The Corporate Law Group

Billion Dollar Mistakes?

We have been concerned about the rule of law. You can start with innocuous stuff like speed limits, drug laws, and immigration laws, which are flouted all the time. But it’s much deeper than that. Silly laws that have put people in prison for felonies, like importing the wrong kind of orchid or shipping lobsters in bags rather than boxes.

Well, we were surprised recently to hear about more than one multi-billion dollar jury verdicts that were overturned on appeal by a judge. Some were patent infringement claims. After the trial and appeal the appellate judge said that the patent was invalid as too broad. No patent; no infringement; defendant closes its wallet.

Part of our shock was that we know what it takes to win a billion dollar jury verdict. It takes thousands of hours of incredibly detailed work by an army of lawyers over multiple years. And tens if not hundreds of millions of dollars in costs and legal fees. We can imagine the thrill of the team as the verdict is read. Maybe there is a partial contingency and the legal team earned a bonus of millions of dollars. Now the appellate decision. “Wait. What?”

Turn of last century newspaperman G.K. Chesterton famously said that if you ignore the big laws, you don’t get freedom. You don’t even get anarchy. You get small laws. We have been a nation of small laws for a century now. Many started in the 1930’s as a supposed response to the depression. Our strong suspicion is that everything the government did then made things worse and prolonged the pain. That suspicion is born out in some recent reexamining of the causes and cures of the depression.

As our laws get smaller their observance becomes less universal, frequently by folks who don’t even know the laws exist. And they get harder to understand, parse, obey, and follow. Hence tens of millions of dollars invested in a case that a judge wipes out with a pen stroke.

And we’re not even saying the judge was wrong. The judge could very well have been right. What we are saying is that neither side could figure out in advance that the judge would do that. And don’t forget these are jury verdicts so the “peers” thought the award justified. And also granted that this assumes both sides had lawyers who were competent but most companies don’t spend tens of millions on incompetent lawyers. So when things like this happen we have to ask what kind of system creates billion dollar mistakes. We can only hope someone figures out a better system.