Intellectual Property Defenses

By:  Gideon Parchomovsky & Alex Stein

 

This Article demonstrates that all intellectual property defenses fit into three conceptual categories: general, individualized, and class defenses. A general defense challenges the validity of the plaintiff’s intellectual property right. When raised successfully, it annuls the plaintiff’s right and relieves not only the defendant, but also the entire world, of the duty to comply with it. An individualized defense is much narrower in scope: Its successful showing defeats the specific infringement claim asserted by the plaintiff, but leaves the plaintiff’s right intact. Class defenses form an in-between category: They create an immunity zone for a certain group of users to which the defendant belongs, without nullifying the plaintiff’s right.

 

The Article then shows that society has a special interest in the successful raising of class and general defenses. These defenses eliminate the unneeded intellectual property protection and thereby facilitate innovation, creativity, and competition. However, because defendants do not capture the full social benefit associated with class and general defenses, their investment in such defenses falls below the socially optimal level.

 

To remedy this problem, the Article proposes that defendants who raise class or general defenses be allowed to implead other potential defendants. To this end, it develops two mechanisms: “preclusion” and “restitution.” Both mechanisms permit impleaded parties to decline the invitation to join, but attach a consequence to the refusal. Under the preclusion mechanism, parties who choose to opt out would be barred from raising any general or class defense that was unsuccessfully asserted by the original defendant, if sued by the same plaintiff. The restitution mechanism imposes no procedural bars on the parties selecting to opt out. Instead, it requires them to pay the defendant a fair share of her litigation costs should she prevail on a class or general defense as they, too, benefit from her effort. The Article ultimately endorses the restitution mechanism.

 

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