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Bound print copies of George Mason School of Law’s working paper series on law and economics are available in the Law Library. The bound set often includes initial drafts of papers. Search Mason’s Classic Catalog to locate a working paper.

Recent Working Papers:

Market-Reinforcing Versus Market-Replacing Consumer Finance Regulation

By Todd Zywicki


The aftermath of the financial crisis has seen the formation of several new banking regulators and an onslaught of new financial regulation. In the area of consumer financial protection bureau these regulations have resuscitated the regulatory approach of prior eras, namely substantive regulation of the prices, terms, and products offered to consumers. But these regulations have also resulted in predictable unintended consequences — higher prices, reduced innovation, and exclusion of many consumers from mainstream financial products. This chapter drawn from the book Reframing Financial Regulation: Enhancing Stability and Protecting Consumers, distinguishes between two types of regulatory approaches, “market-reinforcing” and “market-replacing” consumer finance regulation, and argues that consumer welfare would be improved by a regulatory strategy that makes markets work better instead of displacing them with command-and-control regulation.

Anonymity, Autonomy, and the Collection of Personal Data: Measuring the Privacy Impact of Google's 2012 Privacy Policy Change

By James Cooper


One of the most vexing problems in privacy policy is identifying consumer harm from unwanted observation; because it is highly subjective and is likely to vary greatly throughout the population, it doesn’t lend itself to easy measurement. Yet, these types of situations increasingly are the focal point of privacy policy discussions. The primary approach to attempt to quantify subjective harms has been to measure consumers’ willingness to exchange personal data for money in an experimental setting. This study takes a different tack, using field data to measure actual consumer response to a real-world reduction in the anonymity of online search. In March 2012, Google began to combine user information across platforms. To the extent that Google’s policy change reduced the anonymity associated with Google search, it may have reduced incentives to search sensitive or topics. Using a difference-in-difference estimator with top non-sensitive search terms as the control group, the results suggest that there was a small and short-term reduction in the Google Trends scores for sensitive search. There is no measured difference in reaction between high- and low-privacy demand states. Overall, the results indicate that any consumer welfare loss from Google’s policy change was small, and likely swamped by the demand-increasing impact of customization made possible from the cross-platform data sharing. That there is no measurable long-term substitution out of sensitive search may reflect the privacy advantages of searching for sensitive information on Google versus seeking the same information in an interpersonal setting. These findings suggest that privacy policy changes that are publicized should be treated like ordinary price changes — causing marginal consumers to exit and reducing consumer surplus for those who remain — not opportunities for regulatory intervention.

The History Of ‘Substantive’ Due Process: It's Complicated

By David Bernstein


The history of what has come to be known as substantive due process is fraught with political implications, even more so now that same-sex marriage has joined abortion as a right protected by the Court under the rubric of due process. It’s tempting to create a simplified version of the past that explains how we got from point A to point B, and that implicitly or explicitly teaches some profound lesson about the present. History, rarely truly lends itself to such convenience. It’s complicated. 

With that in mind, this essay discusses a recent Texas Law Review article by Joshua Hawley. Hawley seeks to demonstrate that modern substantive due process jurisprudence was a novel invention of the Warren and Burger Courts, having no significant antecedents in the due process jurisprudence of the so-called Lochner era. Hawley makes some eminently reasonable points, especially with regard to how the Court replaced its historic natural-rights-based constitutionalism with a positivist understanding of the law that invites Justices to read their own philosophical views into the Due Process Clauses. Nevertheless, not all of Hawley’s claims are persuasive. In this essay, I complicate the story Hawley tells, by discussing alternative and additional explanations for the developments he discusses.

Our Illiberal Administrative Law

By Douglas Ginsburg, Steven Menashi


In adopting the Administrative Procedure Act, the Congress intended to extend the liberal tradition - of limited government, checks and balances, and the protection of individual rights - to governance of the administrative state: The APA would give the public a way to get relief from administrative excess. Yet in the 70 years since it was enacted, evasive practices by the agencies and an increasingly deferential posture from the courts have combined to frustrate that purpose. The result is a legal regime that insulates agencies from correction and denies citizens redress. The illiberal aspects of this regime - presumptions that favor the government, unbounded delegations of authority, judicial deference on questions of law, the evasion of notice‑and‑comment rulemaking - do not arise from the APA itself but from the failure of courts and agencies to fulfill their obligations under the APA.

