Del. 1966) (citing cases supporting paper patent doctrine); see also In re Holladay, 584 F.2d 384, 386-87 (C.C.P.A. 1978) (holding that in choosing prior art to compare with claimed invention, applicant should be permitted to select commercialized patent over paper patent that is equally close to claimed invention).
  • 251
    • 46149089024 scopus 로고    scopus 로고
    • See, e.g., Wire Tie Mach. Co. v. Pac. Box Corp., 102 F.2d 543, 556 (9th Cir. 1939) (holding patent on innovation never utilized or placed upon the market to be a paper patent that would not be given any broader scope than it is clearly required to be given).
    • See, e.g., Wire Tie Mach. Co. v. Pac. Box Corp., 102 F.2d 543, 556 (9th Cir. 1939) (holding patent on innovation never "utilized or placed upon the market" to be "a paper patent" that would not be given "any broader scope than it is clearly required to be given").
  • 252
    • 46149124180 scopus 로고    scopus 로고
    • See, e.g., Power Curbers, Inc. v. E.D. Etnyre & Co., 298 F.2d 484, 493 (4th Cir. 1962) (rejecting argument that successful patent should be viewed as obvious variation of a number of old paper patents and reasoning that 'patents for useful inventions ought not be invalidated and held for naught because of such excursions into the boneyard of failures and abandoned experiments' (quoting Reynolds v. Whitin Mach. Works, 167 F.2d 78, 84 (4th Cir. 1948))).
    • See, e.g., Power Curbers, Inc. v. E.D. Etnyre & Co., 298 F.2d 484, 493 (4th Cir. 1962) (rejecting argument that successful patent should be viewed as obvious variation of "a number of old paper patents" and reasoning that "'patents for useful inventions ought not be invalidated and held for naught because of such excursions into the boneyard of failures and abandoned experiments'" (quoting Reynolds v. Whitin Mach. Works, 167 F.2d 78, 84 (4th Cir. 1948))).
  • 253
    • 46149112443 scopus 로고    scopus 로고
    • See Goodyear Tire & Rubber Co. v. Ray-O-Vac Co, 321 U.S. 275, 278-79 (1944, counting patentee's commercial success in favor of sustaining patent where patentee was first to market product and product was met with immediate commercial success, Todd v. Sears, Roebuck & Co, 216 F.2d 594, 596 (4th Cir. 1954, invalidating patent determined to be mere paper patent which has never been put into production, Schweyer Elec. & Mfg. Co. v. Reading Co, 63 F.2d 402, 405 (3d Cir. 1933, viewing patent on device not successful enough to warrant the risk of installation and use to be theoretical or paper patent and invalidating it for want of invention, Air Reduction Co. v. Carbo-Oxygen Co, 17 F.2d 138, 142 (D. Del. 1926, holding patent invalid based in part on finding that the patent is purely a paper patent that has made no imprint upon the art, aff'd, 19 F.2d 1014, 1015 3d Cir. 1927, expres
    • See Goodyear Tire & Rubber Co. v. Ray-O-Vac Co., 321 U.S. 275, 278-79 (1944) (counting patentee's commercial success in favor of sustaining patent where patentee was first to market product and product was "met with immediate commercial success"); Todd v. Sears, Roebuck & Co., 216 F.2d 594, 596 (4th Cir. 1954) (invalidating patent determined to be "mere paper patent which has never been put into production"); Schweyer Elec. & Mfg. Co. v. Reading Co., 63 F.2d 402, 405 (3d Cir. 1933) (viewing patent on device not "successful enough to warrant the risk of installation and use" to be "theoretical or paper patent" and invalidating it for want of invention); Air Reduction Co. v. Carbo-Oxygen Co., 17 F.2d 138, 142 (D. Del. 1926) (holding patent invalid based in part on finding that "the patent is purely a paper patent" that "has made no imprint upon the art"), aff'd, 19 F.2d 1014, 1015 (3d Cir. 1927) (expressly adopting district court's reasoning on paper patent issue).
