Presuming Harm from IP Infringement
Copyright law guru William Patry has posted a thorough and interesting critique of the presumption of irreparable harm that most courts apply in copyright cases. It dovetails nicely with the Supreme Court’s recent eBay decision in the patent context (which I discussed here). And if the idea catches on, it has some nice potential application to fair use cases in both copyright and trademark.
In general (and oversimplifying greatly), courts grant injunctive relief — orders to do or stop doing something — only when monetary damages are insufficient to compensate a prevailing party in the lawsuit. Thus, parties seeking injunctive relief usually must prove that they will suffer “irreparable harm” without such relief.
But courts in most copyright cases (and to different degrees in trademark and patent cases too) apply a presumption of irreparable harm when intellectual property rights have been infringed. As a result, the aggrieved IP rightsholder effectively gets off the hook from proving such harm. Patry asks whether this makes sense:
[I]s the presumption a substitute for any obligation on plaintiff’s part to produce evidence of irreparable harm? What if defendant introduces some evidence showing there is no irreparable harm? Does the presumption vanish and does plaintiff then have to present evidence?
He then shows how badly this trend in copyright cases conflicts with the underlying Rules of Evidence applicable to all cases, including IP. He concludes:
In sum, the presumption of irreparable harm cannot be justified on a blanket basis, and if applied at all, is a mere burden-shifting device, not evidence. Once some contradictory evidence is introduced by the nonmoving party, the presumption vanishes. If plaintiff fails to introduce convincing evidence of actual irreparable harm, the request for injunctive relief must be denied.
Similarly, the unanimous eBay Court held (emphasis added):
According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. … These familiar principles apply with equal force to disputes arising under the Patent Act.
To a lot of IP lawyers, the notion of automatic irreparable harm has become dogma. When I practiced trademark law, I found that the section of a brief arguing for irreparable harm usually consisted of a few case cites, essentially boiling down to: “this is a gimme.” All the attention focused on proving infringement. In a contract case, by contrast, proving irreparable harm required real effort.
“LKB,” a commenter on Patry’s blog, defends the presumption, emphasizing that IP rightsholders have “exclusive” rights, meaning they can stop others from using their property. But this is semantic. Ownership of real estate includes the right to keep out trespassers too, but there are classic law-school cases in which that right is abridged for public policy reasons (eminent domain, the trespasser who needs to cross your land for safety reasons). IP rights, of course, are not “exclusive” in the ordinary sense of that word either. The law includes numerous mandatory limitations on those rights — fair use chief among them.
As Patry and the eBay court both say, it may be that almost all infringement cases do indeed merit injunctions. (A concurring opinion in eBay emphasizes that viewpoint.) But the move away from even analyzing the question, toward an automatic presumption, sweeps too broadly. Sometimes the unauthorized use of content just means rightsholders lose potential licensing fees, and that’s it. Why is it insufficient in such cases to award monetary damages keyed to the licensing fee that would have been charged? Note that, in situations where such damages would be too low, a plaintiff also has the option to elect statutory damages instead under section 504(c) of the Copyright Act.
This could be especially significant in a case where a defendant incorporates content into some new work. Imagine the defendant uses music or film clips in a movie. Maybe the defendant mistakenly thought it was fair use, or that the content was cleared properly. Should plaintiff, after receiving an appropriate payment, also get to stop distribution of the movie?
I haven’t thought through all the implications, but this is definitely an idea worth pursuing.
Filed under: Copyright, Court Decisions, Education & Copyright, Patents, Trademarks
[...] William McGeveran follows up at Info/Law with his own great post, this one exploring the consequences of eBay for the continued vitality of the presumption in patent cases. My own sense is that the presumption of irreparable harm in patent infringement preliminary injunction cases can no longer be (if it ever was) anything more than a (weak) “bursting bubble” presumption that drops out of the case the moment the non-movant introduces any evidence suggesting the lack of irreparable harm. I thought so the moment I read the Supreme Court’s decision in eBay: Here’s the first paragraph of my first substantive post on eBay the morning of the decision (May 15): Top line thought: The presumption of irreparable harm, long a mainstay of the Federal Circuit’s preliminary injunction jurisprudence, is now highly questionable. Expect it to come under sustained attack in the lower courts. [...]
I respectfully disagree.
Why is it insufficient to require a copyright owner to just look to damages, particularly when there has been an adjudication of infringement? Stated simply, because the nature of an exclusive right requires enforcement of the right to exclude.
This is not “mere semantics” — it means treating the term “exclusive right” as used in the Copyright Act seriously and giving it its plain and obvious meaning. In other words, exclusive means exclusive. Further, where copyright law limits exclusivity (fair use, mechanical licenses, 120(a) limitations on architectural works copyrights, etc.) it is because *Congress* established exceptions to the 106 grant of exclusive rights. To allow an infringer to continue to infringe under a judge-made doctrine that the copyright holder can just collect damages later effectively creates a forced license — a result that is contrary to the Copyright Act (which allows for compulsory licenses *only* in the context of mechanical licenses), and that the Supreme Court refused to accept in Sony.
Does this mean that factor 2 effectively collapses into factor 1, particularly in the context of a permanent injunction? Probably, except perhaps in the rare case where future infringement is impossible (which I would analyze under factor 1 anyway). Does the recognition in eBay that permanent injunctions are not automatic contradict this proposition? I don’t think so. eBay simply held that the four factor test had to be applied, and I read that decision as focusing primarily on factors 3 and 4 — particularly in light of the reasoning in both concurrences, and especially given the full court’s rejection of the trial court’s reasoning for rejecting an injunction.
