Amicus Curiae Brief — AMG Capital Management, LLC, et al., Petitioners v. Federal Trade Commission

No. 19-508

IN THE

Supreme Court of the United States

AMG CAPITAL MANAGEMENT, LLC, et al.,

Petitioners,

v.

FEDERAL TRADE COMMISSION,

Respondent.

On Writ of Certiorari

to the United States Court of Appeals

for the Ninth Circuit

BRIEF OF AMICI CURIAE

REMEDIES, RESTITUTION, ANTITRUST, AND

INTELLECTUAL PROPERTY

LAW SCHOLARS

IN SUPPORT OF RESPONDENT

Caprice L. Roberts

Visiting Professor of Law

GEORGE WASHINGTON

UNIVERSITY LAW

SCHOOL

2000 H Street NW

Washington, DC 20052

(202) 994-0966

croberts@law.gwu.edu

Phillip R. Malone

Counsel of Record

JUELSGAARD INTELLECTUAL

PROPERTY AND

INNOVATION CLINIC

MILLS LEGAL CLINIC AT

STANFORD LAW SCHOOL

559 Nathan Abbott Way

Stanford, CA 94305

(650) 725-6369

pmalone@stanford.edu

Counsel for Amici Curiae

TABLE OF CONTENTS

INTEREST OF AMICI CURIAE ................................. 1

SUMMARY OF ARGUMENT ...................................... 2

ARGUMENT ................................................................. 2

I.

