Randal C. Picker

With D. G. Baird and R. Gertner, Game Theory and the Law, (Harvard University Press, 1994).

"Simple Games in a Complex World: A Generative Approach to the Adoption of Norms," University of Chicago Law Review (Fall 1997).

"Regulating Network Industries: A Look at Intel," Harvard Journal of Law & Public Policy (Fall 1999).

For a listing of research publications, please visit the university library listing page.

REVISION: The Bankruptcy Partition
Date Posted:Tue, 23 Jun 2020 02:04:19 -0500
Many current bankruptcy debates—from critical vendor orders to the Supreme Court’s decision last year in Czyzewski v. Jevic Holding Corporation—begin with bankruptcy’s distributional rules and questions about how much discretion a judge should have in applying them. It is a mistake, however, to focus on distributional questions without first identifying the bankruptcy partition and ensuring it is properly policed. What appear to be distributional disputes are more often debates about the demarcation of the bankruptcy partition and the best way to police it.

Once the dynamics of establishing and policing the bankruptcy partition are taken into account, there is little room for departures from bankruptcy’s distributional rules. There might be a few rare cases in which maximizing the value of the estate requires it, but these inhabit an exceedingly narrow domain so small and so hard to navigate that they are sensibly handled with a per se rule that prohibits them.

REVISION: The Bankruptcy Partition
Date Posted:Fri, 27 Apr 2018 05:59:23 -0500
The central ambition of Chapter 11 is to vindicate the hypothetical bargain creditors would strike among themselves before the fact if they had the opportunity to do so. When investors gather to invest in a common venture, their focus is on maximizing the value of that venture, rather than maximizing their total wealth as a group. The creditors’ bargain is similarly focused on the bankruptcy estate, something that is partitioned from the other interests of the creditors. The ambition of bankruptcy law is to put in place a process that maximizes its value. Many current bankruptcy debates — from critical vendor orders to the Supreme Court’s decision last year in Jevic — begin with bankruptcy’s distributional rules and questions about how much discretion a judge should have in applying them. It is a mistake, however, to focus on distributional questions without first identifying the bankruptcy partition and ensuring it is properly policed. What appear to be distributional disputes are ...

REVISION: The Bankruptcy Partition
Date Posted:Wed, 14 Feb 2018 06:14:17 -0600
The central ambition of Chapter 11 is to vindicate the hypothetical bargain creditors would strike among themselves before the fact if they had the opportunity to do so. When investors gather to invest in a common venture, their focus is on maximizing the value of that venture, rather than maximizing their total wealth as a group. The creditors’ bargain is similarly focused on the bankruptcy estate, something that is partitioned from the other interests of the creditors. The ambition of bankruptcy law is to put in place a process that maximizes its value. Many current bankruptcy debates — from critical vendor orders to the Supreme Court’s decision last year in Jevic — begin with bankruptcy’s distributional rules and questions about how much discretion a judge should have in applying them. It is a mistake, however, to focus on distributional questions without first identifying the bankruptcy partition and ensuring it is properly policed. What appear to be distributional disputes are ...

The Bankruptcy Partition
Date Posted:Wed, 14 Feb 2018 00:00:00 -0600
Many current bankruptcy debates?from critical vendor orders to the Supreme Court?s decision last year in Czyzewski v. Jevic Holding Corporation?begin with bankruptcy?s distributional rules and questions about how much discretion a judge should have in applying them. It is a mistake, however, to focus on distributional questions without first identifying the bankruptcy partition and ensuring it is properly policed. What appear to be distributional disputes are more often debates about the demarcation of the bankruptcy partition and the best way to police it.

Once the dynamics of establishing and policing the bankruptcy partition are taken into account, there is little room for departures from bankruptcy?s distributional rules. There might be a few rare cases in which maximizing the value of the estate requires it, but these inhabit an exceedingly narrow domain so small and so hard to navigate that they are sensibly handled with a per se rule that prohibits them.

REVISION: Access and the Public Domain
Date Posted:Thu, 14 Feb 2013 06:20:58 -0600
One of the constitutive notions of intellectual property is the public domain. These are the ideas, notions and works that are usable by all where no person can invoke a right to block use by another. I am interested in the mechanics of accessing the public domain and the consequences of the choices that we make about the operational effectiveness of various tools available for controlling access to the public domain. That matters both for the extent of access but also importantly for the ...

Access and the Public Domain
Date Posted:Sun, 10 Feb 2013 16:26:25 -0600
One of the constitutive notions of intellectual property is the public domain. These are the ideas, notions and works that are usable by all where no person can invoke a right to block use by another. I am interested in the mechanics of accessing the public domain and the consequences of the choices that we make about the operational effectiveness of various tools available for controlling access to the public domain. That matters both for the extent of access but also importantly for the scale and scope of competition in the provision of the public domain. This takes us to contract and terms of use; to the core of copyright in what it means to be original and also what it means to copy; to copyright?s periphery in the form of the deposit requirement; to the DMCA and its tools of distant control; and to the Computer Fraud and Abuse Act and its restrictions on accessing materials and objects under local control. With the emergence of major digital scanning projects for works in the public domain, we are at a point of possibly unparalleled practical access to the public domain. But the decisions we make about the tools just described will have a strong effect on the scope of the actual access to the public domain that emerges and in the extent of competition on the provision and use of the public domain. We think of the public domain as open to all and in that sense owned by no one (or owned by all). But that ignores the question of how the public domain is actually accessed

REVISION: Access and the Public Domain
Date Posted:Sun, 10 Feb 2013 11:26:25 -0600
One of the constitutive notions of intellectual property is the public domain. These are the ideas, notions and works that are usable by all where no person can invoke a right to block use by another. I am interested in the mechanics of accessing the public domain and the consequences of the choices that we make about the operational effectiveness of various tools available for controlling access to the public domain. That matters both for the extent of access but also importantly for the ...

The Scope and Implications of Stern v. Marshall, 131 S. Ct. (2011)
Date Posted:Thu, 05 Jan 2012 00:00:00 -0600
This paper discusses the possible meaning and effect of the Supreme Court?s recent decision in Stern v. Marshall, in which the Court held that the bankruptcy courts? statutory authority to enter final judgments on certain counterclaims against creditors violates Article III of the Constitution. It was prepared by the authors as a report to the fall 2011 annual meeting of the National Bankruptcy Conference. The Stern decision is enigmatic. While stressing the narrowness of the issue decided, the Court?s opinion rests on a rationale that, carried to its logical conclusion, could have broad implications for the exercise of bankruptcy jurisdiction specifically and more generally for the authority of other non-Article III decision makers. This paper addresses the three major uncertainties raised by the decision: its scope (does it apply to more than just bankruptcy court?s authority over state law counterclaims?); the significance of consent (does party consent to bankruptcy court adjudication eliminate all constitutional concerns?); and resulting procedural issues (what authority do bankruptcy courts now have over matters statutorily designated as ?core? that constitutionally require determination by an Article III court?). While addressing the arguments for a broad reading of Stern, the paper provides reasons for a more cautious and limited application of the decision.

New: The Scope and Implications of Stern v. Marshall, 131 S. Ct. (2011)
Date Posted:Wed, 04 Jan 2012 19:15:04 -0600
This paper discusses the possible meaning and effect of the Supreme Court’s recent decision in Stern v. Marshall, in which the Court held that the bankruptcy courts’ statutory authority to enter final judgments on certain counterclaims against creditors violates Article III of the Constitution. It was prepared by the authors as a report to the fall 2011 annual meeting of the National Bankruptcy Conference. The Stern decision is enigmatic. While stressing the narrowness of the issue decided, ...

New: After Google Book Search: Rebooting the Digital Library
Date Posted:Mon, 13 Jun 2011 16:12:01 -0500
The rejection of the Google Book Search settlement means that we are at a point of rebooting how we design our digital library future. There were many criticisms of GBS and the settlement but perhaps chief among those was the risk that approval of the settlement would have locked in a single approach to digital libraries. Google would have received unique access to the so-called orphan works and that would have provided it what may have been a decisive advantage against digital library ...

