Saturday, 16 June 2012

Thoughts on tort law reform

As a child, I watched on television hidden camera footage of a woman pouring oil over steps, then repeatedly walking up and down them in a deliberate attempt to slip and sue for compensation.

In early 2010, Glen Hanncock was compensated $300,000 after becoming paraplegic in a work-related injury. In late 2010, Kristy Fraser-Kirk was compensated $850,000 after being sexually harassed on 2 occasions at work. 

I do not speak for all, but forced to choose, I would much rather be odiously groped and harassed on 20 occasions than become incurably paraplegic, even if I am not compensated the extrapolatable $8.5 million. If I could cure someone's paraplegia by groping and harassing them on 20 occasions, it would be a medical miracle.

In tort law, the principle of plaintiff remedy should be restorative, compensating wrongful losses and restituting wrongful gains. There should not arise a situation where the plaintiff makes a net utility profit and is glad to have been "torted." However, punitive damages (ie, in excess of the wrongs incurred) are justified, lest people commit calculated torts knowing they gain more than damages they'll need to pay (for the same reason, I do not support proposals to cap punitive damages). The principle of punitive damages should be future public interest rather than rewarding the plaintiff.

▪ I dream of a world where punitive damages are not awarded to the plaintiff but rather, eg, a charity organisation independently appointed or mutually agreed upon

One problem with such a world is that plaintiffs can still make net utility profits at the expense of future public interest through out-of-court settlements (Kristy Fraser-Kirk threatened $37 million in punitive damages to charity and settled for $850,000 to her own pocket).

▪ I dream of a world where manifestly unjust out-of-court agreements risk legal action, just as in the real world how manifestly inappropriate sentences can be appealed and illegal agreements can be ruled unenforceable

Litigation is ideally the last resort after out-of-court agreements have been exhausted, lest the court system become further clogged. While limitations to such agreements may create additional burden upon the courts, this may be offset by a reduction in opportunistic and profiteering lawsuits. Another problem is that plaintiffs may rarely pursue punitive damages at all due to minimal incentives. Awarding the plaintiff a nominal share of the punitive damages may only be a partial remedy.

Ultimately, the onus and reward of a public interest matter should be taken out of the hands of a private litigant in the first place. This is the case in another field where public interest is the underlying principle; criminal law.

▪ I dream of a world where the primary onus of punitive damages falls not on the plaintiff but on a state office akin to a public prosecutor

One sesquicentury ago, the military hegemony of the British Empire exported a pernicious produce in opium. Today, the cultural hegemony of the USA exports a pernicious produce in its legal practices.

Moral hazard

International concessions in the face of Syriza brinkmanship would create a moral hazard. Capitalism for profits and communism for losses is the worst of both worlds, undermining free market principles and causing a tragedy of the commons. Greece enters into elections tomorrow. Will the democracy’s cradle see democracy's failure?

Tuesday, 12 June 2012

Dopaminomics

BBC News
16 April 2012
Apple is being sued by parents who claim the iPhone-maker is unfairly profiting from in-app payments in games aimed at children.

It is interesting what $60 can buy:
1) For a traditional outright purchase, the fastest-selling PC game of all time, with 3.5 million copies sold within the first 24 hours:
Diablo III
2) For a subscription business model, the world's most popular massively multiplayer online roleplaying game, with 10.2 million subscribers as of December 2011 and new content constantly added:
 World of Warcraft, 4 months subscription
3) Almost enough FarmVille in-game currency to purchase:
Two Beach Resorts

The above is one example of a wider media trend (social networks, smartphones, etc), calling into question the utility function of (at least certain subspecies of) Homo economicus. Granted, FarmVille can be played for free and "Beach Resorts" are expensive high-end buildings aimed at extracting consumer surplus via market segmentation, so perhaps the comparison should be limited to optional premium "add-on" content.

Thus, it is interesting what $10 can buy:
1) Fallout 3 add-on: The Pitt
Adds an entire new area to explore in a game that has won multiple awards for "Best of 2008"
2) A FarmVille in-game purchase:
One Fishing Hole

...

Monday, 4 June 2012

Exclusive design rights


Exclusive design rights should only be granted if they are new and distinctive. Basic concepts and shapes such as "minimalism" and "rounded rectangles" by definition meet neither criterion.

The Pareto inefficient practice of intellectual property laws can only be justified insofar that innovation is rewarded without restricting rivals from superior innovation and allowing King Ludd (“your auto-loom invention incorporates my hand-loom patent and must be smashed!”) hold the rest of industry to ransom. The principles of essential patents and compulsory licensing follow in this spirit, whereas Apple’s sales injunctions against its rivals do not.