SECTION 13(b) OF THE FTC ACT

PROPERLY AUTHORIZES AN AWARD OF

RESTITUTION OR DISGORGEMENT. .............. 2

A. Equity Has Long Permitted Courts to

Order the Disgorgement of Gains from

Wrongful Acts. ................................................. 3

B. Congress Enacted Section 13(b) Against

the Backdrop of These Well-Established

Equitable Principles. ..................................... 20

II. DISGORGEMENT UNDER SECTION 13(b)

MUST COMPLY WITH THE LIMITS

ARTICULATED IN LIU v. SEC ......................... 24

III. SOUND POLICY REASONS SUPPORT

PERMITTING COURTS TO CONTINUE TO

ORDER DISGORGEMENT UNDER

SECTION 13(b). ................................................... 25

CONCLUSION ........................................................... 26

APPENDIX ................................................................ A1

ii

TABLE OF AUTHORITIES

Cases

Callaghan v. Myers,

128 U.S. 617 (1888) ................................................. 11

Cook Cnty. v. United States ex rel. Chandler,

538 U.S. 119 (2003) ................................................. 23

eBay Inc. v. MercExhange, L.L.C.,

547 U.S. 388 (2006) ................................................. 23

FTC v. AMG Capital Mgm’t, LLC,

910 F.3d 417 (9th Cir. 2018)..................................... 3

FTC v. Commerce Planet, Inc.,

815 F.3d 593 (9th Cir. 2016)..................................... 3

FTC v. Credit Bureau Center,

937 F.3d 764 (7th Cir. 2019)............................. 17, 18

Hamilton-Brown Shoe Co. v. Wolf Brothers &

Co.,

240 U.S. 251 (1912) ................................................. 12

Hecht v. Bowles,

321 U.S. 321 (1944) ................................................. 23

Int’l Union, United Mine Workers v. Bagwell,

512 U.S. 821 (1994) ................................................. 19

Leman v. Krentler-Arnold Hinge Last Co.,

284 U.S. 448 (1932) ................................................. 19

Liu v. SEC,

140 S.Ct. 1936 (2020) ...................................... passim

Livingston v. Woodworth,

56 U.S. (15 How.) 546 (1853) .................................. 10

Meghrig v. KFC W., Inc.,

516 U.S. 479 (1996) ................................................. 24

iii

Mitchell v. Robert DeMario Jewelry, Inc.,

361 U.S. 288 (1960) ........................................... 16, 23

Osborn v. Bank of the United States,

22 U.S. (9 Wheat) 738 (1824) ................................. 14

Petrella v. Metro-Goldwyn-Mayer, Inc.,

572 U.S. 663 (2014) ................................................. 17

Porter v. Warner Holding Co.,

328 U.S. 395 (1946) ......................................... passim

Providence Rubber Co. v. Goodyear,

76 U.S. (9 Wall.) 788 (1869).................................... 10

Romag Fasteners, Inc. v. Fossil Group, Inc.,

140 S.Ct. 1492 (2020) .............................................. 17

Sheldon v. Metro-Goldwyn Pictures Corp.,

309 U.S. 390 (1940) ....................................... 9, 10, 12

Snepp v. United States,

444 U.S. 507 (1980) ................................................. 22

Stevens v. Gladding,

58 U.S. (17 How.) 447 (1855) .................................. 11

Taggart v. Lorenzen,

139 S.Ct. 1795 (2019) .............................................. 22

Tilghman v. Proctor,

125 U.S. 136 (1888) ................................................. 10

Tull v. United States,

481 U.S. 412 (1097) ................................................. 18

TVA v. Hill, 437 U.S. 153 (1978) ................................. 4

United States v. RaPower-3, LLC,

960 F.3d 1240 (10th Cir. 2020)............................... 16

Weinberger v. Romero,

456 U.S. 305 (1982) ............................................... 4, 5

iv

Statutes

11 U.S.C. §1117(a) .................................................. 9, 11

15 U.S.C. § 45(l) .......................................................... 21

15 U.S.C. § 53(b) ........................................................... 2

15 U.S.C. § 57b ........................................................... 21

18 U.S.C. §1836(b)(3)(B) ............................................... 9

26 U.S.C. §7408 .......................................................... 16

29 U.S.C. §217 ............................................................ 16

35 U.S.C. §284 .............................................................. 9

35 U.S.C. §289 .............................................................. 9

42 U.S.C. §6972(a) ...................................................... 24

Act of Feb. 20, 1905, §19, 33 Stat. 724 ...................... 12

Patent Act of 1870. Act of July 8, 1870, 16 Stat.

198 ........................................................................... 10

Patent Act of July 4th, 1836, 5 Stat. 123 .................. 10

Other Authorities

1 John Norton Pomeroy, Treatise on Equity

Jurisprudence (5th ed. 1941) .................................... 5

2 Joseph Story, Commentaries on Equity

Jurisprudence as Administered in England

and America (1st ed. 1836) ..................................... 13

Andrew Kull, Rationalizing Restitution, 83

Calif. L. Rev. 1191 (1995) ......................................... 6

Caprice L. Roberts, The Case for Restitution and

Unjust Enrichment Remedies in Patent Law,

14 Lewis & Clark L. Rev. 653 (2010) ..................... 11

v

Dan B. Dobbs & Caprice L. Roberts,

Law of Remedies: Damages—Equity—

Restitution (West 3d ed. 2018) ....................... passim

Doug Rendleman & Caprice L. Roberts,

Remedies: Cases and Materials 298 (9th ed.

2018) .................................................................. 19, 22

Doug Rendleman, Complex Litigation:

Injunctions, Structural Remedies, and

Contempt 79 (2010) ................................................... 4

Doug Rendleman, The Triumph of Equity

Revisited: The Stages of Equitable Discretion,

15 NEV. L.J. 1397 (2015) ........................................... 5

Douglas Laycock & Richard L. Hasen, American

Remedies: Cases and Materials 645 (5th ed.

2019) ........................................................................ 20

Frederic William Maitland, Equity (Brunyate,

reissue ed. 2011) ....................................................... 6

George Palmer, The Law of Restitution (1978) ......... 22

Howard C. Joyce, Treatise on the Law Relating

to Injunctions (1909) ................................................. 7

Owen M. Fiss & Doug Rendleman, Injunctions

(2d ed. 1984) .............................................................. 4

Restatement (Third) of Restitution and Unjust

Enrichment (Am. Law Inst. 2011)........................ 3, 6

Restatement Third of Unfair Competition (Am.

Law Inst. 1995) ......................................................... 6

1

INTEREST OF AMICI CURIAE

Amici are 43 professors and scholars of remedies,

restitution, antitrust, and intellectual property law

throughout the United States. Amici include editors of

major casebooks and books on Remedies, Antitrust,

and Intellectual Property, and one of the amici is the

new editor of the leading treatise on Remedies. Many

of the amici also have served as Advisers and

Members of the Consultative Group to the

Restatement (Third) of Restitution and Unjust

Enrichment (Am. Law Inst. 2011). Two are the

Reporters, and several serve as Advisers, for the

Restatement (Third) of Torts: Remedies (in progress).

One is President Emeritus of the American Law

Institute. All amici have taught at major law schools

and regularly publish articles in the areas of remedies,

restitution, antitrust, and intellectual property. Amici

seek to clarify the history and source of power for

equitable remedies incident to injunctions such as

disgorgement of a wrongdoer’s profits.

