Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘Ted Frank’

The Patent Reform Act of 2007

My latest Liability Outlook is on the Patent Reform Act of 2007:

Despite some in the media calling patent reform dead, on January 24, 2008, the Senate placed S. 1145, the Patent Reform Act of 2007, on the general calendar. The next few weeks will be critical to the legislation, which the House passed in September. Although much of the discussion has focused on the different perspectives and concerns that the high tech and the biotech/pharma industries have about the legislation, the fact remains that the patent litigation system is broken. Congress should make every effort to fix it by writing into this legislation reasonable formulas for damage awards and venue rules that discourage forum-shopping. …

Affiliates of Erich Spangenberg’s Plutus IP have sued 476 different defendants in 42 lawsuits. The vast majority of those lawsuits allege infringements of patents that Plutus IP purchased for $1,000. The use of invalid patents in litigation is more than theoretical. Philip Jackson sued his attorneys, Chicago plaintiffs firm Niro, Scavone, Haller & Niro, for malpractice after his $12.1 million jury verdict against Glenayre Electronics Inc. was reduced to under $3 million; Niro challenged the malpractice suit by claiming that th e patent Jackson had successfully enforced was invalid. In 2006, approximately 6,000 defendants were sued in 2,800 patent cases; in 2007, the six thousand mark was reached in early October, implying a 30 percent increase in patent litigation in a single year. Such litigation stifles substantial technological innovation. Patent trolls claim to block entire fields, and one cannot hope to innovate in these areas without the financial capital to handle the threat of patent litigation. IBM has 370 corporate patent attorneys, not just to avoid the pitfalls of infringement, but to create a patent portfolio that can provide counterclaims (or cross-licensing opportunities) if a commercial entity were to sue them for infringement. Since the late 1990s, patent litigation costs have outstripped patent profits.

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The Pop Tort: John Edwards and the Valerie Lakey case

For all the complaints about tort reformers supposedly relying upon urban legends to promote their cause, one more frequently sees trial lawyers promoting fictional versions of their victories. As Hillary Clinton and Barack Obama kowtow to John Edwards for his endorsement, it’s worth exploring the case on his record he refers to most frequently. Remarkably, not a single mainstream media organization has questioned Edwards’s self-serving version of the Valerie Lakey case. I correct this problem in today’s American:

Sta-Rite had already been putting warnings on its pool drain covers, and the 1993 case did nothing to change their product design or the warnings conveyed to buyers. The drain cover in the Lakey case was sold in February 1987 with a warning label; soon thereafter Sta-Rite began embossing the warnings on the cover. This safety innovation was used against them at trial, the argument being that they should have acted earlier. But no one could reasonably think that an additional warning to screw in the drain cover would have made an iota of difference. The cover already had holes for screws, county regulations already required the pool drain cover to be screwed down, the pool managers testified that they had done so several times in the year before Lakey’s accident—and Edwards had already recovered millions from the municipality for its failure to keep the cover screwed down.

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January 7: Vioxx Settlement panel at AEI

Please register for this event online at http://www.aei.org/event1626.

The AEI Legal Center for the Public Interest and the Federalist Society present:

The Vioxx Settlement

Monday, January 7, 2008, 12:00 p.m.–2:00 p.m.
Wohlstetter Conference Center, Twelfth Floor, AEI
1150 Seventeenth Street, N.W., Washington, D.C. 20036

In 2004, Merck withdrew its pain reliever Vioxx from the market because of new studies showing increased cardiovascular risk. Merck announced that it would not settle any of the tens of thousands of Vioxx lawsuits filed, and set aside over a billion dollars to litigate cases without reserving a penny for damages. After a $254 million verdict in the first Vioxx trial in 2005, some observers predicted over $25 billion in liability for the company. Fifteen trials later, Merck and the plaintiffs’ attorneys announced a settlement of the outstanding personal injury litigation—for under $5 billion. Merck stock rose after the announcement, and is now higher than before it withdrew Vioxx from the market. But some law professors are arguing that a new and unusual provision in the settlement raises ethical concerns.

Why did Merck settle? And why was the settlement for so much less than originally anticipated? Is the Merck settlement different from the Wyeth fen-phen settlement, which was originally announced as a $3.75 billion settlement, but has so far cost more than $20 billion? Will the settlement stand up under legal challenge, and what will remain of the Vioxx litigation if it does?

At this event cosponsored by AEI and the Federalist Society, a panel of experts will explore these and other questions. Speakers include Vanderbilt law professor Richard Nagareda, author of Mass Torts in a World of Settlement; Virginia legal ethics professor George Cohen; author and leading pharmaceutical mass torts defense attorney Mark Herrmann; Andy Birchfield, a member of the Vioxx Plaintiffs’ Steering Committee; and Ted Frank, director of the AEI Legal Center for the Public Interest. AEI resident scholar John E. Calfee will moderate.

11:45 a.m.
Registration and Lunch

12:00 p.m.
Panelists:
Andy Birchfield, Beasley Allen
George Cohen, University of Virginia School of Law
Ted Frank, AEI
Mark Herrmann, Jones Day
Richard Nagareda, Vanderbilt University Law School

Moderator:
John E. Calfee, AEI

2:00 p.m.
Adjournment

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Frank on NY Times on Edwards and Romney

To the Editor:

Re “Two Candidates, Two Fortunes, Two Distinct Views of Wealth” (front page, Dec. 23):

There is a critical distinction between Mitt Romney’s and John Edwards’s wealth. Mr. Romney, as a businessman, made investments that created wealth. Mr. Edwards, as a trial lawyer, made his money through lawsuits that merely took from one pocket and gave to another, and probably destroyed wealth in the process. (Mr. Edwards’s multimillion-dollar medical malpractice verdicts almost certainly hurt the quality of health care in North Carolina.)

Little wonder that Mr. Romney understands that to improve the economy, one needs to expand the pie, while Mr. Edwards’s policy proposals focus entirely on the redistribution of the existing pie without thought for the future adverse consequences to the size of the pie.

Theodore H. Frank
Washington, Dec. 23, 2007
The writer is a resident fellow at the American Enterprise Institute for Public Policy Research.

More on the question of pie-sharing and pie-growing at SSRN. More on John Edwards’s trial-lawyer record: the Valerie Lakey trial; Edwards on the failure to warn; Edwards on stacking juries; and Edwards’s cerebral palsy cases (also: April 11 and links therein).

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“Should Trial Lawyers Make Terror Policy?”

Ted has a new essay out by this title in AEI’s Liability Outlook series (Sept. 11). To quote from the conclusion:

One can debate the appropriate role for each of the three branches in the post-9/11 world in coordinating domestic and foreign policy in responding to terrorism. But one matter should be beyond debate. Individual litigants in individual cases should not be able to use the combination of civil liability rules and the power of the civil courts to interfere with larger national policy. Congress can disagree with the executive branch, but should do so through legislation, rather than abdicating its responsibilities to trial-lawyer proxies. Civil liability is a poor tool for deterring suicide bombers, and civil anti-terrorism laws are bound to have their greatest effect when used against innocent parties.

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