Institutionalization, Investment Adviser Regulation, and the Hedge Fund Problem

Anita K. Krug

Volume 63, Issue 1, 1-52

This Article contends that more effective regulation of investment advisers could be achieved by recognizing that the growth of hedge funds, private equity funds, and other private funds in recent decades is a manifestation of institutionalization in the investment advisory context. That is, investment advisers today commonly advise these “institutions,” which have supplanted other, smaller investors as advisory clients. However, the federal securities statute governing investment advisers, the Investment Advisers Act of 1940, does not address the role of private funds as institutions that now intermediate those smaller investors’ relationships to investment advisers.

Consistent with that failure, investment adviser regulation regards a private fund, rather than the fund’s investors, as both the “client” of the fund’s adviser and the “thing” to which the adviser owes its obligations. The regulatory stance that the fund is the client, which recent financial regulatory reform did not change, renders the Advisers Act incoherent in its application to investment advisers managing private funds and, more importantly, thwarts the objective behind the Advisers Act: investor protection. This Article contends that policymakers’ focus should be trained primarily on the intermediated investors—those who place their capital in private funds—rather than on the funds themselves and proposes a new approach to investment adviser regulation. In particular, investment advisers to private funds should owe their regulatory obligations not only to the funds they manage but also to the investors in those funds.

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Patent-Eligible Inventions After Bilski: History and Theory

Joshua D. Sarnoff

Volume 63, Issue 1, 53-126

The U.S. Supreme Court has continued to require that patentable subject-matter eligibility determinations be made by reference to three historic, categorical exclusions (scientific principles, natural phenomena, and abstract ideas), which must be treated as if already known even when newly discovered by the applicant. Various thoughtful scholars have alternatively urged that these exclusions should be viewed restrictively or that such eligibility decisions should be avoided. But these scholars underappreciate the systemic and social benefits of categorical exclusions, and particularly of treating these categories as if they were already known prior art. In any event, the Federal Circuit, the U.S. Patent and Trademark Office, and the public must now draw lines between eligible inventions and ineligible applications of excluded discoveries.

This Article supplies a history and theory of subject-matter eligibility to guide such line drawing, based on the recognition that (for both eligibility and patentability) the Patent Act has always required, and still requires, creative, human invention in the application of such categorically excluded discoveries. So long as these basic discoveries continue to be treated as if already known, relying on threshold eligibility determinations will improve efficiency and reduce patent-system errors. Supplying clearer criteria for the additional creativity required for eligibility will further reduce overall patent-system burdens and will better direct investment, effort, invention, and disclosure towards more creative, patentable applications.These categorical eligibility exclusions were justified historically on both deontological and utilitarian moral grounds. Prudence counsels retaining them, given the high social stakes involved, the lack of theoretical or empirical demonstration that competing innovation approaches are better, and the moral concerns that would be raised by their elimination. The Article thus concludes with an exhortation to celebrate rather than to reluctantly embrace categorical exclusions of patentable subject matter, their prior-art status, and the line drawing that eligibility determinations require, to better protect the public domain of science, nature, and ideas while simultaneously improving the patent system.

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The Psychology of Procedural Justice in the Federal Courts

Rebecca Hollander-Blumoff

Volume 63, Issue 1, 127-178

This interdisciplinary Article examines our federal court system from the perspective of the psychology of procedural justice—that is, subjective perceptions about the fairness of process. The Article considers some of the central features of civil litigation from the standpoint of the psychology of procedural justice, highlighting some of the aspects of the system that are likely to increase perceptions of fair process, and exploring, conversely, rules and practices that may decrease those perceptions. The Article focuses on procedural justice in two contexts: basic rules and practices of civil procedure and more complex federal court doctrines that involve the allocation of judicial business between the states and the federal government. In both cases, procedural justice is considered from the perspective of litigants involved in civil disputes; in the latter case, the analysis broadens to encompass the procedural justice experiences of other important actors in civil litigation, including judges, legislators, and state executives. This Article argues that, while legal academics have typically analyzed the fairness of federal procedure and rules through an analysis of procedural due process, the psychology of procedural justice provides an important and potentially wider perspective from which to consider the procedural fairness of our legal system. Because perceptions about fair process are critical to assessments of legitimacy and deference to legal authority, scholars in both law and psychology should devote greater attention—both empirical and theoretical—to the potential procedural justice effects of specific legal rules and doctrine.

