Small size - large impact - Nanowerk

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long overlooked field of insolvency regimes, global
coordination is beginning to produce beneficial effects.
But there are no signs of such movements with respect
to liability regimes. The differentials of national
procedures and standards remain highly vulcanized –
indeed, those of us who monitor global litigation could
be forgiven for perceiving a trend toward the increasing
nationalization of liability regimes.
The situation is compounded by rules which permit
the same claim to be brought in a variety of locations,
such as the country of origin of the developer and/or
manufacturer, the country of sale, the country of injury,
or (the most popular) the country of easiest recovery.
Since the US is ordinarily and correctly viewed as the
country of easiest recovery, the US is every claimant’s
favorite liability regime. Commercial interests in the
US have, in consequence, begun to invest substantial
sums in resisting global forum shopping. But, the real
impact of these conditions is the fact that a company
wholly domiciled in Europe or elsewhere that develops,
distributes or markets high risks products can be
virtually as seriously exposed to US liability as
a competitor domiciled in the US.
One need look no farther than the current Vioxx trauma
to understand the difficulty. In one of a multitude of
advertisements placed by US lawyers on the internet and
in global media, the attorney’s claim was that over 85
million people were Vioxx users – a global claim if there
ever was one since only 10 million are known to be
users in the US. Using the privilege of US attorneys to
openly advertise, and global communications technology,
seeking to tempt claimants into US litigation by
declaring that simply by being a user of Vioxx, “you may
be entitled to a minimum cash settlement between USD
100,000 and USD 300,000”. These are the conditions
that nanotech practitioners need to be prepared to deal
with in the future.
Which brings me to my final topic: Is there anyway
in which the nanotechnology industry might mitigate
the uncertainties and risks faced in an unfair world
of liability and regulatory regimes? I am fundamentally
an optimist, believe that conditions run in cycles
and that pendulums tend to return from their excesses.
I urge that the nanotechnology industry not retreat from
the opportunities and responsibilities that lie ahead.
While I do not have a prescription that will provide
safety and security, I offer a few observations that I hope
you find useful.
First, it is imperative that you understand the enemy
(and recognize that there is one) and the processes by
which the enemy operates (and that they can be abusive).
Do not assume that what is reasonable will occur and for
you to incorporate that understanding in your business
plans and business structures. Simple but powerful
illustrations from current headlines include the lessons
Dow is learning after acquiring Union Carbide in the
belief that the Bhopal was settled and closed long ago,
and the struggles of ABB for having acquired a US
asbestos manufacturer. Business plans must take great
care with merger and acquisition decisions that may
have such consequences.
Second, when the early phase of risk and claims activity
emerges, do not take the easy route of compromising
and settling uncertain exposures. While it is tempting
to view each individual case as one that could be more
economically resolved through settlement than
litigation, the momentum and growing expectations
created by such behavior can be extraordinary. Consider
that asbestos liability litigation is currently expected
to cost the industry collectively more than USD 300
billion. Had the industry, and its insurers, understood
this a few decades ago and refused to compromise itself
into more exposed positions and higher expectations,
it is doubtful that asbestos litigation would have cost
even one-third that amount.
Third, focus early attention on building better
understanding and stronger relationships with regulators.
Demand realistic safe haven protection as a condition
of your continued contribution of your entrepreneurial
skills and investment. Only by negotiating your way
to constructive partnerships with policymakers can some
of the current political opportunism be controlled.