Law Articles

This article courtesy of SSRN - Legal Scholarship Network and authored by NELSON LUND.

 Abstract:     
David Bach is a former Navy SEAL, a commissioned officer in the Naval Reserve, an experienced firearms instructor, and an attorney. He is now employed by the Department of Defense, where he holds a Top Secret security clearance. This model citizen resides in the Commonwealth of Virginia, where he is licensed to carry a concealed weapon.

Bach periodically takes his wife and three young children to upstate New York by car in order to visit his parents. This lengthy journey goes through several high-crime areas in New York, and he wants to carry a defensive firearm on his person, either openly or concealed, in case of a criminal assault during one of these trips. New York issues licenses to carry firearms to its own citizens who meet certain statutory criteria, and to nonresidents who have their principal place of employment or business in the state, but not to visitors like Bach. If he carried his personal weapon with him, he would be committing a felony.

The Second Circuit rejected Bach's claim that New York law violates the Privileges and Immunities Clause of Article IV. This brief essay argues that Bach's Privileges and Immunities claim is valid, and that the nature of the claim throws an interesting light on a provision of the Constitution whose importance exceeds the amount of attention it has received from the Supreme Court.

This article courtesy of SSRN - Legal Scholarship Network and authored by ILYA R. SEGAL and MICHAEL D. WHINSTON.

 Abstract:     
We study the effects of antitrust policy in industries with continual innovation. A more protective antitrust policy may have conflicting effects on innovation incentives, raising the profits of new entrants, but lowering those of continuing incumbents. We show that the direction of the net effect can be determined by analyzing shifts in innovation benefit and supply holding the innovation rate fixed. We apply this framework to analyze several specific antitrust policies. We show that in some cases, holding the innovation rate fixed, as suggested by our comparative statics results, the tension does not arise and a more protective policy necessarily raises the rate of innovation.

This article courtesy of SSRN - Legal Scholarship Network and authored by LINDA R. COHEN and JUN ISHII.

Abstract:     
The U.S. Patent and Trademark Office resolves patent priority disputes in patent interference cases. Using a random sample of cases declared between 1988 and 1994, we establish a connection between patent interferences and patent races, and then use the data to consider some key issues in dynamic competition and innovation. We look at the incidence and distribution of patent races by technology, evidence for strategic delay of innovation by incumbent firms, and evidence that patent races moderate incentives to delay. Our results have implications for patent policy in general and for evaluating the U.S. "first to invent" patent priority rule. 

This article courtesy of SSRN - Legal Scholarship Network and authored by ROBERT B. AHDIEH.

 Abstract:     
Among a litany of criticisms of the Sarbanes-Oxley Act, its asserted "federalization" of corporate law is perhaps the most consistent object of criticism. This is also among the most damning objections to the Act - given its seeming insusceptibility to cure. Here, I attempt to deconstruct the broad rhetoric of this critique. Absent the identification of a consistent line between the realms of corporate law and securities regulation, or some aspiration to diversity in the rules of corporate governance, attacks on Sarbanes-Oxley's "federalization" of corporate law are not about federal versus state authority, at least in any inherent sense. Nor are they, at heart, about the regulatory benefits of competition. Instead, they reduce to general critiques of the imposition of regulation, where private incentives and the market have previously held sway.

Once we appreciate as much, we can begin by replacing the misleading rhetoric of "federalization." More importantly, we might start to conceptualize a theory of corporate law that is both more effective in advancing our desired ends and perhaps closer to market realities than the competing paradigms presently in ascendance. In that spirit, I offer a model of jurisdictional redundancy - in which public and private dynamics intertwine, and federal mandatory rules overlap with state enabling rules, to create a more indeterminate regulatory regime than we might otherwise pursue. Such a scheme of "mixed governance" may deprive legal scholars of the opportunity to draw clean distinctions, but may allow the regulation of corporate governance to operate more effectively, and to evolve efficiently over time.

This article courtesy of SSRN - Legal Scholarship Network and authored by STEPHEN M. BAINBRIDGE.

 Abstract:     
Where the contract between a corporation and one of its creditors is silent on some question, should the law invoke fiduciary duties or other extra-contractual rights as a gap filler? In general, the law has declined to do so. There is some precedent, however, for the proposition that directors of a corporation owe fiduciary duties to bondholders and other creditors once the firm is in the vicinity of insolvency.

Courts embracing the zone of insolvency doctrine have characterized the duties of directors as running to the corporate entity rather than any individual constituency. This approach is incoherent in practice and unsupportable in theory. Courts should focus on whether the board has an obligation to give sole concern to the interests of a specific constituency of the corporation. The leading argument for imposing a duty on the board running to creditors when the corporation is in the vicinity of insolvency is the claim that shareholders will gamble with the creditor' money. This Article demonstrates that this argument is unpersuasive. It is director and manager opportunism, rather than strategic behavior by shareholders that is the real concern. Because bondholders and other creditors are better able to protect themselves against that risk than are creditors, there is no justification for imposing such a duty.

This article also argues that the zone debate is much ado about very little. The only cases in which the zone of insolvency debate matters are those to which the business judgment rule does not apply, shareholder and creditor interests conflict, and a recovery could go to directly to those who have standing to sue. In those cases, as this Article explains, there is a strong policy argument that creditors should be limited to whatever rights the contract provides or might be inferred from the implied covenant of good faith.