Taking Steel Seizure Seriously: Reflections on the Iran Nuclear Agreement

By Steven Menashi


This article examines the constitutional validity of President Obama's decision, as part of his 2015 agreement with Iran, effectively to repeal 17 different sanctions laws for the 15-year life of the agreement. Although Congress had legislated extensively in this area, the President effected this change by entering into a "nonbinding political agreement" with Iran and by aggregating individual waiver provisions in the sanctions laws into an-across-the-board waiver of sanctions. We argue that the commitments made by the President in the Iran agreement violate a fundamental separation-of-powers limit on executive power—what we term "the Steel Seizure principle," after the Youngstown Steel Seizure Case.

As the Supreme Court reaffirmed in the Steel Seizure Case, the President does not have lawmaking power even where national-security and foreign-relations concerns are at stake. A vast literature has grown around the Steel Seizure Case, especially the influential concurring opinion by Justice Robert Jackson. Yet relatively little attention has been paid to the majority view of the Justices that President Truman’s seizure order was unlawful not because it contravened any express statutory prohibition but because it flouted the congressional "plan" for addressing the particular policy issue. This central aspect of the Steel Seizure Case highlights what is particularly problematic about President Obama's decision to aggregate authorities in the sanctions laws and to commit the United States to an across-the-board waiver of nuclear-related sanctions pursuant to his agreement with Iran. The President treated the waiver provisions as an invitation to end the congressionally prescribed sanctions regime for addressing Iran's nuclear weapons program and to replace it with his own non-sanctions regime for addressing the same issue. Yet the President lacks the unilateral power to overturn Congress's prescribed policy and to replace it with his own.

The President is both an agent and, particularly in the foreign relations area, can be viewed as a co-principal with Congress. The Steel Seizure principle highlights the limits of the co-principal conception of the President. Once Congress has developed a legislative framework for a subject matter, that framework occupies the field; the President's role becomes one of a responsible agent. In the Iran sanctions laws, Congress provided bounded waiver authority, acting responsibly to allow limited executive discretion rather than requiring the President to seek new legislation each time flexibility was needed. It did not, however, invite the President to override the sanctions framework altogether, as occurred in connection with the Iran nuclear agreement. An emergent literature in administrative law has praised Congress's delegation of waiver authority to the executive branch as providing needed flexibility and other policy benefits. Yet that literature recognizes that the President's exercise of waiver authority must be carefully circumscribed to avoid the problem of the President revising a statutory regime out of disagreement with Congress's policy choices. Such limiting principles are no less necessary in the foreign-affairs context, where the President has used purported waiver authority in the Iran sanctions statutes to pursue his own independent policy in defiance of Congress.

A Dual Non-Banking System? Or a Non-Dual Non-Banking System? Considering the OCC's Proposal for a Non-Bank Special Purpose National Charter for Fintech Companies, against an Alternative Competitive Federalism System, for an Era of Fintech Banking

By J.W. Verret


This Article examines the Office of the Comptroller of the Currency’s (OCC) proposal to grant special purpose national bank charters to rapidly emerging financial technology (fintech) companies. The Article contemplates the particular dynamics of the OCC’s proposal in light of recent court decisions such as Madden v. Midland Funding, LLC and CashCall that have called certain aspects of the fintech-bank partnership model (bank partnership model) historically favored by fintech companies. This Article reviews how the dual banking system has functioned historically, and uses this analysis to predict how the OCC’s proposal would be expected to operate. After detailing potential issues posed by the OCC’s federal solution, the Article puts forth a more effective alternative to the OCC’s proposal in the form of a competitive state fintech chartering system modeled on the competitive state chartering system for corporations. The Article also briefly considers whether the OCC could establish a hybrid approach in which national bank charters might incorporate elements of state competition. The Article concludes with a consideration of complications that will continue to inhibit the promise of a fintech charter under a competitive federalism inspired system of state fintech chartering competition.

