Academic journal article Notre Dame Law Review

Did eBay Irreparably Injure Trademark Law?

Academic journal article Notre Dame Law Review

Did eBay Irreparably Injure Trademark Law?

Article excerpt

In eBay v. MercExchange, (1) the Supreme Court held that patent owners were not automatically entitled to an injunction when they won their cases. Relying on the patent statute, which provides that courts "may grant injunctions in accordance with the principles of equity," (2) the Court held that courts should consider four traditional equitable factors on a case-by-case basis before deciding whether to grant an injunction. (3) Copyright courts quickly followed suit, applying the same four-factor test. (4) More recently, three circuits have held that the same four factors govern the grant of trademark injunctions, (5) pointing to statutory language similar to that in the patent and copyright statutes. (6)

A number of scholars have questioned the eBay result, either as a matter of history (7) or on policy grounds. (8) That is not my intent here. The conclusion that injunctions are not automatic seems an unexceptional reading of the relevant statutes. Even accepting the criticism that the Court cobbled together the four-factor test, which wasn't well-established as a separate test, it certainly seems to capture the factors courts in equity cases have used in the past in deciding whether to grant injunctions in various areas of law. (9) And the results in patent cases have been salutary as a policy matter, allowing courts to deny injunctions to non-practicing entities that sought injunctions only to hold up defendants while still granting injunctions to those who need it. (10) I think that eBay was a good--indeed, great--development in patent and copyright law.

Trademark, however, is different. The purposes of trademark law--and whom it benefits--should lead us to treat trademark injunctions differently than patent and copyright injunctions. Further, trademark courts have misinterpreted eBay, treating each of the four factors as a requirement rather than a consideration. That is a particular problem in trademark law, where proof of future injury can be elusive. And perhaps most remarkably, courts have expanded eBay in trademark cases at the same time they have denied damages relief, with the result that trademark owners can and do win their case only to receive no remedy at all. (11) The result is a very real risk that courts will hurt rather than help consumers by allowing confusion to continue.

eBay is about the application of equity. Trademark cases should take account of the true equities of trademark cases, not simply cement the eBay factors into a rule. Doing so will not mean that trademark owners always win injunctions, but it should make it more common, at least in the core cases in which confusion is a real risk. And doing so will remain true to the core insight of eBay, which is that context matters.

I. eBAY AND TRADEMARK INJUNCTIONS

The decision whether to grant an injunction has long been a matter of discretion for courts of equity. Before 1938, when courts sat separately in law and equity, (12) only equity courts could grant injunctive relief. Even after the merger of law and equity, the federal courts have considered various factors in deciding whether an injunction was appropriate. Those factors have included the adequacy of legal remedies in the form of damages, the hardship an injunction (or its denial) would work on both parties, and the public interest. (13) While Doug Laycock has demonstrated that none of these factors are any longer prerequisites to injunctive relief, (14) they are factors that courts have long considered in the exercise of their discretion. (15)

Except, that is, in IP law. IP cases before 2006 nominally applied these various equitable factors, but they almost always concluded that the equitable factors supported an injunction. Courts in patent, copyright, and trademark cases concluded that irreparable injury did not have to be shown but could be presumed from the act of infringement. (16) And courts similarly concluded that as a matter of policy the public interest favored the enforcement of IP rights. …

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