Archive for January, 2012

January 6 roundup

Dodd-Frank and conflict minerals: the law’s wide reach

Some expected that the big new SEC regulations on industrial users of tin, tungsten, tantalum and gold would mostly affect electronics and jewelry makers, but the actual net being cast is far wider. Manufacturers in general must investigate the supply chains of their products in order to comply with the disclosure requirements, no small matter at a firm like Kraft with 40,000 products and 100,000 suppliers. (Kraft found that the minerals may turn up in pouch packaging of juice products.) No wonder the SEC’s absurd initial estimates of a mere $70 million economy-wide compliance cost have given way to estimates a hundred times higher or more. In an echo of the infamous CPSIA statute, “the rule provides no de minimis exemption for trace amounts.” [Melissa Maleske, Inside Counsel, earlier here, here, and here] (& Bainbridge)

More: the Dodd-Frank conflict minerals provision and the Democratic Republic of the Congo [Marcia Narine, Conglomerate via Bainbridge]

“The Private and Social Costs of Patent Trolls”

A new study by James Bessen, Jennifer Ford and Michael J. Meurer in Cato’s Regulation magazine:

This article makes several findings about this litigation [patent litigation by non-practicing entities (NPEs)]. First, by observing what happens to a defendant’s stock price around the filing of a patent lawsuit, we are able to assess the effect of the lawsuit on the firm’s wealth, after taking into account general market trends and random factors affecting the individual stock. We find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010. During the last four years, the lost wealth has averaged over $80 billion per year. These defendants are mostly technology companies that invest heavily in R&D. To the extent that this litigation represents an unavoidable business cost to technology developers, it reduces the profits that these firms make on their technology investments. That is, these lawsuits substantially reduce their incentives to innovate.