The Administrative State and Its Law

By Michael Greve


For understandable but also unfortunate reasons, the contemporary scholarly and public debate over “the administrative state” — a poorly defined term of convenience — has been marred by dramatic claims, ideological rancor, and arcane doctrinal quarrels that serve as placeholders for a grim clash of convictions. Expansive delegations of legislative powers, coupled with highly deferential judicial review and increasingly “unorthodox” forms of administration, have prompted scholars from opposing vantages to argue that all administrative law is an unlawful departure from constitutional government, or a thin veneer for an essentially “Schmittian” state beyond effective legal control (and a good thing, too).

This essay — written as an Introduction to a series of articles commissioned for a transatlantic law conference — argues that the stateside debate would greatly benefit from a comparative administrative law inquiry. In contrast to the acrimony over unchecked executive power in the United States, British scholars apprehend tendencies toward administrative juristocracy. In even sharper contrast, the German administrative law profession shares a firm conviction that is entirely possible to reconcile the demands of modern government with constitutionally grounded rule-of-law precepts. At a minimum, the comparative perspective greatly complicates facile stories of constitutional decay or the “modernization” of an archaic constitutional framework. It invites deeper reflection and opens a wider, perhaps more sober perspective on the American administrative state and its law.

Do Americans Really Save Too Little and Should We Nudge Them to Save More? The Ethics of Nudging Retirement Savings

By Todd Zywicki


The contention that consumers systematically “undersave” for retirement is a frequent example provided by adherents to behavioral economics and behavioral law and economics to purportedly illustrate their theories. Although frequently asserted, the claim that people systematically undersave is rarely assessed empirically. 

This article, written for the Georgetown Institute for the Study of Markets and Ethics Symposium on “The Ethics of Nudging,” examines available data on how many people fail to save and the reasons why they do not. According to available evidence, the overwhelming number of households saves enough or more than they need for retirement; only a small minority does not seem to save enough. Those who do not save for retirement lack the money to do so or allocate available resources to paying down consumer and student loan debt. Behavioral economics theories explain little of the observed patterns of saving or non-saving behavior. Moreover, behavioral economics itself suggests that many people probably oversave for retirement and makes no effort to reconcile these offsetting biases. 

More fundamental, once it is recognized that there is an opportunity cost to saving more—one must consume less today, borrow more, or work more—the theoretical validity of the claim that people undersave because of behavioral biases is suspect. Given the inherently subjective nature of opportunity cost, a central planner cannot be confident that he can make people better off by influencing their consumption expenditures across time than he could by shifting consumption expenditures across different goods and services today. It is concluded that there is little reason to believe that people would be made better off by nudging them to save more for retirement.

A Second Amendment Right to Be Negligent?

By Stephen Gilles, Nelson Lund


Professor Andrew Jay McClurg maintains that the Second Amendment has been used to create a right to store firearms negligently. It is conceivable that some such thing could happen, just as the Supreme Court has used the First Amendment to require plaintiffs who are public figures to prove more than negligence in defamation actions. But Professor McClurg presents no evidence to support his claim. To accept his claim that the Second Amendment has caused courts to distort the application of standard tort principles, we would have to believe that they secretly relied on the Second Amendment and that they undertook this insidious project before they believed there was a legal basis for what they were doing. This is completely implausible. Professor McClurg, however, makes two additional claims that require a more extended response.

First, he maintains that courts have misapplied well-established tort principles in refusing to hold the victims of gun thefts liable for injuries subsequently inflicted with the stolen weapons. This is wrong. Courts are simply applying traditional tort doctrines — including proximate cause and limits on duties to protect strangers from wrongdoing by others — when they refuse to impose liability on a gun owner whose unsecured gun is stolen and subsequently used to commit a crime. 

Second, Professor McClurg contends that legislatures have irresponsibly failed to impose objectively reasonable safe-storage duties on gun owners. Unfortunately, he has conflated his personal policy preferences with what is objectively reasonable. He advocates a rule requiring gun owners to store their guns in a sturdy, non-portable gun safe whenever they are not within the owner’s immediate control. This rule simply assumes away the costs of safe-storage practices, which include the expense of gun safes and the risk of being unable to quickly access the gun in an emergency. Furthermore, the imposition of such a duty — whether by courts or legislatures — would raise serious Second Amendment questions.

