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There is an easy case to be made against giving states more influence over the patent system. For the patent system to work well, the Supreme Court has repeatedly emphasized, uniform nationwide rules are key.17 Otherwise, individual states could upset the balance between encouraging innovation and protecting competition and a robust public domain.18 State laws that specifically target patent-holders and make it harder to exercise their patent rights are especially likely to upset this balance, since they directly undermine the incentives that patent law is designed to promote. State laws are also troublesome because they can represent an attempt by residents of that state to extract rents from outsiders, whether by strengthening or weakening patent rights.

Another challenge to this semi-decentralized model is the potential for efficiency losses due to local legal experimentation, an issue that is particularly [*300] relevant in China. In the context of local competition, local patent laws often incorporate two types of measures. Firstly, local governments use their own finances to fund businesses applying for patents. For instance, Article 4 of the Fujian Patent Law stipulates, "The local people's government should increase funding for the promotion and protection of patents, raise funds through multiple channels, and use them to support patent applications."261 Secondly, local governments make patents a primary consideration when granting financial benefits to businesses, such as government funding, preferential access to government procurement, and tax benefits. For example, Article 12 of the Fujian Patent Law dictates that "government procurement and other purchases using fiscal funds shall give priority to the purchase of patented products under equal conditions."262 Businesses engaged in innovative activities and keen on obtaining patent protection undoubtedly find these measures attractive, as government financial support at the application stage reduces the cost of patent acquisition, while financial benefits granted on the basis of patents can put companies in a financially advantageous position compared to their competitors.

However, research shows that the implementation of these two types of measures can encourage businesses to engage in rent-seeking behavior. With no or minimal investment required to apply for patents, businesses might apply for patents for non-innovative, low-quality technologies.263 Some applicants, in order to secure government supportive funding for patent applications, even divide a single application into multiple ones.264 Studies indicate that the practice of local governments subsidizing patent applications has led to a decrease in the patent quality.265 This not only results in a waste of government financial and human resources at the application stage266 but also leads to increased administrative costs [*301] for subsequent patent management.267 For companies wishing to enter the innovation field, navigating a dense thicket of low-quality patents can also lead to waste of resources that they could otherwise have used for innovation.

At least until 2050, and possibly for decades after, climate change will remain a creeping threat that will exacerbate and amplify existing, structural global inequalities. While the developed world will be negatively affected by climate change through 2050, the consequences of climate change will be felt most acutely in the developing world. The national security threats posed by climate change to 2050 are likely to differ in degree, not kind, from the kinds of threats already posed by climate change. For the next few decades, climate change will exacerbate humanitarian crises—some of which will result in the deployment of military personnel, as well as material and financial assistance. It will also aggravate natural resource constraints, potentially contributing to political and economic conflict over water, food and energy.

The question for the next 30 years is not “can humanity survive as a species with 1.5°C or 2°C of warming,” but, “how much will the existing disparities between the developed and developing world widen, and how long (and how successfully) can these widening political/economic disparities be sustained?” The urgency of the climate threat in the next few decades will depend, to a large degree, on whether and how much the U.S. government perceives a widening of these global inequities as a threat to U.S. national security.