  • 254
    • 46149122367 scopus 로고    scopus 로고
    • See, e.g., Frank B. Killian & Co. v. Allied Latex Corp., 188 F.2d 940, 942 (2d Cir. 1951) (Hand, C.J.) (The phrase 'paper patent' is a mere bit of rhetoric, usually employed as a makeweight by judges who wish to support the patent in suit, but are embarrassed by a reference, of an escape from which they are not too confident. It is a meaningless platitude.).
    • See, e.g., Frank B. Killian & Co. v. Allied Latex Corp., 188 F.2d 940, 942 (2d Cir. 1951) (Hand, C.J.) ("The phrase 'paper patent' is a mere bit of rhetoric, usually employed as a makeweight by judges who wish to support the patent in suit, but are embarrassed by a reference, of an escape from which they are not too confident. It is a meaningless platitude.").
  • 255
    • 46149124178 scopus 로고    scopus 로고
    • A proposal for awarding patents on the basis of commercial nonobviousness is set forth in Karen I. Boyd, Nonobviousness and the Biotechnology Industry: A Proposal for a Doctrine of Economic Nonobviousness, 12 BERKELEY TECH. L.J. 311, 337-43 1997, Boyd's analysis differs significantly from ours because she argues that patents would be helpful where commercial success is uncertain as a result of the risk aversion of potential commercial innovators. Id. at 337-38. Our analysis does not depend upon risk aversion but instead focuses on the possibility that second and subsequent movers can free ride on first-movers' market experiments by copying successes while avoiding failures. See supra Part II. Boyd also considers the issue only in the context of biotechnology inventions, see Boyd, supra, at 312-13, whereas we believe that the problem is more general
    • A proposal for awarding patents on the basis of commercial nonobviousness is set forth in Karen I. Boyd, Nonobviousness and the Biotechnology Industry: A Proposal for a Doctrine of Economic Nonobviousness, 12 BERKELEY TECH. L.J. 311, 337-43 (1997). Boyd's analysis differs significantly from ours because she argues that patents would be helpful where commercial success is uncertain as a result of the risk aversion of potential commercial innovators. Id. at 337-38. Our analysis does not depend upon risk aversion but instead focuses on the possibility that second and subsequent movers can free ride on first-movers' market experiments by copying successes while avoiding failures. See supra Part II. Boyd also considers the issue only in the context of biotechnology inventions, see Boyd, supra, at 312-13, whereas we believe that the problem is more general.
  • 256
    • 46149104826 scopus 로고    scopus 로고
    • See Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966) (listing commercial success among secondary factors that may be indicia of obviousness or nonobviousness); see also ROBERT P. MERGES & JOHN F. DUFFY, PATENT LAW AND POLICY 736-57 (3d ed. 2002) (noting that secondary factors, or objective indicia, play essential role in 35 U.S.C. § 103 determinations of nonobviousness). But see Robert P. Merges, Commercial Success and Patent Standards: Economic Perspectives on Innovation, 76 CAL. L. REV. 803, 838-66 (1988) (arguing that commercial success may not necessarily be result of patented technology itself, but rather of market forces at work).
    • See Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966) (listing "commercial success" among secondary factors that may be "indicia" of obviousness or nonobviousness); see also ROBERT P. MERGES & JOHN F. DUFFY, PATENT LAW AND POLICY 736-57 (3d ed. 2002) (noting that secondary factors, or "objective indicia," play essential role in 35 U.S.C. § 103 determinations of nonobviousness). But see Robert P. Merges, Commercial Success and Patent Standards: Economic Perspectives on Innovation, 76 CAL. L. REV. 803, 838-66 (1988) (arguing that commercial success may not necessarily be result of patented technology itself, but rather of market forces at work).
  • 257
    • 46149094915 scopus 로고    scopus 로고
    • See, e.g, Patent Law's Nonobviousness Requirement: The Effect of Inconsistent Standards Regarding Commercial Success on the Individual Inventor, 19 HASTINGS COMM. & ENT. L.J. 199, 210-17 1996, discussing application of inconsistent standards, burden of proof, and other issues
    • See, e.g., Reed W.L. Marcy, Patent Law's Nonobviousness Requirement: The Effect of Inconsistent Standards Regarding Commercial Success on the Individual Inventor, 19 HASTINGS COMM. & ENT. L.J. 199, 210-17 (1996) (discussing application of inconsistent standards, burden of proof, and other issues).
