The Cons of a Strict “Loser Pays” Policy

Over on Forbes.com today, Tim Worstall asks:

{W}hy is the US near unique in not having a system whereby the loser picks up both sets of legal bills?

His question comes in the context of thinking of ways to prevent copyright trolling, and the sort of copyright trolling that Prenda Law has been up to, specifically. Worstall’s thinking is that a strict “loser pays” structure would prevent copyright trolls from plying their trade, because the potential expense would be too high.

It’s a seductive line of reasoning, but there are a couple potential problems with this idea.

First and foremost, the specter of possibly having to pay the other side’s legal expenses won’t just deter frivolous claims and nuisance suits, it will also serve to deter meritorious cases in which the prospective plaintiff has even a little doubt concerning his odds of prevailing.

Given the complexity and (seemingly perpetual) unsettled nature of intellectual property law, and given that we have appellate courts and trial courts occasionally disagreeing about some pretty fundamental questions of law, even rights-holders who are quite confident in their claims could be excused for pondering the “What if I do lose?” question, were loser pays the blanket law of the land.

On the flip side of things, proponents of an expansive reading of fair use doctrine should be skeptical about the wisdom of enacting a strict loser pays rule for copyright litigation, as well. How eager would creators of things like mashups, songs that rely heavily on samples, picture collages and various other forms of “appropriation art” be to ply their trade, knowing that if they lose a lawsuit in connection with their work, they will be liable not only for damages, but the legal expenses of both parties to the suit, as well?

There’s little doubt that U.S. copyright law, and U.S. intellectual property law generally, could use some reform, particularly in the vein of catching up with technology. I think a lot of artists, musicians and other creative folk would say that we could use some adjustments that make life easier for rights-holders and those who provide intellectual property rights enforcement services, for example.

Whatever reforms might come in the future, as we endeavor to come up with sensible statutes and prudent public policy, we must keep the law of unintended consequences at the forefront of the discussion. Otherwise, in seeking to fix copyright, we may well end up making things worse.