July 2008

GamePolitics.com points out that Minnesota will reimburse the video game industry to the tune of $65,000 for their attorneys fees it incurred when challenging Minnesota’s 2006 “fine-the-buyer” law. The Minnesota law was unique in that it sought to impose fines on the buyers rather than the sellers of games rated either “M” for Mature or “AO” for Adults Only under the industry’s voluntary ratings system. Other state and local laws that have been struck down in recent years imposed penalties mostly on game retailers who sold games rated M or AO to minors. In a scathing opinion handed down back in August 2006, James M. Rosenbaum, Chief District Judge of the District Court of Minnesota, struck down the Minnesota law as unconstitutional.

But here’s what’s really important about the fact that the industry recovered legal fees in this case and others. As the Entertainment Software Association noted in its press release about the Minnesota settlement: “The ESA [has] prevailed over similar unconstitutional laws in nine other jurisdictions [and] now has been awarded close to $2 million in fees and expenses spent in defending gamers, developers and publishers’ First Amendment rights.”

As I have noted previously, these cases make it clear that there is a significant opportunity cost associated with censorship efforts. That $2 million in recovered legal fees could have been plowed into educational efforts to help explain to parents how to use the excellent voluntary ratings systems or console-based parental control tools that are at their disposal. Moreover, that $2 million in recovered industry legal fees does not account for the resources that state and local officials put into these regulatory efforts. So, we are talking about a much greater deadweight loss for society and taxpayers.
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Polycentric Patent Law

by on July 1, 2008 · 5 comments

Craig Allen Nard and John Duffy wrote a great paper last year on the problems created by the centralization of patent jurisdiction in the Federal Circuit. I thought this passage was really striking:

The PTO is perhaps the best institutional candidate for a peer competitor. Indeed, the Supreme Court itself seems to have recently encouraged the PTO to serve as a check on the court by providing another viewpoint in cases on petitions for certiorari. In the last six terms (2000–2005), the Supreme Court has called for the views of the Solicitor General (CVSG) on fifteen certiorari petitions filed by private parties in Federal Circuit patent cases. These cases accounted for over 16% (fifteen out of ninety-one) of all CVSG orders entered by the Supreme Court during the period even though patent cases occupied less than 3% of the Court’s docket. The response to such a CVSG order invariably is a brief signed by the Solicitor General (SG) and the PTO (and sometimes by other components of the government); and where the SG and the PTO have recommended granting certiorari, the Court has uniformly followed the recommendation. Thus, by issuing a comparatively large number of CVSG orders in patent cases, the Supreme Court appears to be trying to use conflicts between the Federal Circuit and the PTO as a substitute for conflicts among federal circuit courts, which is the normal criteria used by the Court in ruling on certiorari petitions.

Jurisdictional competition is crucial to the efficient working of our legal system. Duffy and Nard argue that Congress undermined jurisdictional competition in patent law when it centralized all patent decision-making in the Federal Circuit. The passage above suggests that the Supreme Court clearly understands the benefits of jurisdictional competition, but Nard and Duffy argue (and I think I agree with them) that asking for briefs from the Patent Office is a poor substitute from the kind of robust inter-circuit competition that would result from the decentralization of patent jurisdiction.