State Consumer Protection Acts: An Economic and Empirical Analysis

By James Cooper


Consumer protection acts (CPAs) developed with the goal to protect American consumers from fraudulent, deceptive and unfair business practices. Initially, Congress, through the FTC Act, sought to define and deter conduct that the existing legal system largely failed to remedy. Subsequently, states localized and individualized these rights while maintaining a careful balance between protecting consumers and preventing the proliferation of lawsuits that harm both consumers and businesses. But in recent decades, this thoughtful balance has yielded to damaging legislative and judicial overcorrections at the state level with a common theoretical mistake: the assumption that more CPA litigation automatically yields more consumer protection. The result has been an explosion in consumer protection litigation, which serves no social function and for which consumers pay indirectly through higher prices and reduced innovation. Using data on state and federal CPA litigation from 2000-2013, we find substantial increases in CPA litigation in both, with federal litigation growing almost twice as fast in federal than state courts (a cumulative average growth rate of 6.1 percent vs. 3.4 percent). We also find that the financial crisis appears to have played a large role in the recent growth in CPA litigation — the financial services industry is the most common target for private CPA actions in a set of cases we sample, and a large proportion of these cases involve debt collection or federal lending or housing statutes. We conclude that although the entire suite of expansive provisions in CPAs — enhanced damages, class actions, attorneys fees, and eliminating the need to show harm — are responsible for the explosion in private CPA litigation, from a social standpoint, requiring consumers to show cognizable harm would be the most efficient reform.

Vested Use-Privileges in Property and Copyright

By Christopher Newman


The notion that, “If it’s mine, I can do whatever I want with it” continues to have strong popular appeal as describing one of the implications of property ownership.  Indeed, this notion is coming to be pressed into service as a source of normative objection to the scope of certain intellectual property laws which have the effect of limiting what consumers can do with chattels they otherwise own.  Yet in property theory the status of use-privileges has long been dubious, with the right to exclude instead taking center stage.  This essay considers the nature of a “vested use-privilege” from both analytical and positive law perspectives, offering both a formal account of what it would mean for such an entitlement to exist or be infringed and a discussion of both the extent to which such an entitlement actually exists in extant property law and the extent to which copyright law should be regarded as conflicting with it.

The Due Process Right To Pursue a Lawful Occupation: A Brighter Future Ahead?

By David Bernstein


The ghost of Lochner hangs over due process challenges to laws that restrict entry to occupations. In an attempt to vanquish the remnants of Lochner and similar pre-New Deal cases, the Supreme Court established and applied a weak rational basis test to evaluate all economic regulation, including occupational regulations, leaving very little room for successful challenges.

Recent precedent, however, suggests that courts are becoming more protective of the right to pursue an occupation. The gradual undermining of standard critiques of Lochner and its progeny on the one hand, and the spread of costly and restrictive occupational licensing to jobs that pose minimal risk to public well-being on the other, have ignited debate over whether strict judicial deference to even the most arbitrary and abusive licensing laws is appropriate.

Meanwhile, the unofficial demise of the fundamental/non-fundamental rights dichotomy in the Supreme Court’s due process jurisprudence, combined with a rising generation of judges, liberal and conservative, who may not share their predecessors’ reflexive hostility to meaningful judicial oversight of occupational restrictions, provide a glimmer of hope that the right to pursue a lawful occupation free from unreasonable government regulation will soon be rescued from constitutional purgatory.

The Missing Role of Economics in FTC Privacy Policy

By James Cooper, Joshua Wright


The FTC has been in the privacy game for almost twenty years.  In that time span, the digital economy has exploded, dramatically increasing the importance of privacy regulation to the economy.  Unfortunately, the sophistication of the FTC’s privacy policy has yet to keep pace with its stature.   Privacy stands today where antitrust stood in the 1970s.  Antitrust’s embrace of economics helped transform it into a coherent body of law that almost all agree has been a boon for consumers.  Privacy regulation at the FTC is ripe for a similar revolution.  We examine the history of FTC privacy enforcement and policy making, with special attention paid to the lack of economic analysis, and we show the unique ability of economic analysis to ferret out conduct that is likely to threaten consumer welfare, and provide a framework for FTC privacy analysis going forward.  Specifically, the FTC needs to be more precise in identifying privacy harms and to develop an empirical footing for both its enforcement posture and prophylactic measures that it urges firms to adopt, such as “privacy by design” and “data minimization.”  The sooner that the FTC begins to incorporate serious economic analysis and rigorous empirical evidence into its privacy policy, the sooner consumers will begin to reap the rewards.  

