Justinian C. Lane, Esq.
Let Justice Be Done, Though the Heavens May Fall

Justinian Lane's Blog

Justinian's Blog

Corporate Hypocrisy

In 2003, the Texas Legislature passed House Bill 4, a bill that protects medical providers, including some manufacturers of medical devices, by capping the amount of noneconomic damages in personal injury lawsuits at $250,000.00. This cap was ostensibly put into place to protect medical providers from “runaway juries” that award tens of millions of dollars to catastrophically injured patients. However, as it turns out, this bill doesn’t protect medical providers from one group of plaintiffs that receive jury verdicts into the hundreds of millions of dollars: their competitors.

In 2002, Igen International, Inc. was awarded $505 million dollars from Roche Diagnostics for patent violations, with $404 million dollars in punitive damages . While this case took place in Maryland, it could have taken place in Texas, and if it did, neither House Bill 4 nor its progeny, Proposition 12, would prevent Igen from collecting nearly half a billion dollars in punitive damages.

The irony becomes apparent with this hypothetical scenario: Assume arguendo that Roche used Igen’s patents to create a medical device that causes a patient to die on the operating table. Under numerous proposed tort reform bills across the country, Roche would be liable for a maximum of $250,000.00 to the family of the deceased. Yet, Roche was liable for nearly half-a-billion dollars to Igen for patent infringements – an award over 1,600 times as large as the $250,000.00 cap on noneconomic damages existing in Texas for personal injury lawsuits. Surprisingly, the large amount of punitive damages in the Igen case isn’t a rarity: In 1997, the Rand Group found that punitive damages are awarded four times as often in financial injury cases than in personal injury cases.

It’s not hard to imagine the same executives at Igen, who praised the $404 million dollar award, criticizing “runaway juries” if they were ordered to pay even $4 million dollars to someone paralyzed by their products.

One of the founding principles of our justice system is the belief that human life is infinitely more valuable than human property; it’s why you can’t simply shoot someone that’s trying to steal your car. This principle is subverted by any tort reform bill that holds companies accountable for hundreds of millions of dollars for theft of intellectual property, but only holds those same companies accountable for hundreds of thousands of dollars if their products disable or kill a consumer.

So why, then, don’t big businesses want tort reform that insulates them from enormous jury verdicts in financial injury cases? We’ll use another hypothetical scenario with Igen and Roche. $101 million of the Igen verdict was for economic damages – the actual monetary loss of Igen. Such an award creates a reasonable assumption that Roche must have made close to $100 million dollars from Igen’s patents. So, what would the deterrent be of a maximum award of $250,000.00 to a company that made $100 million dollars? Insignificant.

The question then becomes this: If businesses need multimillion dollar jury verdicts to deter their competitors from stealing their intellectual property, why don’t consumers need multimillion dollar jury verdicts to deter businesses from knowingly selling harmful, or even fatal products?