Notes from the IP, Private Law, and Supreme Court Conference

Post by Patrick Goold

On March 10, the Project on the Foundations of Private Law at Harvard Law School and the Intellectual Property Program at the George Washington University Law School hosted the Intellectual Property, Private Law, and the Supreme Court conference. This day-long conference brought scholars, practitioners, and policy makers together to discuss the Supreme Court’s use of private law concepts in IP cases. The conference was a time to reflect on how the court has used principles from property, torts, contracts, equity and remedies, in IP law, and to think about how the court should use these principles in the future. This short blog post reports some of the day’s major themes.

Opening remarks were delivered by Commissioner F. Scott Kieff (International Trade Commission, on leave from his faculty position at George Washington Law).  Drawing from the examples of three prior cases (MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2015); Limelight Networks, Inc. v. Akamai Technologies, 134 S.Ct. 2111 (2015); and ClearCorrect Operating, LLC, v International Trade Commission, 819 F.3d 1334 (2016)), he explored some benefits and risks presented when individual litigants focus their arguments on private law concepts, and how this differs from the “too much versus too little protection” debate that commonly dominates IP law discussions.

Panel I: The Nature of IP

The first panel discussed the “Nature of IP.” This was a chance to think about one of the most controversial questions in IP: is intellectual property really property? Prof. Rob Merges (Berkeley School of Law) presented the case that it is. Prof. Merges argued that, even post eBay v. MercExchange, L.L.C., 547 U.S. 388 (2006) (denying injunctions as an automatic remedy for patent infringement), IP rights are still property rights in the sense that they are good against the world and freely alienable. However, Prof. Merges equally argued that categorizing IPRs as property rights does not imply absolutism. In Merges’s view, the scope of property rights is always tailored to facilitate important policy goals, and intellectual property rights are no different. The proprietary nature of IP does not prevent Congress enacting desirable limitations and exceptions to IP rights. Likewise, Prof. Henry Smith (Harvard Law School) reminded us that private law does not mean “all property, all the time.” While IP has always enjoyed a close connection with property, some IP cases, like International News Service v. Associated Press, 248 U.S. 215 (1918) are better viewed, not as property cases, but as equity cases, while copyright may share more in common with tort than it does with property. Similarly, Donald B. Verrilli Jr. (Munger Tolles & Olsen) highlighted how the court frequently uses property-like language in patent cases, but only when the relevant parties agree the invention is protected by patent law. By contrast, when questions of patentability exist, property concepts are used less frequently; perhaps because the court is more concerned with striking the right policy balance and is concerned about the impact that Lockean notions of property may have on that goal.

Our second panel turned to the cases on “Infringement and Defenses.” One of the interesting features about the copyright and patent acts is the lack of detail in the infringement provisions. Mr. Malcolm Stewart (Department of Justice) pointed out that other statutory regimes, for example the tax code, contain complex industry-specific sections. A similar level of detail cannot be found in the patent and copyright statutes, and as a result, statutory construction cannot be wholly guided by textualism. With one method of statutory construction largely unavailable in infringement cases, the Justices instead regularly turn to private law concepts – such as inducement, proximate cause, or volition – which have existed, largely at common law, for hundreds of years. It will be interesting to see in the years to come, as Mr. William F. Lee (WilmerHale) remarked, how exactly the court will continue to integrate these “300-year-old” doctrines into IP. 

Panel II: Infringement and Defenses
Panel II: Infringement and Defenses

Whether such integration is desirable is, however, much debated. On one hand, Prof. Dmitry Karshtedt (GW Law School) emphasized how these cognate areas of private law often provide a helpful guide to resolving hard IP cases. For example, Prof. Karshtedt argued that tort law frequently holds individuals responsible for causing another person to perform a tort. Patent law, he argues, should follow the same approach, and, in cases like Limelight v. Akamai, should hold one actor responsible for causing another to infringe a patent right. On the other hand, Prof. Rebecca Tushnet is a “private law skeptic.” Prof. Tushnet (Georgetown Law Center) is not convinced private law contains a particularly helpful set of tools to resolve these cases. Analogies to regulation may be even more fitting in the IP context. For example, American Broadcasting Companies, Inc. v. Aereo, Inc., 134 S.Ct. 2498 (2014) may be better understood by considering the distinction between tax avoidance and tax evasion. In that case, Aereo’s conduct seemed to more like tax evasion (a wrong) rather than merely avoiding a tax (permissible).