INTRODUCTION Advocating a new body of regulation with the explicit concession of likely error and risks of regulatory derailment may seem self-defeating. Nevertheless, effective regulatory design, like effective investment strategies, must be designed for success yet anticipate unfavorable developments and error risks.1 And in the United States, due to our constitutional structures and linked political norms, any major regulatory choice must include decisions about how to utilize the regulatory roles demarked by federalism. What roles should be allocated to or preserved for federal, state, and local actors, or perhaps a combination of them all? Climate change policy choices remain the subject of partisan and rancorous contestation, including disputes over the right federalism choice. By leavening idealized policy solutions with attention to political and legal discord and regulation-market linkages, this Article illuminates the effects and dynamics of federalism hedging, a largely overlooked value of federalism structures retaining concurrent and often interacting federal and state roles. Federalism hedging refers to the regulatory choice to retain overlapping, interacting, and often intertwined federal and state roles even in a setting where the apparently ideal regulatory regime would rely on exclusive federal regulation that would preempt state roles. This Article argues that both federalism discourse and climate change policy debates have failed to analyze adequately how choices about federal and state roles can serve to hedge and even reduce risks of regulatory reversal and implementation failure. This Article’s analysis of federalism hedging operates at three levels. First, it introduces federalism hedging as a theory, explaining the attributes and dynamics of federalism hedging and situating it within recent scholarly and policy debates about the values and functioning of federalism. Second, it then illuminates federalism hedging with analysis of the regulatory challenges posed by climate change and the history of climate and clean energy progress and contestation. And, third, drawing on this theoretical and historical analysis, the Article makes a normative and prescriptive claim that retaining latitude for state and federal overlap can provide an array of benefits and, especially, reduce risks of disruptive policy reversals that could, in turn, undercut linked markets and regulatory progress. Such a hedging role is of especial importance where a body of regulation provides a crucial underpinning of a market and that market is itself essential to regulatory success. Retaining latitude for both federal and state roles also can serve in a valuable precautionary role conducive both to innovation and pragmatic adjustment in regulatory settings characterized by rapid change in business models and technology.2 This Article, like much federalism discourse, is actually not about what is constitutionally required. Instead, the Article builds on an increasingly robust body of scholarship analyzing how federal and state roles recognized by the Constitution should be utilized to further particular regulatory policy goals or political ends.3 Although federalism scholars often mention the benefits of federalism “redundancy” in risk regulation and benefits of dynamic interjurisdictional learning, little of this pro-overlap and interaction federalism literature devotes attention to the regulation-business link, regulatory risks of error, implementation failures, and political reversal risks.4 Another strain of federalism scholarship documents and analyzes the logic and legality of state and local climate and clean energy initiatives undertaken without a broader national agreement. Before comprehensive federal climate legislative proposals went down to defeat in 2009 and 2010, they spurred an important but truncated debate over what roles should be retained by states if the nation enacted a climate-focused federal cap-and-trade bill.6 Prominent scholars and stakeholders argued that because climate regulation addresses a global ill and logically must embrace market-based regulatory tools—most likely cap-and-trade-based regulation or use of pollution taxes—regulation should be structured to draw on the largest markets possible in order to facilitate the business search for costeffective means to reduce emissions.7 They often championed preemption of state climate roles. Final (but unsuccessful) bills, however, rejected such calls.8 And a recent 2017 proposal by leading Republican conservatives advocated enactment of a carbon tax regime, but coupled that proposal with a call for the elimination of other similarly targeted federal or state laws.9 In the absence of a tailored federal climate law, states nonetheless have made climate and clean energy regulatory progress and, as litigants, prompted a series of federal regulatory actions to address climate risks under the Clean Air Act and federal energy laws. And those federal regulatory interventions, especially the Clean Power Plan (CPP) targeting existing power plants’ greenhouse gas (GHG) emissions, were shaped by state experiences, sought to harness state regulatory capacity and creativity, and preserved state authority to do more.10 The role of federalism overlap and interaction as a hedge, especially in the climate regulation arena, is a subject of more than just theoretical interest. As this Article goes to press, the new administration of President Donald Trump has overtly declared plans to revisit and roll back climate progress.11 The extent to which this new administration can do so is substantially shaped by federal, state and business climate and clean energy progress, and past statutory federalism choices. This Article agrees that the ideal answer to a global challenge like climate change would be regulation at the largest scale possible, with minimized regulatory overlap. Nonetheless, mandating such authority allocations would be the wrong answer. The effects and political economic dynamics of federalism hedging analyzed in this Article reveal why. The value of federalism hedging links to likely regulatory implementation failures, regulatory reversal risks, and risks of unsettling linked markets. Responses to regulation will inevitably be ongoing and dynamic; whatever regulatory instruments and design are chosen will shape and change the political and market terrain, and vice versa.12 All policy reforms are “at risk,” facing post-enactment threats and a dynamic environment.13 The challenges of climate change make such regulatory derailment risks especially likely to be persistent threats. Federal harnessing of state roles, or at least preservation of the possibility of state regulation alongside federal regulation,14 can be part of an effective and durable regulatory design due to three effects linked to federalism hedging: heightened stakeholder incentives to commit to the federal regime; policy diffusion dynamics; and gradual entrenchment of supportive coalitions through a process of path dependence dynamics that result in “increasing returns” and “costs of exit.”15 Relatedly, tested regulatory and market accomplishments create a body of experience and record that can provide a bulwark against ungrounded claims of regulatory hardship, change coalitional political dynamics, and provide a fact-based foundation for future regulation.16 For market actors supplying goods and services to meet a regulatory goal, a web of regulation resulting from multiple regulators, or at least potential regulators, is far more resilient and resistant to wholesale derailment than would be complete dependence on a single federal regulatory scheme. Retaining that state authority, even if just a regulatory hedging strategy, fosters overall stability, creates room for regulatory innovation, and thereby creates conditions conducive to private investment to meet regulatory goals. Legal durability is always important, especially where the regulatory infrastructure is a critical underpinning of linked investments and markets. This is especially true in the setting of climate regulation.17 Always underlying climate politics and linked markets is fear of all governments, citizens, and market actors that their jurisdiction will act, but others will not. Such inaction or regulatory reversals of others can disadvantage the climate-regulating jurisdiction, lay waste to investors in related businesses and markets, and leave GHG levels still on the rise.18 The climate and clean energy regulatory infrastructure is already built on laws and regulations benefitted by federalism hedging.19 Concerted federal efforts to reverse course on climate change—a constant in all climate regulation battles and an even more certain scenario under the Trump administration—will surely slow and might even halt federally led climate progress. The existence of federalism hedging strategies, however, will likely reduce the scale of such reversals and also set the stage for future progress.

