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  1. 1. 26th Class <ul><li>Distribute </li></ul><ul><ul><li>Sign-in sheet </li></ul></ul><ul><ul><li>Slide handouts </li></ul></ul><ul><ul><li>Next assignment </li></ul></ul><ul><li>Voice Recorder on </li></ul><ul><li>Agenda </li></ul><ul><ul><li>Remedies </li></ul></ul><ul><ul><ul><li>Injunctions </li></ul></ul></ul><ul><ul><ul><li>Damages </li></ul></ul></ul>
  2. 2. Homework Fiasco <ul><li>Everyone needs to turn in only 10 assignments </li></ul><ul><ul><li>Not 11 </li></ul></ul><ul><li>Question </li></ul><ul><ul><li>How many people need to do Thursday’s assignment in order to have completed 10? </li></ul></ul><ul><li>Participation points for Thursday? </li></ul>
  3. 3. Review Class & Office hours <ul><li>Review Class </li></ul><ul><ul><li>Wednesday, Dec. 12, 1:30-2:45, Rm. 7 </li></ul></ul><ul><ul><li>Note start time </li></ul></ul><ul><li>Office hours </li></ul><ul><ul><li>M 12/3. 2:40-3:40 </li></ul></ul><ul><ul><li>Th. 12/6. 2:40-3:40 </li></ul></ul><ul><ul><li>M. 12/10. 1:00-2:00 (not 2:40-3:40) </li></ul></ul><ul><ul><li>W. 12/12. 1:00-2:00 </li></ul></ul><ul><ul><li>F. 12/15. 1:00-2:00 </li></ul></ul><ul><li>My office is Rm. 442 </li></ul><ul><li>I prefer questions in person to email </li></ul><ul><li>Make sure you are on the email list </li></ul><ul><ul><li>I sometimes send info relevant to the exam in this way. </li></ul></ul>
  4. 4. Review – Rights of Publicity <ul><li>Use of identity in advertising is paradigmatic case </li></ul><ul><li>Use of identity in news reporting (TV or print) does not usually result in liability </li></ul><ul><ul><li>Not “commercial” or “use in trade” or protected by First Amendment </li></ul></ul><ul><ul><li>But may be liable if use “too much” ( Zacchini human canon ball case) </li></ul></ul><ul><li>Transformative uses protected by 1 st Amendment </li></ul><ul><ul><li>at least in California. Comedy III (Cal. Supreme Court) </li></ul></ul><ul><ul><li>Parody is paradigmatic transformative use </li></ul></ul><ul><ul><ul><li>White probably not good law </li></ul></ul></ul><ul><li>In most states, rights survive death </li></ul><ul><ul><li>California. Life plus 70 years </li></ul></ul><ul><li>Person need not have commercially exploited identity during life </li></ul><ul><ul><li>Nor does s/he need to have been motivated by prospect of rights of publicity revenue </li></ul></ul><ul><li>Even politicians have rights of publicity </li></ul><ul><li>Uses which invoke both copyrighted theme and individual identity probably require consent of both copyright owner and individual </li></ul><ul><ul><li>Wendt ( Cheers bar case) </li></ul></ul>
  5. 5. Remedies <ul><li>Injunctions </li></ul><ul><ul><li>Court order to stop infringement </li></ul></ul><ul><li>Damages </li></ul><ul><ul><li>Compensatory damages </li></ul></ul><ul><ul><ul><li>Usually measured by IP owner’s lost profits </li></ul></ul></ul><ul><ul><ul><li>Sometimes measure by infringer’s illegitimate gains </li></ul></ul></ul><ul><ul><li>Supra-compensatory damages </li></ul></ul><ul><ul><ul><li>but not usually called “punitive” </li></ul></ul></ul><ul><li>Other </li></ul><ul><ul><li>Criminal penalties </li></ul></ul><ul><ul><li>impounding </li></ul></ul>
  6. 6. Injunctions <ul><li>In most areas of law, injunctions are disfavored </li></ul><ul><ul><li>Available only if remedies “at law” (e.g. damages) inadequate </li></ul></ul><ul><ul><li>Common in some areas, such as property </li></ul></ul><ul><li>Before Ebay (2006) </li></ul><ul><ul><li>Injunctions in IP were routine </li></ul></ul><ul><ul><ul><li>IP is species of property </li></ul></ul></ul>
