Shay Lavie and Roy Shapira have posted an article on ssrn titled Rivalrous Remedies, Vand. L. Rev. (forthcoming). Here is a link to the paper, and here is the abstract:
Legal scholarship typically conceptualizes enforcement as operating directly on wrongdoers: either by enjoining them ex ante or by imposing monetary sanctions on them ex post. Yet across a wide range of legal fields, courts and lawmakers have long employed a different and largely untheorized instrument. Instead of sanctioning the wrongdoer directly, these doctrines deter misconduct by conferring a legal advantage on the wrongdoer’s rival: a business competitor, a litigation counterparty, or another strategically positioned actor. For example, when a patent holder forces customers to sign aggressive licensing agreements, courts may allow the patent holder’s competitors to freely infringe the patent. And in family law, when one parent alienates a child from the other, courts often respond not by fining the alienator parent but by granting the alienated parent additional visitation rights.
This Article is the first to systematically analyze this institutional design, which we term “rivalrous remedies.” In the process, the Article makes three contributions. Conceptually, it identifies the conditions under which regulating behavior indirectly—by empowering rivals—can outperform classic remedies. Rivalrous remedies can leverage the superior information and incentives of rivals. At the same time, these remedies operate effectively only in certain market structures and pose risks of overuse and spillover harms to third parties.
Descriptively, the Article demonstrates the prevalence of rivalrous remedies by analyzing nine doctrines across diverse legal fields: from false advertising to defamation law to civil procedure. While each doctrine has been criticized by scholars in their respective fields, viewing them through a common lens reveals a shared institutional logic: they emerged to address chronic underenforcement problems. In particular, these doctrines respond to underenforcement by shifting who enforces (not necessarily the direct victim) and/or how enforcement occurs (through largely self-executed mechanisms requiring minimal judicial involvement).
Normatively, the Article offers guidance for courts interpreting existing rivalrous remedies, identifying when they should be expanded, constrained, or combined with traditional remedies. It also proposes the adoption of a new rivalrous remedy in trade secret law to address enforcement failures surrounding consumers’ “right to repair.”
Although I don’t necessarily with everything in the paper, its presents an intriguing analysis of a variety of doctrines—including one that I have written on from time to time (including in my forthcoming book, Wrongful Patent Assertion), namely IP misuse. On misuse in particular, the authors argue that traditional remedies against, say, overextensive licensing practices are often ineffective, because the direct victim may have difficulty proving (for example) an antitrust violation (or, in the copyright sphere) fair use. Patent and copyright misuse law can counter this potential underenforcement problem by conferring an advantage (unenforceability of the subject IP) on the patent or copyright owner’s rivals; in principle, this “rivalrous remedy” should serve as a deterrent against the overextensive licensing practice in the first place. Of course, how effective that deterrent is depends on the rivals being aware of the overreaching, and being confident that they would prevail on the misuse defense if sued for infringement. (One possible countervailing consideration, it occurs to me, is that under the traditional understanding of misuse the penalty of unenforceability lasts only until the misuse is purged, so a rival might still be hesitant to make any irreversible investments in reliance on its ability to lawfully access the subject IP.) Moreover, as the authors note, “the patent misuse doctrine is imperfect,” because “[c]ourts sometimes have a hard time distinguishing between practices that do not hurt competition and those that do” (p.22). All that said, this is an interesting way of thinking about misuse and doctrines in other bodies of law such as false advertising (where the idea of investing competitors with the right to sue has sometimes been thought of as, in effect, deputizing them to vicariously avenge the direct injuries suffered by consumers) and antitrust. I think one could probably extend the analysis to the tort of interference with prospective business relations as well, insofar as that body of law confers upon a disappointed rival some recourse against a person who has used improper means to discourage third parties from doing business with the rival—though my sense is that, in its current form, this tort is rarely successful.
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