Current Issue

Volume 2017 — Issue 1 (Spring)

Articles:

"Reforming and Specifying Intellectual Property Rights Policies of Standard-Setting Organizations: Towards Fair and Efficient Patent Licensing and Dispute Resolution" by Richard Li & Richard Li-Dar Wang
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Standard-setting organizations (SSOs) rely on commitments to license on fair, reasonable, and non-discriminatory (FRAND) terms from standardessential patent (SEP) holders to ensure access to standards and prevent potential anticompetitive conduct that unreasonably enforces SEPs against standard implementers. A substantial number of SEP disputes, however, have been raised unceasingly in recent years. In this Article’s research, a statistical analysis of the SEP litigation cases in the United States from 2000 to 2014 shows that the SEP disputes are closely related to the FRAND licensing terms that are required in the intellectual property rights (IPR) policies of the SSOs in the information and communications technology (ICT) sector. In accordance with opinions to date from the U.S. Court of Appeals for the Federal Circuit, the U.S. International Trade Commission, the U.S. competition authorities, the European Commission, and the Court of Justice of the European Union, there is no per se rule that prohibits seeking injunctive relief against SEP infringement. Nonetheless, the criteria to decide whether to grant injunctive relief are different among various forums. In principle, injunctive relief should not be granted against a standard implementer who is willing to take license and is still negotiating in good faith with the SEP holder, so as to be aligned with the SEP holder’s commitment to license on FRAND terms. With regard to FRAND royalties of SEPs, a fundamental principle emerging from several court decisions on SEP royalties in the United States is that a royalty award for an SEP should only be based on the value of the patented invention, not to include the value added from the standards.

Furthermore, through semi-structured interviews with standard-setting delegates and licensing negotiators from the ICT industry, this research finds that many existing IPR policies are too ambiguous to constrain potential anticompetitive conduct that enforces SEPs in an unreasonable way. In fact, in light of the results of the statistical survey, the case analysis, and the stakeholder interviews, it has become urgent and imperative to improve existing vague and ambiguous IPR policies. Concrete proposals for reforming IPR policies include: defining the standard essentiality clearly and using the accurate phrase “essential patent claim”; adding specific deadlines for SEP disclosure and declaration, legal effects of failing to disclose, and update obligations for material changes concerning SEPs; incorporating prerequisite conditions for seeking injunctive relief against SEP infringement; clarifying the FRAND obligation applicable to all offers of SEP royalties during licensing negotiations; identifying a series of steps or key factors for SEP royalty calculation under the FRAND obligation; and allowing reciprocal license to be a precondition for the commitment to license on FRAND terms. These proposals could substantially strengthen existing IPR policies, fix their ambiguities, and avoid potential disputes.

Finally, this research investigates fifteen representative SSOs, examining whether their IPR policies conform to the reforming proposals, by way of which the authors further elaborate on these proposals and provide substantial suggestions on how to amend the existing policies of the representative SSOs to avoid potential disputes. Based on the statistical and qualitative analysis and the specific reforming proposals, this Article concludes that it is imperative to reform existing IPR policies to facilitate fair and efficient SEP licensing and dispute resolution, and therefore to promote competition and to ultimately benefit consumers around the world.

"Not Even Remotely Liable: Smart Car Hacking Liability" by Scott L. Wenzel
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Automobile laws must change in light of the increasingly popular smart car. Automobiles have dramatically evolved since their introduction to American society in the early twentieth century. Along the way, state and federal legislatures have passed innumerable laws aimed at regulating every facet of the industry. Since the initial regulatory scheme in the 1970s, Congress has been specifically interested in ensuring car safety and reducing the emissions of vehicles. These laws were highly effective in curbing emissions and lowering the mortality rate on the highways of America. Because of their success, the framework of these laws has remained virtually unchanged, signaling a failure to acknowledge the recent introduction of technologically advanced car systems. The legislatures’ unquestioned reliance on this framework has never proved to be a problem—until now.

Smart car technology has caused a plethora of problems for consumers ranging from death due to a misplaced reliance on driverless car technology to privacy issues with Internet-“connected” cars. In the summer of 2015, hackers found a weakness in a Jeep’s computer system and remotely commandeered the vehicle. They also unwittingly discovered a flaw in the laws assigning liability of defective vehicles. Reliance on the traditional defective automobile laws in cyberattacks would render car manufacturers completely liable, despite the interference of an independent third party. Nobody wins when car manufacturers are burdened with this kind of unbridled liability. In response, manufacturers could choose not to equip their vehicles with sophisticated computers that are prone to hacking events. Those same components, however, play essential roles in car safety and emissions reduction efforts—which both the government and consumers demand.