We cannot “make America great again” unless America is secure both at home and in its global position. But what does this have to do with democracy? During the first decade after the 1991 fall of the Soviet Union, President George H. W. Bush’s goal of “a Europe whole and free” and a wider world largely at peace seemed within reach. The deadly threats of the Cold War were gone, and the democratic revolutions that appeared to be sweeping through eastern Europe and elsewhere created optimism as to the continuing progress of a liberal international order. Now, two and a half decades later, that promising trend is being reversed. The authoritarian resurgence in Europe and elsewhere over the past decade has shaken our confidence that liberal democracy, free markets and peaceful borders will continue to dominate the post–Cold War international order. From our being the “sole superpower” in the 1990s, U.S. global influence and effective power are now challenged by China and Russia, the weakening of the European Union and the sharp domestic divisions revealed by the U.S. presidential campaign. The United States and Europe are threatened by radical terrorists, challenged by territorially expansionist autocracies, and targeted by covert action, massive disinformation and propaganda offensives. Russia and China, the world’s two principal autocratic powers, lead the way in consolidating their model domestically, but also in advocating internationally for an alternative authoritarian model based on strident nationalism, autocratic leadership, and repression of human rights and the rule of law. Russia, through its covert intervention in the U.S. election, military actions in Ukraine and support of right-wing populist forces in Europe, is working to undermine the system of liberal institutions, laws and behavioral norms that have bound Europe and the United States. Sadly, this alternative model is gaining ground in Europe and elsewhere. The list includes formerly promising new democracies such as Hungary, Turkey, Thailand, the Philippines—and now even Poland. What is the connection between America’s security and the state of democracy in the world? Democratic countries rarely, if ever, go to war with each other or prey on their neighbors. Democratic systems and free markets support each other and sustain individual and group freedoms. Also, the rule of law, which subsumes all, is best guaranteed by democratic systems. Protection of the democratic order, now under challenge, must therefore be one of the priorities weighed in our strategic decisionmaking analysis and policy process. And democracy promotion via a revised, realistic and targeted approach must remain a fundamental national-security objective for the United States and its allies. At a recent conference at the Woodrow Wilson International Center for Scholars in Washington, DC on this subject, eleven experts of varying political and operational perspectives all concluded that the national-security interests of the United States and its allies not only permit, but require, America to support democracy abroad. Not to do so would ignore an existential threat to democracies, and to the international order that has allowed the United States to remain secure and prosper. The new administration will need a democracy-promotion strategy. We suggest a triage approach, which will concentrate on three categories of countries where external support is most likely to succeed. Excluded from these efforts will be countries like Russia and Uzbekistan, where the effort would be futile and/or discredit democracy promotion by validating regime propaganda that equates these programs with aggressive intrusion into domestic affairs. The most promising cases are found in countries where autocratic regimes have recently fallen or have agreed to a negotiated transition (e.g., Tunisia, Ukraine, Myanmar and Indonesia) or where semi-autocratic governments are visibly weak and opposed by broad-based indigenous movements (Venezuela). The second group is made up of countries undergoing democratic regression resulting from the aggressive nature and partial success of the authoritarian counteroffensive. Existing democracies such as Poland and Hungary must be helped from falling backwards. Emerging democracies such as Ukraine, Moldova and Georgia need assistance in fending off foreign attempts to subvert them. The third group is comprised of nondemocratic countries that fall in between regimes transitioning to democracy and consolidated dictatorships. This category includes autocratic countries such as Armenia, Thailand and Belarus, where the regimes have retained some democratic trappings such as controlled elections to maintain a degree of popular legitimacy. These openings may be used to lay the groundwork for democratic transition through carefully calibrated democracy promotion programs. Understandably, much of the focus of the new U.S. administration will be on countering terrorist threats and dampening the appeal of radical ideology to susceptible young people. Yet, we must pay attention to prospects for democratic transition and meet the authoritarian counteroffensive. At the same time, Americans must reaffirm their own democratic commitments and standards as they manage their economic divisions and challenges. If democracy is to continue to flourish, nothing is more important than being true to American values and principles and protecting them globally.

