Solving the Patent Problem—and Much Else

I am at this instant attending a conference on what to do about problems with software patents. The purpose of this post is to argue that the real problem is more fundamental, and to propose a simple solution.

Under current law, an ordinary civil suit, whether for patent infringement or anything else, is a "heads I win, tails I break even" bet. If you persuade the court that it is more likely than not that your claim is right, you collect damages. If you don't, you don't.

That means that if you believe you are probably wrong, have one chance in five or ten of winning, it may still be worth suing. You could get lucky, and the other side could blink—agree to settle out of court—especially if your claim is for a lot of money. If you lose, you pay for your own lawyer and possibly, if the court thinks your claims are sufficiently unjustified, for the other side's legal costs. You do not pay for inflicting the risk of large damages on an innocent party.

This problem was faced more than two thousand years ago by the legal system of Periclean Athens, and they came up with a simple solution. Their equivalent of criminal law was privately prosecuted; the prosecutor usually got a large share of the fine paid by the convicted defendant. That created an obvious risk—accuse someone innocent, unpopular, and rich of a crime he did not commit, in the hope of either being paid off to drop the charge or persuading enough members of a large jury to get a majority vote for conviction.

Their solution was to make the prosecutor liable to a large fine, the equivalent of about three years of an ordinary workman's wages, if he failed to get at least 20% of the jury to vote for conviction.

How might we apply that approach to our legal system? A civil case, unlike a criminal case, is supposed to be decided by a "preponderance of the evidence." That means that if the plaintiff loses, it is more likely than not that the defendant was in the right, which means that it is more likely than not that the plaintiff was in the wrong, was trying to extort a payment to which he was not entitled. When the plaintiff wins, the legal system treats the result as if it was certain that he was in the right, so when he loses ...  .

Which suggests a simple solution to the problem both of software patents and of tort litigation more generally. Make the losing plaintiff liable. Base the amount he owes the defendant on the amount he claims,  giving plaintiffs, legitimate as well as illegitimate, an incentive not overclaim. 

One of the speakers at the conference brought up the example of a Pigouvian tax, such as a tax on air pollution produced by steel mills, and argued that the equivalent in the context of software patents would be an increase in patent maintenance fees. Charging for patents when the problem is patent litigation is like charging steel mills for steel instead of for pollution. The correct implication of his example is that there ought to be a cost for suing people, ideally for suing innocent people. That is what I have just proposed.

P.S. A recent online comment on a different blog post of mine demonstrated the risk of discussing IP issues without proclaiming one's allegiance to one side or the other of the current IP wars. Let me make myself perfectly clear. I hold no position on whether copyright law or patent law ought to exist. My views on the arguments for and against can be discovered, by those sufficiently patient, from the recordings of the course on IP Theory I am currently teaching.

P.P.S. It turns out that Athenian law came even closer than I thought to my proposal; although the details are unclear, there was, in at least some cases, a penalty owed by a losing plaintiff to the winning defendant in their equivalent of a tort suit:

"In some private cases in which the prosecutor had claimed a sum of money from the defendant, on losing the case he had to pay to the defendant one-sixth of the amount which he had claimed (epobelia, one obol per drachma). Demosthenes faced this risk when he prosecuted his guardian Aphobos in 364/3 for making away with his inheritance, but Kallimakhos did not when he claimed 10,000 drachmas in 400/399, even though epobelia was payable in a diamartyria or a paragraphe at that period. Either the law was changed between those dates or epobelia was payable only on some financial claims and not all. It is also uncertain whether it was payable on every acquittal or only when the prosecutor failed to get one-fifth of the votes."

(Douglas M. MacDowell, The Law in Classical Athens, Cornell university Press, Ithaca, N.Y., 1978, pp. 252-253.)