Amici have no direct financial interest in the

parties to or the outcome of this case. They do share a

professional and academic interest in ensuring that

the Court is aware of the history of injunctions and

equitable power to order ancillary relief.1

A full list of amici can be found in the Appendix.

1 The parties have granted blanket consent for the filing of this

brief. No counsel for a party authored this brief in whole or in

part, and no party or counsel for a party made a monetary

contribution intended to fund its preparation or submission. No

person, other than amici or their counsel, made a monetary

contribution to the preparation or submission of this brief.

Amici’s university affiliations are for identification purposes only;

amici’s universities take no position on this case.

2

SUMMARY OF ARGUMENT

An injunction is an equitable remedy with a long

history in the courts of equity. The injunctive power

historically and necessarily includes the attendant

power for a court also to order restitutionary

disgorgement of a defendant’s ill-gotten gains, among

other forms of equitable monetary relief. That has

been a long-standing and steadfast rule in equity

jurisprudence for nearly two hundred years. It has

also been a consistent holding in this Court’s cases.

And this Court has required statutes to be clear and

unambiguous in disclaiming traditional equity

powers. The FTC Act does not do so.

ARGUMENT

This brief addresses two principal questions:

(i) whether statutory authority for courts to issue an

injunction includes the power to issue equitable

ancillary relief, including disgorgement or other

restitution remedies to strip ill-gotten gains, and

(ii) whether restitution or disgorgement under the

Federal Trade Commission Act should accord with the

longstanding principles of equity. The answer to both

questions is yes.

I.

SECTION 13(b) OF THE FTC ACT

PROPERLY AUTHORIZES AN AWARD OF

RESTITUTION OR DISGORGEMENT.

Pursuant to Section 13(b) of the FTC Act, “the

Commission may seek, and after proper proof, the

court may issue, a permanent injunction.” 15 U.S.C.

§53(b). The statutory authority to issue an injunction

includes with it a range of well-established equitable

powers incident or ancillary to the injunction power.

3

The Ninth Circuit properly determined that §13(b)’s

statutory injunctive power “‘empowers district courts

to grant any ancillary relief necessary to accomplish

complete justice, including restitution.’” FTC v. AMG

Capital Mgm’t, LLC, 910 F.3d 417, 426 (9th Cir. 2018),

quoting FTC v. Commerce Planet, Inc., 815 F.3d 593,

598 (9th Cir. 2016). This grant of injunctive authority

includes the traditional equitable power, incident to

the injunction, to order disgorgement or restitution of

net gains to undo unjust enrichment.

An overly rigid conception of the statutory

injunction power as including only a command to act

or not act, but not the adjunct authority to order an

accounting of profits or restitution of ill-gotten gains,

belies the historic meanings and uses of injunctive

authority. Such a strict and formalistic view ignores

the long history of injunctions and incident authority

also to order restitution, even when the statute

provides for injunctions without explicitly listing other

remedies.

A. Equity Has Long Permitted Courts to Order

the Disgorgement of Gains from Wrongful

Acts.

Disgorgement of a wrongdoer’s profits, by

whatever name, is an equitable remedy with a

pedigreed history. The Restatement describes it as

“one of the cornerstones of the law of restitution and

unjust

enrichment.”

Restatement

(Third)

of

Restitution and Unjust Enrichment §3 Comment a

(Am. Law Inst. 2011). And this Court recognized last

Term that “equity practice long authorized courts to

strip wrongdoers of their ill-gotten gains.” Liu v. SEC,

140 S.Ct. 1936, 1942 (2020).

4

An injunction is an in personam command to the

defendant to take action (affirmative/mandatory) or to

stop action (negative/prohibitory). Dan B. Dobbs &

Caprice L. Roberts, Law of Remedies: Damages—

Equity—Restitution §2.1(2) (West 3d ed. 2018); Doug

Rendleman,

Complex

Litigation:

Injunctions,

Structural Remedies, and Contempt 79 (2010)

(continuing edition of Owen M. Fiss & Doug

Rendleman, Injunctions (2d ed. 1984)). An injunction

can include both affirmative and negative commands.

But the injunction power is not limited only to the

ability to impose negative and affirmative orders on a

defendant. In appropriate circumstances, courts’

“injunctive orders compel the payment of money.”

