OPINION
Tort Reform: A Bandwagon for Open Source

President Bush has made it clear that tort reform, narrowly construed in terms of medical liability reform, is on the short-term agenda. In theory, that should be easily done and very positive in its effects, but of course, reality is never as simple as theory, and there are some real risks to open source here.

In theory the part about it being easy to get done is pretty clear: he has a mandate to act, his party has clear majorities in both houses, and medical claims litigators like John Edwards aren't exactly popular anywhere. On "The West Wing" they'd have a PR secretary handle the whole thing and be done before the first commercials.

The part about it being good isn't rocket science either: the cost of liability insurance and related reserves is forcing doctors out of the profession and drug manufacturers out of the country. Put a cap on liabilities, the theory goes, and market discipline will re-assert itself; bringing down costs and raising supply for both medical products, like flu vaccine, and medical services, like obstetrics.

Law of Unintended Consequences

It's hard to argue sensibly against either theory: this should be easy and it should be beneficial; but unfortunately there's the legislative variation on Murphy's Law, known as the Law of Unintended Consequences.

The Law of Unintended Consequences says that good intentions often lead to bad results. Welfare often leads only to more welfare, giving humanitarian help to the women and children victimized in a civil war usually extends the war, airline safety surcharges on short-haul flights lead to more road deaths, and the use of fungiable (tradeable) pollution credits within the Kyoto Protocols turned quota exaggeration into a mechanism for corruption leading inevitably to a significant net increase in worldwide emissions.

It's axiomatic that the people making legislative decisions never fully predict the unintended consequences -- so if you manage to make them aware of a consequence you want to avoid, it's usually possible for them to avoid it. In this case, one obviously incidental but necessary consequence of liability reform (meaning contingency fee limitation) is a whole lot of lawyers looking for alternative billing sources.

The concern we've got to make sure legislators understand is that we don't want these lawyers to look at open source and see endless opportunities for patent and intellectual property litigation.

SCOSource Case

Some, of course, already are. According to Groklaw.com, for example, Boies et al is charging SCOSource around US$26 million in direct fees plus the following levels of contingencies:

• 33 percent of any aggregate recovery amounts received up to $350 million;

• plus 25 percent of any aggregate recovery amounts above $350 million but less than or equal to $700 million;

• plus 20 percent of any aggregate recovery amounts in excess of $700 million.

Most people disagree with me on this, but I believe that the underlying contractual issue here is a slam dunk for SCOsource and that almost all of the negative effects on the Linux community have come about because of actions the lawyers needed in order to establish the highest possible market value for the consequent losses suffered by SCOsource -- and if that means killing SCO in the process, well that's not who the real money's coming from is it?

This is the door we have to slam shut before the inevitable horse trading in Congress gives us medical liability reform while inadvertently killing off open source and related innovation in the U.S.

So what can you do? Talk to your elected representatives -- or at least those aides who actually run things. Talk about the impact on national economic competitiveness and American jobs if litigation kills the open-source goose; talk about having change, and creative people, ground to a stop in the courts; talk about the Europeans using their relative freedom from private litigation to forge ahead on critical technologies.

Bundling Limitations

Then go beyond that, get them to understand there's both a constituency and a logical argument for bundling some general limitations on IP and patent litigation in with tort reform. If enough people make an effort to communicate the issues, we'll have a chance of getting positive action before it's too late.

On the other hand, with Thanksgiving nearly upon us, you might want to give thanks to the law of unintended consequences because it means that if all those Microsoft (Nasdaq: MSFT) lobbyists working frantically to make sure tens of thousands of underemployed medical liability lawyers are re-pointed at us instead of them, the result is almost certain to unintentionally put them out of business.