Default of da system? Or, “Tally Ho!”

Via this patently entertaining post I was alerted to this somewhat more analytical one by Venkat Balasubramani, with Eric Goldman riding shotgun, decrying the $100 million default judgment entered in favor of Hermès:

We’ve blogged repeatedly about trademark owners obtaining ex parte orders that provide extraordinarily broad relief, ranging from domain name seizures to orders directing search engines and social networks to “delist” or “deindex” certain websites. In the run-up to SOPA’s introduction and consideration, it seemed relevant to keep track of what relief courts were willing to order under current law that overlapped with SOPA. Hermès recently initiated a similar case. In a breathtakingly short amount of time, Hermès filed its complaint, obtained a temporary restraining order and then an injunction, and finally obtained a judgment . . . in the amount of one hundred million dollars. (!!)

. . .

What’s most striking about this case is how the court grants astronomical damages without any supporting evidence of actual damages. Usually when someone asks for damages, even in a default judgment setting, the court has a prove-up hearing and requires the party put forthsome evidence in support of their claim for damages. Granted, the evidence may not be subject to the rigorous examination of an adversarial proceeding, but the court is still supposed to take an independent look at the request for damages and make sure it’s kosher. (See, for example the Seventh Circuit’s decision in e360 v. Spamhaus: “Spamhaus off the hook for $11 million judgment.”) Here, there was no evidence of damages whatsoever. A party’s failure to “participate in litigation” or comply with court orders is sometimes used as a basis for a harsh award in the form of sanctions, but a court will almost always give someone a chance and warn them before coming down on them. A party’s failure to respond to lawsuit documents that were emailed to them–particularly where there’s no proof even that the documents have been received by the defendants–is not the type of scenario where courts typically smack defendants for frustrating the judicial process.

Yeah, well.  They do, actually, and even in less justifiable circumstances.  But not usually this much.

Is there a real difference, however?  Isn’t the real question is how big a meaningless, symbolic bit of press-release-fodder does the judge want to give the plaintiff here?  Heck, when I got the $3 million for LVMH in the Veit case,* they were pretty pleased back at the office.  It’s a kind of sport!  Tally ho!

You know when I ask questions like that what’s going to happen, right?  Well, I always like to see if I can piggyback on someone even smarter than I am.  That’s usually Eric Goldman:

OK, so Hermès gets a big, empirically indefensible, uncollectable damages award ex parte. Um…yay…?

Can someone please explain to me how an award like this does any good for anyone? If anything, I think outcomes like this breed disrespect for trademark owners and for the judicial system. Trademark owners look like greedy SOBs making such pie-in-the-sky demands using procedural shortcuts that almost certainly negate any possibility of opposition.

Ooh, almost!  Yes.  Everything Venkat and Eric say is right.  Judges give out these default judgment dollars like they’re giving out Pez candies.  And here’s the last little point, though — another reason why it matters:  Because this judgment represents a new order of magnitude in the inflationary process by which judges and juries in IP cases involving no proof of damages get to what I’ve called infinity dollar verdicts.

And beyond bringing this entire process into disrepute, those things are no game.  They ruin real people’s lives.

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* Please, it’s not all about me (any more than any other blogging is), and I’m not name-dropping. I am trying to establish credibility among those few readers — those who came in late — who might think I am merely a bomb-tosser.  Merely.

Also, it’s all about me.

Originally posted 2012-05-14 16:55:52. Republished by Blog Post Promoter