Volume 14 / Number 2 / Summer 2010

 

BUSINESS LAW FORUM:
INTELLECTUAL PROPERTY REMEDIES 

Introduction

H. Tomás Gómez-Arostegui, Lydia Pallas Loren, and Joseph Scott Miller

Some Open Questions About Intellectual Property Remedies

Michael Traynor and Katy Hutchinson

This Essay addresses four questions about intellectual property remedies. It assesses the implications of eBay Inc. v. MercExchange, L.L.C. for relief sought in infringement actions, asks whether the Due Process Clause imposes a limit on statutory damages, asks whether monetary compensation should be considered as a remedial factor in fair use analysis, and discusses the use of attribution in fair use analysis and its impact on remedies.

Trademark Remedies and Online Intermediaries

Stacey L. Dogan

For several years now, courts and commentators have tussled over the question of whether online intermediaries can face liability under trademark law. Because both case law and commentary have largely focused on the threshold question of “trademark use,” we know little about what specific behavior will subject intermediaries to liability and what remedies might follow. This Essay takes some preliminary steps toward addressing those questions.

It begins by classifying claims against intermediaries into three general groups: general-confusion claims, failure-to-police claims, and failure-to- respond claims. It contends that differences in the nature of these claims justify distinct approaches, both in evaluating liability and in considering the appropriate scope of relief. In particular, it contends that judges evaluating claims against intermediaries should resist trademark law’s general preference for broad prohibitory injunctions in favor of a tailored approach, given the significant benefits that can result from intermediaries’ use of trademarks online.

Declaratory Relief After MedImmune

David I. Levine and Charles E. Belle

In MedImmune, Inc. v. Genentech, Inc., the Supreme Court of the United States rejected the Federal Circuit’s “reasonable apprehension of imminent suit” test for determining the existence of a justiciable controversy in actions for declaratory relief involving alleged or potential patent infringement. The Supreme Court substituted the totality-of- circumstances test, which has long been used trans-substantively in actions for declaratory relief. Justice Clarence Thomas, the lone dissenter, contended that the majority’s holding would allow parties to seek improper advisory opinions. This Article evaluates MedImmune’s impact on declaratory judgment actions in patent litigation and considers whether Justice Thomas’s prediction was accurate. To do so, this Article compares how the Federal Circuit and other federal courts addressed justiciability in patent cases in the three years before and after the Supreme Court announced its MedImmune decision in January 2007. The Article also examines how lower courts have (and have not) utilized their discretion to decline to hear actions for declaratory relief in patent litigation. In sum, MedImmune appears to have had the results desired by the Court majority: (1) Parties can more easily demonstrate the existence of a controversy in order to question arguably coercive measures by patentees in court; and (2) The lower courts have adhered to a reasonable notion of when a sufficiently concrete controversy exists, even though they have not utilized the discretion to decline actions for declaratory relief as often as they might. Justice Thomas’s concern that MedImmune would unleash a torrent of hypothetical actions in and out of the realm of patent litigation does not appear to be coming to fruition.

Back to the Future:
Rediscovering Equitable Discretion in Trademark Cases

Mark P. McKenna

Courts in recent years have increasingly made blunt use of their equitable powers in trademark cases. Rather than limiting the scope of injunctive relief so as to protect the interests of a mark owner while respecting the legitimate interests of third parties and of consumers, courts in most cases have viewed injunctive relief in binary terms. This is unfortunate, because greater willingness to tailor injunctive relief could go a long way to mitigating some of the most pernicious effects of trademark law’s modern expansion. This Essay urges courts to reverse this trend towards crude injunctive relief, and to re-embrace their equitable discretion as a means of achieving greater balance in the trademark system.

What Hath eBay v. MercExchange Wrought?

James M. Fischer

Before the Supreme Court’s decision in eBay Inc. v. MercExchange, L.L.C., courts tended to grant injunctive relief for patent infringement as a matter of course. The Court’s decision in eBay changes the calculus such that courts have broad discretion in awarding discretionary relief if they consider four factors: irreparable injury, inadequacy of the remedy at law, the balance of hardships, and public policy. Most scholarly discussion of this change in the law has focused on a rights-based analysis. This Essay analyzes the decision from a remedial perspective.

This Essay first discusses traditional identification of rights and remedies along an axis that aligns damages with so-called liability rules and injunctions with so-called property rules. It then analyzes the four-part test from the perspective of the law of remedies, taking particular note of several public policy concerns raised by commentators, and how the courts have dealt with these concerns when applying the eBay decision. Finally, this Essay reviews the courts’ application of their newfound discretion under eBay, and concludes that it is difficult to discern a trend in post-eBay decisions, outside a significant reinvigoration of the irreparable injury requirement.

