Courts Should Not Have Itchy Injunction Fingers
Courts Should Not Have Itchy Injunction Fingers
Courts Should Not Have Itchy Injunction Fingers

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    PK has filed amicus briefs in a number of copyright cases recently where the plaintiffs were trying to get a preliminary injunction–that is, to shut down a service they allege infringes copyright, before there has even been a trial. This has been the legal posture of the DISH cases over its Hopper DVR, the Aereo case, and others.

    Like a lot of legal issues, This Is Important, but fairly technical. This post will explain some of the legal context before spending a little more time with one of the issues, the concept of “irreparable harm.”

    For a long time courts had granted such injunctions in copyright cases as a matter of course–basically, courts would side with plaintiffs even in very close cases. As Mark Lemley and Eugene Volokh put it in their 1998 article “Freedom of Speech and Injunctions In Intellectual Property Cases,” “Modern U.S. courts have treated plaintiffs seeking preliminary injunctions in copyright cases more favorably than plaintiffs in other areas of law, and certainly more favorably than they treated copyright plaintiffs a century ago.”

    This is troubling with digital copyright, where because of new technologies and new business practices, the law and precedent are not clear-cut, and courts would benefit from a more fully-developed record. By siding with plaintiffs so much in granting preliminary injunctions, courts were putting their fingers on one side of the scale and creating a legal environment hostile to innovation and risk-taking–and doing so in a pre-trial proceeding before defendants even had a chance to fully explain their legal case, teach the court about new technologies, or produce evidence supporting their defense.

    All this was at odds with the traditional showings that plaintiffs must make to be granted a preliminary injunction. Normally, plaintiffs would have to show (1) that they were likely to succeed on the merits of their arguments, (2) that they would suffer irreparable injury if an injunction is not granted (that is, an injury where a damages judgment wouldn’t make up for any harm), (3) that the “balance of hardships” weighs in their favor (that is, that the minor benefit to the plaintiff wouldn’t be outweighed by a major cost to the defendant that is enjoined), and (4) that the public interest favors granting an injunction. But as Lemley and Volokh observed, in copyright cases this test “collapse[d]… to a simple inquiry into likelihood of success on the merits. If that [could] be demonstrated, a preliminary injunction [was] the expected remedy.” Courts were replacing a complex, multi-factor test with a simple rule–one that might make a their jobs and a plaintiff’s burden easier, but which did not serve the interests of justice.

    Now, a plaintiff that, after a trial, actually does succeed on the merits is usually entitled to an injunction. But the Supreme Court has cautioned against confusing “likelihood of success” with “success,” and for good reason. A preliminary injunction proceeding is less formal, and happens more quickly, than a final decision on the merits. In a fuller proceeding new facts or arguments might come to light that change the outcome–or a court may simply reach a different decision if given more time to reflect on the law and the implications of its ruling. The purpose of the other factors that a plaintiff must show to be granted a preliminary injunction, therefore, is to balance all that out. Thus, even if a plaintiff can show that it is likely to succeed on the merits of its case, it can’t get an injunction unless it can also prove that the public interest supports its injunction, that it will suffer irreparable harm, and that the balance of harms weighs in favor of the injunction. Unless it can show all of these things its request for an injunction must be denied.

    But courts were ignoring all of this, and simply granting injunctions as a matter of course in intellectual property cases. Luckily, the Supreme Court reined some of this in. In its important decision in eBay v. MercExchange, the Supreme Court reminded lower courts that they had to take all of the factors into account and not grant injunctions so easily. This was great news–some large media industries have taken to suing over new products and services at the drop of a hat, and eBay took away one of their biggest legal swords–the ability to very easily get new, allegedly “infringing” services shut down with minimal effort.

    All of the factors that *eBay* clarified that plaintiffs must show are important. One of these is “irreparable harm.” To get an injunction, a plaintiff has to show that waiting until trial will harm it so greatly, or in a way that is impossible to quantify, that a losing defendant can’t simply pay damages to make things right again.

    This is at the heart of the issue of preliminary injunctions over standards-essential FRAND patents that has come up in the mobile patent wars. (The basic legal issues here are the same for copyright and patent.) In short, a patent holder benefits from having its patent included as an essential part of a standard–it means that everyone who implements that standard must use the patent. In exchange, the patent holder must license the patent to anyone who wants to implement the standard on Fair, Reasonable, and Non-Discriminatory terms. This guarantees a revenue stream to the patent holder–who probably also benefits from the existence of standards and the ability to license others’ patents easily, too. While infringing these patents is still infringement, the existence of a FRAND commitment means that money damages can necessarily make the plaintiff whole: it has agreed to take money for a license from anyone who asks, so any damages are just lost licensing fees. The exact amount of money that a defendant might end up having to pay might be in dispute, but because some dollar amount must suffice to license the patent under the FRAND commitment, a plaintiff cannot say that its damages are “irreparable.” This is why the Department of Justice and the Patent and Trademark Office have been saying that preliminary injunctions are usually not appropriate over FRAND patents. While some knowledgable observers characterize this as a novel development, it’s a logical implication of the traditional preliminary injunction standard as repeated by eBay.

    A similar issue to this comes up in copyright cases, like the lawsuits over DISH Network’s Hopper DVR. There, the broadcaster plaintiffs claim that their damages are “irreparable” simply because they might be hard to compute, or because they haven’t bothered to compute them. But just because the exact amount of damages might be uncertain doesn’t mean they’re “irreparable.” Perhaps to get around this plaintiffs also tend to cite vague, non-specific concepts such as “loss of control” or “disruption” as being irreparable harms. But courts should see through this–listing a string of abstract nouns should not be enough to prevail in a court of law. To show irreparable harms plaintiffs should be required to show both real harms to their business and how money damages of any amount that the defendant could pay could never make up for them. Of course, this is a high burden–but plaintiffs that can’t meet it can always follow the standard process and simply wait until there’s a full trial, instead fo trying to short-circuit this process and shut down their opponents in an abbreviated procedure.

    PK will continue to pay attention to the preliminary injunction issue because it’s one of the many ways that reactionary plaintiffs try to hold back innovators and tilt the law in their favor. One of the best ways we can do this is to continue to cast doubt on overblown claims of “irreparable harm” that courts should not give weight to when deciding whether to keep technology innovators from serving the public–and to keep reminding courts to ignore plaintiffs’ contant pleas to go back to the pre-eBay times of easy injunctions.