    • Marcy, R.W.L.1
  • 258
    • 46149097480 scopus 로고    scopus 로고
    • As the Federal Circuit recently explained: Commercial success is relevant because the law presumes an idea would successfully have been brought to market sooner, in response to market forces, had the idea been obvious to persons skilled in the art. Thus, the law deems evidence of (1) commercial success, and (2) some causal relation or nexus between an invention and commercial success of a product embodying that invention, probative of whether an invention was non-obvious. Merck & Co. v. Teva Pharms. USA, Inc, 395 F.3d 1364, 1376 Fed. Cir. 2005
    • As the Federal Circuit recently explained: Commercial success is relevant because the law presumes an idea would successfully have been brought to market sooner, in response to market forces, had the idea been obvious to persons skilled in the art. Thus, the law deems evidence of (1) commercial success, and (2) some causal relation or "nexus" between an invention and commercial success of a product embodying that invention, probative of whether an invention was non-obvious. Merck & Co. v. Teva Pharms. USA, Inc., 395 F.3d 1364, 1376 (Fed. Cir. 2005).
  • 259
    • 46149095139 scopus 로고    scopus 로고
    • See, e.g., Indian Head Indus., Inc. v. Ted Smith Equip. Co., 859 F. Supp. 1095, 1108-09 (E.D. Mich. 1994) (applying nexus test and noting that alleged infringer attributed commercial success to marketing efforts). For further discussion of the nexus requirement and the relationship between market and technology forces in driving commercial success, see Merges, supra note 220, at 859.
    • See, e.g., Indian Head Indus., Inc. v. Ted Smith Equip. Co., 859 F. Supp. 1095, 1108-09 (E.D. Mich. 1994) (applying nexus test and noting that alleged infringer attributed commercial success to marketing efforts). For further discussion of the nexus requirement and the relationship between market and technology forces in driving commercial success, see Merges, supra note 220, at 859.
  • 260
    • 33845900231 scopus 로고    scopus 로고
    • We do not mean to imply that independent invention always signifies obviousness. Different parties may hit on a nonobvious invention at the same time. For an argument that independent invention should be a defense to patent infringement, see generally Samson Vermont, Independent Invention as a Defense to Patent Infringement, 105 MICH. L. REV. 475 2006
    • We do not mean to imply that independent invention always signifies obviousness. Different parties may hit on a nonobvious invention at the same time. For an argument that independent invention should be a defense to patent infringement, see generally Samson Vermont, Independent Invention as a Defense to Patent Infringement, 105 MICH. L. REV. 475 (2006).
  • 261
    • 46149109329 scopus 로고    scopus 로고
    • At least some commentators, however, believe that the Federal Circuit has increased the importance of secondary considerations to the point where they are relevant even in cases that otherwise would not be close. See, e.g, Kevin Rhodes, Comment, The Federal Circuit's Patent Nonobviousness Standards: Theoretical Perspectives on Recent Doctrinal Changes, 85 NW. U. L. REV. 1051, 1075-76 1991, The [Federal Circuit] has completely abandoned the Supreme Court's view that [secondary considerations are] useful merely to tip the balance in close cases
    • At least some commentators, however, believe that the Federal Circuit has increased the importance of secondary considerations to the point where they are relevant even in cases that otherwise would not be close. See, e.g., Kevin Rhodes, Comment, The Federal Circuit's Patent Nonobviousness Standards: Theoretical Perspectives on Recent Doctrinal Changes, 85 NW. U. L. REV. 1051, 1075-76 (1991) ("The [Federal Circuit] has completely abandoned the Supreme Court's view that [secondary considerations are] useful merely to tip the balance in close cases . . . .").