Our Polarized, Presidential Federalism

By Michael Greve


Over the past three-plus decades, American federalism has taken on a decidedly executive, presidential coloration. The trend has persisted under Republican and Democratic administrations, and on all accounts it has accelerated. Moreover, federalism has become increasingly polarized at the federal and, perhaps more consequentially, at the state level. Controversies over environmental policy, immigration, health care, and other salient issues have been fought by remarkably cohesive, sharply polarized blocs of states. The extant literature has ably limned executive, presidential federalism’s contours and especially its intergovernmental dynamics. This Article seeks to extend and broaden the scholarly inquiry. It urges greater attention to questions of political economy; comparative politics; fiscal federalism; and constitutionalism and judicial capacity.

Those lines of inquiry and especially a comparative perspective provide cause for concern. Polarized, presidential federalism is a defining feature of political systems (especially in Latin America) that share our formal institutional arrangements, such as Argentina, Brazil, and Venezuela. Those systems tend toward a highly personalized style of executive government, political and fiscal instability, and institutional corruption. The Article expresses no view on the likelihood of a similar scenario in the United States, let alone predict it. However, it suggests that such a trajectory is within the range of possibilities.

Antonin Scalia and the Dilemma of Constitutional Originalism

By Nelson Lund


Antonin Scalia has had a very significant and healthy impact on the way people talk about American constitutional law. Before he took his seat on the Supreme Court, it was barely respectable to treat the Constitution, understood to mean what it meant to those who wrote and ratified it, as the law. Constitutional law was - as every sophisticated lawyer, jurist, and academic understood - whatever the courts said it was, and the written document had been superseded in significant part by a “living constitution” that reflected the progressive political agenda of the modern left. Thanks largely to Justice Scalia’s forceful and eloquent voice, originalism is now so respectable that even those who seek to move the law ever farther to the left frequently find it prudent to pose as expositors of the Constitution’s original meaning.  Scalia’s substantial effect on the terms of debate in constitutional law, however, is not likely to be matched by a comparable influence on the future of the law itself. His effort to alter the Supreme Court’s approach to constitutional adjudication faced serious obstacles that will continue to frustrate Justices - and observers like me - who share Scalia’s desire for a revival of respect for the written Constitution. Most obviously, political realities could easily prevent presidential appointments from producing a majority of like-minded Justices any time soon, if ever. There are, however, some more interesting obstacles that have deep historical roots. This essay explores those obstacles before considering two examples that suggest why Scalia’s originalism is unlikely to make a decisive contribution to the reformation in constitutional law that he sought.

Intellectual Property and Standard Setting

By Joshua Wright, Koren Wong-Ervin


Standard setting has become increasingly important to the economy. Voluntary, open, and market driven standard setting promotes research and development investments in “best of generation” technologies that enable and accelerate follow on innovation, competition, and economic growth. Standard development organizations (SDOs) are private organizations that develop technical and other standards through a collaborative and consensus-driven process that balances the varied interests of industry participants, which include both producers and potential users of technology. SDOs provide a platform for industry scientists and engineers to come together and develop technical standards. Because standards may include technology that is the subject of intellectual property rights (IPRs) such as patents, SDOs historically have promoted widespread dissemination of standardized technologies through IPR Policies, which balance the rights of IPR holders with rights to access essential technology. Although SDO IPR Policies vary widely, many policies achieve this balance by seeking to have their members publicly declare any potential standard-essential patents (SEPs) (i.e., patents that are essential to practice a given standard) and to license them on “fair, reasonable, and nondiscriminatory” (FRAND) terms. Most SDOs clearly state that the purpose of the FRAND assurance is to both ensure access to the standardized technology and fairly compensate the contributors to the standard.