After Google Book Search: Rebooting the Digital Library
Date Posted:Mon, 13 Jun 2011 02:13:27 -0500
The rejection of the Google Book Search settlement means that we are at a point of rebooting how we design our digital library future. There were many criticisms of GBS and the settlement but perhaps chief among those was the risk that approval of the settlement would have locked in a single approach to digital libraries. Google would have received unique access to the so-called orphan works and that would have provided it what may have been a decisive advantage against digital library competitors, both private and public. As we move forward on the orphan works, we need to do so with two principles in mind. First, we need to enable broad competing uses of the orphan works while, to the greatest extent possible, respecting the rights of the orphan works holders. Second, we should not repeat the mistake of the GBS settlement by somehow tilting the table in favor of digital library monopoly, either public or private. We should want to foster a rich digital library ecosystem. GBS makes clear that we can have large-scale private digital libraries. That is an important development and one that we should seek to enable. If we create use rights for copyrighted works for digital libraries, we should be sure to make those privileges available to both public digital libraries and private digital libraries such as GBS and its successors. Our existing statutory safe harbors for libraries favor noncommercial libraries and archives. The emergence of GBS suggests that that is too narrow a c

New: The Razors-and-Blades Myth(s)
Date Posted:Tue, 14 Sep 2010 16:53:30 -0500
The razors-and-blades story offers a foundational understanding of a key area of economics and strategy: Invest in an installed base by selling the razor handles at low prices or even giving them away, then sell the razor blades at high prices to justify the prior investment. Large chunks of modern technological life - from VCRs and DVD players to video game systems like the Xbox and now ebook readers - seem to operate subject to the same dynamics of razors and blades. At least on the paper, ...

The Razors-and-Blades Myth(s)
Date Posted:Tue, 14 Sep 2010 00:00:00 -0500
The razors-and-blades story offers a foundational understanding of a key area of economics and strategy: Invest in an installed base by selling the razor handles at low prices or even giving them away, then sell the razor blades at high prices to justify the prior investment. Large chunks of modern technological life - from VCRs and DVD players to video game systems like the Xbox and now ebook readers - seem to operate subject to the same dynamics of razors and blades. At least on the paper, the competitive dynamics of this situation are straightforward and well understood. If you actually give away the handle to create the installed base, you need to recapture those loses in the blade sales. And if you are selling blades above cost, you need to be able to tie the blades to your handle or you should expect entry in the blades business to compete on the base that you have installed. That is at least the theory. The actual facts of the dawn of the disposable razor blades market are quite confounding. Gillette?s 1904 patents gave it the power to block entry into the installed base of handles that it would create. While other firms could and did enter the multi-blade market with their own handles and blades, no one could produce Gillette handles or blades during the life of the patents. From 1904-1921, Gillette could have played razors-and-blades - low-price or free handles and expensive blades - but it did not do so. Gillette set a high price for its handle - high as measured

New: Organizing Competition and Cooperation after American Needle
Date Posted:Fri, 25 Jun 2010 14:01:30 -0500
In American Needle, Inc. v. National Football League, in a unanimous decision by Justice Stevens, the U.S. Supreme Court concluded that the NFL’s licensing activities constituted concerted action subject to Section 1 inquiry under the Sherman Act, even though the actual licensing itself was done via a separate corporate entity. In so deciding, the Court laid to rest the notion that the NFL and similarly-organized sports leagues should be treated as a single entity wholly outside of Section 1 ...

Organizing Competition and Cooperation after American Needle
Date Posted:Fri, 25 Jun 2010 00:00:00 -0500
In American Needle, Inc. v. National Football League, in a unanimous decision by Justice Stevens, the U.S. Supreme Court concluded that the NFL?s licensing activities constituted concerted action subject to Section 1 inquiry under the Sherman Act, even though the actual licensing itself was done via a separate corporate entity. In so deciding, the Court laid to rest the notion that the NFL and similarly-organized sports leagues should be treated as a single entity wholly outside of Section 1. But the Court?s opinion is substantially broader than just the relatively narrow world of sports leagues and will become the starting point for analysis of joint ventures going forward. On the broader issues at stake in American Needle, the Court takes the next step after Copperweld. American Needle is the yin to Copperweld?s yang. Copperweld held that formally separate firms wouldn?t be treated as separate actors for Section 1 purposes if those firms had a unity of interest, as occurred there for a parent and its wholly-owned subsidiary. American Needle says that a formally single entity won?t be treated as such if in reality in represents concerted decisionmaking. Firms can?t use clever entity structuring to shield what would otherwise be concerted activity from Section 1 inquiry. For Section 1 of the Sherman Act, jointness isn?t a sterile, formal inquiry. The question is one of, as Justice Stevens puts it, ?competitive reality?. Separate entities might have enough of a unity of int

New: Assessing Competition Issues in the Amended Google Book Search Settlement
Date Posted:Mon, 16 Nov 2009 18:33:53 -0600
Google takes products out of beta status slowly, even while it is making substantial improvements in the product. Objectors will see the amended settlement agreement as a mixed bag, with some finding almost nothing in the changes (privacy advocates and those who fear high prices for institutional subscriptions), while others will find their concerns addressed (foreign governments acting, one hopes, with the correct sense of the interests of foreign authors). The amended settlement agreement ...

Assessing Competition Issues in the Amended Google Book Search Settlement
Date Posted:Mon, 16 Nov 2009 07:21:57 -0600
Google takes products out of beta status slowly, even while it is making substantial improvements in the product. Objectors will see the amended settlement agreement as a mixed bag, with some finding almost nothing in the changes (privacy advocates and those who fear high prices for institutional subscriptions), while others will find their concerns addressed (foreign governments acting, one hopes, with the correct sense of the interests of foreign authors). The amended settlement agreement clearly responds to the concerns raised by the Department of Justice. In waiving the benefits of possible doctrines of antitrust immunity, the ASA solves a timing problem for DOJ. DOJ faced an all-or-nothing quandary: challenge the agreement now or risk the possibility losing the right to challenge it later. The Noerr waiver solves that problem. There may be real benefits to seeing how the pricing provisions play out in actual operating conditions. Don?t shadow box now but fight later if necessary. I could easily see DOJ or Judge Chin reaching that conclusion and choosing to defer consideration of the pricing issues to another day. The orphan works licensing is differently situated. The revised agreement creates a new unclaimed works fiduciary but does so in incomplete fashion. The UWF takes over some of the registry?s responsibilities rather than acting as a true fiduciary for orphan works holders. Such a fiduciary would be situated to license the orphan works to third parties on a goin

New: Easterbrook on Copyright
Date Posted:Mon, 16 Nov 2009 03:51:42 -0600
In this essay prepared in celebration of Judge Frank Easterbrook’s 25th year on the bench, I focus on what copyright students learn from him. Three of his dozen or so copyright opinions turn up repeatedly in copyright casebooks: Nash v. CBS, Inc.; Lee v. A.R.T. Co.; and ProCD, Inc. v. Zeidenberg. This is a surprising success rate for a judge from the copyright-starved 7th Circuit. Judge Easterbrook has an eye for fundamental questions, writes opinions that are brief while treating issues fully ...

