PUTTING THE EQUITY BACK INTO INTELLECTUAL PROPERTY REMEDIES.

AuthorSmith, Henry E.

INTRODUCTION

Nowhere is the question of remedies more front and center than in intellectual property. In recent years intellectual property cases have even exerted some influence on the law of remedies more generally. At the same time, equity and the traditions of equity are invoked in the very process of cutting back on injunctions and making them into a rare form of "supracompensatory" remedies. And nowhere is the mysterious role, if any, of equity more needed and less apparent than in intellectual property remedies. We have an equity deficit.

It is not as if uses of the word "equity" are lacking. Certain remedies are labeled "equitable," as are certain defenses. The United States Supreme Court points to the "tradition[s] of equity" as a source of law for intellectual property remedies, among other things. (1) And people seem to think that equity means discretion. (2) Beyond that there be monsters--to the extent anyone is paying attention.

And yet equity shapes the law of intellectual property remedies in a more thoroughgoing way. I will claim that once we understand some of the true functions of equity, it probably should play a much greater and more explicit role in our law, (3) and especially in intellectual property remedies.

One such function is meta-law. A theme of equity with deep roots in the Western tradition is its role in correcting the law when it failed because of its generality. Intellectual property and its associated remedies strive for simplicity and generality but fail in characteristic ways. These involve complexity and uncertainty that stem from interactions among parties, their activities, and the resources they employ to develop information. Of particular relevance is the possibility that informed parties, of which there is no lack in situations involving intellectual property, will bend the system to purposes for which it was not designed. This problem of opportunism is hard to specify in advance because such efforts invite further game playing. Announcing the line past which something will be treated as constructive fraud will allow the well informed to engage in "compliant non-compliance." (4) Moreover, opportunism itself is multiparty, and multidimensional solutions to one party's opportunism often invite another's. Removing the leverage one party can obtain through an injunction can lead the other party to abuse a system based on (inevitably) imperfectly determined damages.

These problems are especially difficult to deal with head on, and I will argue that they are especially suited for treatment on another level--that of meta-law. (5) Certain problems of great uncertainty and complexity call for an ex post intervention that ranges over the law and employs more context than the law usually does, in a process of adjustment. These problems include multipolar relations, conflicting rights, and opportunism. Each of these involves complex interaction, whether among multiple parties, among multiple presumptive rights, or among an unspecified set of other elements of the legal system. Even opportunism results from hard-to-foresee exploitation of the weaknesses thrown up by the law.

Existing approaches to intellectual property remedies suffer from under-exploiting the potential of equitable meta-law. Frameworks for thinking about remedies, especially property rules versus liability rules, (6) treat remedies along a spectrum of strength rather than as multidimensional and finely adjusted, as in traditional equity. The caselaw has partially followed this flattening of remedies. From the standard for injunctions to the underutilization of doctrines like estoppel, the law tries to do at one messy level what could be handled more effectively using equity as a second-order modulation of the law.

This Essay will excavate the remnants of equitable meta-law in the area of intellectual property remedies. It will show how current approaches are lacking and how a reconstruction of equitable meta-law could solve some of these perennial problems without introducing new ones. Part I will show how the law of intellectual property remedies has been flattened in many respects. In Part II, I show how popular frameworks for thinking about remedies if anything go even further in this direction, leaving many loose threads. Part III then shows how bringing out the theme of meta-law among the equitable aspects of intellectual property law could help the law of intellectual property remedies more effectively address some common complaints about its current state. The Essay concludes with some thoughts about how to overcome the current impasse in intellectual property remedies.

  1. INTELLECTUAL PROPERTY REMEDIES FLATTENED

    Commentators and many courts have flattened the law of remedies. Indeed, they have flattened the law in general and in remedies in particular. The consequences for intellectual property are especially serious.

    What is flattened law? Implicit in much commentary about the law is the "heap" conception. Law is a heap of rules, each of which can be evaluated in isolation, because each contributes additively to the fitness of law (its efficiency, fairness, promotion of autonomy). This assumption traces back to legal realism and beyond and can be seen in proto form in Holmes's aphoristic admonition that "a body of law is more rational and more civilized when every rule it contains is referred articulately and definitely to an end which it subserves, and when the grounds for desiring that end are stated or are ready to be stated in words." (7) The legal realists assumed something along these lines in holding up legal doctrine to the light of policy and especially in assuming that property is not just a bundle of rights but metaphorically a "bundle of sticks." (8) Sticks hardly interact with each other, and a bundle of noninteracting sticks can be optimized stick by stick. If we optimize one stick, we are improving the bundle and getting toward overall optimization. Making a stick better is overall improving because there is no room for a negative effect produced in tandem with other sticks. As an outgrowth of legal realism, much of law and economics adopts this atomizing reductive view of law as a heap when it analyzes "legal rules" for their efficiency.

    In keeping with the realist legacy, alternatives to the heap picture face some suspicion. The realists were expert at tarring alternatives as formalist and deductive, and claiming that such approaches could not handle the complexity of modern law and society (and that only realism could). (9) While it is true that some approaches to "system" in the writings of the nineteenth century were rather formalist, a closer look reveals a variety of notions of system. (10) In particular, it is decidedly not the case that all such notions were of logical or deductive systems. Thus, pace Holmes's aphorism "[t]he life of the law has not been logic: it has been experience," (11) we are not necessarily in the realm of logic but of experience when we regard law as a system.

    What kind of system is the law? That I leave for another day, but a glance at the modern notion of system from complex systems theory is illuminating. (12) In complex systems theory, a system is a collection of interconnected elements, and a complex system is one in which the elements are so interconnected that they give rise to emergent properties. (13) These properties hold of the system as a whole and cannot be traced to the individual contributions of elements taken individually. The connections between elements need not be deductive or logical. Thus, for instance, in the bundle of rights, the reason to cluster attributes together is that they are complementary; they are more valuable taken together. One reason would be that using one attribute affects the use value of another attribute. Given the patterns of use, we might find that attributes cluster into modules (there is a community structure that can be found using familiar algorithms) and these might correspond to legal things. (14) (We might want to adjust the interface between such things and other things by suppressing unimportant connections and crystallizing others.) Likewise, notions of possession, definitions of legal thing, and tort causes of action can interact to produce an effect not reducible to single "rules." (15) Thus, with aerial trespass, instead of looking for rules for aircraft, rules for drones, rules for overhanging eaves, etc., we see an interplay between a partially specified notion of legal thinghood (surface boundaries extended upward and downward indefinitely, but not infinitely, under ad coelum) along with definitions of possession (for buildings and activities) and rights to possess (for building upward and a lesser form of protection), safeguarded by trespass and supplemented by nuisance. (16) The owner's protection is emergent out of this complex interplay of devices.

    Complexity comes in degrees. Despite the popular emphasis on chaos and the too-easy assumptions of simplicity, many systems fall somewhere in between the extremes of chaos and simplicity. If every attribute of every resource were maximally connected to every other, any change in one could set off massive ripple effects in terms of the value of the whole (unified) resource, which can result in genuine chaos. At the other pole (of simplicity) where attributes are not connected at all, the fitness landscape is correspondingly simple, with one maximum. However, interconnection may be less than maximal, and the interconnections may not be evenly distributed, a phenomenon known as "organized complexity." (17) And correspondingly, a fitness landscape for organized complexity is jagged but shows local peaks and valleys. (18) In organized complexity, spontaneous evolution may be enough for local maximization. Reaching some maxima may require larger changes. (19) In any case, when it comes to entitlements, they are neither atomistic nor...

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