The issues and choices regarding specific IPR Policies are best left to individual SDOs and their members to decide, rather than government agencies. SDOs “vary widely in size, formality, organization and scope,” and therefore individual SDOs may need to adopt different approaches to meet the specific needs of their members. A government agency’s issuance of recommendations may unduly influence private SDOs and their members to adopt policies that might not otherwise gain consensus support within a particular SDO and that may not best meet the needs of that SDO, its members, and the public. This could occur because the SDO believes that failing to adopt the specified policy is not permitted or because failing to adopt the policy could subject the SDO and its members to other legal liabilities. Accordingly, the U.S. Antitrust Agencies have taken the position that they do “not advocate that SSOs [standard setting organizations or SDOs] adopt any specific disclosure or licensing policy, and the Agencies do not suggest that any specific disclosure or licensing policy is required.” 
 However, despite these statements, the U.S. Department of Justice’s Antitrust Division (DOJ) recently issued a Business Review Letter on the proposed amendments to the Institute of Electrical and Electronics Engineers, Incorporated’s (IEEE’s) IPR Policy. In the letter, the DOJ went well beyond its mission of providing a statement of its antitrust enforcement intentions with respect to the proposed amendments, and instead endorsed certain policy choices. Some of its preferred policies include provisions that essentially prohibit patent holders from seeking or enforcing injunctive relief on FRAND-assured SEPs, and provisions that essentially require component-level licensing; the latter is contrary to the long-standing industry practice of end-user device licensing. The IEEE’s controversial amendments were highly criticized by SEP holders and others on both procedural and substantive grounds. Recent econometric analysis reveals a biased treatment of substantive comments submitted to the IEEE by members opposed to the controversial revisions. Additional empirical evidence following the amendments shows a slowed rate of development for IEEE standards and numerous major SEP holders refusing to grant letters of assurance (i.e.,assurances to license under certain terms) under the new policy. 
 Another concerning development is the U.S. Federal Trade Commission’s (FTC’s) recent consent agreements with Bosch and Motorola Mobility/Google. The former prohibits the company from seeking or enforcing injunctive relief on FRAND-assured SEPs; the latter prohibits the companies from seeking injunctive relief on a worldwide basis except under certain circumstances. Following the FTC’s consent agreements, antitrust agencies around the world, including in Canada, China, Korea, and Japan, adopted similar approaches, namely creating competition law sanctions for seeking or enforcing injunctive relief against “willing licensees.” These developments represent a fundamental policy shift that threatens to disrupt the carefully balanced FRAND ecosystem without any evidence that the targeted conduct (namely “holdup” by patent holders) is a widespread or systemic problem that has led to higher prices, reduced output, or lower rates of innovation. Indeed, in contrast to the predictions of the theories that such injunctions will have anticompetitive effects, products that intensively use SEPs have seen robust innovation as well as falling prices and increased output when compared to industries that do not rely upon SEPs.

Rethinking Presidential Eligibility

By Eugene Mazo


Throughout American history, several aspiring presidents have had their candidacies challenged for failing to meet the Constitution’s eligibility requirements. These challenges began in the 1880s with the dispute over Chester A. Arthur's eligibility, and they continued into the twentieth century. Recently, presidential eligibility challenges have become much more prominent. In addition to being contested in the court of public opinion, these challenges have recently been contested in the courts of law as well. Although none of these challenges have ever been successful, they have worked to sap presidential campaigns of valuable resources and have threatened the campaigns of several ambitious men. This Essay examines several famous presidential eligibility challenges. It looks at the historic challenges confronted by Chester A. Arthur, Charles Evans Hughes, Barry Goldwater, George Romney, Christian Herter, and Lowell Weicker, and at the more modern challenges faced by John McCain, Barack Obama, and Ted Cruz. The literature on presidential eligibility traditionally has focused on discerning the meaning of the the Constitution's Eligibility Clause, which enumerates the age, residency, and citizenship requirements that a U.S. president must satisfy before taking office. By contrast, very little of it examines how a challenge to a candidate's eligibility impacts a presidential campaign. Nor does the literature offer many solutions for what Congress can do to respond to these challenges. This Essay seeks to fill this gap. It also offers a modest proposal. It calls on Congress to pass legislation defining exactly who qualifies to be a natural born citizen or, in the alternative, to implement procedural rules that would expedite presidential eligibility challenges for review to the U.S. Supreme Court.

Federalism and the Roberts Court

By Ilya Somin


The Roberts Court saw a number of important advances for judicial enforcement of federalism-based limits on congressional power, both in high-profile cases such as NFIB v. Sebelius, and lesser known ones. The extent of these gains is greater than many observers recognize. Much of this progress fits the conventional model of federalism as a left-right ideological issue on the Court, dividing liberal Democrats from conservative Republicans. But some noteworthy developments depart from this framework, and suggest a greater degree of openness to federalism among the liberal justices, and perhaps others on the left.