Smart car technology will continue to evolve—as should our laws. This Article analyzes the current liability scheme for defective automobiles and discusses why laws predicated on physical access and control should not be applicable to remote hacking events. This Article then identifies and analyzes other liability schemes and proposed legislation relating to smart cars. After concluding that none of the current or proposed laws assigning liability for smart car cyberattacks are sufficient, the Article offers a new, flexible scheme for this novel, ever-evolving technology.

The proposed scheme takes into account, inter alia, public safety, consumer demand, environmental concerns, and blameworthiness. Based on Judge Learned Hand’s calculus of negligence, manufacturers would be required to meet a certain standard when producing cars that are susceptible to cyberattacks. Because of the nature of digital technology, this standard cannot be fixed—if it were, it would quickly become obsolete. Manufacturers would only be liable when they fail to meet the appropriate standard. To be sure, given the awareness of potential hacking events and the gravity of harm that can result from a cyberattack, manufacturers have a significant burden in satisfying this standard of care; however, they would not be strictly liable for hacking events. Once this minimum standard is set, much like what happened with the emissions regulations of the 1970s, consumer demand and the market will drive manufacturers to surpass the minimum requirements, ultimately making our roads, and cars, safer.

"Would You Like Your Internet With or Without Video" by William Lehr & Douglas Sicker
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According to Cisco’s Visual Networking Index forecast, “consumer Internet video traffic will be 85% of consumer Internet traffic in 2020, up from 76% in 2015,” and the majority of this traffic will be entertainment-oriented video.1 Many might view this as the (near) realization of the promised convergence of digital broadband delivery platforms that has been coming since first generation broadband services started becoming available in the mid-1990s. A question we should ask is whether this is the Internet we want. Even if one concludes that the marriage between entertainment media and the Internet is a foregone conclusion, it is worthwhile to consider what this may mean for the design, regulation, and economics of the Internet.

In this Article, we critically examine the proposition that the conventional wisdom that convergence toward “everything over IP,” or even stronger, “everything over the Internet,” is efficient, inevitable, or desirable may be wrong. Convergence means different things in technical, economic, and policy terms. Building a single network that is optimized for 80% entertainment video traffic might disadvantage other services. Moreover, the economics of media entertainment are distinct from, and potentially in conflict with, the economics motivating many of the usage cases most often cited as justification for viewing the Internet as an essential infrastructure. Finally, separately managing the traffic for Internet and video services may be advantageous in addressing regulatory agenda items such as performance measurement, set-top boxes, universal service, online video distributor reclassification, and Internet interconnection. While most of the traffic may share the same physical (principally, wired) conduit into homes, it may be more efficient and flexible to segregate traffic into multiple logically distinct networks; and doing so may facilitate technical, market, and regulatory management of the shared resources.

Book Review:

"Neuroscience Changes More Than You Can Think" by Paul S. Davies & Peter A. Alces
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In this Essay, we consider the contribution of a startling new book, Law & Neuroscience (L&N), by Owen Jones, Jeffrey Schall, and Francis Shen. It is a law school course book (a genre not often the focus of a scholarly review essay) that supports fundamental inquiry into the relationship between emerging neuroscientific insights and doctrinal conceptions in the law. We believe that the book shifts the paradigm and so may profoundly affect the course of normative evaluation of law. In this Essay, we trace and evaluate the “argument” of the book and suggest ways in which its contribution to the normative analysis of law may impact students and legal scholars for years to come. We believe that L&N is that rare work that will, quite literally, change the way people think.

The book’s power rests, securely, on two premises: (1) legal doctrine derives mainly from our folk psychological intuitions (based on our inferences about others’ beliefs, desires, and intentions) concerning human agency and, in particular, our capacities for practical reason; and (2) progress in the sciences of the mind, including neuroscience, casts grave doubts on folk intuitions at the core of our understanding of human agency. It is folk psychology that gives way to an understanding informed by neuroscience, compelling revision of our notions of responsibility embodied in contracts, torts, and criminal law.