  • 262
    • 0010884941 scopus 로고    scopus 로고
    • Industrial organization analysis frequently makes use of the concept of multidimensional product space, in which each product's location depends upon its unique characteristics. See, e.g, Andrew S. Caplin & Barry J. Nalebuff, Multi-dimensional Product Differentiation and Price Competition, 38 OXFORD ECON. PAPERS (SUPPLEMENT) 129 1986, seeking to develop multidimensional location model
    • Industrial organization analysis frequently makes use of the concept of multidimensional product space, in which each product's location depends upon its unique characteristics. See, e.g., Andrew S. Caplin & Barry J. Nalebuff, Multi-dimensional Product Differentiation and Price Competition, 38 OXFORD ECON. PAPERS (SUPPLEMENT) 129 (1986) (seeking to develop multidimensional location model).
  • 263
    • 46149092333 scopus 로고    scopus 로고
    • Consider, for example, the envelopes that Netflix uses to send and receive DVDs to and from its customers. See U.S. Patent No. 6,966,484 filed Sept. 16, 2002, One might characterize the development of these envelopes either as a technological feat or as marketing genius
    • Consider, for example, the envelopes that Netflix uses to send and receive DVDs to and from its customers. See U.S. Patent No. 6,966,484 (filed Sept. 16, 2002). One might characterize the development of these envelopes either as a technological feat or as marketing genius.
  • 264
    • 46149100107 scopus 로고    scopus 로고
    • At least one country seems more open to the possibility of allowing patents based merely on commercial nonobviousness. Unlike the United States, India, in its newly amended patent statute, provides that the standard of patentability, or the inventive step, can be satisfied by a feature of an invention that either involves a technical advance or has economic significance. The Patents (Amendment) Act, 2005, No. 15, § 2(f, 2005 C.I.S. 32, 34 (India, amending Patents Act, 1970, No. 39, § 2(1)(ja, available at Compare Manoj Pillai, India: India's Patents Bill, 2005, Is It TRIPS Compliant, MONDAQ, Mar. 31, 2005, http://www.mondaq.com/i_article.asp_Q_articleid_E_31717 By bringing 'economic significance' under the definition of 'non-obviousness' what has been funda
    • At least one country seems more open to the possibility of allowing patents based merely on commercial nonobviousness. Unlike the United States, India, in its newly amended patent statute, provides that the standard of patentability, or the "inventive step," can be satisfied by a feature of an invention that either involves a "technical advance" or has "economic significance." The Patents (Amendment) Act, 2005, No. 15, § 2(f), 2005 C.I.S. 32., 34 (India) (amending Patents Act, 1970, No. 39, § 2(1)(ja)), available at http://www.patentoffice.nic.in/ipr/patent/ patent_2005.pdf. Commentators are divided as to the intended doctrinal significance of this change. Compare Manoj Pillai, India: India's Patents Bill, 2005 - Is It TRIPS Compliant?, MONDAQ, Mar. 31, 2005, http://www.mondaq.com/i_article.asp_Q_articleid_E_31717 ("By bringing 'economic significance' under the definition of 'non-obviousness' what has been fundamentally diluted is a cardinal principle of patent law!"), with Archana Shanker, India: Patent Reform; What Patent Owners Need to Know, MANAGING INTELL. PROP. (PATENT FOCUS 2005), 2005, at 50, 50, available at http://www. managingip.com/Article.aspx?ArticleID=1321465 ("Such a definition is more or less well accepted internationally and in all probability the term economic significance might be interpreted as being synonymous to industrial application."). The invention still is required to be "not obvious to a person skilled in the art," but the structure of the Indian statute suggests that the nonobvious quality may be economic or technical. See § 2(f) ("'[I]nventive step' means a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art."). This statutory language at least opens the possibility that patents in India could issue on technically trivial variations of prior art if the modified invention is successfully commercialized and if that economic success would have been nonobvious to a person skilled in the art.