Easterbrook on Copyright
Date Posted:Mon, 16 Nov 2009 00:00:00 -0600
In this essay prepared in celebration of Judge Frank Easterbrook?s 25th year on the bench, I focus on what copyright students learn from him. Three of his dozen or so copyright opinions turn up repeatedly in copyright casebooks: Nash v. CBS, Inc.; Lee v. A.R.T. Co.; and ProCD, Inc. v. Zeidenberg. This is a surprising success rate for a judge from the copyright-starved 7th Circuit. Judge Easterbrook has an eye for fundamental questions, writes opinions that are brief while treating issues fully and has a distinctively lively Easterbrookian style, one that he preserves by refusing to outsource his opinions to his clerks. Nash poses a key conceptual question: if only one person believes something to be a fact, is it a copyright fact? We confront the idiosyncratic fact, that is a claim of fact that may be believed by only one person and by no one else. Nash is casebook-worthy alone because of the factual situation it encompasses, as it is the law-school hypo come alive. The opinion nails down a key conceptual boundary question for copyright: copyright facts and actual facts may have little to do with each other. Lee answers the age-old question: what does glue do? Annie Lee created postcards of her original art. A.R.T. Co. glued postcards to tiles and sold them. In doing so, does A.R.T. violate Lee?s exclusive right to make derivative works as set forth in Section 106(2)? Lee is a refreshingly brief opinion, little more than five columns in F3d, yet, like Nash, it poses in simp

REVISION: Antitrust and Innovation: Framing Baselines in the Google Book Search Settlement
Date Posted:Thu, 05 Nov 2009 08:07:31 -0600
The Google Book Search Settlement has received a great deal of attention. In response to opposition, the original settlement has been delayed and will now be resubmitted. In this brief paper, I address three points. First, I do a quick status update on competition issues in the case. Second, I turn to a key issue that has emerged in the commentary on the competition issues, namely, what is the right way to frame the competition policy baseline for assessing whether a new arrangement such as ...

REVISION: Antitrust and Innovation: Framing Baselines in the Google Book Search Settlement
Date Posted:Wed, 04 Nov 2009 08:09:44 -0600
The Google Book Search Settlement has received a great deal of attention. In response to opposition, the original settlement has been delayed and will now be resubmitted. In this brief paper, I address three points. First, I do a quick status update on competition issues in the case. Second, I turn to a key issue that has emerged in the commentary on the competition issues, namely, what is the right way to frame the competition policy baseline for assessing whether a new arrangement such as ...

Antitrust and Innovation: Framing Baselines in the Google Book Search Settlement
Date Posted:Wed, 04 Nov 2009 07:11:26 -0600
The Google Book Search Settlement has received a great deal of attention. In response to opposition, the original settlement has been delayed and will now be resubmitted. In this brief paper, I address three points. First, I do a quick status update on competition issues in the case. Second, I turn to a key issue that has emerged in the commentary on the competition issues, namely, what is the right way to frame the competition policy baseline for assessing whether a new arrangement such as GBS is procompetitive? That question is of general interest to the intersection of antitrust and innovation policy and given the importance of both to the health of the economy, it is critical that we get the baseline question right. We will be misled if we simply track expansions in output. Clever cartelists will want to cartelize new industries in their infancy, as they know that a new product innovation will inevitably raise output, even if it does so by much less than we would see in the face of full competition. And innovators will want to bundle anticompetitive features with competitive ones if they know that they are simply being judged against the pre-innovation baseline. Third, as applied to the Google Book Search settlement itself, antitrust enforcers need to disentangle the genuine benefits of the project from anticompetitive features. Obviously, that is a conventional problem in antitrust but it means here that product innovation can?t be used as a general shield against stan

The Google Book Search Settlement: A New Orphan-Works Monopoly?
Date Posted:Tue, 13 Oct 2009 12:08:59 -0500
This paper considers the proposed settlement agreement between Google and the Authors Guild relating to Google Book Search (GBS). I focus on three issues that raise antitrust and competition policy concerns. First, the agreement calls for Google to act as agent for rightsholders in setting the price of online access to consumers. Google is tasked with developing a pricing algorithm that will maximize revenues for each of those works. Direct competition among rightsholders would push prices towards some measure of costs and would not be designed to maximize revenues. The consumer access pricing provision might very well fail a challenge under Section 1 of the Sherman Act. Second, and much more centrally to the settlement agreement, the opt-out class action will make it possible for Google to include orphan works in its book search service. Orphan works are works as to which the rightsholder cannot be identified or found. The opt-out class action is the vehicle for large-scale collective action by active rightsholders. Active rightsholders have little incentive to compete with themselves by granting multiple licenses of their works or of the orphan works. Plus under the terms of the settlement agreement, active rightsholders benefit directly from the revenues attributable to orphan works used in GBS. We can mitigate the market power that will otherwise arise through the settlement by expanding the number of rights licenses available under the settlement agreement. To do that, w

REVISION: The Google Book Search Settlement: A New Orphan-Works Monopoly?
Date Posted:Mon, 20 Jul 2009 18:03:16 -0500
This paper considers the proposed settlement agreement between Google and the Authors Guild relating to Google Book Search. Google boldly launched Google Book Search in pursuing its goal of organizing the world’s information. Even though Google was sensitive to copyright values, the service relied on mass copying and thus Google undertook a substantial legal risk in setting up the service. That risk was realized with the lawsuits by the Authors Guild and the Association of American Publishers ...

REVISION: The Mediated Book
Date Posted:Fri, 10 Jul 2009 10:18:48 -0500
Text in hand, we have read books by candlelight, oil lamp and Edison's incandescent bulb, maybe even the occasional CFL. But even as light itself has changed, the book has remained constant. Until now. With the rise of Google Book Search and ebook readers like Amazon’s Kindle, we have entered the era of the mediated book. We will still browse and read books, but we will do so through a screen. This is more than just a change in medium. Digital texts are inherently on-demand works, that is, ...

New: Online Advertising, Identity and Privacy
Date Posted:Wed, 01 Jul 2009 17:39:23 -0500
For individuals, the basic architecture of computing is changing. That is obviously about the device itself, with the desktop or laptop computer now being supplemented with other computing devices such as the smartphone and the netbook. That switch, coupled with ubiquitous wireless access, means that many people have access to computing power whenever and wherever. The way in which we use these devices has changed. We have switched from the freestanding world of the desktop computer and the ...

Online Advertising, Identity and Privacy
Date Posted:Wed, 01 Jul 2009 04:45:27 -0500
For individuals, the basic architecture of computing is changing. That is obviously about the device itself, with the desktop or laptop computer now being supplemented with other computing devices such as the smartphone and the netbook. That switch, coupled with ubiquitous wireless access, means that many people have access to computing power whenever and wherever. The way in which we use these devices has changed. We have switched from the freestanding world of the desktop computer and the next stage of surfing the Internet net to consume provided content to a world in which users interact with each other. This is the world of Web 2.0, the world of Google, Facebook and Twitter. This is not just a change in use, but also a change in the organization of computing power and storage, cloud-computing in phrase. This is also a world of identity, often direct actual real me, on Facebook and Twitter; an authenticated identity to access my data stored in the cloud when I use Google Reader or Gmail or another cloud-based mail service; and a browser-identity when I use a search service. And this is also a world of advertising. Web 2.0 and cloud-computing services are often free to individuals, but they have to be paid for somehow, at that is usually through advertising. Advertising is also increasingly important in a world in which the integrity of the copy itself has weakened and the copy may no longer serve as a reliable means of organizing payment for content. This combination of

The Mediated Book
Date Posted:Fri, 08 May 2009 02:29:10 -0500
Text in hand, we have read books by candlelight, oil lamp and Edison's incandescent bulb, maybe even the occasional CFL. But even as light itself has changed, the book has remained constant. Until now. With the rise of Google Book Search and ebook readers like Amazon?s Kindle, we have entered the era of the mediated book. We will still browse and read books, but we will do so through a screen. This is more than just a change in medium. Digital texts are inherently on-demand works, that is, works that can be produced at the instant that a consumer wishes to interact with the text. Physical books historically have been printed in batched runs in advance of demand. This fact of production matters relatively little for the texts themselves, as we typically want books to be fixed, reliable artifacts. This changes matters for how we finance books. On-demand texts can be financed through advertising. Printing in advance means that embedded advertising has little chance of being relevant at the point of reading. Mediated texts can be updated instantly with new, continuously timely advertising. That advertising also can be personalized for individual readers as the interaction between the mediating device and the reader will create a rich information stream to enhance the relevance of this advertising. That process of course will raise standard privacy issues. The short history of 20th Century advertising expenditures in the United States is characterized by two facts. First, overa

REVISION: The Mediated Book
Date Posted:Fri, 08 May 2009 01:35:01 -0500
Text in hand, we have read books by candlelight, oil lamp and Edison’s incandescent bulb, maybe even the occasional CFL. But even as light itself has changed, the book has remained constant. Until now. With the rise of Google Book Search and ebook readers like Amazon’s Kindle, we have entered the era of the mediated book. We will still browse and read books, but we will do so through a screen. This is more than just a change in medium. Digital texts are inherently on-demand works, that is, ...

