Doing 401(k) stuff over the weekend, I read the 10-K for Pixar, the wonderful amalgam of computer wizardry, movie-making, and animation that produced Toy Story and Finding Nemo, and is now on track to produce another such every year.

The thought crossed my mind: If the problems of illicit downloading and piracy of content are not dealt with effectively, this great organization could actually disappear. The result would be not just financial loss (measurable) to investors but spiritual loss (incalculable) to the consumers who love its output.

Is it possible that our legal and political systems could get this demented? In general public discussion, there is a comfortable assumption that the answer is "no," that these systems will deal with the problems, or that, even if downloading and piracy proceed untrammeled, the Lord will provide an alternative business model. In this happy land, there is no fundamental threat to the music or movie industries, or, to look further afield, to the production of pharmaceuticals or software, and no chance that we will be deprived of their creativity.

For these optimists, I have one word: ASBESTOS. No one, 20 years ago, would have predicted that a relatively small group of pirates would be able to hijack the legal system and paralyze the political system for the sake of personal profit to be gained by wreaking havoc on industrial America. Yet that is what has happened.

The havoc is monumental, as one can learn by searching for "asbestos" on Walter Olson's www.overlawyered.com, or reading "Asbestos Exposed" in TechCentralStation (March 9, 2004), or, to get really depressed, Lester Brickman's "On the Theory Class's Theories of Asbestos Litigation: The Disconnect Between Scholarship and Reality", from the Pepperdine Law Review.

Sixty-six companies have gone bankrupt, the great majority of which had small connection to asbestos. Businesses have paid out over $70 billion. The number of claims keeps increasing, even though the asbestos problem was primarily an artifact of WWII industrial urgency. The count is now over 730,000, with 90% of the claimants having no illness recognized by medical science, and even fewer having any condition attributable to asbestos. As other companies have gone bankrupt, new victims must be found, with, for example, 41,500 suits filed against Ford, half of them in the past year.

Corruption is rife. A WSJ editorial today (subscription required) points out that the bankruptcy process has been compromised, and plaintiffs without injury are receiving higher payments than those with injury. One-quarter of all cases are brought in the jurisprudential hub of Madison County, IL, and a federal trial judge was recently removed from a case for the appearance of possible impropriety. (He appointed a coven of plaintiffs' lawyers to be his advisors and had 325 lunches and dinners with them. Not that the appellate court thought he actually did anything wrong, mind you, but some outside observer might think so, however unjustly.)

Could an equivalent catastrophe engulf the creative industries? It seems unlikely -- surely someone would notice that things were going awry -- but there are two reasons to take the threat seriously.

First, there is money to be made from piracy and illicit downloading, which automatically creates an interest group with resources to subvert the political and legal systems and then prevent rectification. If it can get a few judicial decisions its way and then paralyze reform, it wins.

Second is the role of the theory class, as per the title of Brickman's article. His last five pages discuss the capacity of tort law academicians to remain in an imaginary world, a condition that seriously impairs reform efforts. Since most of IP academia exhibits a comparable tendency to prefer airy theory to gritty reality, it cannot be counted upon to serve as a gyroscope if things go wrong.

Do I think disaster is likely? Not really. But it is distinctly possible, and I think the creative businesses are absolutely right to treat the matter with deadly seriousness, assuming nothing.