The distortionary effect of evidence on primary behavior

Harvard Law Review

Volumn 124, Issue 2, 2010, Pages 518-548

  Parchomovsky, Gideon ^a,b   Stein, Alex ^c  

^a UNIVERSITY OF PENNSYLVANIA   (United States)

^b Faculty of Law   (Israel)

^c YESHIVA UNIVERSITY   (United States)

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EID: 79851492119     PISSN: 0017811X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (219)

1. We assume that Andy is rational in a rudimentary sense, that is, that he is disposed "to choose, consciously or unconsciously, an apt means to whatever ends [he] happens to have." RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW 17 (6th ed. 2003).
2. Arguably, Andy's primal instinct will prompt him to avoid the collision. Assume that Andy follows this instinct: he drives his car into the ditch and suffers an uncompensated damage of $1000. Will Andy follow this instinct if he finds himself in a similar situation once again? Most likely not: Andy's primal instinct will be superseded by his experience-based rationality.
3. See generally DREW FUDENBERG & JEAN TIROLE, GAME THEORY § 1.2.5, at 23-29 (1991) (explaining the evolutionary basis of rational choice).
4. Andy's choice does not constitute comparative negligence, nor will it allow Bob to successfully invoke the "avoidable consequence" defense.
5. See infra notes 63-66 and accompanying text.
6. Here and in many other contexts, the distortion engendered by evidence-seeking behavior may be partly offset by the saving of the party's expenditures on alternative evidence. We thank Steven Shavell for drawing our attention to this mitigating factor.
7. This example is modeled on a landmark criminal case, People v. Rizzo, 158 N.E. 888 (N.Y. 1927), featuring an armed robbery suspect arrested by the police while he and his accomplices were searching for the man they conspired to rob. The suspect was initially found guilty of attempted robbery, but the New York Court of Appeals reversed his conviction because the prosecution failed to establish that "in all reasonable probability the crime itself would have been committed, but for timely interference."
8. Id. at 889. At the outset of this decision the court stated: The police of the city of New York did excellent work in this case by preventing the commission of a serious crime. It is a great satisfaction to realize that we have such wide-awake guardians of our peace. Whether or not the steps which the defendant had taken up to the time of his arrest amounted to the commission of a crime, as defined by our law, is, however, another matter.
9. Id. at 888.
10. By the same token, a wrongdoer seeking to avoid detection and liability will try to destroy or suppress inculpatory evidence and fabricate exculpatory evidence. For analyses of complex enforcement problems engendered by detection avoidance,
11. see Jennifer Arlen, The Potentially Perverse Effects of Corporate Criminal Liability, 23 J. LEGAL STUD. 833, 842-43 (1994) (arguing that firms' strict liability for employees' crimes may suppress the firms' willingness to self-police and uncover inculpatory evidence);
12. Arun S. Malik, Avoidance, Screening and Optimum Enforcement, 21 RAND J. ECON. 341 (1990);
13. Jacob Nussim & Avraham D. Tabbach, Controlling Avoidance: Ex Ante Regulation Versus Ex Post Punishment, 4 REV. L. & ECON. 45 (2008);
14. Chris William Sanchirico, Detection Avoidance, 81 N.Y.U. L. REV. 1331 (2006);
15. and Chris William Sanchirico, Evidence Tampering, 53 DUKE L.J. 1215 (2004). For analysis of evidence fabrication,
16. see Chris William Sanchirico & George Triantis, Evidentiary Arbitrage: The Fabrication of Evidence and the Verifiability of Contract Performance, 24 J.L. ECON. & ORG. 72 (2008);
17. George G. Triantis, The Efficiency of Vague Contract Terms: A Response to the Schwartz-Scott Theory of U.C.C. Article 2, 62 LA. L. REV. 1065, 1076-78 (2002) (arguing that rigid contractual terms may incentivize a contracting party to manufacture evidence that will fend off allegations of breach and that vague contractual terms can mitigate this inefficiency). Fraudulent detection avoidance and evidence fabrication fundamentally differ from the evidence-generating behavior focused upon by this Essay. First and most importantly, we focus upon behavior that generates true evidence rather than upon frauds aiming to distort factfinders' decisions. Unlike evidentiary frauds, such behavior does not constitute a crime or a civil wrong. Moreover, there is no general way to set up incentives against evidence-generating behavior.
18. See infra pp. 527-29.
19. The socially beneficial motivation to minimize the damage will also dominate when the actor estimates that she is unlikely to recover compensation due to the wrongdoer's insolvency.
20. For a related point made in connection with whistleblowing,
21. see William E. Kovacic, Whistleblower Bounty Lawsuits as Monitoring Devices in Government Contracting, 29 LOY. L.A. L. REV. 1799, 1829 (1996) ("Rather than promptly bringing problems to management's attention, employees may allow them to persist - thus increasing the size of the injury and the relator's potential recovery - and to gather evidence for pursuing a qui tam suit. The incentive to delay will be greatest where few people know of the misconduct, and thus the number of potential competing relators is small.").
