Trademark’s eBay Problem | Peter J. Karol | Fordham IPLJ
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Trademark’s eBay Problem
Peter J. Karol*
ARTICLE

  The full text of this Article may be found by clicking here.

26 Fordham Intell. Prop. Media & Ent. L.J. 625
Article by Peter J. Karol*

 

INTRODUCTION

 

To deny all remedy is to deny the right itself. Judges can deny any enforcement of the plaintiff’s right where the plaintiff has forfeited the right by his conduct, as in estoppel cases. Judges can also deny remedies on the basis of cost-benefit balances. But not so easy to think that the Congress means statutory rights to come and go in the discretion of a federal judge. Indeed, the concept of a right is at odds with the concept of discretion to deny the right.1

 

[T]

his Article addresses the current debate over whether to extend, to trademark law, the rule in eBay, Inc. v. MercExchange, L.L.C. denying prevailing patent plaintiffs presumptive entitlement to injunctive relief.2 Its central concern, however, is not whether or how eBay should apply to trademark law, but rather the way in which the debate resurfaces structural flaws undermining foundational provisions of the Lanham Act. Namely, the Act purports to grant ex ante exclusive rights to mark owners against all confusingly similar uses, but then reserves discretion to district courts to deny statutory injunctive relief without further guidance.3 This ambiguity, a familiar one to the broader subject area of statutory injunctions, is particularly acute in the trademark space because the Lanham Act conflictingly aimed both to codify state-based common law trademark practices, and to create a national statutory right.

 

Part I of this Article analyzes the debate over eBay’s place in trademark infringement law, revealing the trouble this issue has posed for federal courts and commentators alike.4 Subsequent decisions reveal deep conflicts at the appellate level and widespread confusion among the district courts. Commentators, too, seem unable to reach consensus. Practitioners and black letter trademark authorities, like Professor J. Thomas McCarthy, largely reject eBay as inconsistent with the purpose of trademark law and structure of trademark litigation. On the other end of the spectrum, some scholars have embraced eBay as a check on overzealous plaintiffs, including in the trademark space. Adding to the confusion, the available empirical data counterintuitively suggest that trademark injunction win rates have actually increased overall since eBay.

 

Part II seeks to locate the source of this difficulty and conflict. It first sets the groundwork by contrasting the nature of trademark and patent rights in order to reject a common reductive statutory argument for extending eBay to trademark law. It then seeks to contextualize the debate by positioning it as a particularly knotty instance of the intertwining of equitable discretion with statutory injunctive authority. In the trademark case, the Lanham Act purports to create a strong form of exclusive right in registered marks. Yet it then gives discretion to courts to deny injunctive relief even where plaintiff has demonstrated infringement of this exclusive right and shown likely continuing harm (to itself and the public). At the same time, it denies monetary relief except in exceptional cases.

 

The problem, at heart, is one of statutory construction. This Article thus turns to the drafting history of the Lanham Act to better understand how the drafters intended to reconcile exclusive trademark rights with judicial discretion. It argues that neither Congress nor the drafters of the Act provided a cogent explanation for granting a strong form of national, exclusive rights to trademark owners while denying a true entitlement to injunctive relief. Instead, this ambiguity was most likely a product of the Act’s long, haphazard drafting history, coupled with unresolved conflicts regarding the basic theory of the legislation. Specifically, rather than provide a logical and consistent explanation for how a regime of national trademark registration can coexist with geographically limited, state-created common law trademark rights, the Act buried the controversy (and placated opposition) by retaining some form of ex post judicial discretion to enforce the supposedly ex ante “exclusive” right.

 

This Article determines in Part III that the fairest reading of the Act and its history is that Congress intended to retain the equitable remedial practices in place in trademark cases at the time the Act was passed as a check on national exclusivity given to mark owners. A review of those historical practices shows that courts presumed a prevailing trademark infringement plaintiff’s entitlement to injunctive relief, because of the tort’s continuing nature and the harms it caused to the plaintiff and the public. Courts, moreover, considered injunctive relief the “usual” remedy in trademark cases at the time. The presumption, however, was subject to equitable balancing, and defenses such as unclean hands or laches. This conclusion is consistent with the understanding of general remedies scholars who see statutory injunctive authority as a substitute for the irreparable harm or adequacy of damages rules, but not as any sort of categorical entitlement.

 

This Article concludes with the reflection that eBay, more than anything else, has revealed anew the Lanham Act’s deep internal conflicts—particularly the way in which it sought simultaneously to codify the common law of trademarks and create a national exclusive right. The trouble with eBay is another instance of the trouble with trademarks generally.5 Ultimately, though, the elaborate balance of presumptions and defenses achieved by the courts up until eBay likely comes closest to achieving the Act’s original, if murky, vision for statutory injunctions granted “according to the principles of equity.”6

 


 

*     Associate Professor of Law, New England Law | Boston. Thank you to all of the librarians at New England Law, and Barry Stearns in particular, as well as to Tiffany Knapp, Meghan Bramhall, Brandon Arey, and Lyndsey Fiore for their tireless assistance in researching this Article. Thanks also to Guillaume van Rijckevorsel of Darts-ip and all the researchers there for their help in navigating the Darts-ip database. This Article also benefitted from comments received at the UNH IP Scholars Roundtable, and the 2015 Works in Progress Intellectual Property Colloquium.

 


  1. Dan B. Dobbs, Law of Remedies § 2.10, at 248 (2d ed. 1993).

  2. 547 U.S. 388, 393–94 (2006).

  3. Lanham Act, 15 U.S.C. §§ 1051–1141n (2012).

  4. This Article does not directly address what impact, if any, eBay has had on alternative Lanham Act causes of actions such as dilution, false advertising, and cybersquatting. Instead, it focuses on the core of trademark law—claims for infringement of registered and unregistered trademarks under 15 U.S.C. § 1114 and § 1125(a)(1)(A) (Lanham Act sections 32 and 43(a)(1)(A), respectively).

  5. Cf. Stephen Carter, The Trouble with Trademark, 99 Yale L.J. 759 (1990) (exploring inconsistencies between theory of federal trademark law and reality of trademark usage).

  6. 15 U.S.C. § 1116.