Overlawyered: Chronicling The High Cost Of Our Legal System

“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.

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January 5 roundup

  • Big business vs. free markets again: light bulb makers “fuming” over GOP effort to restore consumer choice [Sullum] Large grocery chains like DC’s bag tax [Tim Carney]
  • Eeeuw! Bystander can sue train fatality victim whose body part flew through air and hit her [Chicago Tribune]
  • “Recommended Cell-Phone Ban Comes as ‘Shocking,’ ‘Heavy-Handed’ To Some” [Josh Long, V2M]
  • “Exploding churros are newspaper’s fault, Chilean court rules” [AP]
  • In New Jersey and North Carolina, GOP friends of trial bar block legal reform bills [Armstrong Williams, Washington Times]
  • Kozinski vs. ill-prepared lawyer in case of Sheriff Arpaio vs. newspaper that covered him [The Recorder; Phoenix New Times case]
  • Federal judges block cuts to in-home personal care services in California, Washington [Disability Law, San Francisco Chronicle, KQED]

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Great moments in public sector arbitration

“A police lieutenant, fired for covering up a hit and run crash involving a fellow officer [she] was involved in a relationship with, has been reinstated following an arbitration decision that chastised the city’s Police Commission.” Christine Burns also got six months back pay. The arbitrator found that Burns’s boyfriend had been treated leniently, drawing only a one-year unpaid suspension despite serious misconduct, which in turn deprived her of her right to be treated “evenhandedly and without discrimination.” [Connecticut Post]

And while we’re at it: Police union defends Denver cop fired for driving drunk at 143 mph [Tina Korbe, Hot Air; The Truth About Cars]

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“Mississippi Court Reverses $322 Million Asbestos Verdict”

“A Mississippi court has reversed a $322 million asbestos verdict against Union Carbide — believed to be the largest in U.S. history — after the judge failed to disclose his own father had pending asbestos litigation against the same company. … The jury ruled for Brown even though nine treating physicians, an independent medical examiner and an X-ray technician all testified that the plaintiff had no symptoms of asbestos-related disease.” [Daniel Fisher, Forbes; earlier here, here and here]

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Argentina moves to take control of newsprint business

Economic liberty intertwined with civil liberty, part 7,914,886: “The paper used to produce newspapers came under government control in Argentina on Thursday, in a long-sought victory for President Cristina Fernandez in her dispute with the country’s opposition media,” reported AP last month. More from the BBC, and earlier from my Cato colleague Juan Carlos Hidalgo.

Independent papers in the South American republic are quite right to fear for their future, if earlier ventures into government newsprint control are any indication. Dictator Juan Peron used similar methods to muzzle the press, while in Mexico for decades governments of the ruling PRI closely controlled newsprint allocation, a power they were not hesitant to use to bring excessively independent publishers to heel. It came as an important move toward Mexican political liberalization in 1990 when the Salinas government did away with the controls, by allowing free importation of newsprint to any buyers subject to a modest tariff.

Significantly, the measure just signed by Argentine president Cristina Fernández de Kirchner inserts the government directly as a prospective owner of the business and contains provisions on newsprint imports as well. Per Impunity Watch:

Clarins newspaper notes that there are a number of disturbing aspects to the bill. First is the passage that allows for the state to unilaterally take a majority share of the company as the newsprint distribution is now classified a national interest. Also of concerns is the portion that would permit the Economy Minister to determine how much newsprint to import, establishing government quotas that have never before existed….

Concurrent with the media bill passage is a new anti-terrorism bill that classifies certain “economic crimes,” including certain actions taken by the media, as terrorist acts. The bill states that “economic terrorist acts” are those done with an intent to terrorize the general population.

Whether relatedly or not, the Argentine government last year launched prosecutions of independent economists who have asserted that the country’s actual inflation rate is higher than that reported by the government (& Coyote).

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January 3 roundup

  • Popehat’s Ken to the rescue after Maine lawyer/lawmaker assists naturopath in bullying critical blogger [Popehat]
  • Newt’s “patriotism made me stray” among highlights of the year in blame-shifting [Jacob Sullum]
  • Nifong sidekick, now in a spot of legal bother himself, hits back with lawsuit [K C Johnson, Durham in Wonderland]
  • Shareholder action: “Delaware approves $285 Million in Plaintiffs’ Lawyers’ Fees” [Bainbridge, WSJ Deal Journal, WSJ Law Blog]
  • “Even one death is too many — WE MUST BAN NETI POTS!” [NYDN via Christopher Tozzo]
  • Debatable premise of Joe Nocera analysis on Stephen Glass case: bar admission turn-down = “rest of his life … destroyed” [NYT, Howard Wasserman/Prawfs, earlier]
  • Who says Connecticut never reforms liability? Towns won protection last year from some recreation-land tort exposure [CFPA, earlier here, here]

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N.J.: overdoses on Xanax, collects $4.1 million

“A man who overdosed on stolen drugs he ingested at a party in 2007 has settled his lawsuit with a pharmacy, several guests, the party’s host and the host’s mother for $4.1 million. … [Scott] Simon sued the pharmacy for not taking proper precautions to avoid the theft of drugs. He also sued several guests, the party’s host and the host’s parents, who were away for the weekend.” [AP via NJLRA, Schepisi & McLaughlin]

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