Many contracts involving intellectual property have a provision allowing for a party, or both parties, to enforce the agreement by injunction, specific performance or other equitable relief, in the event certain provisions such as confidential information obligations, are breached.
Should equitable relief, or a violation of an obligation that is considered to cause irreparable injury, be agreed to ahead of time or for the courts to decide?
One opinion is that having the provisions are useful because courts have followed them. Also, the provisions make it difficult for a breaching party to object to equitable relief, though a court may not be required to grant it.
Another opinion is that not having such provisions does not mean that a party is not able to seek equitable relief. Thus, the provisions are not necessary since a party may seek equitable relief in the absence of such provisions.
Still another opinion is that provisions where parties agree ahead of time on what constitutes irreparable injury are not enforceable. This opinion is based on the theory that parties can negotiate on legal relief, but not equitable relief.
A permanent injunction is a final court order that a party cease certain activities permanently or perform certain acts. Basic elements in order for a permanent injunction to issue include: (a) money or other legal damages are inadequate, (b) a property interest is involved, (c) practical for the court to oversee that its decree is followed, (d) balancing of hardships, (e) no defenses are applicable to the situation.
From the elements, public concerns are invovled in issuing injunctions. It appears a court has an independent duty to be involved in the balancing test. This duty is not taken away from a court by parties who have agreed to a contract clause involving equitable relief or irreparable injury. There is the argument that equitable relief has a greater imposition on a party's rights and freedoms than legal relief, and thus, a court's duty to review the circumstances for equitable relief is greater.
After reviewing the possible opinions, it seems, like many legal issues, that there really is no answer to this question, and the law is unsettled in the area.
Comment Preview