Evidence-Based Management : Robert I. Sutton : A Lesson also for the "Soft Sciences" – the Humanities?

We have been preaching “best evidence” to the soft sciences for 30 years but they are still not listening. Perhaps Robert I. Sutton at Stanford would have more success than we do if he applied to mainstream academia in the humanities what he teaches at the Department of Management Science and Engineering and at the Graduate School of Business at Stanford University.

Professor Sutton offers managers a course in Organizational Behavior: An Evidence-Based Approach which he describes as follows:

This course tackles fundamental organizational behavior issues (e.g. employee selection, rewards, teamwork, culture, innovation) from an evidence-based perspective. Evidence-based management is a simple idea. It just means finding the best evidence that you can, facing those facts, and acting on those facts – rather than doing what everyone else does, what you have always done, or what you thought was true. It isn’t an excuse for inaction. Leaders of organizations must have the courage to act on the best facts they have right now, and the humility to change what they do as better information is found. The course includes active discussion, industry guests, and case studies.

Professor Sutton, how about if you offered that same course in principle to the archaeologists, Egyptologists, Near East scholars, Biblical scholars, and historians of astronomy on this planet, who generally “do what everyone else does”, who persist on “doing what they have always done” and “who do what they think is true” rather than acting on the best evidence available, which often contradicts what they think.

In any case, we are on your side.

Society needs a more solid evidence-based approach in many fields of human endeavor, rather than the witchdoctor-like tea-leaf reading which prevails in many of the soft sciences today. Apparently, the same problem prevails in management as well.

War of the Worlds in EU Copyright Law

Helena Spongenberg in her 29.11.2006 article

MEPs push for new copyright law in digital era

quotes Pia Raug, spokeswoman collective rights management lobby CISAC, who says about the current situation of copyright law in the European Union, that:

It’s a war of the worlds

on issues such as digital rights management (DRM), collective rights management, and private copy levies.

Spongenberg writes:

Interest in copyright reform is being sparked by explosive growth in the digital music market which is set to become a €3.9 billion a year industry in the EU by 2011, but which is throwing up new challenges both for independent artists trying to exploit the new medium and the companies trying to make money from downloading songs.

How right she is. We ourselves have uploaded our musical compositions and performances to Kaulinsium at MySpace in order to participate in this new 21st century “gold rush”. Happy listening.

French Alcatel Sues Cisco and Microsoft for Patent Infringement and Punitive Triple Damages : Philip Morris v. Williams : Constitutional Law

Revenge is a kind of wild justice, which the more man’s nature runs to, the more ought law to weed it out, for the first wrong, it doth offend the law, but the revenge of that wrong, putteth the law out of office. – Francis Bacon

That quotation appeared in Isaac Ray Corner : A history of justice: origins of law and psychiatry, a thoughtful April 1999 article by Walter A. Bordenn, MD, in the AAPL Newsletter, the newsletter of the American Academy of Psychiatry and Law, · Vol. 24, No. 2, pp. 12-14.

It has particular relevance to recent events in patents and torts and to Constitutional Law, especially in view of the upcoming US Supreme Court decision in Philip Morris v. Williams, which, as one can see from the discussion of the case at SCOTUSblog, may find the US Supreme Court ducking the hard issues in the case and sending it back on a technicality. As written by Peter Lattman at the Wall Street Journal Online Law Blog:

To the disappointment of those who wanted to see a grand debate over the constitutionality of large punitive damage awards, the Court seemed to focus more on the second question presented in the case: Whether due process permits a jury to punish a defendant for the effects of its conduct on people not parties to the lawsuit. Philip Morris contends that the jury improperly punished the company for conduct regarding other people who haven’t brought suit against it.

Lattmanspoke with Sheila Birnbaum, a Skadden Arps partner…[who] won the last punitive damages case before the Supremes, representing State Farm in 2003’s Campbell v. State Farm“, and who remarked that:

[I]t’s pretty clear that Campbell will remain the jurisprudential standard for this case.

As Lattman writes:

In State Farm, the Court suggested that, at most, punitive damages should not exceed nine times the amount of actual damages awarded to the plaintiff.

Andrew F. Susko and Edward M. Koch at White and Williams LLP go into greater detail on the holding in Campbell:

Prior to the Supreme Court’s recent decision in Campbell, the Court recognized that punitive damages awards posed an acute danger of arbitrary deprivation of property under the Due Process Clause of the Fourteenth Amendment. In light of these concerns, the Court, in the landmark case of [BMW v. Gore], 517 U.S. 559 (1996), outlined a three-part test to evaluate the constitutionality of such awards. This test looked to: (1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages awarded; and (3) the difference between the punitive damages awarded and the civil penalties authorized by statute or in comparable cases….