Irreparable Harm

David McGowan

This Article examines the irreparable harm doctrine and argues that sociological factors such as user perceptions of works be taken into account in evaluating whether such harm exists for purposes of granting injunctive relief. It surveys recent injunctive relief cases and argues that a presumption of irreparable harm should still apply where a plaintiff shows he or she is likely to prevail on infringement. This presumption is justified both by formal considerations concerning the nature of property rights and by the social expectations and understandings that often rest on those rights.

The Supreme Court’s Unremarkable Decision
in eBay Inc. v. MercExchange, L.L.C.

Rachel M. Janutis

In eBay Inc. v. MercExchange, L.L.C. the Supreme Court concluded that a district court had discretion to balance the equities and deny a permanent injunction even after a finding of infringement and validity. The Court thus held that general equitable principles applied to patent disputes. Commentators have attacked the decision along two main lines of criticism. Some argue that the “general principles of equity” announced by the Court in eBay are inconsistent with the general principles actually practiced by courts sitting in equity. Specifically, they argue that the Court misconstrued the nature of the discretion accorded to courts in equity in two areas: enforcing property rights and statutory rights. Second, some commentators argue that even if discretion exists with respect to other statutory rights and property rights, the unique nature of patent rights makes such discretion undesirable.

This Article focuses on the argument that the principles delineated in eBay are inconsistent with actual equity practice. I argue that eBay is not a remarkable break from equitable practice. Indeed, the principles outlined by the Court in its decision are neither novel or surprising when viewed in light of previous precedents. Second, eBay accords only limited discretion to deny permanent injunctive relief upon finding a patent violation. This argument is supported by both the doctrine outlined by the Court in eBay, and by the manner in which the district courts have exercised their discretion post-eBay. Third, equity historically invested courts discretion to balance hardships even in cases involving real property rights. Courts could thus deny injunctions in cases where there was a gross disparity between the harm from an injunction and the harm from the interference, and in cases where the defendant acted without notice of the plaintiff’s claim of right or under a good faith belief that the plaintiff’s claim was invalid. As such, equitable discretion recognized in eBay is consistent with this traditional practice.

A Structured Approach to Calculating Reasonable Royalties

Daralyn J. Durie and Mark A. Lemley

A significant part of the problem with patent damage awards comes from the non-exclusive, fifteen-factor “Georgia-Pacific” test now taken as the gold standard for calculating reasonable royalty damages. Simply handing the question of reasonable royalty to the jury, without more, is not a recipe for precision in damages analysis. But the fifteen-factor test may actually be worse, because it overloads the jury with factors to consider that may be irrelevant, overlapping, or even contradictory. And because the jury’s finding is the result of such a complex, multi-factor test, it is, as a practical matter, almost entirely immune from scrutiny by either district or appellate judges facing a deferential standard of review.

The Authors suggest a structured approach to calculating reasonable royalties. Most of the factors in the Georgia-Pacific test in fact boil down to three fundamental questions: (1) what is the marginal contribution of the patented invention over the prior art?; (2) how many other inputs were necessary to achieve that contribution, and what is their relative value?; and (3) is there some concrete evidence suggesting that the market has chosen a number different than the product of (1) and (2)? By structuring the inquiry in this way, courts (or Congress) can not only simplify the question for the jury, but also enable district courts and the Federal Circuit to easily review the factual basis for a jury award.

The Case for Restitution and Unjust
Enrichment Remedies in Patent Law

Caprice L. Roberts

A patent owner should have access to a restitutionary disgorgement remedy. The goals served by the remedy could operate to benefit patent law aims. Depending upon the desired parameters, the remedy could serve to prevent the infringer’s unjust enrichment, recapture wrongful gains to the owner who lost an opportunity to gain, deter infringement, and encourage bargaining for licenses.

Congress’s deletion of the infringer’s profits from the Patent Act and the Supreme Court’s interpretation of congressional intent as an outright elimination of the remedy do not render restitutionary principles incompatible with patent law. Even pursuant to the Court’s flawed interpretation of congressional intent, an infringer’s gain is permissible evidence of a patent owner’s loss in appropriate cases. Also, existing law does not foreclose the option of disgorgement as a contempt sanction.

