Tuesday, March 28, 2006

Injunctions, Patents, and Copyrights

The Washington Post carried this story about the US Government's brief before the Supreme Court in MercExhange v. eBay. One of the disputes is whether injunctions in patent cases should be issued automatically. It was, of course, the imminent threat of an injunction in the Blackberry dispute that led to the astonishing $620 million settlement. There are different issues with injunctive relief in patent than copyright cases, including compulsory licensing and whether the plaintiff was "working" the patent, and it may be that those differences are sufficient to render the Supreme Court's eventual decision in the eBay case to be of little relevance in copyright cases. Indeed, it is amusing only in a sardonic sense to read the Court's opinions, where it variously finds an historic "kinship" between the two areas, or finds them quite different.

In the Ninth Circuit, in copyright cases, preliminary injunctions seem to be virtually automatic, but it is helpful to think about why preliminary injunctive relief should be awarded. Preliminary injunctive relief is supposed to be the exception, not the rule, an extraordinary remedy, one of the most drastic tools in the arsenal of judicial remedies," a "very far reaching power to be granted only sparingly and in limited circumstances and not as a matter of right." The purpose of temporary injunctive relief is frequently stated to be to preserve the status quo, or to "preserve the existing state of things until the rights of the parties can be fully investigated and determined." For this reason, a preliminary injunction is sometimes referred to as preserving the relative positions of the parties.

While preserving the status quo seems to evoke ancient concerns, the roots are quite shallow, and as a main goal of preliminary injunctive relief did not emerge until late in the nineteenth century. An injunction can, and frequently does, alter the parties’ positions. When an injunction is granted, the defendant’s conduct is stopped in plaintiff's favor, sometimes to defendant’s extreme detriment. This effect was well stated in an 1896 copyright case from the Circuit Court for the District of Massachusetts, Ladd v. Oxnard: [P]atent, trade-mark, and copyright cases . . . do not ordinarily preserve the status quo. . . . [T]hey sometimes operate to suspend temporarily the entire establishment or business of the respondent, and sometimes break them up as to result in permanent destruction."

Conversely, where an injunction is denied, defendant’s ongoing conduct cannot be described as preserving the plaintiff's pre-infringement position. Indeed, the copyright owner may be considerably worse off. In a traditional copyright infringement action, any decision on preliminary relief can only loosely be described as preserving the status quo. Even in the best of circumstances (where a fair degree of information is available to the court), crafting an injunction that will approximate a world that has in fact changed poses formidable difficulties. Answering the question "What would have happened had the defendant not appeared on the scene?" inherently involves speculation and therefore risk of error.

In technology cases, the large number of infringing uses for the technology sought to be enjoined, relevant for third party-liability, is also relevant in determining the harm to the public factor for injunctive relief. One is also, however, thrown on the horns of a dilemma by denying injunctive relief, namely, the denial can, especially if permanent, act just like a compulsory license. Whether courts can effectively create compulsory licenses was the subject of much internal debate among the Supreme Court justices in the Sony case, and it will be interesting to see how that debate plays out 22 years later in the eBay case.

4 comments:

Edward Lee said...

Why is $620 million "astonishing" in your view? As I understand it, the settlement is one-time lump sum. No future royalties. In that light, some might find $620 pretty cheap, especially given the very likely possibility the district court was about to order a shutdown of Blackberry's service.

billb said...

Astonishing, I believe, because NTP's patents are presently on the road to invalidation. I don't know the terms of the settlement agreement, but I'd be surprised if NTP has to give any of that back should their patents be ruled invalid.

William Patry said...

William Patry:

Edward:

I meant astonishing in two senses, one as an absolute number and second as a perrcent of the profits RIM had earned. But of course, RIm apparently believed the settlement was in their best economic interests and they would know.

Anonymous said...

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