This “tradition” of crying wolf presents problems for sober analysts now legitimately worried about the presidency of Donald Trump. Many Americans seem sincerely to believe that their nation is tottering on the brink of fascism. Since Election Day, the Amazon and New York Times bestseller lists have included titles such as George Orwell’s 1984, Hannah Arendt’s Origins of Totalitarianism, Sinclair Lewis’s It Can’t Happen Here, and Timothy Snyder’s On Tyranny. Soon after Inauguration Day, the Washington Post coined a new motto for its mission: “Democracy Dies in Darkness.” And the New York Public Theater recently staged Shakespeare’s Julius Caesar while striving to give the actor who played Caesar a strong physical resemblance to our current president. Even if some of this is overwrought, many Americans seem genuinely worried. In this unusual political milieu, analysts on the left and in the political center have come to champion our nation’s commitment to representative democracy and the institutions that undergird it as bulwarks against oppressive national power. Consider the recent writings of David Frum, Timothy Snyder, and Jeffrey Rosen, three prominent center-left intellectuals. Their worries, taken collectively, include Trump’s use of controversial executive orders, the rhetoric of confrontation and violence at his campaign rallies last year, and a litany of extravagant promises, sometimes accompanied by a cool indifference to the accuracy of facts. This list is hardly exhaustive. As Frum pithily notes: “Civil unrest will not be a problem for the Trump presidency. It will be a resource.” Our representative democracy is well suited to prevent fascism from arising, but analysts who want to allay their worst fears about a Trump presidency must bear in mind the crucial role of federalism in checking the national government—and they must acknowledge the ways in which judicial supremacy and progressive centralizing tendencies have undermined federalism. Remedies? The perspectives of Frum, Snyder, and Rosen complement one another. Frum is an editor at The Atlantic and a former speechwriter for President George W. Bush; Snyder is a professor of European history at Yale; Rosen is a law professor who directs the National Constitution Center. Each assesses the prospect of fascism or authoritarianism from the standpoint of an American citizenry that could be either apathetic or engaged, with civic apathy being a great danger in this setting. In his March cover story for The Atlantic, Frum depicts the United States in 2020 soon after Trump’s reelection. The country has drifted toward illiberalism and kleptocracy, a chief trait of which is “less the power to persecute the innocent, more the power to protect the guilty.” Invoking Dickens’s “Ghost of Christmas Future,” Frum reveals a two-part strategy for preserving our republic: greater civic engagement among the people and greater reliance on federal judges and federal civil servants to keep the president and Congress in check. Because of Trump’s populist appeal, Frum argues that the current Republican Congress may be powerless to resist some of the president’s initiatives. Snyder’s widely acclaimed On Tyranny draws from his vast knowledge of twentieth-century European history, especially of Hitler’s Germany and Stalin’s Soviet Union. Snyder tries to distill twenty lessons from those horrible years, “adapted to the circumstances of today.” Like Frum, Snyder praises and encourages civic engagement. Some of his lessons align with specific fears about the Trump administration, while others—“Defend institutions,” “Believe in truth,” “Be kind to our language,” “Do not obey in advance”—would seemingly apply at all times, regardless of who occupies the White House. Because both men are writing about the United States, it is curious that Frum and Snyder say almost nothing about American federalism. A twenty-first lesson would have been well placed in Snyder’s book: “Respect American federalism,” or more broadly, “Devolve power from central authorities.” The framers recognized that the authority of the several states would be a feature, not a bug, in inhibiting the growth of an oppressive central government like the one against which they rebelled. In Federalist No. 10, James Madison saw that the dispersal of power amongst a wider sphere and a broader array of factions would make it “less probable that a majority of the whole will have a common motive to invade the rights of other citizens.” Federalism and Our Fractious Republic In a long feature article published in the Wall Street Journal in late May, Rosen identifies American federalism as an essential tool to check an imperial or authoritarian presidency. His point of departure is a series of controversial executive orders issued by President Obama and President Trump, prompted by their inability to gain support for certain initiatives in Congress. Rosen does not invoke the specter of fascism, though our highly polarized electorate and the scope of executive authority trouble him. And unlike Frum and Snyder, Rosen sees the legislative authority of the states as a counterbalance to federal overreaching. Yet in several ways his analysis stops curiously short. He describes initiatives in three areas—education, immigration, and law enforcement—that allow for both federal laws and local variation. While Rosen rightly recognizes the potential of executive power to undermine representative democracy, he gives no account—not even the barest acknowledgment—of the ways in which representative democracy in the states has already been compromised by the Supreme Court through judicially invented rights. Some of these rights are more controversial than others, but they all involve federal judges removing certain topics from the political realm. Observers on the left and right agree that the Supreme Court has invented rights without grounding in the text, logic, or original meaning of the Constitution—even if they sometimes cannot agree which rights are invented. On the right, there is a healthy skepticism of the constitutional provenance of judicial decisions involving abortion and contraception, sexual freedom, the scope of racial and gender equality, and the imposition of various punishments, including capital punishment. On the left, commentators question the legitimacy of Supreme Court decisions that have, under federal law, broadened the rights of corporations, limited the ability to blunt the influence of moneyed interests in politics, and—in one instance—decided a presidential election. Our focus here is the Court’s invalidation of duly enacted laws passed by state legislatures. In arguing that the Court compromised representative democracy in the states through certain rulings, we withhold judgment here about the wisdom or desirability of the policies that it invalidated. Judicial review is constitutionally warranted in some circumstances, but even when properly exercised, judicial review of state legislation effectively nationalizes issues, leaving many Americans disaffected. Unlike when the Court leaves state laws in place, the losing side has no political recourse when the Court strikes down a popularly enacted law. Judicial review effectively ends debate, and with debate, the potential for meaningful persuasion and compromise. Thus, the grounds for disaffection are clear: invalidating state policies through judicially invented rights involves a form of condescension to those who backed the policies. An elite institution reproves or chastises a republican or demotic institution—a familiar story in our time. Given Americans’ sharp differences on these issues, it is fair to say that the Court’s rulings have helped to divide and polarize the nation. Moreover, judicial intervention has transformed several important policy debates into a winner-take-all enterprise, and sometimes with no discernible limits as we look ahead. It is no wonder, then, that judicial confirmation battles have bordered on all-out warfare. Frum, Snyder, and Rosen know that a highly polarized electorate presents problems for the functioning of representative democracy and increases the odds of an imperial presidency or something more ominous. Yet they seem unwilling to consider how much the Supreme Court has done to polarize our nation. Other observers, including David French and Angelo Codevilla, believe that our nation has become so polarized that the most worrisome scenario for the near future is not nationalist tyranny, but civil war. But one does not preclude the other. The two might be coterminous, and they might be accompanied by widespread violations of individual rights. As political theorist George Kateb argues, the most egregious human rights violations typically occur when a prominent faction in a political community has a strong sense of group identity and clings to a dualistic, “we-they” mentality. Such a mentality, alas, is seen in many places in the United States today. Federalism, Pluralism, and “Populist” Liberalism Any scholar or commentator who truly worries about the prospect of fascism, nationalist tyranny, or civil war should favor the restoration of a more robust American federalism, with more powers exercised by the states and fewer powers assigned to the national government. There are several reasons for this. First, the dispersion of power in our federal system should be regarded as a salutary way of avoiding the concentration of power in the national government. Those who support the judicially invented rights cited above have tended to assume that the Supreme Court is the final interpreter of the Constitution and that all states must accept its rulings as soon as they are handed down. But given the constitutionally dubious grounds of these rulings, states may in the future push back and defy the Supreme Court by ignoring a decision and leaving enforcement to Congress and the president. If one accepts a “departmentalist” view of constitutional interpretation, it is possible that those two branches of the federal government will not enforce it, but even if they do, relying on them to protect such dubious rights is problematic, even worrisome. Liberals could help to avoid such a situation and a possible constitutional crisis by reviewing and reaffirming the principles and practices of American federalism. Second, when state legislatures exercise their powers to promote public health, safety, and morals, they function, in the famous words of Justice Louis Brandeis, as “laboratories of democracy.” Different state policies in response to different questions—should the death penalty be used? should public schools in a state be required to provide gender-neutral bathrooms?—are to be expected, given the basic fact of American pluralism. By the “fact of pluralism,” we mean something akin to Isaiah Berlin’s statement on pluralism—namely, that there are many ways for human beings to lead fully human lives deserving of recognition from others, even if others remain strongly attached to their way of life. If appellate court judges and Supreme Court justices would honor the principles of American federalism, they would see that our federal system can accommodate the great religious, ideological, and cultural pluralism that exists in this land. A third reason for embracing a restoration of American federalism involves the trajectory of liberal thought in this century. A fascist state frightens people because it insists that all or nearly all pursuits in society must advance the aims of the state or at least be subservient to the state. In our time, however, some versions of liberalism make similar demands, and this development deserves the attention of those who worry about the authoritarian tendencies of our current president. In Two Faces of Liberalism, John Gray delineated two accounts of tolerance in liberal theory and distinguished a “modus vivendi” account of tolerance from an account that sees tolerance as a feature of a universal, liberal civilization. In the former, tolerance is a means to the end of civil peace, a precious good in all times. In the latter, tolerance is supposed to be both a principle and a mindset, integral to a universal liberal civilization that is now emerging. The role of tolerance in this emerging liberal civilization is theoretically intelligible, yet in recent years many American liberals have displayed different kinds of intolerance. This occurs because tolerance as a principle sometimes conflicts with other goods or principles that liberals and progressives deem more important, such as some vague notion of equality or the self-esteem of individuals, ethnic groups, and sexual minorities. The imposition of sundry “orthodoxies” in academic life and the use of violence in early 2017 at institutions like Berkeley and Middlebury attest to this. Events such as these should be construed as warnings about the future, especially if this kind of “populist” liberalism continues to spread. These events also tell us how we should think of tolerance in our republic. The modus vivendi account of tolerance helps those who seek to understand more fully the implications of American pluralism, especially the nation’s religious and cultural pluralism. The modus vivendi account also helps us to appreciate the virtues of a federal system in maintaining civil peace and avoiding authoritarian politics, regardless of whether the threat emerges from the left or the right.

