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Using Game Theory to Optimize the Pace of New Technology Adoption
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A recent article in the NYT, “On Tyson’s Face, It’s Art. On Film, a Legal Issue” by Noam Cohen, discusses the uncertainty that exists regarding the interpretation of many Federal laws, copyright laws in this case, especially when the jurisdiction of the laws creep into unchartered territory:

 

In “The Hangover Part II,” the sequel to the very successful what-happened-last-night comedy, the character played by Ed Helms wakes up with a permanent tattoo bracketing his left eye. The Maori-inspired design is instantly recognizable as the one sported by the boxer Mike Tyson …

…S. Victor Whitmill … designed the tattoo for Mr. Tyson, called it “tribal tattoo,” and claims it as a copyrighted work.

He has gone to Federal District Court in St. Louis to ask a judge to stop Warner Brothers Entertainment from using the tattoo in its posters or in the movie… as well as to demand monetary damages for what he calls “reckless copyright infringement” by the studio…

The suit isn’t frivolous, however, legal experts say. They contend the case could offer the first rulings on tricky questions about how far the rights of the copyright holder extend in creations that are, after all, on someone else’s body. They are questions likely to crop up more often as it becomes more common for actors or athletes to have tattoos and as tattoo designs become more sophisticated.

Unfortunately, the lawsuit will probably not resolve much uncertainty for the general public, since the high costs of litigation will likely lead the parties to settle out of court, according to an expert on copyright law who was questioned in the article.

The issue I’m grappling with here is the following.

  • The laws as they are written are often unclear.

There is a general trade-off of time and money resources between

•  Drafting laws that apply to general principals, and

•  Drafting laws that are able to anticipate and address all the issues that might arise.

Presumably, Congress reaches a balance by making laws that tilt more towards general principles, and then letting the courts clarify controversies that arise over the application of the laws to specific circumstances.

  • Gaining clarity requires litigation.

When a dispute arises over the interpretation of law, the greatest amount of clarity as to how the law applies to that particular situation is achieved through litigation, that is, by going to trial, getting a verdict, and establishing court precedent.

Such precedent can then be used by others who face similar circumstances.  In other words, when two parties go to court to settle a matter, the decision reached in that case helps others who find themselves in similar situations. There are thus externalities, or spillovers, associated with litigation, in which the social benefits of litigation are greater than the private benefits they provide to the original parties involved in the adjudicated dispute.

  • Litigation is expensive.

Fully adjudicating disputes has become prohibitively expensive for all but those cases that have the most at stake.  As a result, most parties choose the less expensive option of settling their disputes “out-of-court”.  However, such settlements do not provide much clarity as to how the law should be interpreted by others in similar circumstances.

  • Resources are wasted in disputing the same issues over and over.

While it might not pay the original two parties involved in a dispute to litigate the case, it would be beneficial to society as a whole to have the issue litigated so as to gain the consequential clarity.  That is, if you take all the small disputes involving the same legal issue and add up the costs spent trying to settle all the disagreements, the total costs would exceed the costs it would take to litigate the matter and provide general clarity.

So how do you solve the problem?  (I can’t believe I’m actually saying there’s too little litigation in the US!!!)

Part of the difficulty in addressing this type of issue is that the first time a dispute arises involving the interpretation of a law as it applies to some new issue, we (society) don’t necessarily know that that issue will end up leading to the same type of dispute over and over again.

On the other hand, there are certain issues for which it is (or becomes) clear (at least to some) that many people will eventually need the same type of clarification.  This point is admitted in the article (see the last paragraph cited above).

Generally, when there is too little of an activity taking place from a social point of view, one of the first proposals for increasing the incidence of the activity is for the government to subsidize it.  In this case, it would mean having the government pay part of the legal costs associated with litigating an issue the first time it brought to court, if it is believed that the same issue will arise again and again.  In this case, however, there are a couple of problems with this type of solution:

  • Where will the funds comes from that are used to subsidize the litigation?  Ideally, everyone who benefits from the clarification of a particular law would be the ones to pay into pot.  This clearly will not work in this case, as most people who need the clarification would probably not step forward and contribute, if they know they can free ride off the payments of others.
  • Who decides which cases should be subsidized, and how much funding should the government make available?  These two issues alone are probably big enough to sink this particular proposal.

Another possible solution would be for a special judge or panel to be assigned to make general clarifications to laws that “the experts” agree need further amplification.  Perhaps when an issue arises that is believed will end up causing a lot of other related disputes, a petition could be submitted to the designated judge or panel asking that the law at issue be clarified.  The judge or panel could then post the issue to the community, and if and when enough other members of the community agree that the law at issue needs clarification, then the judge or board could act.

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