REVISION: The Google Book Search Settlement: A New Orphan-Works Monopoly?
Date Posted:Thu, 16 Apr 2009 08:45:58 -0500
This paper considers the proposed settlement agreement between Google and the Authors Guild relating to Google Book Search. Google boldly launched Google Book Search in pursuing its goal of organizing the world’s information. Even though Google was sensitive to copyright values, the service relied on mass copying and thus Google undertook a substantial legal risk in setting up the service. That risk was realized with the lawsuits by the Authors Guild and the Association of American Publishers ...

The Google Book Search Settlement: A New Orphan-Works Monopoly?
Date Posted:Thu, 16 Apr 2009 01:40:20 -0500
This paper considers the proposed settlement agreement between Google and the Authors Guild relating to Google Book Search. Google boldly launched Google Book Search in pursuing its goal of organizing the world?s information. Even though Google was sensitive to copyright values, the service relied on mass copying and thus Google undertook a substantial legal risk in setting up the service. That risk was realized with the lawsuits by the Authors Guild and the Association of American Publishers. The October, 2008 settlement agreement for those suits will create an important new copyright collective and will legitimate broad-scale online access to United States books registered before early January, 2009. The settlement agreement is exceeding complex but I have focused on three issues that raise antitrust and competition policy concerns. First, the agreement calls for Google to act as agent for rights holders in setting the price of online access to consumers. Google is tasked with developing a pricing algorithm that will maximize revenues for each of those works. Direct competition among rights holders would push prices towards some measure of costs and would not be designed to maximize revenues. As I think that that level of direct coordination of prices is unlikely to mimic what would result in competition, I have real doubts about whether the consumer access pricing provision would survive a challenge under Section 1 of the Sherman Act. Second, and much more centrally to t

REVISION: Competition and Privacy in Web 2.0 and the Cloud
Date Posted:Tue, 01 Jul 2008 19:32:15 -0500
With Web 2.0, we have once again changed how we use computers. That change has brought with it new intermediaries who sit at the crossroads of the matching and coordination that define how we use the Internet today. Those intermediaries - Google first and foremost - have access to extraordinarily detailed information about their customers. That information arises naturally from the very services provided. We will see a similar pattern as cloud computing becomes more important, and cloud ...

Competition and Privacy in Web 2.0 and the Cloud
Date Posted:Fri, 27 Jun 2008 19:29:16 -0500
With Web 2.0, we have once again changed how we use computers. That change has brought with it new intermediaries who sit at the crossroads of the matching and coordination that define how we use the Internet today. Those intermediaries - Google first and foremost - have access to extraordinarily detailed information about their customers. That information arises naturally from the very services provided. We will see a similar pattern as cloud computing becomes more important, and cloud service providers will also have available to them a rich datastream that arises from their customer's activities. To date, these intermediaries have faced few limitations in how they use the information that they see. That information can be used to improve their core businesses - adding collective intelligence to search to increase relevance - and to finance - through advertising backed by rich databases that allows ads to be matched to individual customers - virtually any content or service that can be provided through a screen. To focus on Google as the largest player in this space, there is no obvious limit to its scale and an advertising-supported business adds revenue with each additional screen that is viewed. In the past, we have regulated intermediaries at these transactional bottlenecks - banks, cable companies, phone companies and the like - and limited the ways in which they can use the information that they see. Presumably the same forces that animated those rules - fundamenta

REVISION: Competition and Privacy in Web 2.0 and the Cloud
Date Posted:Fri, 27 Jun 2008 03:59:43 -0500
With Web 2.0, we have once again changed how we use computers. That change has brought with it new intermediaries who sit at the crossroads of the matching and coordination that define how we use the Internet today. That change has brought with it new intermediaries who sit at the crossroads of the matching and coordination that define how we use the Internet today. Those intermediaries - Google first and foremost - have access to extraordinarily detailed information about their customers ...

New: Take Two: Stare Decisis in Antitrust - The Per Se Rule Against Horizontal Price-Fixing
Date Posted:Fri, 28 Mar 2008 07:15:44 -0500
In this essay prepared for the American Bar Association's 56th Antitrust Law Spring Meeting, I consider two issues that pertain to the overall question of what antitrust doctrines are up for retirement. First, we can't consider that without understanding how the Supreme Court approaches stare decisis in antitrust. The Court's 5-4 decision in Leegin identified some of the fault lines on this issue. The Court has suggested that it should approach stare decisis differently in statutory areas from ...

Take Two: Stare Decisis in Antitrust - The Per Se Rule Against Horizontal Price-Fixing
Date Posted:Fri, 28 Mar 2008 00:00:00 -0500
In this essay prepared for the American Bar Association's 56th Antitrust Law Spring Meeting, I consider two issues that pertain to the overall question of what antitrust doctrines are up for retirement. First, we can't consider that without understanding how the Supreme Court approaches stare decisis in antitrust. The Court's 5-4 decision in Leegin identified some of the fault lines on this issue. The Court has suggested that it should approach stare decisis differently in statutory areas from the way it approaches it when it reconsiders constitutional decisions. I think that that is wrong and that the Court should apply its approach to stare decisis in constitutional cases to cases based on statutes, such as the Sherman Act. Second, I focus on the evil of evils: horizontal price-fixing. I don't think that the Court is likely to retire the per se rule against horizontal price-fixing, certainly not directly. We might only realize that it had been overturned after the fact, after the Court had so chipped away at the doctrine that nothing remained. That said, as again Leegin itself suggested, we can't be fully confident that horizontal price-fixing is always pernicious, especially when it might be implemented as part of a larger vertical arrangement.

New: Fair Use v. Fair Access
Date Posted:Sun, 16 Mar 2008 07:47:27 -0500
In this paper, I make four points. 1. The copyright act defines use rights, not access rights. That overstates slightly - especially with the Digital Millennium Copyright Act in the statute - but the core of copyright law addresses how works can be used assuming that legal access has been obtained. Other law addresses the circumstances under which works can be accessed. 2. Nothing in copyright itself suggests that use rights should trump access rights; indeed, our core access principles ...

Fair Use v. Fair Access
Date Posted:Sun, 16 Mar 2008 00:00:00 -0500
In this paper, I make four points. 1. The copyright act defines use rights, not access rights. That overstates slightly - especially with the Digital Millennium Copyright Act in the statute - but the core of copyright law addresses how works can be used assuming that legal access has been obtained. Other law addresses the circumstances under which works can be accessed. 2. Nothing in copyright itself suggests that use rights should trump access rights; indeed, our core access principles suggest just the opposite. We frequently speak of a fair use "right." I am doubtful about that on its own terms but even if we find something there, a fair use right isn't an access right. Fair use doesn't equal fair access. 3. The scope of rights given to an initial author will effect the timing and scope of investment she will make in creating a work. For many works, those investments can be made in discrete lumps. As a society, we want investments to be made incrementally rather than as one large lump as doing so allows us to get feedback from the market on the value of a work. We don't want to throw good money after bad, and if we learn that, say, the English version of a work is a failure, we don't want to bother translating it into Mandarin. Plus we will delay the time that works reach the market if we create an incentive to do large, lumpy investments rather than a sequence of investments coupled with market feedback. Authors start with one monopoly: their unique access to the work t

REVISION: Twombly, Leegin and the Reshaping of Antitrust
Date Posted:Wed, 13 Feb 2008 19:34:33 -0600
This paper considers the four antitrust decisions in the Supreme Court's 2006 Term. It offers brief discussions of Weyerhaeuser and Credit Suisse. Weyerhaeuser is a small, modest decision. The Court isn't likely to see another predatory bidding case soon and the Court chose to minimize doctrinal complexity by bringing predatory bidding analysis in sync with the Court's prior treatment of predatory pricing in Brooke Group. Credit Suisse too is minimally incremental. In concluding that ...

