Volume 2012, No. 4


PDF link Bridging the Divide between Congress and the Courts

By Barbara B. Crabb

Most people give little thought to the relationship between Congress and the federal courts. It is the divide between Congress and the White House that provides headlines and engages pundits—and for good reason. The intransigent, in-your-face, high-stakes standoff between the two branches has all the elements of great drama. The divide between Congress and the courts is a much less visible but still consequential one. It is an appropriate topic for a lecture series honoring Robert Kastenmeier, United States Representative to Congress from Wisconsin’s Second District from 1959 to 1991. Friend, ally, and conscience of the judiciary, he did as much as anyone in Congress has ever done to help the courts function effectively. A strong supporter of the independence of the judiciary, he worked to keep it accountable to its constitutional responsibilities.


PDF link Copyright and Innovation: The Untold Story

By Michael A. Carrier

Copyright has an innovation problem. Judicial decisions, private enforcement, and public dialogue ignore innovation and overemphasize the harms of copyright infringement. Just to pick one example, “piracy,” “theft,” and “rogue websites” were the focus of debate in connection with the PROTECT IP Act (PIPA) and Stop Online Piracy Act (SOPA). But such a debate ignores the effect of copyright law and enforcement on innovation. Even though innovation is the most important factor in economic growth, it is difficult to observe, especially in comparison to copyright infringement.

This Article addresses this problem. It presents the results of a groundbreaking study of 31 CEOs, company founders, and vice presidents from technology companies, the recording industry, and venture capital firms. Based on in-depth interviews, the Article offers original insights on the relationship between copyright law and innovation. It also analyzes the behavior of the record labels when confronted with the digital music revolution. And it traces innovators’ and investors’ reactions to the district court’s injunction in the case involving peer-to-peer (p2p) service Napster.

The Napster ruling presents an ideal setting for a natural experiment. As the first decision to enjoin a p2p service, it presents a crucial data point from which we can trace effects on innovation and investment. This Article concludes that the Napster decision reduced innovation and that it led to a venture capital “wasteland.” The Article also explains why the record labels reacted so sluggishly to the distribution of digital music. It points to retailers, lawyers, bonuses, and (consistent with the “Innovator’s Dilemma”) an emphasis on the short term and preservation of existing business models.

The Article also steps back to look at copyright litigation more generally. It demonstrates the debilitating effects of lawsuits and statutory damages. It gives numerous examples of the effects of personal liability. It traces the possibilities of what we have lost from the Napster decision and from copyright litigation generally. And it points to losses to innovation, venture capital, markets, licensing, and the “magic” of music.

The story of innovation in digital music is a fascinating one that has been ignored for too long. This Article aims to fill this gap, ensuring that innovation plays a role in today’s copyright debates.

PDF link (Mis)use of State Law in Bankruptcy: The Hanging Paragraph Story

By Juliet M. Moringiello

This Article addresses the use of state law in bankruptcy in the context of the controversial “hanging paragraph” of the Bankruptcy Code, which was added to the Code by the 2005 amendments. The hanging paragraph appears to grant undersecured car lenders full payment in Chapter 13 bankruptcy cases, treatment that gives such lenders better treatment than other secured lenders. The provision is particularly controversial when applied to negative equity financing. Negative equity financing is provided by lenders when a car buyer offers a trade-in vehicle that is worth less than the outstanding loan that it secures. When a lender makes a negative equity loan, it is undersecured on the day the loan is made.

Whether a negative equity loan is entitled to full payment under the hanging paragraph turns on the definition of “purchase-money security interest,” a term that is used but not defined in the Bankruptcy Code. The majority of all courts that have addressed the issue, as well as all nine of the Circuit Courts of Appeal that have done so, considered the term to be defined by state law, relying on a 1979 Supreme Court case, Butner v. United States. In this Article, I explain why state law should not define the term “purchase-money security interest” for hanging paragraph purposes.

