Thursday, February 16, 2023

Cotter on Nominal Damages

The final version of my paper Standing, Nominal Damages, and Nominal Damages “Workarounds” in Intellectual Property Law After TransUnion, 56 UC Davis Law Rev. 1085-1163 (2023), is now available on the law review’s website and on ssrn.  Here is the abstract:


            In June 2021, the United States Supreme Court held, in TransUnion LLC v. Ramirez, that plaintiffs lack standing to assert claims for statutory damages under the Fair Credit Reporting Act unless they can demonstrate “concrete harm” arising from those violations. Although TransUnion was not a case involving intellectual property (“IP”) rights, if the rationale of the decision is that Congress cannot authorize federal courts to entertain claims for statutory damages unless the plaintiff shows that it has suffered actual harm, some common monetary awards for the infringement of IP rights — specifically, statutory damages, reasonable royalties, and (in design patent law) awards of the infringer’s total profit, all of which are intended to reduce the risk that IP owners otherwise would be left with nothing more than nominal damages — would appear to be in jeopardy. This Article argues, nonetheless, that these three remedies, which the Article refers to as nominal damages “workarounds,” rest on a sufficient footing to overcome the sort of jurisdictional objection at issue in TransUnion, for two reasons. The first is that, according to TransUnion itself, “history and tradition offer a meaningful guide to the types of cases that Article III empowers federal courts to consider”; and history and tradition show that for over a hundred years courts have presumed that violations of IP rights cause harm, sufficient to sustain (at least) an award of nominal damages (or in the case of copyright, statutory penalties). Second, because the value of IP rights (unlike the rights at issue in TransUnion) often lies in the owner’s ability to license those rights to others who can exploit them more efficiently, from a functional perspective it often makes sense to conceive of infringement as causing harm when it deprives the owner of an opportunity to license.


            The Article further argues three additional points: first, that reasonable royalties are generally superior to both statutory damages and total profit awards as a nominal damages workaround; second, that courts retain authority to award nominal damages, as opposed to awarding zero damages or dismissing a claim altogether, when IP owners fail to satisfy all of the necessary conditions to qualify for one of the workarounds; and third, that courts should award only nominal damages in two recurring situations, namely when the evidence shows that the IP in suit provided no advantage over the next-best available non-infringing alternative, or that the defendant manufactured or acquired the IP unlawfully but then failed to use it. The Article rejects the view, however, expressed by some scholars, that courts should award only nominal damages in patent infringement actions in cases brought by patent assertion entities.

I should also note that the final draft of my essay And Should I Then Presume?:  A Response to Carrier and Tushnet’s An Antitrust Framework for False Advertising, 108 Iowa L. Rev. Online 22-35, is also now available on the law review’s website and on ssrn.  Here is the abstract:

             Michael Carrier and Rebecca Tushnet’s Article, An Antitrust Framework for False Advertising, makes a convincing case that a “categorical immunity” approach, under which false advertising can never serve as the basis for a monopolization or attempted monopolization claim under § 2 of the Sherman Act, is unwarranted; and that an alternative approach, under which courts apply a rebuttable presumption that false advertising is insufficiently exclusionary to contribute to the willful acquisition or maintenance of monopoly power, is similarly unsound. Carrier and Tushnet’s further argument that rather than simply applying a case-by-case approach, courts should adopt a rebuttable presumption of antitrust liability whenever a monopolist engages in false advertising, is somewhat less convincing, though I suspect that in practice such a presumption would only rarely be outcome-determinative.

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