REVISION: Twombley, Leegin and the Reshaping of Antitrust
Date Posted:Sat, 09 Feb 2008 10:51:34 -0600
This paper considers the four antitrust decisions in the Supreme Court's 2006 Term. It offers brief discussions of Weyerhaeuser and Credit Suisse. Weyerhaeuser is a small, modest decision. The Court isn't likely to see another predatory bidding case soon and the Court chose to minimize doctrinal complexity by bringing predatory bidding analysis in sync with the Court's prior treatment of predatory pricing in Brooke Group. Credit Suisse too is minimally incremental. In concluding that federal ...

'Twombly', 'Leegin' and the Reshaping of Antitrust
Date Posted:Sat, 09 Feb 2008 00:00:00 -0600
This paper considers the four antitrust decisions in the Supreme Court's 2006 Term. It offers brief discussions of Weyerhaeuser and Credit Suisse. Weyerhaeuser is a small, modest decision. The Court isn't likely to see another predatory bidding case soon and the Court chose to minimize doctrinal complexity by bringing predatory bidding analysis in sync with the Court's prior treatment of predatory pricing in Brooke Group. Credit Suisse too is minimally incremental. In concluding that federal securities law implicitly precluded claims asserting antitrust violations in the sale of new securities, the Court followed its prior decision in Gordon as well as the Court's more recent preference for regulatory schemes over antitrust as seen in Trinko. Pushing antitrust authority toward specialized regulators like the Securities and Exchange Commission broadens the trade-offs that can be made between antitrust concerns and other values and almost certainly expands the circumstances under which industry actors can act collectively. That matters, so Credit Suisse covers more of the economic landscape than Weyerhaeuser, but the decision itself is a small step from prior doctrine. Twombly and Leegin are each, in their own ways, blockbusters. Twombly will appear in case after case, as antitrust defendants try to rely on its new tougher rules for FRCP 12(b)(6) motions. Twombly represents a preference for blunt instruments over sharp edges. The central problem confronted by Twombly is disco

New: Pulling a Rabbi Out of His Hat: The Bankruptcy Magic of Dick Posner
Date Posted:Mon, 26 Feb 2007 14:15:57 -0600
This essay was written for a volume celebrating Judge Richard Posner's 25 years on the bench. The article considers his opinion in Bank of America v. Moglia, which addresses the status of rabbi trusts in bankruptcy. The rabbi trust is first and foremost a tax device, a way to ensure a contigent delayed payment and yet do so without incurring current tax income to the beneficiary of the trust. But the key condition that delays the receipt of income - namely that the assets of the trust remain ...

Pulling a Rabbi Out of His Hat: The Bankruptcy Magic of Dick Posner
Date Posted:Mon, 26 Feb 2007 00:00:00 -0600
This essay was written for a volume celebrating Judge Richard Posner's 25 years on the bench. The article considers his opinion in Bank of America v. Moglia, which addresses the status of rabbi trusts in bankruptcy. The rabbi trust is first and foremost a tax device, a way to ensure a contigent delayed payment and yet do so without incurring current tax income to the beneficiary of the trust. But the key condition that delays the receipt of income - namely that the assets of the trust remain available to the general creditors of the entity creating the trust - means that the trust operates as an asset partitioning device and a way to protect assets for unsecured creditors from potential invasion by secured creditors. Asset partitioning is ubiquitous, and we see it in many forms, such as limited liability corporations and securitization. It is rare to see a device that works to the benefit of a changing group of general creditors. The rabbi trust, as seen in Moglia, emerges as superior to the negative pledge, which may be its closest cousin.

Antitrust and Regulation
Date Posted:Sat, 17 Feb 2007 23:09:29 -0600
Since the passage of the Interstate Commerce Act (1897) and the Sherman Act (1890), regulation and antitrust have operated as competing mechanisms to control competition. Regulation produced cross-subsidies and favors to special interests, but specified prices and rules of mandatory dealing. Antitrust promoted competition without favoring special interests, but couldn't formulate rules for particular industries. The deregulation movement reflected the relative competencies of antitrust and regulation. Antitrust and regulation can also be viewed as complements in which regulation and antitrust assign control of competition to courts and regulatory agencies based on their relative strengths. Antitrust also can act as a constraint on what regulators can do. This paper uses the game-theoretic framework of political bargaining and the historical record of antitrust and regulation to establish and illustrate these points.

New: Antitrust and Regulation
Date Posted:Sat, 17 Feb 2007 13:09:29 -0600
Since the passage of the Interstate Commerce Act (1897) and the Sherman Act (1890), regulation and antitrust have operated as competing mechanisms to control competition. Regulation produced cross-subsidies and favors to special interests, but specified prices and rules of mandatory dealing. Antitrust promoted competition without favoring special interests, but couldn`t formulate rules for particular industries. The deregulation movement reflected the relative competencies of antitrust and ...

New: Of Pirates and Puffy Shirts: A Comment on the Piracy Paradox: Innovation and Intellectual Property i
Date Posted:Sun, 28 Jan 2007 15:03:27 -0600
This is a comment on Kal Raustiala & Christopher Sprigman, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, 92 Va. L. Rev. 1687 (2006). The Piracy Paradox builds on the fun of fashion to undertake a serious exploration of whether we can sustain innovation without property rights. That is an important question, as copyright brings with it a real cost in blocking follow-on uses and a new fashion copyright would limit subsequent copying. We need to ask whether that ...

Of Pirates and Puffy Shirts: A Comment on the Piracy Paradox: Innovation and Intellectual Property in Fashion Design
Date Posted:Sun, 28 Jan 2007 00:00:00 -0600
This is a comment on Kal Raustiala & Christopher Sprigman, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, 92 Va. L. Rev. 1687 (2006). The Piracy Paradox builds on the fun of fashion to undertake a serious exploration of whether we can sustain innovation without property rights. That is an important question, as copyright brings with it a real cost in blocking follow-on uses and a new fashion copyright would limit subsequent copying. We need to ask whether that price is worth it. In this brief response, I emphasize two points. First, the case of the Fashion Originators' Guild of America suggests that we did see a design response to the private property rights regime created by the Guild. More property rights resulted in greater efforts to innovate. Second, copying is likely to be one-sided: low-end firms copy from high-end firms. With a fashion copyright, high-end firms could commit to their customers that they would not face quick matching by low-end copyists. Rapid imitation limits the value that high-end designers can promise to their customers.

New: Review of Hovenkamp: 'The Antitrust Enterprise: Principle and Execution'
Date Posted:Sat, 18 Nov 2006 09:15:38 -0600
This is a review of Herbert Hovenkamp's book 'The Antitrust Enterprise: Principle and ...

Review of Hovenkamp: 'The Antitrust Enterprise: Principle and Execution'
Date Posted:Sat, 18 Nov 2006 00:00:00 -0600
This is a review of Herbert Hovenkamp's book 'The Antitrust Enterprise: Principle and ...

New: Antitrust and Regulation
Date Posted:Fri, 13 Oct 2006 07:42:11 -0500
More than a century ago, the federal government started controlling competition, first railroads through the Interstate Commerce Act and then the general economy under the Sherman Act. The Commerce Act assigned primary responsibility to the first great federal agency, the Interstate Commerce Commission, while the Sherman Act relied for its implementation on federal courts of general jurisdiction. Since that time, there has been an ongoing struggle to formulate the appropriate policy for ...

