Within intellectual property, Darcy v. Allen and the Statute of Monopolies are frequently, almost reflexively, invoked as establishing a baseline norm of economic freedom from which governments depart when they grant exclusive rights to deal in any trade or article of commerce. Against this free-market backdrop, all such grants are suspect, and only those that are justified by reference to their originality or utility (copyrights and patents) are valid. Rejecting the dominant view of Darcy and the Statute of Monopolies, this Article provides a more detailed political and legislative history of both the compromise leading to Darcy and the adoption of the Statute of Monopolies than any to date, and consequently demonstrates that their true importance lies in their political, not economic, content. This reinterpretation suggests that both events are best viewed through the lens of political accountability, a departure from the prevailing understanding of these events, both in and out of intellectual property. The Article concludes by considering the ramifications that this new understanding has for modern debates about intellectual property. Both events suggest that politics and coalition, not litigation, is the most promising brake on the seemingly ever-expanding scope of intellectual property laws. Further, the mercantilist experience with market controls suggests that targeted measures like compulsory licenses are more likely to perpetuate rather than restrict the power of special interests who hold large amounts of intellectual property.
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A Normative Theory of Business Bankruptcy
It is widely agreed that capital cost reduction should be among the goals that a business bankruptcy law should pursue. This Essay argues that capital cost reduction should be the only goal, and that a bankruptcy system seriously committed to this goal would be both smaller and less centralized than the current U.S. Bankruptcy Code. In particular, a bankruptcy law that sought to reduce the cost of debt capital to firms would (a) require the trustee or debtor in possession to maximize the value of the insolvent firm rather than the payoffs of general creditors; (b) permit preferences (but continue to bar fraudulent conveyances); (c) permit suppliers and customers to contract for the right to cease dealing with a firm that has become insolvent; (d) not subsidize the use of expert professionals by junior creditors, but sometimes subsidize expert use by seniors; and (e) permit parties in the lending agreement to induce the debtor to use the bankruptcy procedure, either Chapter 7 or Chapter 11, that turns out to be optimal in the state of the world in which insolvency occurred.
The Constitution in Two Dimensions: A Transaction Cost Analysis of Constitutional Remedies
This Article reveals the underappreciated role of liability rules in constitutional law. Conventional constitutional theory insists that constitutional entitlements require, by their nature, property rule protection. That is, they can only be taken with the owner’s consent; nonconsensual takings can be enjoined. This Article shows that many constitutional values are in fact protected by liability rules, which allow for forced transfers followed by payment of compensation. Substantive entitlements form one dimension of constitutional law. The various ways in which they are protected against transfers form the second dimension. The full picture of constitutional law only emerges from looking at both.
The Article locates liability rules in diverse areas such as the First Amendment prior restraint doctrine, the Third Amendment, Fourth Amendment search and seizure rules, the Due Process Clauses, the Takings Clause of the Fifth Amendment, the Self-Incrimination Clause of the Fifth Amendment, and the Excessive Bail Clause of the Eighth Amendment. Thus constitutional theory’s insistence on property rule protection fails account for how some constitutional values are actually protected. This Article develops a richer understanding of the relationship between constitutional remedies and constitutional entitlements. The transaction cost perspective on constitutional law reveals previously unnoticed connections between various doctrines, and provides a new criterion for evaluating their strengths and weakness.
This Article also presents new evidence that the Constitution does not require property rule protection and can be satisfied with liability rules. It shows that the oft-overlooked Third Amendment explicitly mandates property rule protection for the entitlement it defines. This property rule, together with the Takings Clause’s explicit liability rule, shows that for other entitlements the Constitution does not require any particular form of protection. The explicit property rule and the explicit liability rule define the second dimension in constitutional law.