Thursday, November 13, 2014
When the Justice System is used to advance injustice, can a society survive?
Injustices exist in the world. This should not be news to you. There will always be crimes that go unpunished, and injustices that the justice system cannot address. Murderers will go free. Con artists will get away with their schemes. This is inevitable to some extent. No system of justice can be perfect.
But suppose the justice system itself becomes the agency of injustice? That is another thing entirely.
You may not hear about such injustices, as they are kept fairly quiet. In fact, terms of settlement agreements usually stipulate that the parties remain mum. Silence is the con-man's greatest ally.
In the Patent world, we have something called "Patent Trolls". These are folks who get a Patent on something, and then decide later on that the Patent is for something else. They then go out and sue people and make money. And oftentimes the people they sue are not the big corporations who might fight them, but small companies who can't afford the time and expense of litigation. They will settle for "trivial" amounts ($50,000!!!) and then the troll moves on to his next victim. You sue a few dozen people this way and you can end up making a lot of money.
For example, Joe gets a Patent on a phone directory system. His system doesn't quite work right, but years later, he notices that touch-tone phone directories are quite popular. It isn't quite the same idea as covered by his Patent, but then again, Patents are pretty arcane and vague and hard to read. He and his lawyer start suing small companies (20 employees or less) who have bought such phone systems. These companies can't afford to defend such a suit, so they settle the case quickly for $20,000 or more. As part of the settlement agreement, the company being sued agrees not to say anything to anyone about the suit or the settlement.
Now granted, they could have fought the case in court. They could have shown that the Patent was invalid, and moreover, not infringed. But such a case would cost hundreds of thousands of dollars to litigate. And juries - well, you know how reliable they are. We had a "jury consultant" once, and he advised us that the average juror in our jurisdiction had an eighth grade level equivalent education. And here we were, going to try to explain to them the intricacies of an integrated circuit. It just doesn't work.
In the Patent litigation business, they have a saying, "the first party to go technical, loses." And it is usually the defendant who has to "go technical" - by trying to explain how things work and what the Patent does and doesn't cover. The plaintiff, on the other hand, only has to show up, look aggrieved, and then show his ribboned-and-sealed Patent to the Jury (Issued by the U.S. Government! Official! Tested and Endorsed by the army of Scientists at the Patent Office!).
Even if the company being sued wanted to go through all of that, the 3-5 years it would take to litigate the matter could sink them in other ways. Getting credit (which companies need, but individuals do not) will become more difficult, as "pending litigation" will affect their ability to borrow. If they want to sell their company, merge, or whatever, such pending litigation can nix such a deal. In fact, that was one strategy some litigants use - to file lawsuits on the eve of a merger, just to throw a wrench in the works and hope for a quick settlement.
Great system, eh?
The problem isn't so much the Patent "Trolls" - they are merely taking advantage of a system that works in their favor. The problem isn't so much the Patent Office - they have done their job to the best of their ability - and laws have been made in the last two decades (dozens of them!) to make it harder (but not impossible) to get such vaguely-worded Patents.
The problem is the justice system, which is so complex, costly, time-consuming, and difficult that it creates a "nuisance value" for even the most trivial of lawsuits. Even in this era of lawyer surplus, it can cost tens of thousands of dollars to litigate even the simplest of cases. As a result, these small players are forced to settle cases that have no merit.
Now, there are some things we could do to improve matters - but these things are not easy to do. For example, one wonders why in civil cases, where the issues at hand are merely money, the plaintiff has a right to a jury trial. It is a fluke of our system, but early on, our courts decided that the "right to trial by jury" applied to civil cases, as well as criminal ones. Maybe if they had know where that would all lead, they might have changed their minds. The idea was, I think, that individuals shouldn't be able to be ruined by a criminal plaintiff and a crooked judge - that a "jury of your peers" would prevent injustice.
However, since it is expensive and time-consuming to have jury trials, and criminal matters usually take precedent, civil cases get pushed down the docket, and as a result, it can be years before you get to trial. In the meantime, there are discovery requests and motions that can rack up the billable hours for your attorney and sink you financially. Clearly the system is broken, but no one knows how to fix it.