[T]he Court held that it was improper for the jury to consider State Farm’s national operations, reasoning “[a] defendant should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business.” Second, the Court looked to the disparity between the compensatory and punitive damages awards – here, a 145:1 ratio. Although it expressly declined to impose a bright-line rule, it held that “few awards exceeding a single-digit ratio between punitive and compensatory damages . . . will satisfy due process.” Accordingly, the presumptive constitutional punitive damages award in Campbell was $9 million – some $136 million less than that awarded by the jury. In so ruling, however, the Court noted that greater ratios might be constitutional where “a particularly egregious act has resulted in only a small amount of economic damages.” In carving out this exception, the Court was careful to note that the wealth of a defendant — standing alone — could not justify an otherwise unconstitutional punitive damages award.

Note in all of these cases that the US Supreme Court is apparently not disturbed by the fact that awards of damages in civil cases can be accompanied by additional punitive punishment of the wrongdoer and that this punishment is inflicted upon the wrongdoer without many of the otherwise mandatory legal safeguards to which a criminal defendant has a right according to the US Constitution. To this observer, the infliction of punishments in civil cases is prima facie a violation of the Due Process Clause of the US Constitution since fewer rights of defense are available in civil cases than in criminal prosecutions. Culpability, for example, is not subject to the “guilty beyond a reasonable doubt” standard and punishments are open-ended.

Alcatel sues Cisco and Microsoft for Patent Infringement

As could be expected, European companies, like their American counterparts, are beginning to smell that money might be made in the United States by bringing patent infringement actions against successful and wealthy American corporations:

1) due to the favorable US laws permitting patent infringement claims on patents permitted for business methods and software, (see e.g. Patent Terrorism – Terror of the Intangibles by iPrex Intellectual Property Solutions, M. Qaiser, and P. Mohan Chandran); and,

2) because of the possibility of making gigantic windfall profits through the US laws permitting punitive damages (see e.g. Keith N. Hylton, Punitive damages and the economic theory of penalties, Georgetown Law Journal, November 1998).

As written at ars technica by Nate Anderson, the French company Alcatel, which is “in the process of merging with Lucent“, [link added by LawPundit] and which some months ago sued Cisco for patent infringement, has just sued Microsoft for patent infringement of digital video and communication network patents, asking for triple damages for what is claimed to be “wilful infringement” in seven cases. The claim for punitive triple damages goes hand in hand with weaknesses of the patent system discussed by Dar Haddix of UPI in a Science Daily article, not available at that site, as reproduced at IPBiz.

Punitive Damages in Torts

When I was at Stanford Law School as a student, I worked on a project on punitive damages in torts for Professor of Law Robert A. Girard, a Harvard Law School grad, who saw punitive damages as an extremely important issue in tort law. At that time, I was of the opinion that punitive damages for civil wrongs looked like an ill-conceived mesh of the civil and criminal law, a hybrid form of law which violated the basic tenet that punishment and retribution were state powers to be exercised through the medium of the criminal law.

It is now nearly four decades later and my opinion is unchanged. It is extremely difficult as a matter of logical legal theory to reconcile civil punitive damages of any kind with modern systems of law in the Western world, whose objective is to take the elements of revenge and retribution out of private hands and to reserve the sanction of “punishment” to the criminal law as a power of the state, rather than as a private right of one individual against another.

As written by Aaron Xavier Fellmeth in Civil and Criminal Sanctions in the Constitution and Courts, Georgetown Law Journal, November 2005:

There are few distinctions in Anglo-American jurisprudence more fundamental and consequential than that between the civil law and the criminal law.

This distinction is a fundamental pillar of the modern rule of law, which seeks to replace ancient remnants of private revenge and private retribution – which still afflict primitive nations in our world today – with a system of sanctions governed by due process and modern jurisprudence.

Instructive here is the following article 28 from the Instructions for the Government of Armies of the United States in the Field (Lieber Code), 24 April 1863, which is nearly 150 years ago:

Art. 28. Retaliation will, therefore, never be resorted to as a measure of mere revenge, but only as a means of protective retribution, and moreover, cautiously and unavoidably; that is to say, retaliation shall only be resorted to after careful inquiry into the real occurrence, and the character of the misdeeds that may demand retribution.

Unjust or inconsiderate retaliation removes the belligerents farther and farther from the mitigating rules of regular war, and by rapid steps leads them nearer to the internecine wars of savages. ” [we added the emphasis]

There is no difference in principle here between war and the principles of the rule of law, which demand that we move away from the methods by which savages resolve conflicts, whether those of war or of law.