Antitrust and Regulation
Date Posted:Fri, 13 Oct 2006 00:00:00 -0500
More than a century ago, the federal government started controlling competition, first railroads through the Interstate Commerce Act and then the general economy under the Sherman Act. The Commerce Act assigned primary responsibility to the first great federal agency, the Interstate Commerce Commission, while the Sherman Act relied for its implementation on federal courts of general jurisdiction. Since that time, there has been an ongoing struggle to formulate the appropriate policy for controlling competition and to determine the right balance between antitrust and regulation for implementing that policy. Regulation and antitrust are two competing mechanisms to control competition. The early history in which special courts were established and then abolished, and in which the FTC was created illustrate this point. The relative advantages and disadvantages of each mechanism became clearer over time. Regulation produced cross-subsidies and favors to special interests, but was able to specify prices and specific rules of how firms should deal with each other. Antitrust, especially when it became economically coherent within the past 30 years or so, showed itself to be reasonably good at promoting competition, avoiding the favoring of special interests, but not good at formulating specific rules for particular industries. The partial and full deregulation movement was a response to the recognition of the relative advantages of regulation and antitrust. This does not mean that n

REVISION: Who Should Regulate Entry into IPTV and Municipal Wireless?
Date Posted:Thu, 21 Sep 2006 19:41:44 -0500
We are at an unusual moment in telecommunications. We have two very live cases of entry: Internet protocol television (IPTV) and municipal wireless broadband. IPTV will create new competition with cable, satellite and over-the-air broadcast TV, promising lower prices and new services. Muni wireless makes it possible for local communities to add new broadband capabilities to compete with DSL and cable broadband. Unsurprisingly given the newness of the services, there is substantial ...

Who Should Regulate Entry into Iptv and Municipal Wireless?
Date Posted:Wed, 20 Sep 2006 01:48:01 -0500
We are at an unusual moment in telecommunications. We have two very live cases of entry: Internet protocol television (IPTV) and municipal wireless broadband. IPTV will create new competition with cable, satellite and over-the-air broadcast TV, promising lower prices and new services. Muni wireless makes it possible for local communities to add new broadband capabilities to compete with DSL and cable broadband. Unsurprisingly given the newness of the services, there is substantial uncertainty about whether and how these services should be regulated, and we have seen legislative action at municipal, state and federal levels. To assess that, I set forth a general framework for matching jurisdictions to tasks and consider coordination costs; information aggregation; speed; tailoring; and competence, capture and corruption. I also set forth a typology of legislative approaches: mandatory federal; default federal; uniformity by choice; experimental labs and competitive federalism; and mixed jurisdiction regulation. I also consider specific regulatory issues for telcom entry control, namely, the extent of the natural monopoly and the desired level of cross-subsidization. I consider four prior of telcom entry and regulation: cable TV franchising; control over pole attachments; the local entry preemption provisions of the 1996 Telecommunications Act; and entry into satellite broadcasting. With that framework, I turn to muni wireless and IPTV. Muni wireless turns on decisions about

REVISION: Who Should Regulate Entry into IPTV and Municipal Wireless?
Date Posted:Tue, 19 Sep 2006 20:19:22 -0500
We are at an unusual moment in telecommunications. We have two very live cases of entry: Internet protocol television (IPTV) and municipal wireless broadband. IPTV will create new competition with cable, satellite and over-the-air broadcast TV, promising lower prices and new services. Muni wireless makes it possible for local communities to add new broadband capabilities to compete with DSL and cable broadband. Unsurprisingly given the newness of the services, there is substantial ...

Mistrust-Based Digital Rights Management
Date Posted:Thu, 27 Apr 2006 16:21:50 -0500
The powerful shift in copying technology over the last thirty years has destabilized how we produce copies and the economic arrangements associated with prior technologies. These technological changes have created a broad shift in the ability to make copies moving control away from producers towards consumers. As a consequence, these technologies have altered the practical enforceability of the rights that law assigns to copyright owners. Digital rights management technologies are an effort to make meaningful the legal rights of copyright owners. DRM faces severe obstacles. For preexisting products like the music CD, it has proven to be very difficult to add DRM after the fact. CDs need to work in standard CD players, and the limits DRM. The firestorm over Sony BMG's effort to produce CDs subject to DRM suggests that we are unlikely to see meaningful DRM for music CDs soon. But we are switching how we deliver content from products to services. Music CDs and eventually DVDs will be replaced by online services such as Apple's iTunes and Google Video. Both of these come with DRM built-in and both rely on identity-based DRM. Identity-based DRM ties identity to content. Content can be shared widely, but absent access to identity, the content is worthless. This is a substantial step forward for DRM, but may still be a step short of where we need to be. Content purchasers still have no reason to protect purchased content. Identity-based DRM coupled with bounty tags will create an

New: Mistrust-Based Digital Rights Management
Date Posted:Thu, 27 Apr 2006 08:50:39 -0500
The powerful shift in copying technology over the last thirty years has destabilized how we produce copies and the economic arrangements associated with prior technologies. These technological changes have created a broad shift in the ability to make copies moving control away from producers towards consumers. As a consequence, these technologies have altered the practical enforceability of the rights that law assigns to copyright owners. Digital rights management technologies are an effort ...

Entry Policy in Local Telecommunications: Iowa Utilities and Verizon
Date Posted:Mon, 06 Feb 2006 01:03:19 -0600
This paper offers legal and economic analysis of two recent Supreme Court decisions, AT&T Corporation v. Iowa Utilities Board and Verizon Communications v. FCC. The paper is written with two audiences in mind. For those unfamiliar with the cases, we offer what we hope is an accessible yet detailed account of the underlying policy issues raised by a legal regime that requires incumbent local telephone carriers to lease parts of their telephone networks to would-be rivals. To that end, we ...

Rewinding Sony: The Evolving Product, Phoning Home and the Duty of Ongoing Design
Date Posted:Wed, 30 Mar 2005 13:06:05 -0600
The emergence of distributed storage, machine intelligence and cheap communications has given rise to the networked product. These are products that can evolve even after versions of the product have been put into the hands of consumers. The most interesting consumer products of the day are networked products. This includes the natural successor to the VCR - whether the plain digital video recorder or the TiVo favored by the digerati - and the ubiquitous iPod and its less chic cousin MP3 players. This category also includes peer-to-peer software in its various forms, whether as Napster, Aimster or Grokster. More than twenty years have passed since the Supreme Court confronted the VCR in the Sony case. The substantial noninfringing use test has both virtues and vices. It has provided a safe harbor for product innovation. It makes it possible for a creator to toss a product onto the waters to see what happens, having only a vague sense of what will happen next. But Sony also provides no reason for a creator to design products to eliminate infringing uses. The core fight over Sony turns precisely on the uncertainty of what happens next: what is the next use of the product not seen today? But Sony is framed in the context of episodic design with an installed-base constraint and no real possibility of feedback between actual use of the product and design. We are at a very different point now. Networked products evolve and we are now going to frame what ongoing design obligations

Rewinding Sony: The Evolving Product, Phoning Home and the Duty of Ongoing Design
Date Posted:Wed, 30 Mar 2005 08:09:25 -0600
The emergence of distributed storage, machine intelligence and cheap communications has give rise to the networked product. These are products that can evolve even after versions of the product have been put into the hands of consumers. The most interesting consumer products of the day are networked products. This includes the natural successor to the VCR-whether the plain digital video recorder or the TiVo favored by the digerati-and the ubiquitous iPod and its less chic cousin MP3 players ...

Copyright and the DMCA: Market Locks and Technological Contracts
Date Posted:Fri, 25 Mar 2005 10:30:56 -0600
Copyright has emerged as a pliable tool, to be bent and shaped by firms and frequently with an eye towards disadvantaging competitors through the erection of entry barriers. The easy manner in which copyright arises makes it possible for firms to get copyrights and threaten competitors with costly infringement actions. This is the use of copyright as more than just defining property rights, the use of copyright in creating market locks. But we would paint with too broad a brush were we to ...