  • 265
    • 46149100342 scopus 로고    scopus 로고
    • It is difficult enough for the patent office to handle its workload in identifying technological obviousness. The PTO has issued more than one million utility patents over the past seven years; it took well over one hundred years for the office to issue its first million utility patents. See United States Patent and Trademark Office, Issue Years and Patent Numbers, http://www.uspto.gov/web/offices/ac/ido/oeip/taf/issuyear.htm (last visited Mar. 5, 2008, listing first patent number issued by PTO in each calendar year since 1836, United States Patent and Trademark Office, Great Patent Fire of 1836, http://www.uspto.gov/web/offices/ac/ahrpa/opa/kids/special/1836fire.htm last visited Mar. 5, 2008, stating that approximately 10,000 patents were issued between PTO's founding in 1790 and Great Patent Fire of 1836, On average, patent examiners spend only about eighteen hours on each patent, and the PTO's bonus system rewards examiners for issuing as many patents as quickly as possi
    • It is difficult enough for the patent office to handle its workload in identifying technological obviousness. The PTO has issued more than one million utility patents over the past seven years; it took well over one hundred years for the office to issue its first million utility patents. See United States Patent and Trademark Office, Issue Years and Patent Numbers, http://www.uspto.gov/web/offices/ac/ido/oeip/taf/issuyear.htm (last visited Mar. 5, 2008) (listing first patent number issued by PTO in each calendar year since 1836); United States Patent and Trademark Office, Great Patent Fire of 1836, http://www.uspto.gov/web/offices/ac/ahrpa/opa/kids/special/1836fire.htm (last visited Mar. 5, 2008) (stating that approximately 10,000 patents were issued between PTO's founding in 1790 and Great Patent Fire of 1836). On average, patent examiners spend only about eighteen hours on each patent, and the PTO's bonus system rewards examiners for issuing as many patents as quickly as possible. Mark A. Lemley, Rational Ignorance at the Patent Office, 95 NW. U. L. REV. 1495, 1500 (2001). Given its large workload and the small amount of time spent on each patent, the PTO is probably not equipped to effectively implement a new system to determine commercial nonobviousness.
  • 266
    • 46149100343 scopus 로고    scopus 로고
    • The variation need only be sufficiently great to make the subject matter of the patent as a whole not obvious. See 35 U.S.C. § 103a, 2000, A patent may not be obtained, if the differences between the [invention] and the prior art are such that the [invention] would have been obvious at the time the invention was made
    • The variation need only be sufficiently great to make the subject matter of the patent as a whole not obvious. See 35 U.S.C. § 103(a) (2000) ("A patent may not be obtained . . . if the differences between the [invention] and the prior art are such that the [invention] would have been obvious at the time the invention was made . . . .").
  • 268
    • 46149123934 scopus 로고    scopus 로고
    • The conventional wisdom is that a lawyer should seek to advance a range of claims, from the very broad to a picture claim, i.e., the narrowest claim that still has some commercial significance. E.g., Melvin C. Garner et al., Advanced Claim Drafting and Amendment Writing Workshop for Electronics and Computer-Related Subject Matter, in SIXTH ANNUAL PATENT PROSECUTION WORKSHOP: ADVANCED CLAIM & AMENDMENT WRITING 227, 279 (PLI Patents, Copyrights, Trademarks, & Literary Prop., Course Handbook Series No. G-464, 1996).
    • The conventional wisdom is that a lawyer should seek to advance a range of claims, from the very broad to a "picture claim," i.e., the narrowest claim that still has some commercial significance. E.g., Melvin C. Garner et al., Advanced Claim Drafting and Amendment Writing Workshop for Electronics and Computer-Related Subject Matter, in SIXTH ANNUAL PATENT PROSECUTION WORKSHOP: ADVANCED CLAIM & AMENDMENT WRITING 227, 279 (PLI Patents, Copyrights, Trademarks, & Literary Prop., Course Handbook Series No. G-464, 1996).
  • 269
    • 46149094239 scopus 로고    scopus 로고
    • 189 F. 95 (S.D.N.Y. 1911), aff'd, 196 F. 496 (2d Cir. 1912).
    • 189 F. 95 (S.D.N.Y. 1911), aff'd, 196 F. 496 (2d Cir. 1912).
  • 270
    • 46149095816 scopus 로고    scopus 로고
    • at, 106 analyzing whether substance was naturally occuring and relevance of this fact
    • See id. at 103, 106 (analyzing whether substance was naturally occuring and relevance of this fact).
    • See id , pp. 103
  • 271
    • 46149087605 scopus 로고    scopus 로고
    • Id. at 103
    • Id. at 103.