22. For a summary and critical discussion of this scholarship,
23. see ALEX STEIN, FOUNDATIONS OF EVIDENCE LAW 141-71 (2005)
24. See, e.g., Richard A. Posner, An Economic Approach to the Law of Evidence, 51 STAN. L. REV. 1477, 1484-87 (1999).
25. See STEIN, supra note 9, at 3-8;
26. see also James A. Henderson, Jr., Process Constraints in Tort, 67 CORNELL L. REV. 901 (1982) (developing a general process-cost theory of torts);
27. Douglas Lichtman, Copyright as a Rule of Evidence, 52 DUKE L.J. 683 (2003) (rationalizing "fixation" and "creativity" requirements for copyright protection as savers of factfinding costs);
28. Fred C. Zacharias, The Politics of Torts, 95 YALE L.J. 698, 711-14 (1986) (rationalizing tort liability limitations by focusing on the societal need to contain the costs of litigation).
29. See generally Ronald J. Allen, Presumptions in Civil Actions Reconsidered, 66 IOWA L. REV. 843 (1981) (discussing various evidentiary presumptions and their underlying rationales);
30. Antonio E. Bernardo et al., A Theory of Legal Presumptions, 16 J.L. ECON. & ORG. 1 (2000) (developing an economic model of evidentiary presumptions that mediate between litigation costs and incentives for primary behavior).
31. For a seminal account of how to use evidence-production costs as a proxy for the adequacy of the producer's primary behavior,
32. see Chris William Sanchirico, Relying on the Information of Interested - and Potentially Dishonest - Parties, 3 AM. L. & ECON. REV. 320 (2001).
33. See also Louis Kaplow, The Value of Accuracy in Adjudication: An Economic Analysis, 23 J. LEGAL STUD. 307, 312-21 (1994);
34. Chris William Sanchirico, Games, Information, and Evidence Production: With Application to English Legal History, 2 AM. L. & ECON. REV. 342 (2000) (analyzing the tradeoff between factfinding that relies on disinterested witnesses to determine actors' behavior and factfinding that determines actors' behavior by their costly signals);
35. JEREMY BENTHAM, 2 RATIONALE OF JUDICIAL EVIDENCE, SPECIALLY APPLIED TO ENGLISH PRACTICE 435-44 (1827) (pioneering the idea of "preappointed evidence" - a cost-saving rule under which specified evidence conclusively settles conflicts over disputed facts).
36. See STEIN, supra note 9, at 157-67;
37. see also Daniel J. Seidmann & Alex Stein, The Right to Silence Helps the Innocent: A Game-Theoretic Analysis of the Fifth Amendment Privilege, 114 HARV. L. REV. 430 (2000) (justifying the right to silence as a mechanism that elicits credible signaling from criminal defendants by reducing criminals' incentive to pool with innocents).
38. See Gary S. Becker, Crime and Punishment: An Economic Approach, 76 J. POL. ECON. 169, 184, 188, 192 (1968);
39. see also A. Mitchell Polinsky & Steven Shavell, Punitive Damages: An Economic Analysis, 111 HARV. L. REV. 869, 873-74 (1998) (arguing that courts should take defendants' probability of escaping liability into account when calculating punitive damages).
40. See generally R.H. Coase, The Problem of Social Cost, 3 J.L. & ECON. 1 (1960).
41. See GUIDO CALABRESI, THE COSTS OF ACCIDENTS: A LEGAL AND ECONOMIC ANALYSIS 95-129, 174-97, 266-73 (1970) (developing the "cheapest cost avoider" method for minimizing the cost of accidents).
42. Id. at 135.
43. We assume for simplicity's sake that in this case the relative costs of prevention for the parties are independent of each other.
44. See generally IZHAK ENGLARD, THE PHILOSOPHY OF TORT LAW 31-35 (1993) (underscoring informational difficulties in the identification of the cheapest cost avoider).
45. For example, these contributions may amount to $500 for the driver and $400 for the bicycle rider. The total cost of preventing the harm ($900) would thus fall below $1000.
46. See, e.g., Giuseppe Dari-Mattiacci & Nuno Garoupa, Least-Cost Avoidance: The Tragedy of Common Safety, 25 J.L. ECON. & ORG. 235, 235-36 (2009) (attesting that the cheapest cost avoider principle "is unanimously recognized as desirable").
47. See, e.g., Adam B. Badawi, Harm, Ambiguity, and the Regulation of Illegal Contracts, 17 GEO. MASON L. REV. 483, 530 (2010) (discussing reliance on the cheapest cost avoider criterion in allocating losses from illegal contracts);
48. Tun-Jen Chiang, Fixing Patent Boundaries, 108 MICH. L. REV. 523, 554-57 (2010) (using the cheapest cost avoider principle to allocate responsibility for avoidable errors in patent claims);
49. James J. Park, Shareholder Compensation as Dividend, 108 MICH. L. REV. 323, 346-47 (2009) (using the cheapest cost avoider standard in ascribing liability for securities fraud);
50. Christopher Serkin, Existing Uses and the Limits of Land Use Regulations, 84 N.Y.U. L. REV. 1222, 1272 (2009) (recognizing the cheapest cost avoider principle as one approach to land use regulation);
51. Henry E. Smith, The Harm in Blackmail, 92 NW. U. L. REV. 861, 883 (1998) (applying the cheapest cost avoider criterion to criminal blackmail);
52. Stewart E. Sterk, Property Rules, Liability Rules, and Uncertainty About Property Rights, 106 MICH. L. REV. 1285, 1314-16 (2008) (using the cheapest cost avoider criterion in allocating the responsibility for uncertainty about property rights).