  7. 7. Ebay (2006) I <ul><li>Business method patent infringement suit against Ebay </li></ul><ul><li>District Court </li></ul><ul><ul><li>Patent valid and infringed </li></ul></ul><ul><ul><li>Damages </li></ul></ul><ul><ul><li>No irreparable harm, and thus no injunctive relief, because plaintiff willing to license and does not commercialize patents itself </li></ul></ul><ul><ul><li>Concerned with “patent trolls” </li></ul></ul><ul><li>Federal Circuit </li></ul><ul><ul><li>General rule that injunctions appropriate absent “exceptional circumstances” </li></ul></ul><ul><li>Thomas opinion (joined by all 9 justices) </li></ul><ul><ul><li>Reaffirmed 4 factor test for injunctive relief </li></ul></ul><ul><ul><ul><li>Irreparable injury </li></ul></ul></ul><ul><ul><ul><li>Remedies at law (damages) inadequate </li></ul></ul></ul><ul><ul><ul><li>Balance of hardships </li></ul></ul></ul><ul><ul><ul><li>Public interest </li></ul></ul></ul>
  8. 8. Ebay (2006) II <ul><li>Roberts concurrence </li></ul><ul><ul><li>Joined by Scalia and Ginsburg </li></ul></ul><ul><ul><ul><li>These judges also join Thomas opinion </li></ul></ul></ul><ul><ul><li>But application of 4 factor test must be informed by history (e.g. Federal Circuit precedent) </li></ul></ul><ul><ul><li>Position is pretty close to Federal Circuit’s “general rule” </li></ul></ul><ul><ul><ul><li>Except doesn’t want to call it “general rule” </li></ul></ul></ul><ul><li>Kennedy concurrence </li></ul><ul><ul><li>Joined by Stevens, Souter and Brery </li></ul></ul><ul><ul><ul><li>These judges also join Thomas opinion </li></ul></ul></ul><ul><ul><li>Concern with “undue leverage in negotiations” </li></ul></ul><ul><ul><ul><li>When patentee does not itself produce goods, but only licenses patent to others, injunction can be “bargaining tool to charge exorbitant fees” </li></ul></ul></ul><ul><ul><ul><li>Especially when patented invention is “but a small component of the product” </li></ul></ul></ul><ul><ul><li>Damages “may well be sufficient to compensate” </li></ul></ul><ul><ul><li>Especially concerned about injunctions in business method patent context, because new </li></ul></ul><ul><ul><li>Position pretty close to district court’s </li></ul></ul>
  9. 9. Ebay (2006) III <ul><li>Lower courts seem to pay a lot of attention to Kennedy concurrence </li></ul><ul><ul><li>Reluctant to grant injunctions, unless patent owner is competitor </li></ul></ul><ul><ul><ul><li>Hard to get injunction if plaintiff merely licenses, but does not produce anything itself </li></ul></ul></ul>
  10. 10. NTP v RIM <ul><li>2) A few years ago, NTP sued RIM. RIM makes Blackberry handheld email devices and operates a system which connects the devices. NTP held a patent which it claim Blackberry infringed. NTP sought damages and an injunction barring RIM from continuing to use its patents. The injunction would render Blackberries unable to send or receive email, unless RIM could redesign the system to avoid infringement. Blackberry argued that the patent was invalid, but a district court judge indicated that he was likely to find that the patent was valid and infringed. In 2006, before the Ebay case was decided, the parties settled. RIM paid NTP $612.5 million dollars for the right to use NTP technology. </li></ul><ul><li>How do you think settlement negotiations might have been different, if they had taken place after the Ebay case had been decided? </li></ul>
