Intellectual Property Defenses
Columbia Law Review, vol. 113, forthcoming 2013
In this Essay, we offer an integrated theory of intellectual property defenses. We demonstrate that all intellectual property defenses can be fitted into three conceptual categories: general, individualized and class defenses. A general defense is the inverse of a right in rem. It goes to the validity of the intellectual property right asserted by the plaintiff, and when raised successfully it relieves not only the actual defendant, but also the public at large, of the duty to comply with the plaintiff’s intellectual property right. An individualized defense, as we define it, is the inverse of an in personam right: it helps a defendant who raises it to fend off the infringement claim against her, but leaves the plaintiff’s right intact, and hence allows the plaintiff to assert it against other defendants. Class defenses form an in-between category. They can be analogized to inverse quasi-property rights in that they create an immunity zone for a certain group of users. However, group defenses do not act to invalidate the right of the plaintiff and thus the benefit to the public from a successful showing of a class defense is more limited than that arising from the vindication of general defenses.
Based on this taxonomy, we show that society has a special interest in the successful raising of class and especially general defenses, as those defenses help clear the path of invalid intellectual property rights and thereby facilitate future innovation, creativity and competition. Yet, because defendants do not capture the full social benefit associated with class and general defenses, they will not invest the socially optimal level of resources in raising and litigating such defenses. As a result, some defendants will be defeated in court, while others will agree to a settlement that will keep general and class defenses unrealized to society’s detriment. As we show, this problem is exacerbated by the fact that intellectual property owners will tend to target defendants who have no wherewithal to litigate.
To remedy this problem, we propose a procedural solution designed to achieve a better alignment between the private interest of intellectual property defendants and that of society at large: voluntary joinder of defendants. Specifically, we would allow defendants who raise class or general defenses to implead other potential defendants. Impleaded parties would be at liberty to decline the invitation to join. However, declining the invitation would subject the impleaded parties to one of two mechanisms. We dub the first the “preclusion mechanism” and the second the “restitution mechanism.” Under the “preclusion mechanism,” impleaded defendants would be able to opt out instead of joining in, but if the class or general defense asserted by the actual defendant failed, they would be precluded from asserting a general or class defense in their future litigation against the same plaintiff. The impleaded defendants would thus be incentivized to form an alliance that would face the infringement suit together. Under the “restitution mechanism”—which we ultimately endorse—impleaded parties who chose to opt out would not partake of the litigation, but should the actual defendant(s) successfully raise a class or general defense, they have to pay their fair share of the cost of raising the defense as they, too, benefit from the effort.
Date of Authorship for this Version
Intellectual Property, Civil Procedure, Copyright Law, Patent Law, Trademarks, general defenses, individualized defenses, class defenses, preclusion, restitution
Parchomovsky, Gideon and Stein, Alex, "Intellectual Property Defenses" (2013). Scholarship at Penn Law. 463.