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Copyright Trust
Full text linkCollaborative production of expressive content accounts for an ever growing number of copyrighted works. Indeed, in the age of content sharing and peer production, collaborative efforts may have become the paradigmatic form of authorship. Surprisingly, though, copyright law continues to view the single author model as the dominant model of peer production. Copyright law’s approach to authorship is currently based on a hodgepodge of rigid doctrines that conflate ownership and control. The result is a binary system under which a contributor to a collaborative work is either recognized as an author with a full control and management rights or a person who is deemed a non-author with no rights whatsoever. We argue that the doctrines and judicial precedents that govern the all-important issue of authorship are out of step with authorial reality. And the cost to the copyright system is enormous. As we show in this Article the misalignment between copyright law and authorial reality is both inefficient and unfair: it harms incentives to create, it denies reward to contributors, it leads to under-utilization of content and it creates excessive litigation.
To remedy this state of affairs, we propose a new legal construct, which we call copyright trust. In designing this new tool we draw on insights from property and corporate theory — two areas of research that have long dealt with the challenges of collaborative enterprises and co-ownerships. The doctrine of copyright trust is predicated on the insight of decoupling ownership from control. Essentially, it would empower courts to appoint one contributor as an owner-trustee with full managerial rights and the exclusive power to control the use of the work, while recognizing all other contributors as owner-beneficiaries, who would be entitled to receive a certain percentage of the proceeds from the work. Copyright trusts would enable courts to retain the benefits of having a single owner without sacrificing the rightful claims of other contributors who would be entitled to receive a just reward for their efforts. The proposed doctrine of copyright trust would supplement, not replace, current doctrine. It is designed to enrich the menu of options available to courts in deciding authorship issues. The addition of our solution to the judicial toolbox would not only make it richer, but would also infuse current law with much needed flexibility that is sorely missing from other authorship doctrines
Publish or Perish
Full text linkThe race model has been the darling of patent economists and game theorists. This model assumes that the winner, namely the first to invent, takes the patent grant with the market dominance that comes with it, whereas the second comer, in the best tradition of sports contests, obligingly accepts her loss and quietly vanishes from the scene. While the sports analogy has provided a useful framework for understanding the economics of invention, it has obfuscated an important aspect of the inventive process: the possibility of strategic publication of research findings in order to prevent the issuance of a patent to a competitor. Captured by the sports analogy, patent scholars have consistently presupposed that the loser of a patent race must behave in a sportsmanlike fashion and gracefully accept her fate. But there is no reason whatsoever why competition in the inventive field should conform to the rules of sports. The stakes and payoff matrices of patent races are considerably different from those of sports contests, and, thus, it is only natural to expect firms in a patent race to deviate from the norms of fair competition in sports. The nature of patent races is much more complex than that of other races. Ceding a patent to a competitor may often spell a substantial drop in revenues for the losing firm, and in some cases may even drive the loser out of the market. Therefore, trying to win the race may not always be the profit-maximizing strategy. Rather, in many patent races the superior strategy for one or more of the competing firms would be to prevent other firms from winning the race by publishing their research findings. Recharacterizing patent races in this way implies that firms that are about to lose in a patent race often face a dilemma all too familiar to academics, the choice of publish or perish
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The Essential Role of Securities Regulation
Full text linkThis Article posits that the essential role of securities regulations is to create a competitive market for sophisticated professional investors and analysts ("information traders"). The Article advances two related theses—one descriptive and the other normative. Descriptively, the Article demonstrates that securities regulation is specifically designed to facilitate and protect the work of information traders. Consequently, the Article refutes the conventional wisdom that securities regulation protects the common investor; properly understood, securities regulation is not a consumer protection law. Normatively, the Article shows that information traders can best underwrite efficient and liquid capital markets, and, hence, it is this group that securities regulation should strive to protect. By protecting information traders, securities regulations enhance efficiency and liquidity in financial markets. Furthermore, by protecting information traders, securities regulation represents the highest form of market integrity by ensuring accurate pricing and superior liquidity to all investors. In this way, securities regulation improves the allocation of resources in the economy.Our analysis reveals that securities regulation's essential role is to facilitate a competitive market for information traders. Securities regulation may be divided into three broad categories: (i) disclosure duties; (ii) restrictions on fraud and manipulation; and (iii) restrictions on insider trading—each of which contributes to the creation of a vibrant market for information traders. Disclosure duties reduce information traders’ costs of searching and gathering information. Restrictions on fraud and manipulation lower information traders’ cost of verifying the credibility of information, and thus enhance information traders’ ability to make accurate predictions. Finally, restrictions on insider trading protect information traders from competition from insiders that would undercut the ability of information traders to recoup their investment in information and thereby drive information traders out of the market. Moreover, a competitive market for information traders reduces management agency costs. While courts can discern fraud or illegal transfers, they are ill-equipped to evaluate the quality of business decisions. Judicial oversight can curtail breaches of the duty of loyalty but not breaches of the duty of care; the tasks of curbing breaches of the duty of care and restraining inefficient investments are performed by information traders.Our account has important implications for several policy debates. First, our account supports the system of mandatory disclosure. We show that, while market forces may provide management with an adequate incentive to disclose at the initial public offering (IPO) stage, they cannot be relied on to effect optimal disclosure thereafter. Second, our analysis categorically rejects the calls to limit disclosure duties to hard information and self-dealing by management. Third, our analysis supports the use of the fraud-on-the-market presumption in all fraud cases even when markets are inefficient. Fourth, our analysis suggests that in cases involving corporate misstatements, the appropriate standard of care should, in principle, be negligence, not fraud
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