There is, nevertheless, an uneasy case that this particular form of patent federalism may be a good thing. The federal patent system has systemic flaws that lead to low-quality patents, nuisance patent litigation, and patent trolls exploiting asymmetric bargaining power. And efforts to address these flaws have faltered, or have had limited effects, due to public-choice dynamics in the patent system, so the scope of patent protections has expanded over time without regard to the system’s purpose of encouraging innovation. States may help address some of these problems not in spite of, but because of, their own flaws. States have their own public-choice dynamics that happen to offset some of the flaws of the federal system. State anti-patent laws have been driven largely by small businesses and local small-business groups, which, unlike most patent holders, have preexisting influence in state government. And the laws they have crafted using this influence are well-targeted to affect only the most troublesome patent cases: nuisance cases, cases asserting low-quality patents, and cases targeting end users. States pushing back with anti-patent laws, then, may represent an effective second-best solution to the problem of harmful patent assertions. Moreover, recognizing the dynamics that led to these laws may provide helpful insights in designing federal patent reforms.

State regulation in territorially discrete (in theory) "laboratories,"82 can offer useful lessons to later federal drafters. The three recent federal enactments examined here all build on prior state legislation or common law. But the federal measures respond only partially to the federalism concerns that state intellectual property regulation poses. Because the federal laws leave much of the prior state laws in place, the federal laws do not assure uniformity of national regulation. Thus, while the federal measures in some respects improve the law evolved by the states, Congress appears to accept a substantial continued risk of unpredictable resolution of conflicting rights. This risk, viewed from within the U.S. federal system, may be within our tolerance, as well as within our past experience. Seen from without the U.S., and particularly from the burgeoning system of international digital communications, the complexity of U.S. regulation of intellectual property may well appear befuddling and frustrating.

A uniform patent law that offers protection across states is a benefit of centralized legislation under a federal system. However, for the achievement of cross-state patent protection within a federal system, complete centralization of legislative power doesn't appear to be necessary. A middle ground exists between the full centralization and full decentralization of legislative power, where the central government and local governments can co-exist in patent lawmaking." In this intermediate state, a central government can offer extensive patent protection through legislation while local governments can refine the patent system in cooperation with the central government. However, the current U.S. system does not offer state governments any avenues by which to participate in the making of patent law. This approach maintains legal uniformity and avoids rule diversity.' 2 But, as Roger Ford pointed out, uniformity in patent law does not guarantee an optimal level of patent protection. 3 Centralizing patent legislative power at the federal level keeps states from enacting patent laws that reflect their specific conditions and the needs of their specific industries and innovator communities." It also means that they cannot experiment with different laws and approaches related to patent issues.1 5 Thus, the conclusion that the benefits of maintaining uniformity in patent rules outweigh the cooperation between state and federal governments in constructing the patent system is not a given.

Collaboration between central and local governments in institution-building is not a novel concept. In constitutional law, one characteristic of cooperative [*263] federalism, which originated in the New Deal era in the U.S.,16 is the sharing of regulatory authority between the federal government and the states, allowing states to regulate within a framework that federal law delineates.17 This model fosters problem-solving cooperation between different levels of government,18 providing a flexible framework that adjusts to changing circumstances.19 It stands in contrast to the concept of dual federalism, which imposes a rigid division of powers,20 defining a distinct regulatory domain which it assigns to one level of government and fortifies against encroachment from others,21 thereby creating "tension rather than collaboration" between federal and state governments.22 It also differs from preemptive federalism, in which a unitary federal system overrides all state authority "instead of leaving room for state regulation."23