53. See sources cited supra note 23.
54. Indeed, there is a debate in the law and economics literature over whether distributional goals should be carried out by substantive legal rules or only through the tax system. For the former view,
55. see Matthew D. Adler & Chris William Sanchirico, Inequality and Uncertainty: Theory and Legal Applications, 155 U. PA. L. REV. 279 (2006);
56. and Chris William Sanchirico, Taxes Versus Legal Rules as Instruments for Equity: A More Equitable View, 29 J. LEGAL STUD. 797 (2000).
57. For the latter view, see Louis Kaplow & Steven Shavell, Why the Legal System Is Less Efficient than the Income Tax in Redistributing Income, 23 J. LEGAL STUD. 667 (1994).
58. See, e.g., CALABRESI, supra note 17, at 135-38.
59. Id.
60. See POSNER, supra note 1, at 4.
61. Id. at 24-25, 167-70, 215-19;
62. see also STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSIS OF LAW 1-4 (2004);
63. ROBERT COOTER & THOMAS ULEN, LAW & ECONOMICS 293 (5th ed. 2008) (noting contract doctrine's contribution to efficiency, which "requires uniting knowledge and control over resources at least cost" (emphasis omitted)).
64. Law and economics scholars acknowledge, however, that adjudication costs may distort the allocation of substantive liabilities and entitlements.
65. See POSNER, supra note 1, at 563-64, 577.
66. See STEIN, supra note 9, at 33 (arguing that evidentiary rules and processes are not needed when adjudicators are epistemically infallible).
67. See infra notes 101-05 and accompanying text.
68. For a striking example, see Jordan v. Alternative Resources Corp., 458 F.3d 332 (4th Cir. 2006),
69. cert. denied, 127 S. Ct. 2036 (2007), which held that a wild, but single, racist exclamation referring to black people generally does not make an African American worker's environment hostile for purposes of antiretaliation and other remedies under Title VII of the Civil Rights Act of 1964.
70. Id. at 340-43. This decision is both unfair and inefficient in that it incentivizes victims of racism to pile up evidence of a hostile environment by enduring multiple slurs.
71. For a detailed discussion of cumulative harm requirements, see infra sections II.B-C, pp. 535-42.
72. See, e.g., Paul H. Robinson, A Theory of Justification: Societal Harm as a Prerequisite for Criminal Liability, 23 UCLA L. REV. 266, 266 (1975).
73. See 1 JOEL FEINBERG, THE MORAL LIMITS OF THE CRIMINAL LAW: HARM TO OTHERS 31-36 (1984) (explaining why criminal law should penalize people only for causing harm conceptualized as a morally wrongful invasion of another's interest);
74. George P. Fletcher, Ambivalence About Treason, 82 N.C. L. REV. 1611, 1612 (2004) (underscoring that the harm requirement is central to the "nature and purpose" of criminal law).
75. See Robinson, supra note 34, at 266-67.
76. It is quite possible that this effect can be found in all legal areas, but since proving this hypothesis is beyond the scope of this Essay, we leave this ambitious claim for future projects.
77. From a potential defendant's side, distortion will occur when production of evidence is likely to exonerate the defendant.
78. See WAYNE R. LAFAVE ET AL., CRIMINAL PROCEDURE § 3.3, at 163-68 (5th ed. 2009) (explicating the "probable cause" requirement for arrest);
79. see also Brigham City, Utah v. Stuart, 547 U.S. 398, 406 (2006) (holding that evidence of ongoing violence constitutes "probable cause" because the Fourth Amendment does not require the police "to wait until another blow render[s] someone 'unconscious' or 'semi-conscious' or worse");
80. Terry v. Ohio, 392 U.S. 1, 35 n.1 (1968) (Douglas, J., dissenting) (reasoning that "probable cause" does not require that police officers wait until a suspect "commit[s] a crime before they are able to 'seize' that person"). Note that, upon reasonable suspicion that a suspect is carrying a weapon and might use it against the police officer or another person, the officer can stop the suspect to search for weapons without arresting him.
81. Id. at 27 (majority opinion).
82. See, e.g., WAYNE R. LAFAVE, CRIMINAL LAW § 12.2(b), at 626 & n.52 (4th ed. 2003) (reviewing the "overt act" requirement for conspiracy).
83. See, e.g., Yates v. United States, 354 U.S. 298, 334 (1957) ("The function of the overt act in a conspiracy prosecution is ⋯ to manifest 'that the conspiracy is at work' ⋯ ." (quoting Carlson v. United States, 187 F.2d 366, 370 (10th Cir. 1951))).
