My article with Professor Chung-Lun Shen, Destruction, Proportionality, and Sustainability: A Law-and-Economics Analysis, 32 Texas Intellectual Property Law Journal 111 (2024), has now been published. It is available on Westlaw and SSRN, and should be available soon on TIPLJ’s website. Here is the abstract:
This Paper undertakes a law-and-economics analysis of the remedy of destruction (and, subsidiarily, the related remedies of recall and removal) of products that infringe intellectual property (IP) rights. We begin with a brief survey of international, regional, and domestic law and practice, observing that (1) courts generally are believed to be more likely to order the destruction of copyright- and trademark-infringing goods than of patent-infringing goods, and (2) the frequency with which courts order the destruction of patent-infringing goods varies from one country to another. Our observations lead us to present two principal theses.
The first is that a comparative reluctance to order the destruction of patent-infringing goods, as opposed to copyright- or trademark-infringing goods, would be consistent with economic considerations. From an economic standpoint, destruction can be viewed both as a complement to injunctive relief and as a substitute (albeit an imperfect one) for ongoing monitoring of an infringer’s compliance with the terms of an injunction. The social benefits arising from substituting destruction for monitoring, however, are likely to be lower—on average, and perhaps subject to regional variation—for patent-infringing goods than for products that infringe other IP rights. In addition, although observers have long noted that the private and social costs of destruction provide a rationale for withholding that remedy when it would cause disproportionate harm to the defendant or third parties, these costs may be unusually high in patent cases—particularly that subset of cases in which the risk of patent holdup is substantial. In view of these factors, the social costs of ordering the destruction of patent-infringing goods are likely to outweigh the social benefits in a comparatively broader swath of cases.
In addition, I may as well note a paper I just came across in the preceding volume of TIPLJ, Deepa Sundararaman & Cleve B. Tyler, A Detailed Study of Court Decisions on Admissibility of Intellectual Property Damages Experts, 32 Tex. Intell. Prop. L.J. 45 (2023). Here is a link to the paper, and here is the abstract:
Damages experts’ opinions in intellectual property litigation are routinely challenged for failing to reach standards set forth in the Supreme Court’s 1993 Daubert decision. Our study is the first of its kind, in performing a systematic and in-depth review of court decisions, including an analysis of the substantive reasons for challenge. We studied more than 400 Daubert orders covering nearly 1,300 decisions over a six-year period from 2015 through 2020.
Patent cases make up a significant majority of our dataset. Overall, we find an exclusion rate of 24%. While plaintiff experts are challenged more frequently than defendant experts, their exclusion rates are not significantly different. However, the type of analysis challenged appears to matter—in particular, lost profits analyses are excluded at lower rates than other types of analyses, and experts described as offering legal opinions are excluded at higher rates. Exclusion rates vary by district, with the Northern District of California (NDCA) having higher exclusion rates and the Eastern District of Texas (EDTX) having lower exclusion rates than the rest of the country. We study the impact of the Supreme Court’s Heartland decision on exclusion rates, which has reduced a plaintiff’s ability to engage in “venue shopping.” Overall, rates of exclusion in EDTX and Delaware declined following the decision, with a moderate increase in exclusion rates in NDCA.
Finally, we find substantial disparities in exclusion rates among judges. Among the top ten judges ranked by number of decisions, five have relatively “low” exclusion rates of less than 15% and four have relatively “high” exclusion rates greater than 30%. Variations such as these, along with differences by jurisdiction, raise questions about courts’ consistency in application of the Daubert standard—questions that are left for future researchers and policymakers to address.
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