The case is AMG Capital Management, LLC v. Federal Trade Commission, unanimous opinion authored by Justice Breyer handed down this morning. As explained in the opinion, section 5 of the Federal Trade Commission Act prohibits "unfair methods of competition" and "unfair or deceptive acts and practices." (The former generally is used to target alleged anticompetitive conduct, the latter for alleged false advertising or other practices that deceive consumers). The act provides two avenues for the agency to proceed against violators: an administrative route, whereby the Commission files a complaint before an administrative law judge; and section 13(b), which allows the agency to seek an injunction directly in federal court. In recent years, the agency has more frequently gone the latter route--and in several cases (including the present case against AMG Capital Management) it has also sought disgorgement of the profits the defendant earned from its allegedly unlawful conduct, on the theory that such equitable relief is an incident to the statutory authority to seek injunctive relief. The Supreme Court disagrees, however, as a matter of statutory interpretation, noting first that "the language refers only to injunctions. It says, 'in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction.' 15 U.S.C. § 53(b) (emphasis added). An 'injunction' is not the same as an award of equitable monetary relief" (p.6). Second, the court concludes that "[t]he language and structure of § 13(b), taken as a whole, indicate that the words 'permanent injunction' have a limited purpose" of affording "prospective, not retrospective" relief (pp. 7-8). Further:
Congress in [FTC Act] § 5(l) and § 19 gave district courts the authority to impose limited monetary penalties and to award monetary relief in cases where the Commission has issued cease and desist orders, i.e., where the Commission has engaged in administrative proceedings. Since in these provisions Congress explicitly provided for “other and further equitable relief,” 15 U.S.C. § 45(l), and for the “refund of money or return of property,” § 57b(b), it likely did not intend for § 13(b)’s more cabined “permanent injunction” language to have similarly broad scope.
More than that, the latter provision (§ 19) comes with certain important limitations that are absent in § 13(b). As relevant here, § 19 applies only where the Commission begins its § 5 process within three years of the underlying violation and seeks monetary relief within one year of any resulting final cease and desist order. 15 U. S. C. § 57b(d). And it applies only where “a reasonable man would have known under the circumstances” that the conduct at issue was “dishonest or fraudulent.” § 57b(a)(2); see also § 45(m)(1)(B)(2) (providing court-ordered monetary penalties against anyone who engages in conduct previously identified as prohibited in a final cease and desist order, but only if the violator acted with “actual knowledge that such act or practice is unfair or deceptive”). In addition, Congress enacted these other, more limited, monetary relief provisions at the same time as, or a few years after, it enacted § 13(b) in 1973.
It is highly unlikely that Congress would have enacted provisions expressly authorizing conditioned and limited monetary relief if the Act, via § 13(b), had already implicitly allowed the Commission to obtain that same monetary relief and more without satisfying those conditions and limitations. . . .
. . . the Commission's broad reading allow it to use § 13(b) as a substitute for § 5 and § 19 (pp. 9-10).
The Court further distinguishes a couple of older cases, before concluding with the agency's policy argument:
. . . the Commission and its amici emphasize the policy-related importance of allowing the Commission to use § 13(b) to obtain monetary relief. They suggest that it is undesirable simply to enjoin those who violate the Act while leaving them with profits earned at the unjustified expense of consumers. . . .
Nothing we say today, however, prohibits the Commission from using its authority under § 5 and § 19 to obtain restitution on behalf of consumers. If the Commission believes that authority too cumbersome or otherwise inadequate, it is, of course, free to ask Congress to grant it further remedial authority. Indeed, the Commission has recently asked Congress for that very authority . . . . We must conclude, however, that § 13(b) as currently written does not grant the Commission authority to obtain equitable monetary relief (p.14).
For my part, I hope Congress does choose to amend the statute, since restitutionary relief can provide an appropriate deterrent for willful misconduct (and compensation for victims). Additionally, I would note that at the very beginning of the opinion the Court refers to "equitable monetary relief such as restitution or disgorgement" (p.1). This case, and others making similar statements, might provide further ammunition for anyone who wants to argue that awards of the infringer's profits for design patent infringement is an equitable remedy for which there is no constitutional right to trial by jury. For previous discussion on this blog, see, e.g., here and here.
No comments:
Post a Comment