Part I describes the dynamic balance and pedagogical power that the format of L&N achieves. That dynamic and power is illustrated in the contrast between the neurological reductionism endorsed by Francis Crick and skepticism expressed by Stephen Morse concerning the relevance of neuroscience to legal doctrine. On Crick’s view, if our folk psychological intuitions come into conflict with known neurological facts, it is folk intuitions that must go. On Morse’s view, by contrast, there are, either in principle or merely in fact, no discoveries in neuroscience that threaten our folk view of ourselves. In their judicious selection of theoretical perspectives and case studies, the editors of L&N sustain the Crick-Morse dichotomy across a wide range of substantive legal issues.

We complete our analysis in Part II by taking a stand of our own—we show the very real challenges to law presented by the Crick-Morse dichotomy. With Crick and others, we argue that the former authority of our folk intuitions must be ceded to conflicting findings in science. In defense, we show that recent discoveries from cognitive neuroscience integrate with discoveries in affective neuroscience, and, from those premises, we defend two claims: (1) many human actions—those we intuitively judge to be evaluable in moral and legal terms—are, as a matter of fact, causally influenced by affective processes about which we cannot reason, precisely because those processes do not rise to conscious awareness; and (2) some information about our affective processes can rise to conscious awareness, but, even when that occurs, the actual causes of our actions are liable to misinterpretation. We conclude that, if either (1) or (2) is correct, assumptions at the core of our folk view of human agency cannot be sustained. The shift in paradigm is profound indeed.

Recent Development:

"The Future Energy Jobs Act Shaft: How Illinois' New Zero Emission Standard Is Anticompetitive, or, Why Some Environmentalists Oppose the Clean Power Plan" by Annika Kolasa
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The Future Energy Jobs Act, signed into law by Illinois Governor Bruce Rauner on December 7, 2016, once implemented, will create a compliance market to trade nuclear energy zero emission credits (ZECs) in much the same way as renewable energy credits, using the social cost of carbon to measure nuclear energy’s value in reducing greenhouse gas emissions. The problem is threefold: (1) A zero emission standard would create a previously unrecognized revenue stream in the carbon-avoidance attribute of nuclear energy. This would save some nuclear reactors owned by Exelon from the early retirement they had been facing due to fair competition from cheaper wind energy. (2) The Environmental Protection Agency (EPA), in its final Clean Power Plan (CPP) rule, has made clear that existing nuclear generation will not be able to “count” as emission reduction because, technically, no emissions are being reduced through the continued operation of the same plants. New nuclear plants would need to be built or capacity would need to be increased at existing plants in order for this bill to fulfill its purported purpose. (3) The future of the CPP is becoming increasingly uncertain, as President Trump has vowed to rescind it (having recently signed an executive order to start that process) and Scott Pruitt (who as Oklahoma’s Attorney General had sued over the CPP) is now head of the EPA. In the absence of any compelling necessity to ascribe societal value to emissions from nuclear plants, and having done so in a manner that flies in the face of the EPA’s proposed CPP regulations, critics say the Act amounts to a $235 million annual subsidy to Exelon—paid for by its customers. Furthermore, because nuclear energy is federally regulated, health and safety issues are out of the state’s purview—meaning Illinois would be forfeiting control over these aspects of its energy production to Nuclear Regulatory Commissioners appointed by the President.

Through House Resolution 1146, the Illinois House of Representatives (98th General Assembly) directed state agencies to study the impacts of closing three unprofitable nuclear plants on grid reliability, electric rates, and in-state jobs, but the resulting report is severely distorted in the Future Energy Jobs Act and in Exelon’s promotional materials. Closing the state’s unprofitable nuclear plants could decrease electricity costs over the long run, would not significantly impact electric grid reliability within the State, and would create more jobs over five years than keeping them open, according to the report. Energy policy dictates in-state spending for years to come, and consumers could be on the hook for bad energy investments. Therefore, Illinois should consider the environmental, reliability, and economic impacts of nuclear energy as compared to the alternative of increased renewable generation and non-energy alternatives (such as energy efficiency and demand response) as it continues to develop its energy policy.

Notes:

"Quacking the Foundation: Fracking-Induced Earthquakes and What to Do About Them" by David Bulgarelli
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"Big Data Analytics, Rising Crime, and Fourth Amendment Protections" by Timothy J. Kraft
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"Exploring Alice's Wonderland of Patentable Subject Matter" by Harrison B. Rose
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