Relief for IP Rights Infringement Is Primarily Equitable: How American Legal Education Is Shortchanging the 21st Century Corporate Litigator
Rounds, Charles E., Jr., Santa Clara Computer & High Technology Law Journal
Unjust enrichment can be either an equitable or a legal wrong. (1) Restitution and injunction are Equity's principal remedies for that wrong. (2) Whether in Equity or at law, unjust enrichment is the basic principle on this side of the Atlantic that underlies the remedy of restitution, both generally and in the context of IP rights infringement. (3) In this article, intellectual property (IP) is employed as an umbrella term not only for property rights that flow from authorized monopolies on certain "creations of the mind" such as copyright, patent, and trademark, (4) but also from "comparable rights to control the use of any idea, expression, information, image, designation, or the like." (5) Rights to websites, confidential information, and data files would qualify under this broad definition of IP. (6) These rights, however, have to be enforceable in some court. There can be no unjust enrichment "unless the defendant has obtained a benefit in violation of the claimant's right to exclude others from the interest in question." (7)
The equitable remedy of restitution for unjust enrichment has been the American legal tradition's principal remedy for the infringement of IP rights. (8) "As the American economy completes its transition to a data economy, [it] will increasingly become the principal remedy" for the infringement of "economic interests" generally, at least on this side of the Atlantic. (9) Even the Federal statutes that define and regulate IP monopolies generally defer to and/or codify traditional principles of Equity when it comes to fashioning remedies for IP rights infringement. (10) There are some exceptions: "The most notable departure from restitution principles concerns the available remedies for patent infringement. The Patent Act of 1946 has been interpreted (although only since 1964) to foreclose a claim by the patentee to disgorgement of the infringer's profits." (11)
One who is unjustly enriched is unjustifiably enriched, that is to say there is no legal or equitable basis for the enrichment. (12) The donee of a valid gift is not unjustly enriched, absent special facts. (13) Neither is the party to a valid contract, absent special facts. (14) Neither is a judgment creditor who has prevailed in a properly brought tort action. (15) On the other hand, one who by gift, contract, or judicial process procures an economic benefit fraudulently is unjustly enriched. (16) So also is one who comes into possession of another's property by mistake. (17) A classic example of the latter is when a bank, by mistake, credits a checking account with a certain amount, perhaps as the result of a computer glitch. (18) The bank is entitled to debit the account for an equivalent amount. (19) If it were not the case, the owner of the account, even when innocent, would be unjustly enriched at the expense of the bank. There was no contractual basis for the deposit. Nor did the bank intend to make a gift to the account holder, and likely would not have had the authority to do so in any case.
The concept of restitution for unjust enrichment is a thread that is woven prominently throughout the entire fabric of the Anglo-American legal tradition. (20) It is also the principal monetary remedy for the infringement of IP rights in the 21st Century. (21) In one popular IP hornbook, however, it is mentioned only once, specifically in the context of a discussion of monetary relief for trademark infringement, and obliquely at that. (22) The authors refer to unjust enrichment without explanation as a "notion" and then move on, presumably on the mistaken assumption that most of their readers will be versed in core Equity doctrine. (23) While the assumption might have been warranted at one time, it is no longer. In 1879, Harvard Law School required that its students take 3 year hours of Equity, 1 year hour of Agency, and 2 year hours of Trust, a "year hour" being one hour per week per academic year. …