So listening to a piece about the RIAA lawsuits against college students got me thinking about just how broken the american legal system is in this regard. The adversarial system is supposed to encourage good precedent by ensuring that individuals on both sides of an issue have incentives to present their case as effectively as possible. Whatever your opinion about the RIAA’s lawsuits it’s clear that the exact opposite is occuring in this situation.

Instead of those individuals with the best defenses taking them trial we see just the opposite happening in the RIAA cases. While there are many individuals whose cases raise tough questions about the accuracy of the RIAA’s identifications or whether merely making songs availible constitutes infringement the case that was most throughly defended so far was that of Jammie Thomas who insisted on claiming she hadn’t even made the songs available despite the singularly strong evidence showing this to be a lie. Unsurprisingly the jury saw through the blatant deception and convicted her without reaching any of the serious issues.

Some might dismiss this as an isolated oddity but I think it reflects fundamental incentives that our system creates when large companies sue individuals for massive damages while offering cheap settlements. Given the fact that under the American rule even a successful defense might cost 60-100k any reasonable individual is likely to swallow their pride and pay the couple thousand dollars of bribe money, even if they know they were misidentified. This creates a situation where only the copyright analagos of tax protestors or the judgement proof are likely to defend their cases. Hardly providing ideal test cases. Certainly foundations and charities like the EFF and ACLU can help offset this problem but not every situation is popular enough to attract these deep pockets and our justice system shouldn’t require charitable aid to produce fair results.

One might be tempted to move to the English rule but while this rule would help even this seems to leave a dangerously imbalanced playing field. Corporations are likely to sue private individuals in such a fashion only when they hope to gain massive deterent benefit while the individual can only hope to gain a few thousand dollars. For instance suppose you produced a mix tape pushing the boundaries of fair use which you gave away for free. A group like the RIAA may have a large financial stake in convincing others such behavior will be punished while your potential gain from pursuing the lawsuit under the English rule is just the few thousand the settlement offer proposes a rational defendent will still stimply pay the protection money and give the corporation their example. Besides, the English rule risks unfairly deterring individuals from suing corporations lest they get left with the massive bill the corporation ran up on lawyers.

Hopefully some clever economist can imagine some clever scheme that results in even better incentives but it occured to me that a partial solution to both this problem and the dangers of the English rule more generally might be the following. Create a system where by default the lower pays their own attorney’s fees and gives the winner the amount of money he (the loser) spend on attorneys. This would then minimize the harms of the English rule (you still control the maximum risk you undergo) while giving some extra incentive for ‘example’ defendants to go to trial in hopes of winning a relatively large payout since their example status likely means a great deal of lawyers fees were paid out in selecting and pursuing their case.

I also think some scheme should be considered that prevents corporations from backing out of cases that might go the wrong way. However, on the other side I think that there out to be special scientific decisions with precedential value that corporations can use to easily defend against massive product liability lawsuits but these are both matters for later posts.