Copyright and the Dmca: Market Locks and Technological Contracts
Date Posted:Fri, 25 Mar 2005 10:28:41 -0600
Copyright has emerged as a pliable tool, to be bent and shaped by firms and frequently with an eye towards disadvantaging competitors through the erection of entry barriers. The easy manner in which copyright arises makes it possible for firms to get copyrights and threaten competitors with costly infringement actions. This is the use of copyright as more than just defining property rights, the use of copyright in creating market locks. But we would paint with too broad a brush were we to condemn all of these market locks. Market locks facilitate product differentiation and that may expand the range of ways that fixed costs can be recovered in a competitive industry. This can be useful and can improve outcomes for consumers. We should think this pattern to arise most plausibly in industries with foremarkets and aftermarkets. These would include original equipment markets and repair parts, printers and toner cartridges and garage door openers and would encompass a series of important cases, including Chamberlain, Kodak, Lexmark and Toro. Market locks in these settings may appropriately limit partial entry, as when an entrant wants only to supply replacement parts. In these settings, contractual product degradation - typically a license limiting permitted uses of the product - will make it possible to offer different products to different consumers. We should not routinely condemn market locks in these situations and should be troubled if we shape copyright law in a way that p

Unbundling Scope-of-Permission Goods: When Should We Invest in Reducing Entry Barriers?
Date Posted:Mon, 11 Oct 2004 01:53:58 -0500
Scope-of-permission goods are goods of arbitrary scope, where consumption of the good is non-rivalrous, where users can be excluded from consuming the good - through market organization, technology or law - and where increments to the good can be added to the good, once they are created, at zero marginal cost. Scope-of-permission goods naturally include pay TV, computer software, copyrighted works and licenses from collective right collectives such as ASCAP and BMI. These goods have been ...

Cyber Security: Of Heterogeneity and Autarky
Date Posted:Wed, 06 Oct 2004 22:16:27 -0500
The wonder of the Internet is incredibly capable computers connected with each other under the control of individuals. For all of the reasons that we think that decentralization is a powerful force we have applauded the ability of individual users to set up websites and make their ideas available to others. But there is a dark side as well. Always - on connections, extra computing cycles and gigabytes of storage to burn mean that individual decisions can propagate throughout the network quickly.

Unbundling Scope-of-Permission Goods: When Should We Invest in Reducing Entry Barriers?
Date Posted:Fri, 17 Sep 2004 11:35:20 -0500
Scope-of-permission goods are goods of arbitrary scope, where consumption of the good is non-rivalrous, where users can be excluded from consuming the good - through market organization, technology or law - and where increments to the good can be added to the good, once they are created, at zero marginal cost. Scope-of-permission goods naturally include pay TV, computer software, copyrighted works and licenses from collective right collectives such as ASCAP and BMI. These goods have been at the heart of some of our most difficult cases in antitrust law and competition policy. This includes the extended antitrust litigation over the blanket licenses for the use of copyrighted works issued by ASCAP and BMI. It also includes the Windows operating system, especially as it has grown over time with the addition of Internet Explorer and the Windows Media Player. In the ASCAP cases and in the U.S. and EU antitrust actions against Microsoft, the core question is to what extent do we want to re-scope a scope-of-permission could so as to foster entry. In the recent revision of the 40-year-old consent decrees in ASCAP, we have once again pushed ASCAP to offer meaningfully smaller licenses - a required subtraction of scope - with the hope that we would create entry in collective rights organizations. The U.S. and EU have taken different paths in their actions against Microsoft. Both focus on the scope of the rights given to end-users in Windows. The U.S. has chosen to limit the visibi

Cyber Security: Of Heterogeneity and Autarky
Date Posted:Wed, 15 Sep 2004 00:10:03 -0500
The wonder of the Internet is incredibly capable computers connected with each other under the control of individuals. For all of the reasons that we think that decentralization is a powerful force we have applauded the ability of individual users to set up websites and make their ideas available to others. But there is a dark side as well. Always - on connections, extra computing cycles and gigabytes of storage to burn mean that individual decisions can propagate throughout the network quickly. The small-worlds phenomenon that is the Internet means that my computer is only a handful of clicks away from a malicious computer programmer. My decisions matter for your computing life. A malicious hacker can turn my computer into a zombie and use my broad-band connection and my computer to shut down websites, to send millions of spam emails, or worse. The network is a sea of computing externalities, many extraordinarily positive but others that can range from everyday bothersome to enormously disruptive. And, in the hands of a cyber-terrorist, the more we embed critical infrastructure into the public network, the more we make it possible for a cyber-terrorist to turns our computing resources against us and thereby harm critical infrastructure, such as the electricity grid or our communications networks. Addressing cyber security is a mixed question of engineering - computing architecture - and legal rules. The zombie PC problem emerges with the rise of the Internet and decentrali

The Digital Video Recorder: Unbundling Advertising and Content
Date Posted:Wed, 08 Oct 2003 13:00:22 -0500
Next time you turn on your television, actually watch the commercials and you will quickly see how poorly the economic model of TV is working. They put on a commercial for dog food, but you don't have a dog. Many of the commercials are for product categories that you do not purchase, and others are for products, such as cars or computers, that you use constantly but purchase only sporadically. The digital video recorder (DVR) may change this dramatically. The DVR will allow us to unbundle content and advertising. Content that comes from broadcasters bundled in one form - the TV show itself, the station identifications, the ads selling Budweiser and the promos for a very special Dawson's Creek - can be reshaped and separated before the viewer sees it. The ability to delete commercials puts at risk the basic financing model for free broadcast TV. At least as important, unbundling of ads and content allows personalization of commercials and that in turn may change content itself. Personalization will change the core role that content plays in intermediating between advertisers and audiences. Traditionally, content plays a dual role: it attracts a particular type of reader, and that in turn determines the type of advertising that can be sold. Creators shape content to best fit the intersection of advertisers and audience. A DVR with ad personalization has the capacity to alter completely this critical matching process played by content creators. How the DVR technology is organ

The Digital Video Recorder: Unbundling Advertising and Content
Date Posted:Wed, 08 Oct 2003 04:00:22 -0500
Next time you turn on your television, actually watch the commercials and you will quickly see how poorly the economic model of TV is working. They put on a commercial for dog food, but you don't have a dog. Many of the commercials are for product categories that you do not purchase, and others are for products, such as cars or computers, that you use constantly but purchase only sporadically. The digital video recorder (DVR) may change this dramatically. The DVR will allow us to unbundle ...

Understanding Statutory Bundles: Does the Sherman Act Come with the 1996 Telecommunications Act?
Date Posted:Wed, 29 Jan 2003 05:20:57 -0600
Three recent appellate decisions - Goldwasser, Trinko and Covad - have addressed the interplay of the 1996 Telecommunications Act and the antitrust laws. This area raises questions of both substantive law and standing. This essay focuses on standing and in particular the question of how the antitrust doctrine in Illinois Brick should apply to situations in which there is an alleged breach of an access duty owed by an incumbent local exchange carrier. That access duty might arise under the 1996 ...

Understanding Statutory Bundles: Does the Sherman Act Come with the 1996 Telecommunications Act?
Date Posted:Wed, 29 Jan 2003 01:48:48 -0600
Three recent appellate decisions - Goldwasser, Trinko and Covad - have addressed the interplay of the 1996 Telecommunications Act and the antitrust laws. This area raises questions of both substantive law and standing. This essay focuses on standing and in particular the question of how the antitrust doctrine in Illinois Brick should apply to situations in which there is an alleged breach of an access duty owed by an incumbent local exchange carrier. That access duty might arise under the 1996 Act itself or under applicable antitrust doctrines, such as the essential facilities doctrine or the duty to deal with competitors seen in Aspen Skiing. The essay sets forth a model of access duties leading to entry and Cournot duopoly and evaluates outcomes when that access duty is breached. The essay discusses various approaches to allocating suit rights depending on the purpose of enforcing the duty. I argue that the Illinois Brick doctrine which bars suits by consumers as indirect purchasers should have little application to the breach of access situation as the de facto compensation rationale of Illinois Brick won't operate when the entrant has been denied the mandated access.