The idea that legal persons under the civil laws should be permitted to make a punitive profit from the wrongs of their fellows, rather than merely obtaining just compensation by means of monetary damages, is completely contrary to the democratic ideas which are at the root of American government, but is justified by its proponents under the rationale that the threat of punitive damages deters unwanted tort behavior. But this of course is an absurd argumentation for awarding a pound of flesh to private persons for private wrongs inflicted when the state is absolutely free to legislate effective criminal laws as deterrents if the state so desires. So why does it not do so?

Fellmeth writes:

It is commonly observed that all three branches of government have taken numerous steps in the past half-century to blur the distinction between civil and criminal law. These measures include the increased use of the qui tam action and sharing of penalties with law enforcers, the increased prevalence of punitive damages in civil cases to vindicate various public policies, the now common use of statutory civil penalties, and the expanding notion of “civil fines” for violations of federal and state regulations. This blurring has thrown into doubt the circumstances under which important constitutional procedural protections apply. Much of the Bill of Rights, for example, explicitly guarantees, or has been interpreted to guarantee, certain procedural protections in criminal cases only. The Fifth Amendment Double Jeopardy Clause, for example, has been interpreted to apply only to criminal punishments, as have the Sixth Amendment Confrontation Clause, the Eighth Amendment guarantee against excessive fines, and the Article I, Section 9 prohibition on ex post facto laws. Even in cases in which a plaintiff or prosecutor seeks civil sanctions that are primarily or entirely punitive in nature, such as civil exemplary damages awards or civil fines, these protections usually do not apply, and, where they do apply, they tend to suffer diminution in scope.” [link added by LawPundit]

Moreover, as a matter of law, it is absolutely intolerable to this observer as a matter of justice and due process that private legal persons can be subjected to punitive civil punishments whose scope and nature are not known in advance but depend on the vagaries of decisions made by juries having minimal knowledge of the legal and economic system.

Perhaps the specter of giant amounts of money flowing out of the coffers of American companies into the coffers of foreign companies will wake up the American legal system to the foolishness of the prevailing law in this field.

Although it is not the issue before the court in Philip Morris v. Williams, and although the issue is seen as the question of whether there are “limits” on punitive damages (see Linda Greenhouse, Justices Weigh Limits on Punitive Damages, New York Times), we nevertheless ask: does the Constitution of the United States permit civil courts and juries to PUNISH civil defendants arbitrarily and without the protections granted to the criminal accused.

We think the answer is no.

As Greenhouse writes, in the instant case:

The jury had awarded [the widow] compensatory damages of $821,000, meaning that the ratio of punitive to compensatory damages was 97 to 1.” [The jury awarded $79.5 million in punitive damages]

In our view, that is not law. That is simply madness. It is a legal system which has run completely out of control, and it is so viewed here in Europe in the legal community, where people just shake their heads disbelievingly when they read about the jury awards handed out in the United States in civil cases.

Besides, as a practical matter, the glut of cases in this field and the fact that punitive damage cases are increasing rather than decreasing in number proves without a shadow of a doubt that punitive damages have next to ZERO deterrent effect and that the purpose for which civil punishments are inflicted is thus largely a fata morgana having little empirical foundation.

See the following links for more materials:

Tobacco Products Liability Project
Supreme Court Times Blog
Elizabeth S. Campbell, Supreme Court to Revisit Constitutionality of Punitive Damages Awards

Microsoft and Linux : The Specter of Patent Litigation and the Need for Patent Reform

Over at ars technica Ryan Paul headlines his November 21, 2006 article as Microsoft: we agree to disagree with Novell on Linux patent infringements, and – after an analysis of the patent infringement threats – concludes:

Although readers may be inclined to judge and condemn Microsoft or Novell for this latest round of shenanigans, I think that would be counter-productive. The real culprit in this case is the patent system that makes this kind of situation possible. Microsoft’s threats illuminate the necessity of patent reform, particularly as it relates to software.

Seven Wonders of the World : Ancient Medieval Modern

What do people trained in the law do? One thing they do is the copious and complex legal paperwork involved in realizing and carrying out engineering and construction projects (see e.g. the Real Estate and Construction Law Blog, Construction Attorney Blog, Washington Construction Law Blog, ConstructionWebLinks).

