Legal systems typically curb harmful behaviour by focusing on the wrongdoers: either enjoining them ex ante or imposing monetary sanctions on them ex post. Yet across a wide range of legal fields, courts and lawmakers around the world have long employed a different and largely untheorized instrument. Instead of sanctioning the wrongdoer directly, these doctrines deter misconduct by conferring a legal advantage on the wrongdoer’s rival: a business competitor, a litigation counterparty, or another strategically positioned actor. For example, when a patent holder forces customers to sign aggressive licensing agreements, courts may allow the patent holder’s competitors to freely infringe the patent.
In a new article (forthcoming in Vanderbilt Law Review) we analyze this institutional design, which we term “rivalrous remedies,” and show how it helps explain a wide range of legal doctrines and policy choices. We also highlight the untapped potential of rivalrous remedies, by pointing to new ways of addressing persistent enforcement gaps, such as in the context of consumers’ “right to repair.”
To illustrate the usefulness of the framework, consider two real-world variants of rivalrous remedies. The first (and more familiar) category is doctrines that grant a wrongdoer’s business competitors standing to sue, even when those competitors are not the direct victims. One sees such doctrines in false advertising and antitrust laws. In the U.S., for example, the Lanham Act allows competitors to sue their business rivals who mislead consumers. Thus, an upstart soft drinks company could sue Coca-Cola for labelling a juice blend as predominantly pomegranate-blueberry, when in fact the drink contained only 0.3% pomegranate and 0.2% blueberry.
The rationale behind such competitor suits is straightforward: competitors may not be the direct victims of deceptive advertising, but they do have a direct economic interest in preventing deceptive advertising that can unfairly divert customers. Beyond having the incentives to challenge their rivals’ misconduct, competitors also possess the knowledge to do so. After all, competitors constantly invest in understanding market dynamics, such as by monitoring consumer preferences or conducting product testing. To adapt our Coca-Cola example, if Pepsi claims that seven out of ten consumers prefer its product to Coca-Cola’s, Coca-Cola probably already has in-house knowledge to confirm or refute Pepsi’s assertion.
However, the overall track record of competitor suits has been underwhelming. The reason is twofold: country-specific doctrinal hurdles, and skewed economic incentives. The costs of litigation can be substantial, while the benefits of winning in court (stopping false advertising or monopolistic pricing) often extend to the entire industry, including competitors who did not participate in the lawsuit. This creates a free-rider problem: individual firms will not bear the full cost of enforcement when the resulting benefits are shared broadly among all market players. Further, there exist many scenarios where competitors may actually benefit from their rivals’ misconduct toward consumers. For example, if one cigarette manufacturer distributes ads claiming that smoking poses minimal health risks, other manufacturers have no incentives to challenge the claim.
These dynamics limit the effectiveness of competitor suits to narrow subsets of cases. For example, we can expect to regularly find rivals availing themselves of the right to sue only when the market is oligopolistic, such that the benefits from stopping A accrue almost entirely to B.
Many legal fields therefore rely on a different rivalrous remedy—one that does not require rivals to sue. Instead of giving rivals a cause of action, these doctrines confer a competitive advantage that rivals can exercise without going through courts. To revisit our earlier example, patent law allows B to infringe A’s patent when A misuses it. The confer-benefits-on-rivals approach largely asks less of and provides more to rivals relative to the right-to-sue approach. It does not ask the rival to prove damages in court. And it provides the rival who does the heavy lifting of monitoring A’s behavior with a competitive advantage that accrues to her, such as profiting from using the wrongdoer’s patent. The latter approach can therefore function in a broader array of cases (for example, even in non-oligopolistic markets).
To be sure, the IP misuse doctrines have been criticized by IP scholars for being excessively punitive. For example, copyright scholars argue that an expanded fair use doctrine can address more effectively the same concerns (namely, the concerns of overclaiming IP rights) by allowing unauthorized uses of copyright when the public interest so warrants.
But treating “fair use” as a full substitute for “misuse” misses a crucial distinction between regular remedies and rivalrous remedies. Litigation over “fair use” focuses on the behavior of an individual consumer, whereas litigation over “misuse” focuses on the behavior of the copyright holder. This difference means that the most aggressive behaviors by copyright holders may never make it to court under the fair use doctrine. “Fair use” only kicks in after consumers use the copyright. In cases where the rights holder is most aggressive, consumers are less likely to use the material to begin with, and so unlikely to jump-start enforcement. In such scenarios, there is a strong public interest in having someone else step up and expose the licensing practices for being so aggressive. Enter the “misuse” rivalrous-remedies mechanism.
Relatedly, because litigation over misuse claims focuses on the behavior of copyright holders, it is likely to generate positive spillovers: both legal spillovers in the sense of letting other users know that the copyright holder cannot intimidate them, and reputational spillovers in the sense of telling market participants that the copyright holder plays aggressively and unfairly. These features can make the misuse doctrine better geared to help nonparties.
Our paper features other categories of rivalrous remedies, each with its unique advantages and disadvantages. But all these doctrines share a recurring institutional logic: they emerged as creative responses to persistent underenforcement problems. In some settings, the problem is that direct victims fail to vindicate their rights in courts. Individual consumers often lack the incentives to challenge false advertising or restrictive licensing agreements, because the harm they experience is typically too small and diffuse to justify the personal cost of litigating. In such cases, legal systems may instead leverage the superior information and incentives of business competitors, positioning them as more effective monitors of the wrongdoer’s conduct.
In other settings, cases do reach court, but courts struggle to quantify the relevant harms. Indeed, virtually all the doctrines we highlight deal with types of harms that are hard to prove and monetize. IP misuse doctrines target “innovation harms,” namely, the negative impact on technological progress and creativity that can occur due to restrictive licensing practices. Family law remedies for parental alienation address “emotional harms” caused by the rift between a parent and his or her child. And defamation law’s counterattack defense responds to “reputational harms” that accrue rapidly and are difficult to undo. In these settings, rather than asking courts to calculate damages after the fact, legal systems often grant rights that can be exercised directly by private actors, with minimal judicial involvement.
The institutional design behind these doctrines is therefore twofold. They address underenforcement problems by shifting the enforcement actor (not the direct victim) and/or the enforcement mechanism (self-executed with little or no judicial involvement). By shifting who enforces and how enforcement occurs, these doctrines offer a second-best approach to regulating misconduct in settings where the first-best option—traditional remedies—routinely falls short.
The same logic also illuminates the limitations of rivalrous remedies. Enforcement strategies that rely on empowering market actors depend critically on market structure. If an overreaching patent holder or false advertiser is a monopolist, no rival is likely to infringe on their patents or sue them for deceiving consumers. Conversely, in other settings rivals may overuse their added rights, not to deter socially harmful conduct but to strategically burden A.
Whether rivalrous remedies are welfare-enhancing is therefore a context-specific question that depends on doctrinal calibration. Our framework helps clarify when and how rivalrous remedies should be deployed.
Read the author’s paper here.
Shay Lavie is Assistant Professor at Tel Aviv University Buchmann Faculty of Law and Roy Shapira is Professor at Reichmann University Harry Radzyner School of Law.
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