In the area of patent law, Congress has sole authority to legislate.50 During the very first session of Congress, the patent statute was enacted.51 Congress subsequently amended the statute to develop a body of law relevant to changes in technology and the economy. 52 Everyone looks to Congress for patent-law reform. 53 All the normative reform efforts are continually displayed within the halls of Congress and are confined largely within the Beltway. 54 Lobbyists and interest groups exert influence in shaping patent reform.55 All efforts seem to ignore an ongoing movement at the local level, away from the national epicenter of action, to reform how patent litigation should be changed to reflect both national and local interests in patent cases. 56 Given the languishing pace of patent-law reform in Congress and the unpredictability of the Supreme Court, the local patent-law-reform movement was ripe. 7 Furthermore, local patent reform is an example of how bottom-up reforms parallel the current trends in dynamic federalism. Constitutional law scholars have fueled much of the debate in the last two decades on federalism, examining and positing the constitutional limits of congressional authority, state and federal government relationships, and the social benefits and costs of federalism.58 While the debate is ongoing among scholars in constitutional law, scholars in other areas such as environmental law,5 9 corporate securities, 60 and immigration6 1 have turned their attention to the implications of federalism for their respective fields. In recent years, scholars have embraced a new trend of federalism, proclaiming that strict "[d]ual federalism is dead" and that neither federal nor state governing authority can be seen through a single, nonoverlapping lens.62 The new alternative to the static dual federalism is dynamic federalism, which has many other names such as "federalism" or "interactive federalism., 63 Under the new concept of federalism, scholars focus on the dynamic interaction among the states and the federal government; the competition, either confrontational or cooperative, between states and the federal government; and the overlapping of state and federal authority.6 4 The local movement, as described in this Article, drawing an analogy to dynamic federalism, challenges the normative, static thinking that anything related to patents must be left to Congress. 65 Little progress has been made, as the top-down reformers have so far raced to the top. Congress and the Supreme Court have thus far failed to solve the broken-patent problem. The local movement provides a bottom-up solution that interacts, competes, and overlaps with the top-down approach to solve parts of the broken and complex patent system. The local movement is a product of work accomplished within local laboratories in many different locales across the nation to reform patent litigation.66 The local movement demonstrates that not all patent-related issues should be at the mercy of congressional attention, languishing for years on legislation pulled and pushed by powerful interest groups. 67 The local movement embodies the spirit of cooperative reform in that it represents a system sensitive to the legitimate interests at both the local and national levels.68 Congress wanted to address problems associated with patent litigation but failed to do so during the past couple of terms. Local judges and bar associations compete with Congress by partially filling the void. The local movement reveals how local judges and bar association members, together with citizens in a locality, can bring positive results to solve problems in the patent area by delivering fair and speedy resolutions to patent disputes, reducing patent litigation costs, shortening the timetables for infringement and defense contentions, imposing "good cause" standards to justify delays in pleadings, and dismissing patent cases with prejudice if certain deadlines are missed. 69 Consequently, as more patent cases are promptly disposed of and new cases are filed in the reformed districts, local federal judges have opportunities to enhance their expertise in patent law and subsequently create new federal judicial centers for patent cases. 70 The work accomplished by the local movement does not suggest that all patent related reform should be conducted at the local level. The strict dual federalism view of either national or local authority is not always productive to patent reform. Moreover, the view that all patent-related reform should be local would be unconstitutional, as Congress has the constitutional mandate to legislate substantive patent law. 71 The local movement, however, demonstrates how changes related to an area of law-patent law specifically, which has often been deemed to be exclusively within the power of Congress--can be achieved procedurally, for example, through the creation and adoption of local patent rules at the district level.72 The local movement does not reform the substantive patent law because Congress still possesses the sole power to legislate. Undoubtedly, the Patent and Copyright Clause in the Constitution speaks for the national interest in having a national patentlaw system and vests Congress with the power and authority to govern the patent system. The local patent-reform movement's development and utilization of local patent rules does not encroach upon Congress's authority or flaunt the supremacy of substantive patent law. The local patent rules are not substantive patent law; they are procedures unique to patent cases that govern how patent cases should be managed and disposed of at the district court level. The end result is an increased access to justice, a reduction in the time to dispose of cases, a decrease in litigation costs, a creation of patent expert centers throughout the nation, and a restoration of certainty that benefits the nation as a whole.

Faced with the court system's limited ability to engage in legal experimentation due to its centralized nature, Craig Nard and John Duffy have called for the establishment of a polycentric decision-making structure in patent law. It would emphasize the value of competition and diversity in legal systems and offer the potential benefit of such a "moderately decentralized framework," which could allow for incremental innovation and experimentation.2 Echoing this view, Diane P. Wood suggests that perhaps the solution lies in removing the exclusive jurisdiction of the Federal Circuit.232 Under her proposal, litigants would have the option to submit their appeals to the Federal Circuit or proceed with litigation in the regional circuit where their claims were first presented.233 Such an arrangement would grant the Federal Circuit the room to leverage its specialized expertise, yet pave the way for a more expansive evolution of patent law, allowing fresh perspectives to permeate and flourish. 2" This richer jurisprudential landscape would also provide the Supreme Court with a more comprehensive foundation from which to make its decisions. 235 The second limitation is that courts can only the address matters that come before them. Thus, statutory law inherently constrains the range of issues. Furthermore, the cases that enter the litigation process might not cover the entire spectrum of local needs or concerns, whereas local legislation can comprehensively and specifically address a wide range of regional issues. From a timing perspective, courts generally address issues retrospectively, as they respond to disputes that have already arisen, while local legislation can proactively tailor patent laws to meet regional needs and prevent those disputes in the first place. Forward-looking rulings, such as those relating to cutting-edge technologies like artificial intelligence, might be difficult for the court system to generate in a timely manner. Legislation, on the other hand, allows local governments to construct forward-looking rules. One additional point is that litigation costs also influence the scope of issues that courts address. The high cost of litigation restricts the range of legal updates as most issues with low individual economic value will not enter litigation. However, when enough disputes involving low-value issues accumulate so that their collective value becomes significant, the courts might not be able to respond in a timely manner. The third limitation is that legal reforms through the court system can lead to insufficient participation from stakeholders. Local stakeholders, especially those who have not instigated these cases, have limited opportunities to influence judicial interpretation directly. This is because courts base their decisions primarily on the legal arguments that the parties involved in the litigation present. Conversely, stakeholders can offer direct input that helps to shape local legislation, ensuring that patent laws reflect their priorities and needs. Some critics argue that the Federal Circuit's patent jurisprudence has become isolated and disconnected from the technological communities it affects. 236 Comparatively, when local governments have legislative authority, as is the case in China, local citizens can also advocate for legal reforms that are tailored to their specific needs by influencing local legislation through public consultations, 237 expressing views to representatives, 238 and collaborating with NGOs.239 This approach allows for more informed legislation. Moreover, Article 87 of the Legislative Law of China requires local legislators to make drafts public and to solicit the public's opinions.2 " Stakeholders can also influence legislation by providing comments.