  11. 11. Other Injunction Issues <ul><li>Preliminary injunctions </li></ul><ul><ul><li>Injunctions pending litigation on infringement </li></ul></ul><ul><ul><li>Very common </li></ul></ul><ul><ul><li>3 factors </li></ul></ul><ul><ul><ul><li>Probability of winning on merits </li></ul></ul></ul><ul><ul><ul><li>Balance of harms </li></ul></ul></ul><ul><ul><ul><li>Effects on third parties </li></ul></ul></ul><ul><li>Duration of trade secret injunction </li></ul><ul><ul><li>As long as would have taken to reverse engineer or independently develop </li></ul></ul>
  12. 12. Compensatory Damages <ul><li>3) Damages in intellectual property lawsuits are usually measured by the plaintiff’s lost profits. That is, the court estimates what the plaintiff’s profits would have been, had there been no infringement. The defendant must pay the difference between that estimate and actual profits. Suppose A has a patent on telephones, which B infringed. As a result of infringement, A sold 1000 telephones, making $1 profit on each telephone. As a result of the infringement, B also sold 1000 telephones, also making $1 profit on each telephone. If B had not infringed, it would not have sold any telephones. If A prevailed in a patent infringement lawsuit against B, how would you calculate the damages? </li></ul>
  13. 13. Defendant’s Profits <ul><li>Compensatory damages sometimes measured by defendant’s illegitimate profits, if higher </li></ul><ul><li>Always available in trade secret cases </li></ul><ul><li>Available in trademark cases, only if infringement was “willful” </li></ul><ul><li>Copyright </li></ul><ul><ul><li>Can get both plaintiff’s lost profits (“actual damages”) and defendant’s unjust profits when defendant’s profits “are not taken into account in computing actual damages” § 504(b) </li></ul></ul><ul><ul><li>Examples </li></ul></ul><ul><ul><ul><li>D makes and sells pirated copies of DVDs </li></ul></ul></ul><ul><ul><ul><ul><li>P’s actual damages = D’s sales x P’s profit per copy </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Double counting to give both actual damages and D’s profits </li></ul></ul></ul></ul><ul><ul><ul><li>D makes movie based on P’s book </li></ul></ul></ul><ul><ul><ul><ul><li>P’s actual damages might equal reasonable royalty rate </li></ul></ul></ul></ul><ul><ul><ul><ul><li>If D’s profits higher than reasonable royalty, then not double counting </li></ul></ul></ul></ul><ul><ul><li>In practice, P’s get higher of lost profits and defendant’s profits </li></ul></ul>
  14. 14. Other Compensatory Damages Issues <ul><li>In Dilution cases, damages only for willfull violation </li></ul><ul><li>If infringer added own components </li></ul><ul><ul><li>E.g. movie partly based on copyrighted play, partly based on public domain materials </li></ul></ul><ul><ul><li>Must apportion profits between infringement and non-infringement </li></ul></ul><ul><ul><ul><li>Plaintiff does not get all of defendant’s profits </li></ul></ul></ul>
