Monday, March 5, 2018

Sunstein on Irreparability, Irreversibility, and Injunctions

Cass Sunstein has posted a paper on ssrn titled Irreparability as Irreversibility, forthcoming in the Supreme Court Review.  Here is  a link, and here is the abstract: 
Some things, people say, are “gone forever.” But what exactly does that mean? Some losses are irreparable in the sense that nothing can be done to restore the status quo ante – or if something can be done, it is not enough (or perhaps outsiders can never know if it is). The Irreversible Harm Precautionary Principle takes the form of an insistence on paying a premium to freeze the status quo and to maintain flexibility for the future, while new information is acquired. In many settings, it makes sense to pay for an option to avoid a risk of irreversible losses. An implicit understanding of option value can be found in the emphasis on irreversibility in National Environmental Policy Act and other federal statutes, along with many international agreements. The idea of irreversibility offers a distinctive perspective on the legal concept of “irreparable harm,” a prerequisite for granting preliminary injunctions. In fact some irreparable harms seem to qualify as such precisely because they are irreversible. We can obtain new insights into the time-honored idea of irreparable harm through the lens of irreversibility, especially in environmental cases but also in many contexts, including freedom of speech, privacy, and discrimination on the basis of race and sex.
The article mostly focuses on environmental law, but it's worth thinking about its potential implications for patent and other IP litigation as well.  Thinking about preliminary relief as an option to buy time to acquire better information is interesting, for one thing.  One issue that leaps to mind is whether the "price" of the option is correct, given that U.S. courts (unlike their counterparts in other countries) cap the amount of the compensation to which a wrongly-enjoined defendant is entitled if it prevails at trial in the amount of the injunction bond.  (For previous discussion on this blog, see here.)  On the other hand, in IP cases one type of information that may improve with the passage of time is information relating to the validity of the IP right in suit.  Waiting for better information to develop might tend to favor defendants, though, rather than movants, if one would expect potentially invalidating prior art to be more likely to be uncovered if the suit is delayed.  

Professor Sunstein also discusses how harm can be irreversible in different senses.  For example, a harm may be incommensurable, in the sense that it is "qualitatively distinctive and not fungible with other human goods" (p.13); but such a claim may need to be combined with one involving uncertainty, that is, that "courts do not know how to value the relevant loss in monetary terms, and they will not know how to do that ex post" (p.14).  I would think that IP rights are sometimes incommensurable in the former sense (maybe moral rights in works of art would fall within this category, as suggested by this recent U.S. opinion involving graffit art), but perhaps more often in the latter sense (which is after all one of the standard law-and-economics rationales for granting injunctions of any type in IP cases).  At the same time, Sunstein notes that irreversible harm can occur in both directions, which is also true in IP cases.  A patentee might suffer by waiting for any form of relief until the entry of judgment, if in the meantime its clientele defect or it suffers harms to its goodwill (or if there's a risk the defendant will be judgment-proof, a matter Sunstein doesn't address).  But a defendant also might suffer if a preliminary injunction poses a risk that it will go out of business and the bond won't fully compensate it.     

One suggestion I would make to Professor Sunstein would be to  rethink footnote 3, which cites pre-eBay cases for the proposition that courts can presume irreparable harm to IP rights.  In the patent sphere, that is no longer true, and I don't think it is in U.S. copyright or even trademark law any more either.

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