State action solves slow litigation --- avoids the net benefit.

The United States Federal Government is established by the US Constitution. The Federal Government shares sovereignty over the United Sates with the individual governments of the States of US. The Federal government has three branches: i) the legislature, which is the US Congress, ii) Executive, comprised of the President and Vice president of the US and iii) Judiciary. The US Constitution prescribes a system of separation of powers and ‘checks and balances’ for the smooth functioning of all the three branches of the Federal Government. The US Constitution limits the powers of the Federal Government to the powers assigned to it; all powers not expressly assigned to the Federal Government are reserved to the States or to the people.

Viewed from a dynamic perspective, the advantage of giving local governments patent legislative power lies in their ability to experiment with new rules through legislation.215 Such experimentation can lead to innovation within the patent system. In fact, according to John Duffy, the history of patent law [*293] underscores the importance of experiments in law.216 Local legislative power can facilitate the simultaneous experimentation of different statutory laws across regions, enhancing its efficiency of and, in turn, boosting innovation in law.217 Indeed, the ability to experiment with decentralized law is a characteristic and an advantage of federalism.218 As the late Supreme Court Justice Louis Brandeis pointed out, "It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country."219 By contrast, centralized patent legislation requires that statutory experiments occur sequentially rather than geographically, leading to slower legal innovation.220 And when these experiments are not conducted simultaneously, interpreting the data from any innovation is challenging, as the lack of variation means that there is no proper control.221

The semi-decentralized model promotes innovation by enabling the testing of different approaches, generating a wealth of information about institutional reform.222 Local governments can conduct experiments with the new statutory rules that they create, and the knowledge that such experiments generate can in turn inform the legislation of other local governments as well as the central one. The value of this strategy became clear during China's period of reform and opening up and continues to this day.223 As Deng Xiaoping, the second-generation leader in China, stated: "There are regulations that localities can engage in first, on a trial basis, and then after summing up and improving, [we will be able to] make [*294] laws that are applicable nationwide."224 Xuan-Thao Nguyen echoed this view, highlighting the instrumental role of localities as laboratories of change, whose successful experiments in patent-law reform can profoundly influence both local and national legislation.225

Conversely, as international treaties relating to intellectual property law have become more prescriptive (particularly the TRIPS Agreement) there are increasingly calls to push for the use of the “flexibilities” permitted under those treaties. Utilising them means countries can have more control over what is protected by intellectual property laws and what is not. In other words, this flexibility enables the domestic law to reflect a country’s particular stage of development while still being compliant with international requirements.

If one concentrates on patent law alone, it is fair to say that, invariably, the various provinces, states or regions within a federation will be at very different stages of development when the federation is formed. And so, if the logic applied to TRIPs is applied more generally, this would suggest against a federal patent power, rather leaving it local governments to legislate for their own particular needs. For example, the Southern United States was predominately agricultural long after the industrialisation of the North. A state (rather than federal) patent law would have allowed flexibilities to exist to cater for this difference.

At the height of the pandemic, the lengths to which local leaders were willing to go to secure supplies for their communities was staggering. In April 2020, Illinois Governor J.B. Pritzker coordinated a secret charter plane to bring PPE from Shanghai, China. Governor Pritzker’s plan was meant to circumvent the Trump administration’s alleged seizing of PPE shipments from abroad.7 A hallmark of the desperation and supply chain challenges at the time, the state of Illinois was forced to hand million-dollar checks to intermediaries in parking lots to get more masks, gloves, and gowns for healthcare workers.8

Perhaps the most high-profile example of subnational diplomacy on the fly occurred in Maryland. Governors like Larry Hogan, who were left on their own to address the ever-worsening crisis, were desperate to build up testing and contact-tracing programs. At the time, testing was considered the key to containing the pandemic.9 The initial flaws in the federal Center for Disease Control’s tests set the country back by months in terms of containment, and South Korea had a far more effective testing apparatus than the United States. Hogan and his wife made a direct ask of Korean President Moon Jae-in, touting the “special relationship between Maryland and the Republic of Korea.”10 When the tests arrived in Maryland, the Governor called it “Operation Enduring Friendship” and touted his diplomatic efforts to secure 500,000 COVID-19 tests from South Korea.11

The federal structure of the U.S. government presents interesting questions for intellectual property. Which government, national or state, exercises regulatory authority? Or do both governments play a significant role? Questions of this order cannot be addressed unless one first analyzes what the term "intellectual property" comprehends. Intellectual property includes well-recognized regimes of exclusive rights in inventions (patents), literary, artistic and musical creations (copyrights), and trademarks. But it also covers more elusive, and evolving, interests, such as exploitation of one's personal name and image (right of publicity), trade secrets, and a generalized concern with prevention of acts amounting to unlicensed appropriation of another's time, labor, and money. To which lawmakers and judges, state or federal, then, do claimants and users look to determine the existence and scope of protection for this capacious subject matter?