Here, e.g. is an October 10, 2006 description by Emily Williams of Virginia Law School of the work of International Deal-maker of the Year, Philip Stopford, in International Deal-Maker of the Year Offers Tips on Project Finance:

  • “While working on the Cross Israel Highway Project, a venture that would build a road through Israel from Turkey to Egypt, one of the major considerations was not financing, but an antiquities law and political disruptions. The antiquities law could hamper progress if contractors working on the road came across any ancient remains. The remains would have to be analyzed to determine whose remains they were, which would determine whether construction could continue. The road also paralleled the Green Line, which separated the West Bank and Gaza from Israel in many places. Workers were often targeted by gunmen. These considerations had to be written into the contracts, Stopford explained.”

The LawPundit posting below looks at some construction projects, both ancient and modern, not from the standpoint of law, financing, negotiations and documentation done in the background – whether today or in antiquity – but rather from the standpoint of the finished product.

Still, one must keep in mind that every wonder of the ancient or modern world was built also because there were priests (in ancient days) and lawyers (in modern times) who enabled it to happen. Before the paperwork is ready, nothing is – or can be – built.

The Seven Wonders of the Ancient World

Herodotus in his travels was the first to refer to the “wonders” of the world and Callimachus of Cyrene in the 3rd century BC as a scholar at the library of the Alexandria Mouseion wrote A Collection of Wonders around the World . The original idea of identifying Seven Wonders of the Ancient World comes from a list originally compiled in the 2nd century BC by Antipater of Sidon, who, instead of the Lighthouse of Alexandria listed below, included the Ishtar Gate. These wonders, however, were not wonders of the natural world, but were all man-made engineering and construction wonders which the ancient Greeks as travelers (tourists) could visit several thousand years ago.

Listed in their order of construction, the Seven Wonders of the Ancient World were:

  1. The Great Pyramid of Giza
  2. The Hanging Gardens of Babylon
  3. The Temple of Artemis at Ephesus
  4. The Statue of Zeus at Olympia
  5. The Mausoleum of Maussollos at Halicarnassus
  6. The Colossus of Rhodes
  7. The Lighthouse of Alexandria

The Seven Wonders of the Medieval World

Various locations accessible to travelers in the Middle Ages – and some of these of course were totally unknown to the ancient Greeks – have been included by various sources among the much later Seven Wonders of the Medieval World. This is our selection from a longer list of alternatives:

New Ancient Wonders of the World

Modern archaeological discoveries have also opened up our eyes to new, previously unknown wonders which fully qualify as Ancient Wonders of the World, of which this list, created by us, is only a limited example:

The Seven Wonders of the Modern World

As world populations and technology have expanded, it has become more difficult to pick out just seven world wonders from the many now available. The Seven Wonders of the Modern World according to the American Society of Civil Engineers (in 1994) were:

World Wonders Built in Recent Years

In our view, a number of new building structures definitely fall into the category of world wonders:

To those – as follows – we can add modern skyscrapers and similar tall structures which mark the modern age as mankind continues to reach for the stars.

The World’s Tallest Man-Made Structures and Buildings

The Council on Tall Buildings and Urban Habitat and Emporis have partnered recently and rank the world’s tallest structures and buildings. As written at Emporis:

Taipei 101 is the world’s tallest building, surpassing the height of the Petronas Twin Towers in Kuala Lumpur in late August 2003.” See the Wikipedia for a current list of tallest buildings and structures in the world, ranked by category. Many of these man-made structures are true world wonders in our modern age.

See also a list of the historical development of the world’s tallest man-made freestanding structures on land.

Greatest Engineering Achievements of the 20th Century

The National Academy of Engineering has a list of their selection of the Greatest Engineering Achievements of the just past 20th century but none of these are architectural or archaeological tourist travel sites, even though they are world wonders in their own right:

As one can see from that list, in ancient times mankind’s wonders of the world were confined to things that men built and constructed. In our modern age, the wonders of the world are rightly expanded to include the many new and wondrous things that man has created beyond architecture alone.

Law, Computer Science, Philanthropy and ABA President-Elect William H. Neukom of Dartmouth Stanford and Microsoft

Mark A. Lemley, mentioned in the previous post, is William H. Neukom Professor of Law at Stanford Law School, occupying a chair endowed in 2002 by William H. Neukom, who also funded a chair in computational science at Dartmouth College.

William H. Neukom is a 1964 graduate of Dartmouth College and graduated from Stanford Law School in 1967.

Early in his career, Neukom joined the Seattle law firm now known as Preston, Gates & Ellis LLP, a pioneering firm in the technology sector. See e.g. the history of the Shidler Center for Law, Information and Technology at the University of Washington School of Law.

In 1985 Neukom became the first attorney for Microsoft Corporation when William H. Gates, Sr., the “Gates” in Preston Gates & Ellis, who happened to be the father of Microsoft’s Bill Gates, asked him if he wanted to represent his son’s young company.

