Equity and Juries in Patent Law

A cert petition to watch at the Supreme Court

For those who are interested in equitable remedies or the Seventh Amendment, there's an interesting cert petition by Seth Waxman et al. in TCL Communication Technology v. Ericsson, Inc. (Hat tip to Andrew Hamm at SCOTUSBlog.) I've only glanced at it, and haven't read the opinion below. But it seems to call attention to a basic but unfortunately common mistake about remedies: thinking that monetary awards, or even backward-looking monetary awards, are necessarily legal. There's a rich history of monetary awards in equity, and one use of them is to complete a decree of specific performance. Failing to recognize that equity can "top off" its other remedies and award equitable compensation leads to errors about the Seventh Amendment, including the injection of juries into equitable decisionmaking. This one is worth keeping an eye on.

(Some leads for readers: The leading source on equitable compensation is Meagher, Gummow, and Lehane's treatise on equity. This equitable remedy is also discussed in my Oxford Handbook chapter on fiduciary remedies and in the "Equitable Compensation" chapter in the latest edition of Ames, Chafee, and Re on Remedies.)

 

Comments

[Bruce Hayden]

Need to look more closely at the case, but the recurrent problem in patentdom is the ability to acquire injunctions by non practicing entities. The issue there is that of irreparable harm. If they aren’t a direct competitor, then they probably can only really incur monetary damages.

The thing about injunctive relief is that injunctions were routinely utilized for economic advantage during litigation. Because of the royalty structure of many industries, halting production via injunction for alleged patent infringement, is often far costlier than they would get through court determined royalties. So plaintiffs would routinely obtain injunctions in order to halt production of major products containing arguably patented components or sub components. Inevitably that would result in significantly higher damages than would otherwise be warranted.

The line between practicing and non practicing patent owners is because the practicing patent owner can claim permanent market loss as their irreparable injury. But the non practicing owner can not make that argument, and as a result, should be satisfied with actual damages (which typically means a reasonable royalty). We are talking hundreds of millions, if not billions of dollars here, hence a lot of pressure not to eliminate injunctive relief to non practicing patent owners.

[LawTalkingGuy]

Very interesting. I've always been fascinated by the Seventh Amendment. A brief review of the cert petition makes it seem like this could be a cert worthy case. They did a good job of distinguishing between specific performance and the rule from Dairy Queen vs. Wood. Also since it's the Federal Circuit...they're probably wrong, at least as far as the Supreme Court is concerned.