  • 272
    • 46149088547 scopus 로고    scopus 로고
    • Id
    • Id.
  • 273
    • 46149088767 scopus 로고    scopus 로고
    • Since Parke-Davis, courts have recognized patents on other naturally occurring products in their purified or created forms. DNA patent claims, for example, are drafted to clearly define an isolated and purified DNA molecule. Eileen M. Kane, Splitting the Gene: DNA Patents and the Genetic Code, 71 TENN. L. REV. 707, 741 (2004).
    • Since Parke-Davis, courts have recognized patents on other naturally occurring products in their purified or created forms. DNA patent claims, for example, are drafted to "clearly define an isolated and purified DNA molecule." Eileen M. Kane, Splitting the Gene: DNA Patents and the Genetic Code, 71 TENN. L. REV. 707, 741 (2004).
  • 274
    • 46149126015 scopus 로고    scopus 로고
    • Parke-Davis, 189 F. at 103.
    • Parke-Davis, 189 F. at 103.
  • 275
    • 46149115237 scopus 로고    scopus 로고
    • The Parke-Davis approach, however, should be recognized in a subset of cases in which the inventor's achievement is in identifying a naturally occurring phenomenon for market experimentation. Consider, for example, Allerca's identification of cats that have a mutation that prevents them from producing dander and thus causing allergies. See Elisabeth Rosenthal, Cat Lovers Lining Up for No-Sneeze Kitties, N.Y. TIMES, Oct. 6, 2006, at A14 (describing how Allerca discovered that such cats exist). In our view, Allerca should be able to patent the cats that have been screened and commercialized and not just the test for identifying such cats.
    • The Parke-Davis approach, however, should be recognized in a subset of cases in which the inventor's achievement is in identifying a naturally occurring phenomenon for market experimentation. Consider, for example, Allerca's identification of cats that have a mutation that prevents them from producing dander and thus causing allergies. See Elisabeth Rosenthal, Cat Lovers Lining Up for No-Sneeze Kitties, N.Y. TIMES, Oct. 6, 2006, at A14 (describing how Allerca discovered that such cats exist). In our view, Allerca should be able to patent the cats that have been screened and commercialized and not just the test for identifying such cats.
  • 276
    • 35548966117 scopus 로고    scopus 로고
    • Even this inquiry might be difficult, because patentees might seek to engage in minimal commercialization just to preserve their patent rights. Michael Abramowicz, The Danger of Underdeveloped Patent Prospects, 92 CORNELL L. REV. 1065, 1107 (2007). Pseudocommercialization might be harmful both because it might involve wasteful expenditures and because it might succeed in converting a true commercial innovator into an infringer. Courts would thus need to ensure that the patentee engaged in sufficient commercialization in order to reach a conclusion as to whether commercialization was economically feasible.
    • Even this inquiry might be difficult, because patentees might seek to engage in minimal commercialization just to preserve their patent rights. Michael Abramowicz, The Danger of Underdeveloped Patent Prospects, 92 CORNELL L. REV. 1065, 1107 (2007). Pseudocommercialization might be harmful both because it might involve wasteful expenditures and because it might succeed in converting a true commercial innovator into an infringer. Courts would thus need to ensure that the patentee engaged in sufficient commercialization in order to reach a conclusion as to whether commercialization was economically feasible.
  • 277
    • 46149105043 scopus 로고    scopus 로고
    • Patent litigation is already notoriously uncertain. Claim-construction disputes are not finally resolved until the parties are before the Federal Circuit, even though parties are required to litigate their claims fully either through trial or summary judgment prior to proceeding to the Federal Circuit in the first place. See Gretchen Ann Bender, Uncertainty and Unpredictability in Patent Litigation: The Time Is Ripe for a Consistent Claim Construction Methodology, 8 J. INTELL. PROP. L. 175, 202-09 (2001) (discussing uncertainty associated with claim construction).