84. See MODEL PENAL CODE § 5.01(1) (1962) ("A person is guilty of an attempt to commit a crime if, acting with the kind of culpability otherwise required for commission of the crime, he ⋯ purposely does or omits to do anything that, under the circumstances as he believes them to be, is an act or omission constituting a substantial step in a course of conduct planned to culminate in his commission of the crime.");
85. LAFAVE, supra note 40, § 11.4(e), at 594 ("The Model Penal Code's 'substantial step' language is to be found in the great majority of the attempt statutes in the modern recodifications.");
86. see also United States v. Prichard, 781 F.2d 179, 182 (10th Cir. 1986) ("The police need not wait until the defendant is on the verge of committing the specific act that constitutes the crime. If this were the rule, much of the preventative purpose of inchoate liability would be vitiated.").
87. See STEIN, supra note 9, at 172-83 (outlining the scope of the "proof beyond a reasonable doubt" requirement and analyzing the requirement's rationale).
88. See Apprendi v. New Jersey, 530 U.S. 466, 476 (2000).
89. See SHAVELL, supra note 29, at 543-44.
90. This remedy is available against state governments under 42 U.S.C. § 1983 (2006)
91. and is available against federal agents under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971).
92. See Hudson v. Michigan, 547 U.S. 586, 598 (2006) (underscoring growing effectiveness of compensatory redress as a remedy for violations of suspects' and defendants' rights by government agents);
93. see also Alexander A. Reinert, Measuring the Success of Bivens Litigation and Its Consequences for the Individual Liability Model, 62 STAN. L. REV. 809, 827-45 (2010) (carrying out empirical investigation of Bivens suits and reporting their relative success).
94. 158 N.E. 888 (N.Y. 1927).
95. See id. at 888-89;
96. see also State v. Duke, 709 So. 2d 580, 581-82 (Fla. Dist. Ct. App. 1998) (holding that an alleged child molester was arrested too early to qualify as an attempter);
97. Commonwealth v. Ortiz, 560 N.E.2d 698, 703 (Mass. 1990) (holding that riding in a car with a loaded gun in an unsuccessful search for the intended victim was insufficient to support a conviction for attempted assault and battery);
98. People v. Coleman, 86 N.W.2d 281, 285 (Mich. 1957) (noting that "the purchase of a hunting rifle, secretly intended for the murder of the neighbor" is "merely an act of [noncriminal] preparation").
99. See generally Richard A. Bierschbach & Alex Stein, Mediating Rules in Criminal Law, 93 VA. L. REV. 1197, 1234-41 (2007) (explaining how the tension between retribution and deterrence complicates the standards for identifying and punishing inchoate crimes).
100. For example, before making a drug-related arrest or stop-and-frisk, the police must wait for the suspected drug deal to be carried out, despite the risk of violence that such deals involve.
101. See, e.g., People v. McRay, 416 N.E.2d 1015, 1019-21 (N.Y. 1980) (holding that an exchange of a glassine envelope, the "telltale sign" of heroin, will constitute the lowest level of proof required for "probable cause" if money is passed in exchange for the envelope, if participants behave furtively or evasively, or if the exchange occurs in an area rampant with narcotics activity);
102. Commonwealth v. E.M., 735 A.2d 654, 659-61 (Pa. 1999) (holding that an exchange of a plastic baggie typically used to transport drugs constitutes evidence that allows the police to stop and frisk the suspects under the "reasonable suspicion" standard of Terry v. Ohio, 392 U.S. 1, 30 (1968)).
103. Entrapment is generally permitted, provided that the government does not overstep the "line ⋯ between the trap for the unwary innocent and the trap for the unwary criminal."
104. Sherman v. United States, 356 U.S. 369, 372 (1958). That is, "[w]here the Government has induced an individual to break the law and the defense of entrapment is at issue ⋯ the prosecution must prove beyond reasonable doubt that the defendant was disposed to commit the criminal act prior to first being approached by Government agents."
105. Jacobson v. United States, 503 U.S. 540, 548- 49 (1992)
106. (citing United States v. Whoie, 925 F.2d 1481, 1483-84 (D.C. Cir. 1991));
107. see also United States v. Kaminski, 703 F.2d 1004, 1010 (7th Cir. 1983) (Posner, J., concurring) ("If the police entice someone to commit a crime who would not have done so without their blandishments, and then arrest him and he is prosecuted, convicted, and punished, law enforcement resources are squandered in the following sense: Resources that could and should have been used in an effort to reduce the nation's unacceptably high crime rate are used instead in the entirely sterile activity of first inciting and then punishing a crime. However, if the police are just inducing someone to commit sooner a crime he would have committed eventually, but to do so in controlled circumstances where the costs to the criminal justice system of apprehension and conviction are minimized, the police are economizing on resources.").
108. See Jacobson, 503 U.S. at 548 ("[T]here can be no dispute that the Government may use undercover agents to enforce the law. 'It is well settled that the fact that officers or employees of the Government merely afford opportunities or facilities for the commission of the offense does not defeat the prosecution. Artifice and stratagem may be employed to catch those engaged in criminal enterprises.'"