  15. 15. Supra-Compensatory Damages I <ul><li>Patent </li></ul><ul><ul><li>“ Court may increase damages up to three times amount found” if violation willfull </li></ul></ul><ul><ul><li>3 times means </li></ul></ul><ul><ul><ul><li>1x compensatory damages </li></ul></ul></ul><ul><ul><ul><li>2x additional damages </li></ul></ul></ul><ul><ul><ul><li>3x total damages </li></ul></ul></ul><ul><li>Trademark </li></ul><ul><ul><li>Statute just like patent statute </li></ul></ul><ul><ul><li>Additional damages granted as “compensation, not a penalty” </li></ul></ul><ul><ul><li>Generally awarded if compensatory damages perceived to be too law </li></ul></ul><ul><li>Trade secret </li></ul><ul><ul><li>Exemplary (punitive) damages up to 2x compensatory damages in “exceptional circumstances” </li></ul></ul><ul><ul><ul><li>E.g. willfull and malicious violation </li></ul></ul></ul>
  16. 16. Supra-Compensatory Damages II <ul><li>Copyright </li></ul><ul><ul><li>No supra-compensatory damages </li></ul></ul><ul><ul><li>Statutory damages § 504(c) </li></ul></ul><ul><ul><ul><li>Alternative to actual damages </li></ul></ul></ul><ul><ul><ul><li>Up to $30,000 per violation for innocent infringement </li></ul></ul></ul><ul><ul><ul><li>Up to $150,000 per violation for willful infringement </li></ul></ul></ul><ul><ul><ul><li>Only if work registered before date of infringement </li></ul></ul></ul><ul><ul><ul><li>Plaintiff can choose actual or statutory damages </li></ul></ul></ul><ul><ul><li>MP3.com </li></ul></ul><ul><ul><ul><li>District court found that MP3.com had infringed by uploading 4,700 CD’s </li></ul></ul></ul><ul><ul><ul><li>Damages? </li></ul></ul></ul>
  17. 17. Attorneys Fees <ul><li>American rule </li></ul><ul><ul><li>Each party pays its own attorneys fees </li></ul></ul><ul><li>Patent, Trade Secret, and Trademark </li></ul><ul><ul><li>Defendant pays plaintiff’s attorneys fees if </li></ul></ul><ul><ul><ul><li>Bad faith, malicious and/or willfull infringement </li></ul></ul></ul><ul><ul><li>Plaintiff pays defendant’s attorneys fees if </li></ul></ul><ul><ul><ul><li>Malicious, bad faith suit by plaintiff </li></ul></ul></ul>
  18. 18. Formalities <ul><li>Patent </li></ul><ul><ul><li>Damages only if notice </li></ul></ul><ul><ul><ul><li>“ Patent # xyz” on product itself or packaging </li></ul></ul></ul><ul><ul><li>Notice not required for processes </li></ul></ul><ul><li>Trademark </li></ul><ul><ul><li>If registered, damages only if notice </li></ul></ul><ul><ul><ul><li>® or “Registered trademark” </li></ul></ul></ul><ul><ul><li>No need for notice if unregistered </li></ul></ul><ul><li>Copyright </li></ul><ul><ul><li>Registration </li></ul></ul><ul><ul><ul><li>Must register before suit for damages </li></ul></ul></ul><ul><ul><ul><li>Must register before infringement for </li></ul></ul></ul><ul><ul><ul><ul><li>statutory damages </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Attorneys fees </li></ul></ul></ul></ul><ul><ul><li>Notice </li></ul></ul><ul><ul><ul><li>Not required </li></ul></ul></ul><ul><ul><ul><li>But if notice provided, judge cannot reduce damages on account of innocent infringement </li></ul></ul></ul>
  19. 19. Rights of Publicity, Misappropriation <ul><li>Mostly common law </li></ul><ul><ul><li>Injunctions </li></ul></ul><ul><ul><li>Compensatory damages </li></ul></ul><ul><ul><li>Punitive damages if willful infringement </li></ul></ul><ul><li>California Rights of Publicity statute, § 3344(a) </li></ul><ul><ul><li>Modeled on copyright statute </li></ul></ul><ul><ul><ul><li>injunctions </li></ul></ul></ul><ul><ul><ul><li>damages </li></ul></ul></ul><ul><ul><ul><ul><li>Actual damages plus defendant’s profits not taken into account in computing damages </li></ul></ul></ul></ul><ul><ul><li>But, unlike copyright, punitive damages allowed </li></ul></ul>
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