Entry Policy in Local Telecommunications: Iowa Utilities and Verizon
Date Posted:Fri, 10 Jan 2003 14:14:05 -0600
This paper offers legal and economic analysis of two recent Supreme Court decisions, AT&T Corporation v. Iowa Utilities Board and Verizon Communications v. FCC. The paper is written with two audiences in mind. For those unfamiliar with the cases, we offer what we hope is an accessible yet detailed account of the underlying policy issues raised by a legal regime that requires incumbent local telephone carriers to lease parts of their telephone networks to would-be rivals. To that end, we discuss the main reasons why sharing rules are sometimes imposed in markets like the market for local telephone service, and we then link those issues to the specific legal questions at issue in these cases. For those already well versed in those issues, by contrast, we have woven into our account a variety of new ideas about both the relevant legal analysis and the underlying economics. We explain, for example, how low access prices might encourage incumbents to invest in new infrastructure despite the intuitive argument to the contrary, and how the Commission's seemingly nonsensical pick-and-choose rule can actually accomplish important policy goals, working in essence as a statutory most-favored-nation clause. In the end, then, we hope this paper will have value both for those relatively well steeped in telecommunications policy and for those just beginning to learn these issues.

From Edison to the Broadcast Flag: Mechanisms of Consent and Refusal and the Propertization of Copyr...
Date Posted:Thu, 26 Sep 2002 11:16:30 -0500
Encryption propertizes copyright. Prior to the rise of encryption, intellectual property wasn't really property. Instead, these rights consisted of rights to sue to block use or seek damages for after-the-fact use. Encryption makes possible before-the-fact limits on use of the sort that we associate with physical property. Copyrighted works are becoming real property in a way that will never happen for trademarks or patents. This essay traces the role of consent and refusal for copyrighted ...

From Edison to the Broadcast Flag: Mechanisms of Consent and Refusal and the Propertization of Copyright
Date Posted:Tue, 24 Sep 2002 23:31:36 -0500
Encryption propertizes copyright. Prior to the rise of encryption, intellectual property wasn't really property. Instead, these rights consisted of rights to sue to block use or seek damages for after-the-fact use. Encryption makes possible before-the-fact limits on use of the sort that we associate with physical property. Copyrighted works are becoming real property in a way that will never happen for trademarks or patents. This essay traces the role of consent and refusal for copyrighted works in the context of mass media entertainment. Early phonograph and movie projector manufacturers sought to limit the use of the equipment to specified music or films, almost certainly in an effort at price discrimination. With the rise of radio, we see similar use restrictions imposed by the record companies, but these restrictions should be seen first as a form of raising rival's costs. The fight over home-taping use of the VCR should be seen in consent terms as well, where entry was clearly facilitated by the absence of any requirement of advance consent from copyright holders. Now with the current dispute over a possible broadcast flag for digital TV, we may complete the path started by Edison and his contemporaries. In considering the extent to which we should embrace full propertization of copyrighted works through encryption, we should expect transaction forms to vary with transaction costs and technological possibilities and should not somehow privilege a narrow set of institut

Copyright as Entry Policy: The Case of Digital Distribution
Date Posted:Thu, 02 May 2002 10:27:18 -0500
In this paper, I consider how copyright law influences entry in digital distribution of music and video. The subject encompasses past and current successes in distribution-cable TV and the VCR-current and recent controversies-Napster and the pending cases addressing its successors-as well as possible next steps in distribution, such as web radio, interactive music services and the digital video recorder. Section I of the paper considers six ways that online distribution matters: 1. as a new medium, online distribution adds to the existing set of versioning opportunities for producers; 2. distributional bottlenecks are weakened and gatekeeping roles minimized; 3. sellers receive direct, detailed information about consumer preferences; 4. bundling and packaging opportunities are greatly expanded; 5. pay-per-view or pay-per-listen is easier to implement; and 6. it is possible to devolve control over distribution through peer-to-peer distribution. Section II of the paper considers two cases of distribution entry, devices and online radio. Much of the relevant distribution entry policy is set through copyright law. For new devices that facilitate distribution-the VCR, Napster and the DVR-key features of the reigning copyright test are not sufficiently demanding of entrants. The Sony test for contributory copyright infringement-whether the object in question is capable of substantial noninfringing uses-is far too weak and fails to take into account at all the scope of the infring

Copyright as Entry Policy: The Case of Digital Distribution
Date Posted:Thu, 02 May 2002 05:02:11 -0500
In this paper, I consider how copyright law influences entry in digital distribution of music and video. The subject encompasses past and current successes in distribution-cable TV and the VCR-current and recent controversies-Napster and the pending cases addressing its successors-as well as possible next steps in distribution, such as web radio, interactive music services and the digital video recorder. Section I of the paper considers six ways that online distribution matters: 1. as a new ...

Pursuing a Remedy in Microsoft: The Declining Need for Centralized Coordination in a Networked World...
Date Posted:Mon, 10 Sep 2001 05:56:02 -0500
In this paper, I make a number of points about the Microsoft case itself and the next steps that should take place. In particular, I argue that: - No Liability for Tying. Microsoft should not be found liable under the Sherman Act for tying Internet Explorer to Windows. In the pre-networked world, Windows played the central role in coordinating the sharing of software. Incorporating a browser would have been perfectly consistent with that role. - The Drop in the Cost of Software ...

Pursuing a Remedy in Microsoft: The Declining Need for Centralized Coordination in a Networked World
Date Posted:Wed, 08 Aug 2001 21:27:34 -0500
In this paper, I make a number of points about the Microsoft case itself and the next steps that should take place. In particular, I argue that: - No Liability for Tying. Microsoft should not be found liable under the Sherman Act for tying Internet Explorer to Windows. In the pre-networked world, Windows played the central role in coordinating the sharing of software. Incorporating a browser would have been perfectly consistent with that role. - The Drop in the Cost of Software Coordination. The rise of the network changes how software should be distributed and changes the role of Windows in software coordination. There is less of a need for mandatory incorporation of software into Windows, as decentralized distribution and coordination is now possible. - Distorted Distribution Channels. As found by the D.C. Circuit, Microsoft engaged in impermissible monopoly maintenance. In so doing, Microsoft distorted the channels for software distribution and added software to Windows for the purpose of raising the cost of distribution of rival software. - Distribution Remedies. A proportionate Microsoft remedy should address that distributional distortion and seek to prevent future distortions. These remedies should: - foster desktop flexibility for distributional intermediaries, so that there are no mandatory icons on the Windows desktop or spots reserved in the Start Menu or its equivalent; - require Microsoft to engage in mandatory versioning, so that it issues Windows versions

Regulating Network Industries: A Look at Intel
Date Posted:Wed, 20 Oct 1999 07:46:56 -0500
This paper examines the Federal Trade Commission's recent settlement with Intel. Evaluating the FTC's case against Intel turns on tricky issues regarding the dynamics of cross-licensing. These are essentially barter transactions, and we have only a weak understanding of when firms will turn to barter. Interfering with cross-licensing will make it more difficult for these transactions to take place, and to understand the importance of that, we need to have a better handle on the relative ...

Regulating Network Industries: A Look at Intel
Date Posted:Thu, 14 Oct 1999 15:26:07 -0500
This paper examines the Federal Trade Commission's recent settlement with Intel. Evaluating the FTC's case against Intel turns on tricky issues regarding the dynamics of cross-licensing. These are essentially barter transactions, and we have only a weak understanding of when firms will turn to barter. Interfering with cross-licensing will make it more difficult for these transactions to take place, and to understand the importance of that, we need to have a better handle on the relative importance for a licensor of cash returns versus the in-kind returns that are obtained from cross-licenses. We can say with more confidence that the FTC's case appears to give very little weight to the benefits that arise from royalty-free cross-licenses. These licenses eliminate the double monopoly problem that can arise when two patent holders hold essential patents. Royalty-free cross-licensing eliminates through a contract an externality between the patent holders that would otherwise push up prices, to the detriment of the patent holders and their customers. The settlement may very well make it more difficult for Intel to negotiate royalty-free cross-licenses and may harm society in doing so. The licensing regime that emerges from the settlement may have the benefit of making it possible for prospective PC makers who might not deal with Intel to do so -- though this point does not appear to have figured in the FTC's calculus. These prospective PC makers will have less reason to fear tha