109. (quoting Sorrells v. United States, 287 U.S. 435, 441 (1932))).
110. For a superb study of this phenomenon, see generally Elizabeth E. Joh, Breaking the Law to Enforce It: Undercover Police Participation in Crime, 62 STAN. L. REV. 155 (2009).
111. See Joh, supra note 51, at 156.
112. See, e.g., State v. Yegan, 221 P.3d 1027 (Ariz. Ct. App. 2009) (police detective used the internet to pose as a fourteen-year-old girl, to conduct a sexually charged online conversation, and to arrange a date with a child molester in order to get him arrested);
113. Duke, 709 So. 2d at 581 (police detective used the internet to present himself as a twelve-year-old girl and arrange a sex date with the defendant, who was arrested too early to qualify as an attempter);
114. State v. Morris, 272 N.W.2d 35, 35-36 (Minn. 1978) (to obtain evidence of defendant's engagement in prostitution, undercover police officer partially undressed himself and negotiated sex for hire with defendant). Detectives have at times employed even more extreme methods.
115. See, e.g., State v. Burkland, 775 N.W.2d 372, 373-74 (Minn. Ct. App. 2009) (to obtain evidence of defendant's engagement in prostitution, undercover police officer posed as a paying customer and initiated sexual contact with defendant - a behavior that the court found "offensive to due process,"
116. id. at 376);
117. see also Okin v. Vill. of Cornwall-on-Hudson Police Dep't, 577 F.3d 415, 427-28 (2d Cir. 2009) (observing that a police officer may violate due process when he affirmatively creates or enhances violence against a private person).
118. See Joh, supra note 51, at 156-57 & 156 n.6.
119. See id.
120. See id.
121. The Supreme Court recognized the necessity of these practices long ago.
122. See Sorrells v. United States, 287 U.S. 435, 441-42 (1932) (holding that "[a]rtifice and stratagem ⋯ employed to catch those engaged in criminal enterprises" are permissible, and clarifying that "[t]he appropriate object of this permitted activity, frequently essential to the enforcement of the law, is to reveal the criminal design;
123. to expose the illicit traffic, the prohibited publication, the fraudulent use of the mails, the illegal conspiracy, or other offenses, and thus to disclose the would-be violators of the law").
124. See, e.g., FBI Undercover Guidelines: Oversight Hearings Before the Subcomm. on Civil & Constitutional Rights of the H. Comm. on the Judiciary, 97th Cong. 130 (1981) (statement of Philip B. Heymann, Assistant Att'y Gen., Criminal Division, Department of Justice) ("[U]ndercover operations are extremely effective in aiding us to identify, prosecute and convict the guilty and to reduce the chances that innocent parties will be caught up in the criminal process⋯ . [T]hrough undercover techniques, we can muster the testimony of credible law enforcement agents, often augmented by unimpeachable video and oral tapes which graphically reveal the defendant's image and voice engaged in the commission of crime. These techniques aid the truth-finding process by generally avoiding issues of mistaken identity or perjurious efforts by a witness to implicate an innocent person.").
125. See generally Bruce Hay, Sting Operations, Undercover Agents, and Entrapment, 70 MO. L. REV. 387 (2005) (pioneering economic analysis of entrapment and sting operations that identifies these operations' utility).
126. See STEIN, supra note 9, at 219-25 (outlining and rationalizing the "preponderance of the evidence" requirement for civil trials).
127. See Gideon Parchomovsky & Alex Stein, Reconceptualizing Trespass, 103 NW. U. L. REV. 1823, 1834-36 (2009) (outlining and explaining multiple-damage provisions as a remedy for trespass).
128. See STEIN, supra note 9, at 144-48.
129. See id.
130. See DAN B. DOBBS, THE LAW OF TORTS § 202, at 509-10 (2000) (describing the prevalent understanding of the comparative fault doctrine as based on a "comparison of the unjustified risks taken by each [party]" where "[t]he only negligence to be compared is negligence that is a cause in fact and also a proximate cause in the sense that the harm caused was the kind of harm put at risk,"
131. id. at 509
132. See W. PAGE KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS § 65, at 458 (5th ed. 1984) ("The rule of avoidable consequences comes into play after a legal wrong has occurred, but while some damages may still be averted, and bars recovery only for such damages.").
133. For a comparison of these two doctrines, see DOBBS, supra note 63, §§ 203-05, at 510-17.
134. See id. § 204, at 511-14.
135. Throughout this Essay, we follow the traditional common law approach to causation rather than the "reciprocal causation" concept of Ronald Coase.
136. See, e.g., Thomas W. Merrill & Henry E. Smith, Making Coasean Property More Coasean 26-27 (Mar. 9, 2010) (unpublished manuscript), available at http://extranet.isnie.org/uploads/isnie2010/merrill-smith.pdf (noting that the positive law did not adopt the Coasean idea of reciprocal causation).