Dobbs & Roberts, supra, §2.6, at 106. The history of

equitable relief demonstrates that Section 13(b)’s

statutory grant of injunctive authority includes

equity’s power to achieve complete relief.

In the absence of clear congressional words of

limitation on historical equity power, the court

maintains the full range of equity power to grant,

shape, or deny equitable relief. “Unless otherwise

provided by statute, all . . . inherent equitable

powers . . . are available for the proper and complete

exercise of that jurisdiction.’” Liu, 140 S.Ct. at 1947

(quoting Porter v. Warner Holding Co., 328 U.S. 395,

398–99 (1946)).2 Here, Congress, in drafting Section

2 Compare TVA v. Hill, 437 U.S. 153 (1978) (ruling that

Congress’s clear statutory command eliminated the court’s ability

to deny an injunction where it found an ongoing statutory

violation), with Weinberger v. Romero, 456 U.S. 305 (1982)

(maintaining the court’s historic equity power to deny injunctive

relief despite a technical statutory violation where Congress had

not clearly foreclosed historic equitable discretion).

5

13(b)’s injunctive power, used no words of limitation;

the Section’s statutory grant of power thus carries

with it the full scope of historic equity.

i.

Equitable Remedies Are Highly

Flexible and Have Long Recognized

Accounting for Profits and

Disgorgement as Incident to the

Injunction Power.

Flexibility and adaptability of equitable remedies

is the coin of the equity realm. 1 John Norton

Pomeroy, Treatise on Equity Jurisprudence, §109 (5th

ed. 1941) (“Equitable remedies . . . are distinguished

by their flexibility, their unlimited variety, their

adaptability to circumstances, and the natural rules

which govern their use. There is in fact no limit to

their variety and application . . . .”). Historically,

courts considering equitable remedies have always

possessed the ability to fashion appropriate equitable

relief. See Dobbs & Roberts, supra, §2.1, at 47; see also

id. §2.4; Doug Rendleman, The Triumph of Equity

Revisited: The Stages of Equitable Discretion, 15 NEV.

L.J. 1397, 1434–35 (2015).

Modern applications of equity, even pursuant to

statutory

authorization,

still

require

an

understanding of historic equity and the role of the

Chancellor as Writ Maker, which included power to

fashion new kinds of writs and corresponding

equitable relief. See Weinberger, 456 U.S. at 329 (“The

essence of equity jurisdiction has been the power of the

Chancellor to do equity and to mould each decree to

the necessities of the particular case. Flexibility rather

than rigidity has distinguished it.”) (cleaned up);

Dobbs & Roberts, supra, §2.2; see also Frederic

6

William Maitland, Equity 1–11 (Brunyate, reissue ed.

2011 (notating 1936 ed.)). Injunctive relief with an

incident accounting for profits relies on these historic

equitable principles.

Restitution for wrongdoing and its disgorgement

remedy strip willful wrongdoers of their unjust profit,

both to return to the victims of the wrongdoing funds

obtained through the unlawful activity and to deter

conscious advantage-taking. The roots of such a

restitution

award—disgorgement

of

wrongful

profits—are incident to the injunction power. The

early tie was the equitable remedy of accounting for

profits:

Money claims for restitution with equitable

enforcement: accounting for profits. Several

remedies parallel the constructive trust. The

remedy known as accounting or accounting

for profits is usually regarded as equitable,

but it can ultimately resemble a money

judgment.

Dobbs & Roberts, supra, §2.6, at 109–110; see also

Restatement Third of Unfair Competition (Am. Law

Inst. 1995) at §37, Comment b (“Accountings of profits

in unfair competition cases were initially granted as

ancillary relief in actions in equity, thus permitting an

award of monetary and injunctive relief in the same

action.”).

Restitution and unjust enrichment remedies,

particularly disgorgement, service the goals of

undoing a wrongdoer’s unjust gain and deterring

opportunism, fraud, and other wrongful behavior.