To do so, I propose a framework for analysis that is based on the difference between bankruptcy entry rights and bankruptcy exit rights to show that an analysis that relies only on Butner to determine the appropriate use of state law in bankruptcy is incomplete. This entry/exit framework requires a detailed examination of the package of rights inherent in any property interest in order to determine whether that right is one that bankruptcy policy should respect. I then explain that because a purchase-money security interest in a consumer good (such as a car subject to the hanging paragraph) refers only to a bankruptcy exit right, it should be defined according to federal law, following another 1979 Supreme Court case, United States v. Kimbell Foods. I conclude by proposing a bankruptcy policy-based definition of purchase-money security interest for hanging paragraph purposes.


PDF link Less Speech Is More: Public Financing in the Wake of Arizona Free Enterprise

By Bryce P. Cummings

Though money itself may not be speech, restricting the ability to fundraise and spend in any political campaign predictably impedes the ability to express ideas to a wide audience in today’s society. Concerns for curbing the corruptive influence of money in politics and protecting freedom of expression in the political arena are therefore commonly in tension. Congress and state legislatures around the country seeking protective campaign finance legislation necessarily walk a fine line in balancing the two.

In striking this balance, many election reformers have turned to public financing systems, under which participating candidates voluntarily limit their spending in exchange for state or federal campaign grants. To ensure these systems remain responsive to the varying demands of each election, some systems have incorporated various trigger or matching funds provisions. These add flexibility to the systems by granting additional funding to participants at various times after an initial grant of public funding and ultimately help publicly financed candidates run consistently more competitive races.
The Supreme Court’s decision in Arizona Free Enterprise Club v. Bennett is the most recent in a series of cases demonstrating the Roberts Court’s hostility toward campaign finance regulation. There, the Court struck down a matching funds provision of Arizona’s public financing system that aimed to protect public candidates if their privately financed opponents spent excessively. Viewing the matching funds provision as an unconstitutional penalty on private candidates for choosing to speak, the Court used the First Amendment to effectively justify less speech in elections. By removing funding to public candidates, the Court ultimately hinders political expression more than it protects it.

After analyzing and critiquing the Court’s opinion in Arizona Free Enterprise, this Comment shifts to a discussion of the decision’s impact on Wisconsin. Though the state has a proud progressive tradition of open government and clean elections, its public financing system is currently dead after decades of slow decline. As Wisconsin reformers work to craft a new system, matching funds should not be abandoned entirely in the wake of Arizona Free Enterprise. This Comment suggests multiple ways in which legislators can continue to use such provisions as valuable additions to a new, healthy, and durable public financing system.

PDF link Long-Arm to Protect the Unarmed from Harm by the Armed: Why Wisconsin Needs a New Statute to Ensure Its Residents Can Obtain Restraining Orders against Foreign Residents Who Threaten Them

By Brian Kuhl

A government’s primary responsibility is to render security to its citizens. The State of Wisconsin cannot currently perform this duty because Wisconsin courts do not have clear authority to protect the state’s residents who are threatened or abused by people living in other states. Specifically, Wisconsin courts lack authority to grant restraining orders against nonresidents who threaten Wisconsin citizens with domestic violence.

Domestic violence is a global epidemic that is similarly problematic in Wisconsin. Frighteningly, domestic violence homicide is one of the leading causes of premature death among U.S. women. Domestic violence and harassment are becoming easier to perpetrate, and both cross state borders with increasing frequency. A state government must be able to offer protection to its residents who are threatened with interstate domestic violence.

The primary manner in which state civil courts protect state residents against domestic violence is by issuing restraining orders against those who threaten to harm the residents. But a state court can issue a restraining order against an abuser only if state statutes grant the court personal jurisdiction over the abuser. Wisconsin’s statutes are ambiguous and do not currently provide Wisconsin courts with sufficient authority to exercise jurisdiction over nonresidents who make tortious communications into Wisconsin. After illuminating the prevalence and severity of interstate domestic violence, discussing the benefits of restraining orders, and revealing the flaw in Wisconsin’s current law, this Comment proposes a statute that would eliminate the flaw so that Wisconsin courts could exercise jurisdiction over nonresidents whose communications into Wisconsin harm the state’s residents.