Neukom was subsequently Microsoft’s General Counsel (chief legal officer) for the next nearly two decades and helped to shape what Microsoft is today. In 2002 he rejoined Preston Gates & Ellis from his position as Executive Vice President of Law and Corporate Affairs at Microsoft. At Preston Gates & Ellis LLP, Neukom is the chair of the firm.

Neukom has recently been in the news again as the new President-Elect of the American Bar Association. He will take office in August, 2007.

Neukom is also making a name for himself as a philanthropist. As reported in the print version of the Stanford Law School Annual Report of Giving 2005-2006, Neukom “has committed $20 million for the construction of a new academic building at the [Stanford] Law School“. See also the Stanford Lawyer, Building for the Future by Sharon Driscoll, and Stanford Report.

In 2004, Neukom also committed an approximately equal amount to Dartmouth College, his undergraduate alma mater, for an Institute for Computational Science:

Dartmouth has been known for innovations in computer science, in both application and theory, dating back to the computer’s earliest days. Now, through a generous commitment of $22 million, William H. Neukom, chair of the Seattle law firm Preston Gates & Ellis and the former executive vice president of Law and Corporate Affairs at Microsoft Corporation, will establish an Institute for Computational Science that will continue the college’s legacy of leadership in computing. Neukom is a Dartmouth trustee and a member of the Class of 1964. The commitment, made in honor of his family, is the largest gift in Dartmouth’s history for an academic program.

Neukom’s philanthropy is in line with the same philanthropic spirit we see evidenced in the Bill and Melinda Gates Foundation and conforms to the views of William H. Gates, Sr., who, together with Chuck Collins, has written a book, Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes, whose central theme is that individual wealth is in part a product of investments made by and costs incurred by society and the system as a whole (e.g. educational system, maintenance of the enabling economic system, system-enabled incentives for wealth accumulation, costs incurred in the protection of intellectual property, etc.), so that taxes are a form of societal “return on investment” which are necessary for society to create the very conditions which permit entrepreneurs to accumulate great wealth in the first place.

Interestingly, although there are numerous nay-sayers to that philosophy, it appears to us that it is precisely the very wealthy elements of society – who arguably understand our money system the best – who often have the greatest philanthropic spirit and who, once they have accumulated great wealth, are often the most ready to pump that wealth back into the system. Take a look at this link to Philanthropist at the Wikipedia for examples of what people with really big money have done to repay society for its investment in them. Business Week has a list of the 50 most generous philanthropists.

Patent Law Reform and New Legislation

I just received the Fall 2006 print issue of the Stanford Lawyer which at p. 31 quotes Stanford Law School prof Mark A. Lemley, an intellectual property law expert, in his July 11 testimony before the House Judiciary Committee hearing on the Trademark Dilution Revision Act of 2005:

It is particularly important that Congress act to prevent abuses of the patent system by those who use the patent system not to develop and make products but to squeeze money out of those who do.

Lemley made a similar statement on June 14, 2005 to the Senate Judiciary Committee in their hearings on Patent Law Reform : Injunctions and Damages:

It is particularly important that Congress act to prevent abuses of the patent system by so-called “patent trolls,” who use the patent system not to develop and make products but to squeeze money out of those who do. While there are no reliable statistics on the extent of the troll problem, there is no question that it is a widespread and extremely serious problem in the semiconductor, computer, and telecommunications industries. Large, innovative companies such as Intel and Cisco never have a week go by without threats of suit from a non-manufacturing patent owner claiming rights in technology that the defendants did not copy from the patent owner – usually they’ve never even heard of the patent owner – but instead developed independently. While there is a legitimate role for small and individual inventors who patent their technologies and license their ideas to others, increasingly the patent owners are not contributing ideas at all, but popping up years or even decades later and trying to fit an old patent to a different purpose. Trolls do this because the law permits it, and because it gives them a chance to make a lot of money – under current law, far more money than their technology is worth.

Patent reform needs to deal with these abuses of the system without interfering with the normal, legitimate use of the system to protect and encourage innovation. Doing so requires careful balancing of the interests of patent owners, technology companies, and the public.

One should read all of Lemley’s testimony to get an appreciation for the kinds of reforms that are being discussed for US Patent Law. See also Patently O here and here regarding H.R. 2795: Patent Act of 2005 as well as S. 3818: Patent Reform Act of 2006, bills currently before Congress. Also of interest is the August 21, 206 article by Matthew J. Sag and Kurt W. Rohde, Patent Reform and Differential Impact, Northwestern Law & Econ Research Paper No. 925722.