Restatement (Third), at §3, Comment a & §39,

Comment b; Andrew Kull, Rationalizing Restitution,

83 Calif. L. Rev. 1191 (1995). In such cases, “[e]quity

7

courts have routinely deprived wrongdoers of their net

profits from unlawful activity, even though that

remedy may have gone by different names.” Liu, 140

S.Ct. at 1942.3

In interpreting statutes that provide for equitable

relief, the Court “analyzes whether a particular

remedy falls into ‘those categories of relief that were

typically available in equity,’” the basic contours of

which “can be discerned by consulting works on equity

jurisprudence.” 140 S.Ct. at 1942 (internal citations

omitted). And indeed, early commentators and

treatise writers confirm that not just equitable power

generally, but the injunction power specifically,

included the power to order restoration or restitution

of ill-gotten gains. See, e.g., Dobbs & Roberts, supra,

Law of Remedies §1.1, at 6 (“The injunction may be

prohibitory in form or it may be mandatory,

compelling some affirmative action. It may attempt to

prevent harm or to compel some form of reparation for

harm already done.”); Howard C. Joyce, Treatise on

the Law Relating to Injunctions (1909) §2: (“[T]he

injunction has been regarded as more flexible and

3 “Compare, e.g., 1 D. Dobbs, Law of Remedies §4.3(5), p. 611

(1993) (‘Accounting holds the defendant liable for his profits’),

with id., §4.1(1), at 555 (referring to ‘restitution’ as the relief that

‘measures the remedy by the defendant’s gain and seeks to force

disgorgement of that gain’); see also Restatement (Third) §51,

Comment a, p. 204 ([2011]) . . . (‘Restitution measured by the

defendant’s wrongful gain is frequently called ‘disgorgement.’).

Other cases refer to an ‘accounting’ or an ‘accounting for profits’);

1 J. Pomeroy, Equity Jurisprudence §101, p. 112 (4th ed. 1918)

(describing an accounting as an equitable remedy).” Liu, 140

S.Ct. at 1943–44; see also Restatement (Third) §51, Comment a &

51(4).

8

adjustable to circumstances than any other process

known to the law,” as seen in “the ease with which

damages are substituted in their place when justice

and the public interest so require; the facility with

which a preventative and a mandatory injunction are

made to co-operate so that by a single exercise of

equitable power an injury is both restrained and

repaired.”).

ii.

This Court’s Decisions Have Long

Confirmed the Equitable Power to

Disgorge Ill-Gotten Profits.

“Decisions from this Court confirm that a remedy

tethered to a wrongdoer’s net unlawful profits,

whatever the name, has been a mainstay of equity

courts.” Liu, 140 S.Ct. at 1943.4 Both this Court and

lower courts have routinely coupled injunctions with

restitution awards.

1. This Court’s early intellectual-property cases in

particular confirm that the Court has always viewed

restitution of a defendant’s profits as proper additional

4 See also Kansas v. Nebraska, 574 U.S. 445, 466–67 (2015)

(upholding Special Master’s equitable disgorgement award but

finding the injunction unnecessary where the offensive behavior

was unlikely to recur, especially given that another disgorgement

award would deter such an occurrence). This ruling reinforces the

equitable principles and the functions of a restitution-based

disgorgement of wrongful gain award. See Liu, 140 S.Ct. at 1943–

44 (citing with approval the Kansas holding that, in the “basically

equitable” proceeding, ordering disgorgement of Nebraska’s

unlawful gains was appropriate). Kansas also reinforced the

Court’s equitable power to “accord full justice.” Kansas, 574 U.S.

at 456 (quoting Porter, 328 U.S. at 398).

9

relief incidental to the equitable authority to enjoin

deliberate acts of infringement. The disgorgement

remedy is now codified for copyright, trademark, trade

secret, and design patents.5 But as this Court

explained in Sheldon v. Metro-Goldwyn Pictures Corp.,

309 U.S. 390 (1940), and in numerous other cases, and

as Justice Story had explained in his Commentaries

more than a century before, the remedy was developed

in equity as relief incident to an injunction long before

it was codified in these statutes.

Sheldon was a suit to recover the profits of an

infringing movie based on the script of plaintiff’s

copyrighted play (a remedy the Court called an

“accounting of profits”). 309 U.S. at 396. The Court

described the history of this remedy and its origins in

equity before it was partially codified in the Patent Act

of 1870 and the Copyright Act of 1909:

Prior to the Copyright Act of 1909, there had

been no statutory provision for the recovery of

profits, but that recovery had been allowed

in equity both in copyright and patent cases

as appropriate equitable relief incident to a

decree for an injunction. That relief had been

given according to the principles governing

equity jurisdiction, not to inflict punishment

but to prevent an unjust enrichment by

5 See 17 U.S.C. §504(b) (2012) (copyright); 11 U.S.C. §1117(a)

(2012) (trademark); 18 U.S.C. §1836(b)(3)(B) (2012) (trade

secret); 35 U.S.C. §289 (2012) (design patents). Disgorgement was

a mainstay of utility patents until 1946, when Congress

eliminated it. See 35 U.S.C. §284 (2012).