To protect the limited monopoly established through a valid patent, Congress should reform the Patent Act to reauthorize a restitutionary disgorgement remedy. In keeping with disgorgement’s equitable roots, disgorgement could be reserved for cases in which legal damages are inadequate. Congress also could choose to limit disgorgement’s availability to instances of conscious infringement. Of course, Congress could determine that patent law’s goals are distinct from other intellectual property and that restitutionary principles do not foster the intended patent law aims. At least then elimination would be clear and access to the remedy would be denied on substantive grounds.

 

ARTICLES

Triggering Congressional War Powers Notification: A Proposal to Reconcile Constitutional Practice with Operational Reality

Geoffrey Corn

In 1973, a supermajority of Congress overcame President Nixon’s veto to enact the War Powers Resolution. That law was intended to restore the Founders’ vision of cooperative war-making authority between the two political branches. Since that time, two areas of uncertainty have plagued the efficacy of the law: the arguable intrusion into the exclusive war-making authority of the President and the uncertainty as to what events trigger the law’s obligations. In an effort to cure these defects, a group of experts recently proposed adoption of a substitute law: the War Powers Consultation Act of 2009. This proposed successor statute shifts the focus of statutorily mandated inter-branch war powers cooperation from the express authorization emphasis of the War Powers Resolution to notification and cooperation. While this shift in emphasis is both logical and more aligned with historical constitutional practice than the War Powers Resolution, the proposal still struggles to define an effective trigger for this notification and cooperation mandate. This Article will review how the War Powers Consultation Act seeks to cure the defects of the War Powers Resolution and to impose a more effective cooperative war-making relationship between the two political branches. It will then propose a critical improvement: a more effective notification and cooperation trigger to implement the statute’s purpose, one that is derived from the nature of the military operations this cooperative decision- making mandate is intended to enhance. The Article will explain how linking the congressional notification mandate of the proposed law to operational rules of engagement will provide the most effective pragmatic notification trigger, mitigate the risk of interpretive avoidance of the law’s mandate, and reconcile the scope of the cooperative war-making obligation with constitutional authority.

The Not So Great Writ:
Trapped in the Narrow Holdings of Supreme Court Precedents

Ursula Bentele

Recent opinions by the United States Supreme Court in cases involving petitions for writs of habeas corpus brought by state prisoners under the Antiterrorism and Effective Death Penalty Act (AEDPA) have placed increasing emphasis on precisely what law has been “clearly established” by the Supreme Court’s own precedents. In making that determination, the Court has insisted that it is the holdings, not dicta, in prior cases that control. Depending on how narrowly the “holding” of a case is characterized, therefore, the federal habeas court can short-circuit its review of state court decisions by concluding that, because no clearly established Federal law governed the situation, no habeas relief is available. Particularly when holdings are closely tied to the specific, factual context in which a constitutional claim arose, only habeas petitioners presenting claims already addressed and decided by the Supreme Court on direct review can prevail. This Article suggests that such a limitation on the habeas remedy has unfortunate consequences for both the development of constitutional law and the even-handed application of fundamental rights to persons in state custody.

Losing Hold of the Guiding Hand: Ineffective Assistance
of Counsel in Juvenile Delinquency Representation

Barbara Fedders

Lawyers for children in juvenile delinquency proceedings frequently provide their clients deficient representation. In addition to failing to investigate the facts of a case and research the applicable law, they ignore relevant ethical mandates and fail to address the demands created by the unique characteristics of children. The widespread nature of substandard legal representation, combined with delinquent adjudications’ serious and long-term consequences, makes it imperative that juveniles harmed by deficient legal representation have access to some form of legal redress. Yet, at present, no such remedy exists. A child who is adjudicated delinquent can theoretically bring a claim of ineffective assistance of counsel (IAC), which, if granted, results in a new adjudicatory or dispositional hearing or a plea withdrawal. In practice, however, systemic and doctrinal barriers prevent children from filing IAC claims and from receiving appellate review of those claims. As a recent survey of IAC claims in delinquency cases suggests, children file these claims in an extremely small number of cases. Moreover, courts almost never grant relief on the basis of these claims. This form of appellate review fails to provide meaningful remedies to the large number of children harmed by substandard legal representation. Although commentators have explored this problem in the context of adult criminal defendants, this Article is among the first to examine the inadequacy of the IAC remedy for juveniles. It traces the history of the grant of the right to counsel to juveniles; analyzes substandard representation’s nature, causes, and extent; details systemic and doctrinal barriers facing juveniles who wish to file IAC claims; and offers preliminary proposals for reform.