At first blush, one might assume that all these varieties of intellectual property fall under exclusive federal ordering. By nature, inventions, works of authorship, trade symbols, and such, resist confinement to local boundaries. When ideas and images range widely, their subjection to discrete, and potentially conflicting, territorial regimes can frustrate their effective dissemination, and can produce commercial uncertainty and insecurity. In the U.S. federal system, however, the national government is supposed to be of limited powers; it may not regulate an area simply because uniform national regulation seems good policy. More important than the legal dimensions of U.S. federalism are its political ones. Federal intervention needs justification, and, largely for historical reasons, significant areas are thought to reside with state governments.2 In the U.S., the general areas of property law, tort law, and contract law - all fields relating directly or indirectly to intellectual property - are traditionally considered the subject of state regulation.

it is interesting here to note the correlation between the states with the greatest remedies/sanctions available to plaintiffs suing for trademark infringement/counterfeit and states with the greatest number of filings of online trademark infringement claims. Charting this data out in terms of civil and criminal index quadrants shows that the states with the highest civil remedies and criminal sanctions include: Alaska, Arizona, California, Florida, Georgia, Hawaii, Iowa, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Minnesota, Missouri, Mississippi, Montana, New Jersey, New York, Oregon, Pennsylvania, South Carolina, Tennessee, and Washington.  Of these states listed, three of them (California, Florida, and New York) are also the states with the greatest volume of online trademark counterfeiting suits filed. In contrast, the states with the lowest civil remedies and criminal sanctions include: Colorado, Louisiana, Maine, North Dakota, Nebraska, South Dakota, and Vermont.  None of these states had anywhere near the volume of online trademark counterfeit filings as the three states with the highest volume of filings. Louisiana had four cases, Colorado had eight cases, Maine and Nebraska each had one case, North Dakota and South Dakota both had no cases, and Vermont had two cases. 

These numbers illustrate that some states see an overwhelmingly higher volume of cases compared to other states, but that does not seem to be the end of the story. First, Louisiana (with eight) and Colorado (with five) both had more cases than some states in even the circuits with some of the highest volume of online trademark counterfeiting suits filed. Second, although some states have a remarkably higher number of cases filed compared to other states, that still does not account for the fact that some districts have a higher volume of cases within the states themselves. Indeed, personal jurisdiction would seem to lie in most any jurisdiction where the counterfeit goods are sold, and many trademark owners are not filing in their state of incorporation. In fact, Delaware, which has high criminal sanctions but low civil remedies for trademark infringement,  had only had one case filed for online trademark counterfeiting over the past eighteen years.  Thus, there seems to be something other than either the remedies available to each state or where the brand happens to be incorporated.

A uniform patent law that offers protection across states is a benefit of centralized legislation under a federal system. However, for the achievement of cross-state patent protection within a federal system, complete centralization of legislative power doesn't appear to be necessary. A middle ground exists between the full centralization and full decentralization of legislative power, where the central government and local governments can co-exist in patent lawmaking.11 In this intermediate state, a central government can offer extensive patent protection through legislation while local governments can refine the patent system in cooperation with the central government. However, the current U.S. system does not offer state governments any avenues by which to participate in the making of patent law. This approach maintains legal uniformity and avoids rule diversity.12 But, as Roger Ford pointed out, uniformity in patent law does not guarantee an optimal level of patent protection.13 Centralizing patent legislative power at the federal level keeps states from enacting patent laws that reflect their specific conditions and the needs of their specific industries and innovator communities.14 It also means that they cannot experiment with different laws and approaches related to patent issues.15 Thus, the conclusion that the benefits of maintaining uniformity in patent rules outweigh the cooperation between state and federal governments in constructing the patent system is not a given.

Compared to the centralized U.S. patent legislation model, a significant feature of China's semi-decentralized legislation model is that local governments cooperate in the building of the patent system by making local laws to meet specific regional needs, enhancing the adaptability of the patent system overall.204 Without local governments' input, centralized legislation to maintain uniform patent law across the nation could, as Michael Carroll points out, entail "uniformity costs" namely, under-protecting costly innovations and overprotecting those with lower innovation needs or alternative appropriability mechanisms.205 And like some other countries, China comprises a range of local development plans, traditions, and cultures.206 Granting legislative authority for patents to the local governments might be the ideal way to adapt to diverse local conditions. Part of the reason for this, as Friedrich Hayek pointed out, lies in the dispersed nature of knowledge.207 Informational deficiencies might keep the laws [*292] that the central government enacts from being responsive to local conditions.208 The semi-decentralized legislation model encourages participation, allowing provincial or city governments to use their local knowledge to make the legal system more adaptable to local conditions.

Another related benefit pertains to the geographically uneven distribution of industries. The U.S. has regional clusters of innovators in specific sectors, such as agricultural technology in California or orthopedic devices in Indiana,209 and so does China.210 Uniform national patents that the central government issues create incentives to develop innovations for broad market protection and monetization, but lack specific incentives for investing in innovations important to specific communities.211 Local governments can tailor their patent laws to cultivate regional clusters of innovators in specific sectors,212 or to encourage the pursuit of projects that directly enhance the well-being and quality of life of local residents,213 such as by providing stronger patent protection and enforcement measures. This approach can enhance investment in new technologies by promoting regional innovation clusters and supporting local public goods.214

A state law may also avoid preemption if it addresses "activities violat- ing legal or equitable rights that are not equivalent to any of the exclu- sive rights within the general scope of copyright as specified by section 106."49 Under section 106, the owner of a copyright is guaranteed five exclusive rights: reproduction, preparation of derivative works (or adap- tation), distribution, performance, and display.50 A state law reaching copyrightable subject matter would be preempted if it provided any of these five rights, or their equivalents. The exclusive right that seems most relevant to the fashion industry is the right "to reproduce the copyrighted work in copies."51 The copy- righted work is infringed if the work is reproduced "in whole or in any substantial part, and by duplicating it exactly or by imitation or simu- lation."52 If a garment managed to acquire copyright protection, it would be direcdy protected from knockoffs by the right of reproduction. Therefore, if garments qualified as copyrightable subject matter, a state statute extending a right to designers equivalent to federal copyright's right of reproduction would be preempted

A state law will be preempted only if it addresses subject matter that falls within the scope of federal copyright and extends a right compa- rable to those provided by federal copyright.53 Part II.A discusses the first prong of the preemption test as it relates to garment designs - namely, whether garments qualify as copyrightable subject matter. Part II.B then discusses whether a state law that protects garment designs would provide a right resembling one of those provided by federal copyright. A. The Subject-Matter Requirement