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Crime Mapping and the Fourth Amendment: Redrawing “High-Crime Areas”

Andrew Guthrie Ferguson

Volume 63, Issue 1, 179-232

Crime-mapping technology has the potential to reshape Fourth Amendment protections in designated “high-crime areas.” In Illinois v. Wardlow the Supreme Court held that presence in a high-crime area is one of only two factors necessary for creating reasonable suspicion to stop an individual. Since Wardlow, thousands of federal and state cases have used the term “high-crime area,” yet only a handful of courts have considered how to define it. New crime-mapping technologies can now address that definitional problem. Crime-mapping technologies can collect and analyze crime statistics so that police districts can produce almost perfect information about the level, rate, and geographic location of crimes in any given area. The result: police can define official “high-crime areas” for Fourth Amendment purposes.Crime-mapping technology raises significant Fourth Amendment questions. Does crime-mapping technology alter the existing Fourth Amendment reasonable suspicion analysis? Will this technology create an implicit high-crime area exception to the Fourth Amendment? How will this technology effect police-citizen encounters and liberty interests in officially designated high-crime areas? This Article addresses these questions in an effort to reevaluate and rethink the concept of the high-crime area as understood by the courts. Tracing the history and practice of crime-mapping technology and its effect on Fourth Amendment doctrine, this Article proposes a new framework and redefinition of the term that is both informed by existing crime-mapping technologies and consistent with Fourth Amendment principles.

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Is There a Constitutional Right to Select the Genes of One’s Offspring?

Andrew B. Coan

Volume 63, Issue 1, 233-296

The Supreme Court has long recognized a due process right to make deeply personal decisions such as whether to bear or beget a child. Might this right extend to selecting the genes of one’s offspring? Perhaps more important, should courts interpret it to do so? Thus far, discussion of these questions has focused almost exclusively on the normative goals that a constitutional commitment to procreative liberty should be taken to embrace. That is undoubtedly an important issue, but it cannot tell us whether courts are the institution best suited to carry any particular goal into effect. This is a basic but frequently overlooked point in constitutional analysis and one that has received next to no attention in the context of assisted reproductive technologies. This Article begins to remedy the oversight. In so doing, it has two overlapping goals: to enrich the constitutional analysis of emerging issues in reproductive liberty and to use those issues as a vehicle for exploring the complexities of institutional analysis more generally.

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Note – Fashioning a New Look in Intellectual Property: Sui Generis Protection for the Innovative Designer

Linna T. Loangkote

Volume 63, Issue 1, 297-322

Fashion design is weaving its way through the fabric of American society by transforming how people think about fashion apparel. The $350 billion fashion industry not only puts the clothes on our backs, but gives individuals an outlet for individual expression as well. More and more, the fashion design process is recognized as a creative process where vision, raw materials, and skill meet to produce fashion apparel that should be worthy of sui generis protection.Current intellectual property regimes fail to adequately equip designers with legal remedies to guard against design piracy, and this affects both innovation and competition. Moreover, even though the U.S is a signatory to the Berne Convention, the U.S.’s lack of a protection scheme for fashion design is out of step with other signatory members, namely the European Union, and this mismatch could invite unintended reciprocity problems for American designers abroad. Something needs to be done. Congress has attempted twice now to provide a solution to the design piracy problem. However, the proposed bills do not wholly consider and understand the competing interests involved in this sui generis protection debate. This Note proposes a unique licensing solution that is fitting for a unique intellectual property problem—showing that protection for fashion design does not have to be a zero-sum game between designers and nondesigning retail firms.

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