Legal Studies Research Paper Series Vol. 8, No. 4

The Faculty has published Volume 8 Number 4 of the University of Cambridge Faculty of Law Legal Studies Research Paper Series on SSRN.

This issue includes the following articles:

Matthew H. Kramer: The Illusion of Neutrality: Abortion and the Foundations of Justice (9/2017)

This article will assail one of the central aspirations of Rawlsians and other liberal neutralists in the context of debates over some high-profile issues of political morality. I will ponder chiefly the problem of abortion, but I will also much more briefly treat of some other matters which are similar to that problem in respects that bear directly on my critique of neutralism. As this article will argue, the issues explored herein stymie the efforts of liberal neutralists to prescind from certain vexed points of contention ─ not because those issues render the avoidance of such points of contention especially difficult, but because they render it impossible.

Michael Waibel & Norbert Gaillard: The Icarus Syndrome: How Credit Rating Agencies Lost Their Quasi-Immunity (12/2016)

This Article studies how the status and the liability regime of credit rating agencies (CRAs) have evolved and argues that CRAs lost their regulatory and judicial "quasi-immunity" over the last decade. Until the 1980s, libel lawsuits rarely threatened CRAs because their ratings were akin to opinions. The shift to the "issuer pays" model and the emergence of SF products transformed certain rating activities into advisory services, which changed the nature of credit ratings. Section I discusses the role of CRAs as gatekeepers of financial markets and sheds new light on the regulatory license that the Office of the Comptroller of the Currency (OCC) and the SEC granted them through embedding ratings in regulatory rules and the creation of a nationally recognized status. Section II shows that the Free Speech Clause of the First Amendment has traditionally shielded CRAs from litigation. CRAs have even been immune to claims brought under section 11 of the Securities Act of 1933 - which provides for liability for material misstatements and omissions in public offering documents. Section III argues that the changing character of ratings has eroded the First Amendment protection on which CRAs have traditionally relied. When courts instead started to consider these ratings (especially SF ratings) as commercial speech, CRAs have become more vulnerable to litigation. Lastly, Section IV shows that the subprime crisis of 2007-2008 catalyzed this shift from quasi-immunity to liability because claims by investors and regulators against CRAs for fraud and negligent misrepresentation fell within the scope of commercial speech. In this context, CRAs had little choice but to reach settlements and pay substantial fines.

Johnathon E. Liddicoat: Standing on the Edge: What Type of ‘Exclusive Licensees’ Should Be Able to Initiate Patent Infringement Actions? (14/2017)

In patent laws around the world, exclusive licensees often have standing to initiate infringement actions if the relevant patentee(s) is also added to the suit. Australian patent legislation specifies that exclusive licensees have this power and, correspondingly, the definition of ‘exclusive licensee’ clearly permits licensees to initiate infringement actions if they exclusively control the full complement of rights conferred by a patent. However, an important question remains: Does the definition of exclusive licensee include licensees that exclusively control only a portion of the rights conferred by a patent (e.g. to import and sell an invention but not make it)? The Full Court of the Federal Court of Australia has, through legislative interpretation, recently answered this question in the negative. Arguably, this interpretation is correct as a matter of statutory construction, but is it correct as a matter of patent policy? This article examines this final question via two approaches: (i) by extending the orthodox economic rationale for patents to the issue at hand, in particular by examining the role of exclusive licensing in market economies; and (ii) by evaluating the role of standing for exclusive licensees in the context of world patent harmonisation and the corresponding approaches in the UK and US.

Simon Deakin, Ding Chen, Mathias M. Siems & Boya Wang: Law, Trust and Institutional Change in China: Evidence from Qualitative Fieldwork (15/2017)

China’s rapid growth in the absence of autonomous legal institutions of the kind found in the west appears to pose a problem for theories which stress the importance of law for economic development. In this article we draw on interviews with lawyers, entrepreneurs and financial market actors to illustrate the complexity of attitudes to contract, corporate and financial law and economic growth in contemporary China. In the case of product markets, we find that business relations are increasingly characterised by a mix of trust-based transacting and legal formality which is not fundamentally different from practice in the west. Financial markets are less like their western counterparts, thanks to the preponderant role of government in asset allocation, and a lack of transparency in market pricing. However, in both sets of markets we find evidence of a transition from inter-personal trust (guanxi) to impersonal transacting, and of growing demands from business and legal groups for the impartial application of legal rules and market regulations. China’s experience does not suggest that law is irrelevant or unrelated to growth, but that legal and economic institutions coevolve in the transition from central planning to a market economy.

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