Japan In The Dock: Beware Of The Bashers

The one time U.S. companies don't mind a trip to the courthouse so much is when their adversary is foreign--especially Japanese. The $96 million verdict against Minolta Camera Co. last year in a patent dispute with Honeywell Inc. is often cited as an example of how powerful the home-court advantage can be. "Some of my clients are worried that the jury's emotional reactions might lead to excessively harsh penalties," says Toshiaki Hasegawa, a Tokyo-based attorney specializing in patent suits.

These worries may be somewhat justified. Litigation Sciences Inc., a jury consulting firm, has developed a special scale for its Japanese clients that tracks anti-Japanese bias among American jurors coast to coast. "In certain parts of the country, people blame the Japanese for job loss and negative economic conditions," says Robert D. Minick, managing director of Litigation Sciences' New York regional office. Another jury consulting firm, DecisionQuest, has found repeatedly that mock jurors make different decisions when presented with identical cases except for the nationality of the defendant, which is changed from American to Japanese. And Robert T. Greig, a New York lawyer specializing in Japan, says Japanese companies routinely choose to settle cases because they believe they won't get a fair shake from an American jury.

BAD REPUTATION. Outwardly, Japanese companies are loathe to characterize U.S. juries as biased, fearing that any criticism will antagonize their American counterparts and intensify the debate about the shortcomings of their own legal system. "The U.S. court system... is not a problem if you know what you are doing," said Sony Corp. Chairman Akio Morita in an interview on Japanese television last year. The Japanese do complain about U.S. jurors' ability to grapple with technical issues that arise in business disputes--a problem they admit also exists in their country.

Still, there are numerous instances in which U.S. jurors find in favor of Japanese and other foreign defendants. And many lawyers argue that stories about jurors' prejudices are not credible. "It doesn't make any difference if a defendant is German, Japanese or whatever," says Kenneth B. Herman, a patent lawyer who has tried many cases involving Japanese defendants. "Juries don't have these biases."

Whether they do or don't, America's reputation for litigiousness and bias creates problems. U.S. lawyers with foreign clients say impressions of the American legal system are causing international companies to use British law instead of U.S. law whenever possible to craft deals. Some lawyers even say some clients resist U.S. markets altogether because of litigation fears.

While such setbacks do occur, most international legal experts say the advantages of doing business in the U.S. ultimately outweigh any negative impressions of American juries. Just as long as they don't get sued.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE