Monday, January 25, 2021

What Can Patent Damages Law Learn from Taylor Swift?

You might think that the answer to the question posed above is—with all due respect to the talented Ms. Swift—not much.  But a recent New York Times, titled Citing Taylor Swift, Supreme Court Seems Set to Back Nominal Damages Suits, did set me to thinking.  The article discusses the recent Supreme Court oral argument in Uzuegbunam v. Preczewski, a case that poses the question "[w]hether a government’s post-filing change of an unconstitutional policy moots nominal-damages claims that vindicate the government’s past, completed violation of a plaintiff’s constitutional right."  The matter arose after two students sued public college officials based on a college policy that impeded their ability to publicly speak on campus about their religious beliefs.  The students sought equitable relief and damages.  The college thereafter changed its policy, which led the district court and the Court of Appeals to conclude that the case was moot; but the students contended that they were entitled to nominal damages nonetheless.  I hadn't been following this case, but the Times article's description of oral argument poses some interesting questions about damages remedies generally.  Although Chief Justice Roberts appeared skeptical, suggesting that the plaintiff was seeking nothing more than a declaration that his rights were violated, the article notes that Justice Kagan “asked about 'the most famous nominal damages case I know of in recent times, which is the Taylor Swift sexual assault case.'  Ms. Swift, the pop superstar, sued a Denver radio host she said had groped her. She sought $1 in nominal damages. 'I’m not really interested in your money,' Justice Kagan said, describing Ms. Swift’s thinking. 'I just want a dollar, and that dollar is going to represent something both to me and to the world of women who have experienced what I’ve experienced.'"  Following up, Justice Barrett stated that "What Taylor Swift wanted was, you know, vindication of the moral right, the legal right, that sexual assault is reprehensible and wrong," and Justice Alito suggested that "nominal damages can serve an important goal, as when there is 'a real concrete violation that can’t be easily monetized.'"

I don't want to make a prediction about how this particular case will play out, but my understanding is that there are other lower court decisions in which courts have awarded nominal or emotional distress damages for violations of constitutional rights; and Justice Barrett's analogy to moral rights rang a bell for me, because (as I discuss in my forthcoming paper on noneconomic damages in intellectual property law) courts outside the United States frequently do award nominal damages for violations of authors' moral rights.   As I also discuss in that paper, citing work by among others Professor Mark Geistfeld, in deciding questions relating to damages for intangible harms such as emotional harm, pain and suffering, and the like, there are really two interrelated inquiries:  should these harms be cognizable under the body of law at issue, and if so how should one go about quantifying the resulting damages. 

In this regard, as far as patent law is concerned, I argue (contra an article published a couple of years ago by Professor Ronan Avraham) that courts shouldn't consider emotional harm to be a cognizable injury resulting from patent infringement.  But a question with, arguably, more real-world significance is whether there should be a damages remedy for patent infringement, if the evidence shows that the patented invention is no better than the next-best noninfringing alternative, or if the plaintiff simply fails to present any admissible evidence on damages.  Patent Act section 284 states, after all, that "[u]pon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty."  Last fall, however, the Federal Circuit in TecSec Inc. v. Adobe, Inc., 978 F.3d 1278 (Fed. Cir. 2020), rejected the argument that the statute "require[s] an award of damages greater than zero in all cases where the jury finds infringement," holding instead that if the plaintiff fails to prove any damages, it is not entitled to any damages.  (See my blog post here.)  On the other hand, in Apple Inc. v. Motorola, Inc., 757 F.3d 1286 (Fed. Cir. 2014), the Federal Circuit found fault with Judge Posner’s decision (Posner was sitting as trial court judge)  dismissing the action altogether, after deciding that (1) Apple wasn't entitled to an injunction, under eBay; (2) it hadn't presented admissible evidence on damages; and (3) it had no right to proceed to trial for nominal damages, which in Judge Posner's view would be, essentially, merely an advisory opinion.  As I wrote in an article discussing that case:

Section 284 of the U.S. Patent Act . . . states that “[u]pon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer” (emphasis added).  In Apple, Inc. v. Motorola, Inc., the Federal Circuit interpreted the italicized language to mean that, even when the patent owner fails to introduce admissible evidence quantifying the amount of its loss, the court still has an obligation to “determine what constitutes a reasonable royalty from the record evidence”75—in effect, creating a rebuttable presumption that the patent owner is entitled to something as a consequence of the infringement.  The rule is consistent with practice in some other countries, but it provides no guidance on how to calculate the royalty due when the parties’ evidence is deficient.  One might imagine, though, that in such cases courts will have to take it upon themselves to apply methodology heuristics akin to those I discuss in a subsequent section below, based on whatever record evidence there may be concerning the amount of the use, comparable license rates, and the advantages of the technology over alternatives.  For now, however, this appears to be an area in which U.S. patent damages law remains largely underdeveloped.

75/  . . .  Further:


. . . if the patentee’s proof is weak, the court is free to award a low, perhaps nominal, royalty, as long as that royalty is supported by the record . . . .


Thus, a fact finder may award no damages only when the record supports a zero royalty award. For example, in a case completely lacking any evidence on which to base a damages award, the record may well support a zero royalty award. Also, a record could demonstrate that, at the time of infringement, the defendant considered the patent valueless and the patentee would have accepted no payment for the defendant’s infringement. Of course, it seems unlikely that a willing licensor and willing licensee would agree to a zero royalty payment in a hypothetical negotiation, where both infringement and validity are assumed.


At summary judgment, as is the case here, a judge may only award a zero royalty for infringement if there is no genuine issue of material fact that zero is the only reasonable royalty. Thus, if a patentee raises a factual issue regarding whether it is due any non-zero royalty, summary judgment must be denied. In any event, simply because a patentee fails to show that its royalty estimate is correct does not, by itself, justify awarding a royalty of zero at summary judgment, as the district court did here . . . .

So, maybe the pending decision in Uzuegbunam will provide some guidance, at least by way of analogy, for cases in which (as in Apple) the patent owner is not entitled to an injunction, and (as in TecSec) it doesn’t provide sufficient evidence on damages either.  Is the whole matter moot, or is there some entitlement to vindicate the owner’s claim that its rights have been violated?  I’d be inclined to say that the patent owner’s case is moot, even if the college students’ case is not, either because a civil right (or, as in the Swift matter, the right to be free from sexual assault) is more fundamental than a patent right, or because emotional and other intangible harms should be cognizable in the former but not the latter.  Also, as the Times article points out, citing a comment made at oral argument by Justice Kavanagh, under the civil rights laws the students may be entitled to attorneys’ fees if they qualify as prevailing parties, so that could be an important consideration differentiating that type of case from the patent context.  (Now that I think of it, there may be some relevance as well for cases involving whether someone has standing to sue for data breaches--something I briefly mention in my noneconomic damages paper, citing an important paper on this topic by Daniel Solove and Danielle Citron.)  But maybe I’m wrong, and need to think about this some more.   

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