137. As a general rule, doctors must comply with certain medical customs and protocols.
138. See Gideon Parchomovsky & Alex Stein, Torts and Innovation, 107 MICH. L. REV. 285, 300-03 (2008) (outlining and explaining the custom rules applicable in medical malpractice disputes). Failure to comply with those customs and protocols amounts to malpractice. But there are nonmandatory customs as well, and a doctor may deviate from any of them if she believes that the patient requires a different treatment or diagnostic procedure. These nonmandatory customs include protocols regarding "the timing and frequency of physical and radiographic ⋯ examinations" that diagnose breast cancer.
139. Bradley C. Nahrstadt & Christina D. Ketcham, A Primer on Defending Breast Cancer Litigation, 25 AM. J. TRIAL ADVOC. 451, 464 (2002).
140. See Parchomovsky & Stein, supra note 68, at 301 & nn.87-88, and sources cited therein.
141. The doctor may act in the same way when her primary motivation is risk aversion.
142. See infra notes 101-05 and accompanying text.
143. See Henry E. Smith, Intellectual Property as Property: Delineating Entitlements in Information, 116 YALE L.J. 1742, 1781-82, 1784-86 (2007) (showing how an injunction-backed right to exclude frequently facilitates efficient governance of intellectual property by its owner);
144. see also Eric E. Williams, Patent Reform: The Pharmaceutical Industry Prescription for Post-Grant Opposition and Remedies, 90 J. PAT. & TRADEMARK OFF. SOC'Y 354, 365 (2008) (attesting that "injunctions are vital to innovative drug companies" because "[w]ithout the power of injunctions, they would not be able to prevent a generic drug company from placing inexpensive copies of medicine in the marketplace").
145. See ROBERT P. MERGES ET AL., INTELLECTUAL PROPERTY IN THE NEW TECHNOLOGICAL AGE 13 (rev. 4th ed. 2007).
146. See, e.g., Marc Morgan, Stop Looking Under the Bridge for Imaginary Creatures: A Comment Examining Who Really Deserves the Title Patent Troll, 17 FED. CIR. B.J. 165, 175 (2007) ("The threat of an injunction is an important tool to motivate would-be patent squatters to negotiate a license or settle patent infringement litigation.").
147. See Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 215 (1980) (explaining that "the essence of a patent grant is the right to exclude others from profiting by the patented invention" and that "[c]ompulsory licensing is a rarity in our patent system").
148. See John M. Golden, Commentary, "Patent Trolls" and Patent Remedies, 85 TEX. L. REV. 2111, 2152 (2007) (attesting that "[t]he difficulty of assessing a reasonable royalty [for the use of a patent] has in fact been one of the principal rationales for granting permanent injunctions").
149. See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392-93 (2006) (refusing to establish categorical rules with respect to injunctions in patent and copyright infringement cases and "reject[ ing] invitations to replace traditional equitable considerations with a rule that an injunction automatically follows a determination that a copyright [or a patent] has been infringed").
150. Id. at 391.
151. Id.
152. As Chief Justice Roberts explained in his concurrence in eBay, the discretionary formula is not a "clean slate": The "long tradition of equity practice" that allowed patent holders to obtain injunctions that fend off infringers ought to be read into this formula.
153. Id. at 395 (Roberts, C.J., concurring). Justices Stevens, Scalia, Kennedy, Souter, Ginsburg, and Breyer have agreed with this point.
154. See id. at 394 (noting that Justices Scalia and Ginsburg joined the Chief Justice's concurrence);
155. id. at 395-96 (Kennedy, J., concurring) (agreeing with the Chief Justice on the relevant point, in an opinion joined by Justices Stevens, Souter, and Breyer).
156. See Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 704 (Fed. Cir. 2008) ("[O]ne who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against continuing infringement destroys the business so elected."
157. (quoting Windsurfing Int'l, Inc. v. AMF, Inc., 782 F.2d 995, 1003 n.12 (Fed. Cir. 1986)) (internal quotation marks omitted));
158. Corning Glass Works v. U.S. Int'l Trade Comm'n, 799 F.2d 1559, 1567 (Fed. Cir. 1986) (noting that immediate irreparable damage is presumed in connection with a request for injunctive relief from continued infringement);
159. Smith Int'l, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1581 (Fed. Cir. 1983) ("[W]here validity and continuing infringement have been clearly established, as in this case, immediate irreparable harm is presumed." (footnote omitted));
160. cf. Acumed LLC v. Stryker Corp., 551 F.3d 1323, 1330 (Fed. Cir. 2008) (attesting that, under the "balance of hardships" standard, it is proper for a court to ignore a patent infringer's expenditures on designing and marketing the infringing product).
161. See, e.g., Bridgeport Music, Inc. v. Justin Combs Publ'g, 507 F.3d 470, 492 (6th Cir. 2007) ("Not only is the issuance of a permanent injunction justified '[w]hen a copyright plaintiff has established a threat of continuing infringement, he is entitled to an injunction.'"