Now, take the opposite approach. As a small company or an individual, you decide you want to sue a big corporation or even that Patent Troll that is suing you. Even assuming you could afford the attorney's fees involved (which would be staggering) trying to collect, once you won, would be difficult. The other side would appeal, of course (factor in a number of years there) and your damages, if they are not thrown out, might be reduced on appeal. And your case might be tossed back to the original court for re-trial. But even if you get that judgment, well, you have to collect, and there are ways of preventing you from doing that. It ain't easy for you, but it is for them.
Similarly, when it comes to finances, the odds are not stacked in your favor. If you are buried in debt and try to get out from under it in Bankruptcy, well, the courts are no longer your friend. You will be forced to "work out" your debts under modern bankruptcy laws. And while this still might give you a breather, it isn't the get-out-of-jail-free card that debtors used to have. And of course, for student loans, the deck is stacked even higher - you can't get out from under them unless you can show extreme hardship, which is very hard to do.
The reason we passed these laws was that back in the "good old days" it was possible to rack up a lot of debt and then walk away from it. In many States, generous laws allowed you to keep your homesteaded "residence" and also your "tools of the trade" and maybe even a car. The idea was to allow you to retain the means of getting back on your feet, rather than leave you on the street, homeless. We no longer have debtor's prisons (as they did in England during Dickens' time).
And yes, maybe some folks took advantage of this. But are the lenders really the "victims" here? As I noted in Leave Your Pen at Home, one way to stay out of trouble, as a debtor, is to stop signing loan agreements. You can't go bankrupt if you never sign the papers. Borrow less, or borrow not at all. Borrow the least amount you need to - and you will stay out of trouble.
But the same advice could be given to lenders. A lender appears in court and says, "Gee, we loaned money on onerous terms that no one could ever pay back, to Joe Deadbeat, who has a credit rating of negative 500, and we are shocked he went into default!" I mean, whose fault is that?
We had banks, in the 2000's, offering loans that they themselves called, "Toxic ARMs" - and then wondered why people were wiped out by them. They offered us what they called, "Liars Loans" - and then wondered why the borrowers lied on the applications. They have to have some culpability, here.
But as I noted in my last posting, often lenders made money on some of these rotten deals. The payday loan place expects their clients to go bankrupt, over time. But in the meantime, they collect a lot of dough in interest payments - and get a workout on the principal. The boat or RV lender knows their clients will be upside-down on their loans, for most of the period of the loan - but makes these loans anyway, knowing the customer has no way of paying them back, if they decide to sell the boat or RV before the loan term is over. The mortgage lender knows that padding on fees to refinances will increase the debt load of the consumer - and that if housing prices drop, or the consumer loses his job, he will end up over his head in debt. But they write these loans, anyway.
Sadly, not much of this is going to change, at least in my lifetime. And maybe this is one reason I have sort of lost interest in the Patent Business and look forward to retirement. While a few of my clients have made some money from their Patents, it seems that most of my work, every day, is just being a foot-soldier in long-term Patent wars between major corporations, trying to divine trivial differences in technology and figuring out who should own what. The system is imperfect, of course. I expect that. But it seems that not only is it imperfect, but that its very inertia favors injustice. The Patent Trolls will never go away, at least by using litigation. Even assassination is not an option - they would just pop up again like whack-a-moles.
But the larger question in my mind is whether our system of "justice" can survive when the malfeasors and evildoers in our society use it as a cudgel to bludgeon the weak and vulnerable. We can (and will) win the war on terror. ISIS and its ilk will be defeated. What will cause our system to fail is the failure of our system to work for us. When the average citizen starts to believe that the system is "fixed" in favor of an elite few, they will stop marching off to wars to defend this system. And that, in short, is how all empires decay - from within.
I just hope I am not around to see it.
The threat to our system, however, is not seen by most. They cluck their tongues about Patent trolls and litigation abuse, and assume the real victims are those named in the cases in question. But I don't think they see the larger picture - the damage done to our society as a whole.
We do see this in third-world countries. There, Justice belongs to a few, and the people in general are scared of the courts and the police. If you are raped in places like India, Africa, or Mexico, going to the Police only means being raped again - often literally. The people of Iraq are not defending the government of Iraq, because they don't perceive it as being worth defending. It is not that ISIS is powerful and strong, only that Iraq is weak, because justice there is weak.
But I guess most folks don't make this connection. They assume the real threats to our society come from outside - a plane crashing into a building, or a nebulous threat from halfway across the planet. They don't see the real threat might be down the street at the courthouse.