    • Patent litigation is already notoriously uncertain. Claim-construction disputes are not finally resolved until the parties are before the Federal Circuit, even though parties are required to litigate their claims fully either through trial or summary judgment prior to proceeding to the Federal Circuit in the first place. See Gretchen Ann Bender, Uncertainty and Unpredictability in Patent Litigation: The Time Is Ripe for a Consistent Claim Construction Methodology, 8 J. INTELL. PROP. L. 175, 202-09 (2001) (discussing uncertainty associated with claim construction).
  • 278
    • 46149111773 scopus 로고    scopus 로고
    • See Megan Barnett, Patents Pending, U.S. NEWS & WORLD REP, June 10, 2002, at 33, 34 (noting that examiners have twenty hours on average to complete all work on application and that work incentives established by PTO reward speed, not quality, see also NAT'L ACAD. OF PUB. ADMIN, US PATENT AND TRADEMARK OFFICE: TRANSFORMING TO MEET THE CHALLENGES OF THE 21ST CENTURY 99-107 (2005, available at http://www.aipla.org/ Content/ContentGroups/Issues_and_Advocacy/Comments2/ Patent_and_Trademark_Office/ 20055/NAPAFullReport.pdf detailing criticisms of PTO's production criteria for examiners and concluding that agency should [u]pdate [its] production and quality standards and awards
    • See Megan Barnett, Patents Pending, U.S. NEWS & WORLD REP., June 10, 2002, at 33, 34 (noting that examiners have twenty hours on average to complete all work on application and that work incentives established by PTO reward "speed, not quality"); see also NAT'L ACAD. OF PUB. ADMIN., US PATENT AND TRADEMARK OFFICE: TRANSFORMING TO MEET THE CHALLENGES OF THE 21ST CENTURY 99-107 (2005), available at http://www.aipla.org/ Content/ContentGroups/Issues_and_Advocacy/Comments2/Patent_and_Trademark_Office/ 20055/NAPAFullReport.pdf (detailing criticisms of PTO's production criteria for examiners and concluding that agency should "[u]pdate [its] production and quality standards and awards").
  • 279
    • 46149086882 scopus 로고    scopus 로고
    • See U.S. Patent & Trademark Office, Official Gazette Notice: Pilot Concerning Public Submission of Peer Reviewed Prior Art (June 4, 2007, http://www.uspto.gov/web/offices/com/sol/og/2007/week26/patsuba. htm (discussing pilot program for submission of public comment on patent submissions, Peer to Patent, http://www.peertopatent.org last visited Mar. 4, 2008, providing peer review, in cooperation with PTO, of patent submissions
    • See John J. Doll, U.S. Patent & Trademark Office, Official Gazette Notice: Pilot Concerning Public Submission of Peer Reviewed Prior Art (June 4, 2007), http://www.uspto.gov/web/offices/com/sol/og/2007/week26/patsuba. htm (discussing pilot program for submission of public comment on patent submissions); Peer to Patent, http://www.peertopatent.org (last visited Mar. 4, 2008) (providing peer review, in cooperation with PTO, of patent submissions).
    • Doll, J.J.1
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    • See supra note 243
    • See supra note 243.
  • 281
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    • Karen Boyd argues that biotechnology is one such area. See supra note 219 and accompanying text.
    • Karen Boyd argues that biotechnology is one such area. See supra note 219 and accompanying text.
  • 282
    • 46149113543 scopus 로고    scopus 로고
    • Harold Demsetz, Toward a Theory of Property Rights, 57 AM. ECON. REV. 347, 350 (1967) (Increased internalization, in the main, results from changes in economic values, changes which stem from the development of new technology and the opening of new markets, changes to which old property rights are poorly attuned.).
    • Harold Demsetz, Toward a Theory of Property Rights, 57 AM. ECON. REV. 347, 350 (1967) ("Increased internalization, in the main, results from changes in economic values, changes which stem from the development of new technology and the opening of new markets, changes to which old property rights are poorly attuned.").
  • 283
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    • notes 52-54 and accompanying text discussing literature on need for intellectual property innovation in developing countries
    • See supra notes 52-54 and accompanying text (discussing literature on need for intellectual property innovation in developing countries).
    • See supra


* 이 정보는 Elsevier사의 SCOPUS DB에서 KISTI가 분석하여 추출한 것입니다.