162. (alteration in original) (quoting Walt Disney Co. v. Powell, 897 F.2d 565, 567 (D.C. Cir. 1990)));
163. CBS Broad., Inc. v. EchoStar Commc'ns Corp., 450 F.3d 505, 518 n.25 (11th Cir. 2006) ("Under the Copyright Act, however, a plaintiff need not show irreparable harm in order to obtain a permanent injunction, so long as there is past infringement and a likelihood of future infringement."
164. (emphasis added) (citing Pac. & S. Co. v. Duncan, 744 F.2d 1490, 1499 (11th Cir. 1984)));
165. see also Apple Inc. v. Psystar Corp., 673 F. Supp. 2d 926, 929 (N.D. Cal. 2009) (holding, pursuant to eBay, that "[o]ther than for trademark infringement claims, there is no presumption of irreparable harm with respect to a permanent injunction," but observing that although "[i]rreparable harm may not be presumed ⋯ in run-of-the-mill copyright litigation, such proof should not be difficult to establish,"
166. id.
167. (quoting Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197, 1215 (C.D. Cal. 2007)) (internal quotation mark omitted)).
168. See, e.g., Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1180 (9th Cir. 1988) ("Injunctive relief is the remedy of choice for trademark and unfair competition cases, since there is no adequate remedy at law for the injury caused by a defendant's continuing infringement.");
169. see also David H. Bernstein & Andrew Gilden, No Trolls Barred: Trademark Injunctions After eBay, 99 TRADEMARK REP. 1037, 1053-73 (2009) (discussing implications of eBay for trademark law and arguing that the practice of remedying trademark violations with injunctions should continue).
170. See eBay, 547 U.S. at 391.
171. See Robert P. Merges & Jeffrey M. Kuhn, An Estoppel Doctrine for Patented Standards, 97 CALIF. L. REV. 1, 32-33 (2009) (explaining the types of patentee behavior that should tip the scales in favor of standards estoppel).
172. See id. at 32-34.
173. See MICHAEL HELLER, THE GRIDLOCK ECONOMY: HOW TOO MUCH OWNERSHIP WRECKS MARKETS, STOPS INNOVATION, AND COSTS LIVES 1-22 (2008);
174. Michael A. Heller & Rebecca S. Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical Research, 280 SCIENCE 698, 700 (1998);
175. see also Oren Bar-Gill & Gideon Parchomovsky, Essay, A Marketplace for Ideas?, 84 TEX. L. REV. 395, 412-17 (2005) (discussing liability rule treatment for intellectual property rights);
176. Daniel A. Crane, Intellectual Liability, 88 TEX. L. REV. 253, 258-69 (2009) (analyzing the ongoing depropertization of intellectual property rights, which reduces inefficient rent-seeking and holdouts).
177. For criticism of the excessive protection of patents, see Alfred B. Engelberg, Special Patent Provisions for Pharmaceuticals: Have They Outlived Their Usefulness?, 39 IDEA 389, 419-25 (1999);
178. Michael A. Heller, The Dynamic Analytics of Property Law, 2 THEORETICAL INQUIRIES L. 79, 87-89 (2001);
179. Heller & Eisenberg, supra note 86;
180. Mark A. Lemley & Kimberly A. Moore, Ending Abuse of Patent Continuations, 84 B.U. L. REV. 63, 71-83 (2004);
181. Robert P. Merges & Richard R. Nelson, On the Complex Economics of Patent Scope, 90 COLUM. L. REV. 839, 863-66 (1990);
182. and Suzanne Scotchmer, Standing on the Shoulders of Giants: Cumulative Research and the Patent Law, 5 J. ECON. PERSP. 29, 30-32 (1991).
183. For criticism of the socially unnecessary protection of trademarks, see Mark A. Lemley & Mark McKenna, Irrelevant Confusion, 62 STAN. L. REV. 413, 414 (2010);
184. and Mark P. McKenna, Testing Modern Trademark Law's Theory of Harm, 95 IOWA L. REV. 63, 66 (2009).
185. For criticism of copyright's overbreadth, see Gideon Parchomovsky & Alex Stein, Originality, 95 VA. L. REV. 1505, 1509-16 (2009), and sources cited therein.
186. Naturally, other considerations may affect the choice in this case. Chief among them is solvency, or lack thereof. Specifically, if a rights holder estimates that the infringer does not have sufficient financial resources to pay for the harm he caused, the rights holder may decide to pursue legal action immediately, even if doing so jeopardizes the injunction.
187. NanoPharma might argue that MegaPharma behaved inequitably, but it will probably not be able to procure evidence sufficient to prove this accusation. Moreover, this accusation would fail on the merits because MegaPharma did nothing inequitable.
188. See Pharmacia Corp. v. Par Pharm., Inc., 417 F.3d 1369, 1373 (Fed. Cir. 2005) ("[I]nequitable conduct includes affirmative misrepresentation of a material fact, failure to disclose material information, or submission of false material information, coupled with an intent to deceive." (alteration in original) (quoting Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995)) (internal quotation marks omitted));
189. cf. Henry E. Smith, Institutions and Indirectness in Intellectual Property, 157 U. PA. L. REV. 2083, 2125-32 (2009) (advising courts to use the information-cost theory in applying eBay and to treat an infringer's detrimental reliance on the owner's failure to assert her ownership as a reason for not issuing an intellectual property injunction).