After lunchtime remarks by Q. Todd Dickinson (Polsinelli), Panel III turned to the topic of “Licensing and Exhaustion.”  This issue has proven particularly interesting to the Supreme Court in recent years. As Sarang Damle (U.S. Copyright Office) explained, the Supreme Court in Kirtsaeng v. John Wiley & Sons, Inc., 133 S.Ct. 1351 (2013) helpfully resolved much confusion surrounding copyright’s first-sale doctrine.  By contrast, much uncertainty around the scope of the exhaustion doctrine in patent law remains. As Eric Reifschneider (Marconi Group) highlighted, it is not unheard of for licensing deals to collapse due to uncertainty regarding what acts will trigger exhaustion.

The Audience
The Audience

But now the Supreme Court has a chance to clarify the patent exhaustion standard.  On March 22, the Court heard oral arguments in the Impression Products v. Lexmark International, Docket Number 15-1189 (see my previous post here). One of the most interesting issues raised in the Lexmark case is: When, if ever, can a patent holder put post-sale restrictions on a patented product? Can the manufacturer of patented ink-toner cartridges sell the cartridges with a “single-use / no resale” restriction, meaning the buyer may not reuse nor resell the cartridge after the toner has run out? Or does the patent exhaustion rule render such post-sale restrictions invalid? Prof. John Duffy (UVA Law School) argued forcefully that the exhaustion doctrine does not invalidate such restrictions. In a recent co-authored article, Prof. Duffy argues that the purpose of the exhaustion doctrine is to limit the reach of IP law, and thus prevent IP law displacing other areas of law, such as general contract or property law. Prof. Duffy argues that in Lexmark, the patent owners’ rights exhaust at first sale, and thus patent law cannot be used to impose post-sale restrictions. However, Prof. Duffy also argues that such post-sale restrictions may still be enforced through other areas of commercial law. The single-use / no resale restriction in Lexmark may be enforceable under state contract law, for example. It is simply not the role of patent law to facilitate these arrangements. As a result, patent exhaustion law does not pursue a broad policy of preventing restraints on alienation. Nonetheless, as Mr. Aaron Panner (Kellogg, Hansen, Todd, Figel & Frederick) pointed out, the Supreme Court is often hostile to such restrictions.

Our final panel, Panel IV, discussed “Equity and Remedies” and, in particular, the difficulty of assessing damages in patent suits, as well as the role for permanent injunctions.  Prof. Doug Laycock (UVA Law School) explained that, without a reliable and accurate way of assessing patent damages, legal remedies are largely inadequate and an injunction ought to be the appropriate remedy for infringement. However the eBay v. MercExchange decision has muddied these waters. eBay held that whether an injunction should issue in IP cases (although the case has had effects far outside of IP) ought to require the plaintiff to prove: (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. However, as Prof. Laycock pointed out, the case provides almost no guidance at all on how to interpret these four factors! A. Doug Melamed (Stanford Law School) highlighted that, when interpreting these factors in the future, courts ought to bear in mind the nature of patents as a policy instrument for solving specific problems in innovation markets, rather than try to make deductions from property analogies.

Judge Moore's Closing Remarks
Judge Moore’s Closing Remarks

My personal highlight of the day was Judge Kimberly Moore’s (Court of Appeals for the Federal Circuit) closing remarks. Judge Moore spoke engagingly on the need for both practitioners and scholars to further explore the relationship between private law and IP.  Briefs and law review articles highlighting the analogies between IP issues and private law issues are of particular help to judges deciding IP cases. 

A big thank you to our co-organizers at George Washington University Law School. Without the great work of Robert Brauneis, Dmitry Karshtedt, Kristen Pallmeyer, and John Whealan, this conference could not have been such a success. We also thank Intel and Qualcomm for generously sponsoring this great event.

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