Extra-Jurisdictional Remedies Involving Patent Licensing

By Joshua Wright, Koren Wong-Ervin, Douglas Ginsburg, Bruce Kobayashi


In the last several years, competition agencies around the world have imposed or considered imposing extra-jurisdictional remedies on patent holders, particularly owners of standard-essential patents (SEPs) upon which the patent holder has made a commitment to license on fair, reasonable, and non-discriminatory (FRAND) terms.  For example, in January 2013, the U.S. Federal Trade Commission (FTC) entered into a consent agreement with Motorola Mobility and its parent, Google, that, except in limited circumstances, prohibits the companies worldwide from seeking injunctive relief against infringers of any FRAND-assured SEP in its global portfolio.   Similarly, the Korea Fair Trade Commission and the Taiwan Fair Trade Commission are reportedly considering imposing worldwide restraints on Qualcomm’s enforcement of its global patent portfolio in order to remedy alleged competition violations involving the company’s patent licensing practices.  Imposing worldwide remedies can conflict with principles of international comity and result in significant substantive conflicts with the antitrust agencies of other countries given the wide variety of approaches taken globally on antitrust matters involving intellectual property rights (IPRs), particularly with respect to honoring an IPR holder’s core right to exclude.  This has the potential to produce significant negative effects on competition and welfare, particularly if conduct that is widely considered to be generally procompetitive is the object of the worldwide prohibition.  Even when attacking universally condemned activity such as price fixing, global remedies risk overdeterrence when national authorities do not coordinate to adjust the penalties they impose.  Moreover, as explained below, extra-jurisdictional remedies are likely unnecessary to resolve any alleged harm to consumers in the jurisdiction imposing them.  Each competition agency forgoing global remedies does not prevent competition law solutions to global harms, and is appropriate to mitigate the risk of overdeterrence.  Honoring principles of comity also can mitigate a race to the bottom in competition law enforcement by preventing the lowest common denominator approach to competition law remedies from governing across the board.  Indeed, some, including officials at the highest levels of the U.S. government, have raised concerns that foreign governments may be “using numerous mechanisms, including [antitrust laws] to lower the value of foreign-owned patents” in order to benefit those within their countries who implement foreign technology ; that is, the competition authority may be enforcing competition law not solely to protect their consumers from potentially anticompetitive licensing practices, but also to benefit local implementers or a “national champion” in a way that is inconsistent with the procompetitive goals of the competition laws of other jurisdictions.   While competition officials across the globe have emphatically denied such claims, imposing welfare reducing global remedies on patent licensing, in addition to reducing competition and welfare, will also draw increased criticism and threaten to harm an agency’s credibility with stakeholders, the international antitrust community, and the public.  This article discusses the various approaches taken thus far, as exemplified by four recent decisions: one by the FTC against Google/MMI; two by the European Commission (DG Comp) against Motorola and Samsung, respectively; and one by China’s National Development and Reform Commission (NDRC) against Qualcomm.  In contrast with the FTC’s investigation, the latter three limit remedies to the patent holder’s domestic practices in the licensing of their domestic patents (i.e., activity and patents within the territory of the investigating authority), illustrating nicely remedies that are consistent with principles of international comity. 

Federalism and the Rise of State Consumer Protection Law in the United States

By Joshua Wright


Starting in the 1960s, individual states began to adopt and enforce Consumer Protection Acts (“CPAs”), the purpose of which was to supplement the FTC’s consumer protection authority to prohibit “unfair or deceptive acts or practices.” By 1981, each state had its own CPA. The proliferation of state CPAs provides a valuable opportunity to observe competitive federalism in action and to observe the potential effects of concurrent state and federal regulation. The purpose of this paper is to understand the role of state CPAs in the consumer protection landscape with an eye toward drawing lessons concerning whether state CPAs manifest the benefits of competitive federalism, embody a failure of this principle, or neither. After describing the dramatic rise and expansion of state CPAs, this paper focuses upon two empirical studies that cast significant doubt upon the failure of jurisdictional competition to constrain the adoption of state CPA features likely to result in net harm to consumers.