190. CALABRESI, supra note 17, at 26-27.
191. Id. at 27-28.
192. Id. at 28.
193. Id. at 26-31.
194. As Calabresi observed: [A]s soon as we abandon the hope of having a perfect world in which accident costs could be so particularized that general deterrence could infallibly price the acts or activities causing accidents out of the market, or specific deterrence could prohibit them with complete success, we necessarily move into a world where mixed approaches will prevail. The all-important question that remains, however, is which mixture accomplishes our mixed aims, not perfectly - as that is impossible - but best.
195. Id. at 234-35.
196. Id. at 3-16.
197. For one example of how Calabresi's theory has been applied beyond the realm of accident costs,
198. see Jonathan T. Molot, A Market in Litigation Risk, 76 U. CHI. L. REV. 367, 373-75 (2009).
199. See, e.g., Symposium, Calabresi's The Costs of Accidents: A Generation of Impact on Law and Scholarship, 64 MD. L. REV. 1, 1-754 (2005).
200. CALABRESI, supra note 17, at 28.
201. Id.
202. See, e.g., Ernest J. Weinrib, Toward a Moral Theory of Negligence Law, 2 L. & PHIL. 37, 38 (1983) (explaining corrective justice as a system that "considers the position of the parties anterior to the transaction as equal, and ⋯ restores this antecedent equality by transferring resources from [the wrongdoer] to [the victim] so that the gain realized by the former is used to make up the loss suffered by the latter").
203. David M. Studdert et al., Defensive Medicine Among High-Risk Specialist Physicians in a Volatile Malpractice Environment, 293 JAMA 2609, 2609 (2005). This article perceptively identifies those procedures as "assurance behavior" - a concept capturing the procedures' primary goal: To generate evidence that will defeat future suits for medical malpractice.
204. Id. at 2610.
205. See, e.g., James Gibson, Doctrinal Feedback and (Un)Reasonable Care, 94 VA. L. REV. 1641, 1644-45 (2008).
206. Id.
207. Professor James Gibson identifies the "doctrinal feedback" dynamic: Overcautious doctors take excessive precautions against risk of suit and cyclically transform those precautions into legally binding customs.
208. Id. at 1653-61.
209. Empirical studies estimate the overall cost of defensive medicine to be somewhere between $100 billion and $124 billion per annum across the United States. MASS. MED. SOC'Y, INVESTIGATION OF DEFENSIVE MEDICINE IN MASSACHUSETTS 1 (Nov. 2008), http://www. massmed.org/AM/Template.cfm?Section= Research-Reports-and-Studies2&TEMPLATE=/CM/C ontentDisplay. cfm&CONTENTID=27797 (noting that defensive medicine imposes over $1.5 billion in unnecessary medical expenses upon Massachusetts alone);
210. see also Daniel Kessler & Mark McClellan, Do Doctors Practice Defensive Medicine?, 111 Q.J. ECON. 353, 372-85 (1996) (providing empirical evidence of defensive medicine and its high cost: Reduced expenditures on heartdisease prevention in states capping malpractice damages);
211. Daniel Kessler & Mark McClellan, Malpractice Law and Health Care Reform: Optimal Liability Policy in an Era of Managed Care, 84 J. PUB. ECON. 175, 178-79, 194-96 (2002) (providing updated empirical data confirming the 1996 Kessler & McClellan study).
212. See supra notes 88-89 and accompanying text.
213. See, e.g., Reno Air Racing Ass'n, Inc. v. McCord, 452 F.3d 1126, 1138 (9th Cir. 2006) ("Laches bars trademark infringement claims 'only where the trademark holder knowingly allowed the infringing mark to be used without objection for a lengthy period of time.'"
214. (quoting Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1061 (9th Cir. 1999)));
215. see also id. at 1139 (attesting that courts proceed on a strong presumption that laches is inapplicable and that "[i]t is extremely rare for laches to be effectively invoked when a plaintiff has filed his action before limitations in an analogous action at law has run"
216. (quoting Shouse v. Pierce Cnty., 559 F.2d 1142, 1147 (9th Cir. 1977)) (internal quotation marks omitted)).
217. See Vanderlande Indus. Nederland BV v. Int'l Trade Comm'n, 366 F.3d 1311, 1324 (Fed. Cir. 2004) (reaffirming the well-settled rule that a patent infringer relying on the equitable estoppel defense must establish by a preponderance of the evidence that: "(1) The [patentee], who usually must have knowledge of the true facts, communicate[d] something in a misleading way, either by words, conduct or silence. (2) The [accused infringer] relie[d] upon that communication. (3) And the [accused infringer] would be harmed materially if the [patentee] is later permitted to assert any claim inconsistent with his earlier conduct."
218. (first, third, fifth, and sixth alterations in original) (quoting A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1041 (Fed. Cir. 1992) (en banc) (internal quotation marks omitted))).
219. See STEIN, supra note 9, at 1-4, 12, 141-43.