Further, as I noted in a followup post on Prof. Patry’s blog this morning, there is an additional factor which must be considered, especially in the permanent injunction context.
Where there has been an adjudication of copyright infringement, an infringer’s continuation of that activity will be a per se act of willful infringement, insofar as the infringer is on actual notice of not only the copyrights but of their adjudicated validity and that his conduct is infringing. If the aggregate retail value of the infringing copies exceeds $1000 (which it will in virtually every case), or if the infringing activities are for commercial purposes, the continued infringement will not only be an act of civil infringement, it will also violate 506(a) and will therefore be a crime.
This fact distinguishes the decision in eBay, and particularly the Souter-block concurrence. There is no analog to 506(a) in patent law, and the Supremes have held that the *only* remedy for patent infringement is a civil one. See Dowling v. United States, 473 U.S. 207, 227 n.19 (1985). This is simply not the case in copyright law.
Should courts simply wink at a the commission of a facially criminal act, under the rubric that the copyright owner ought to be satisfied with money damages? I think not.
My bottom line: one can argue that forced licenses make sense from a public policy standpoint. However, such arguments should be made to Congress — not the courts. Except in very unusual cases — which can be accommodated under factors 3 and 4 — the established treating of factor 2 as established once a finding of infringement is made is both wise and warranted.
LKB in Houston
LKB, thanks for your thoughtful comments. As I said in the post, I am still thinking about this.
I hadn’t seen your follow-up post on Patry’s blog when I wrote this post. I think your criminal law point is well taken. And I certainly agree that there are many relevant differences between patent and copyright (and trademark), including the criminal statute.
I guess we have to agree to disagree on the “exclusive rights” point. An “exclusive” right with numerous exceptions just isn’t all that exclusive. Congress debated and passed the Rules of Evidence on presumptions just as much as it debated and passed the Copyright Act. To the extent the two are in tension then courts must work that out case-by-case. I don’t think there can be a blanket presumption of irreparable harm without ignoring congressional intent on evidentiary burdens.
How much difference does it make on a practical level? Maybe not so much. Injunction denial might well remain a rare event even without a presumption of irreparable harm. But as a theoretical matter it is important, and in some cases it could be critical.
Mr. McGeveran:
I think some of the problem here is the rather loose and inaccurate use of the term “presumption” by courts. Prof. Patry is absolutely correct: evidentiary presumptions under FRE 301 are of the Thayer/”bursting bubble” sort. Thus, a “presumption” of irreparable injury, if the Courts meant a FRE 301 presumption, does raise all sorts of offsetting evidentiary issues. My point is that if you take exclusive rights seriously, then the irreparable injury elements exist *as a matter of law* once infringement is established, and thus no additional evidence is needed on this element at all. While courts have called this a “presumption,” in most cases I don’t think that they meant FRE 301 presumption at all, but have instead just got lazy with their language. And, of course, once this sort of sloppy terminology gets into the caselaw, it takes on a life of its own.
In addition to the 506(a) criminal violation, here’s another statutory consideration for you to mull over in assessing whether a threat of future infringement (especially in the context of a permanent injunction) presents irreparable injury per se. Under the first sale doctrine of 109(a), any resale of a “lawfully made” copy is permitted without the copyright owner’s consent. Caselaw establishes that the necessary correlary to the first sale doctrine is that where a copy is *not* lawfully made (i.e., an infringing copy), then each resale of that copy is not covered by the first sale doctrine, and therefore violates the 106(3) exclusive right to vend. Particularly where the subsequent acts of infringement involve distribution of infringing copies (which, excluding ASCAP cases, is the usual copyright case), refusing permanent injunctive relief creates a hydra-like multiplication of disputes, as each sale or resale of the infringing copy gives rise to a new infringement claim and thus the need for a new lawsuit to protect the copyright owner’s rights. Such multiplication of lawsuits has been repeatedly recognized as irreparable injury. Thus, I submit that a threat of future distribution of an infringing copies — especially where the infringement has been adjudicated — presents irreparable injury as a matter of law.
As the fundamental issue here — exclusivity — we’ll just have to respectfully disagree. For me, Congress unambiguously used the term “exclusive right” in the Copyright Act, and the legislative history and caselaw clearly supports giving this term its plain meaning. The existence of the various “exceptions” to exclusivity that you mention is, to me, of little moment, in that all of these exceptions were created **by Congress**. Expressio unius est exclusio alterius. And as the Supremes made clear in Sony, courts can’t just go creating new remedies or exceptions to the Copyright Act, regardless of the perceived wisdom of doing so . . . that’s Congress’ job.
Reasonable minds can certainly differ as to whether it is good public policy to give copyright owners the right to exclude (i.e., whether the law ought to provide for compulsory licenses in situations beyond section 115 mechanical licenses). However, from my perspective as an IP attorney, I’m more interested in what the law *is,* as opposed to what it ought to be — I’ll leave the latter to the policy wonks and politicians to argue and decide. And, for better or worse, I think that under current law, exclusive means exclusive (except where Congress itself has specified otherwise).
Best regards,
LKB in Houston