10

allowing injured complainants to claim “that

which, ex aequo et bono, is theirs[.]”

Sheldon, 309 U.S. at 399) (quoting Livingston v.

Woodworth, 56 U.S. (15 How.) 546, 560 (1853) (other

citations omitted) (emphasis added).

Livingston was a patent case under the 1836

Patent Act, which conferred the power to grant

injunctions but did not explicitly provide for the award

or accounting of profits. 56 U.S. at 550. The Court

recognized “[a]ll the authorities and precedents which

declare that the infringer is to account in equity for the

‘profits’” resulting from its infringement, and

reiterated that this “jurisdiction in equity conferred

. . . by statute, contemplates full power to give the

plaintiff as ample redress as he could have at law[.]”

Id. (citing the Patent Act of July 4th, 1836, §§17, 14, 5

Stat. 123). Accord Providence Rubber Co. v. Goodyear,

76 U.S. (9 Wall.) 788, 803–04 (1869) (upholding, under

the 1836 Patent Act, an accounting of profits “in

accordance with the rule in equity cases established by

this court.”).

These cases reflect the history of accounting or

restitution in patent cases under courts’ general

equitable jurisdiction, before the specific provision for

the recovery of profits was added by the Patent Act of

1870. Act of July 8, 1870, §55, 16 Stat. 198, at 206. This

Court summarized that pre-1870 history in Tilghman

v. Proctor, 125 U.S. 136, 144 (1888), and recognized

that recovery of an infringer’s profits “was established

by a series of decisions under the patent act of 1836,

which simply conferred upon the courts of the United

States general equity jurisdiction, with the power to

grant injunctions in cases arising under the patent

laws.” Id. at 144; see also Caprice L. Roberts, The Case

11

for Restitution and Unjust Enrichment Remedies in

Patent Law, 14 Lewis & Clark L. Rev. 653, 657–58 &

n.21 (2010) (reviewing the availability and evolution

of the accounting remedy in patent cases and noting

that the power to issue injunctions “carried with it the

power to order an equitable accounting of the

infringer’s illicit profits.”) (cleaned up).

While the Patent Act of 1870 provided that a

patent plaintiff could recover “the profits to be

accounted for by the defendant,” Act of July 8, 1870,

16 Stat. 198, §55 at 206, the corresponding copyright

provision (in the same statute) did not specify profits

at all; it simply granted equity jurisdiction and

authorized injunctions. Id. §106 at 215. The

trademark statutes did not allude to net profits until

the Lanham Act, 60 Stat. 427, §35 at 440 (1946), and

then only to allocate the burden of proof. See 11 U.S.C.

§1117(a) (making recovery of profits “subject to the

principles of equity”). But under principles of equity,

courts had the power to make awards of net profits in

all three of these types of cases.

Stevens v. Gladding, 58 U.S. (17 How.) 447 (1855),

was a copyright case under the 1831 Copyright Act

involving printed copies of a map of the State of Rhode

Island. This Court remanded the case with

instructions to grant a “perpetual injunction” and also

to make an accounting of the profits of the defendants,

because “[t]he right to an account of profits is incident

to the right to an injunction in copy and patent-right

cases.” Id. at 455 (emphasis added). Similarly,

Callaghan v. Myers, 128 U.S. 617, 666 (1888),

addressed the infringement of copyright in reports of

the Illinois Supreme Court. The Court upheld a

“perpetual injunction” against further infringing

12

publication, as well as an accounting of profits the

defendant had made from infringing works that had

been distributed.

The accounting of profits in these cases was not

authorized by the terms of the statutes in effect at the

time. For patents, such explicit authorization was true

only after 1870, well after many of these cases; before

that, the various patent statutes did not mention

defendant’s profits. There was no statutory

authorization for recovery of profits in copyright

actions until 1909. Yet accounting of profits, or

restitution, were routinely awarded in both contexts,

as relief incident to an injunction. See Liu, 140 S.Ct.

at 1944 (“[A]s these [pre-1870 Patent Act] cases

demonstrate, equity courts habitually awarded

profits-based remedies in patent cases well before

Congress explicitly authorized that form of relief.”).

In the trademark context, the Court in HamiltonBrown Shoe Co. v. Wolf Brothers & Co., 240 U.S. 251,

259–60 (1912), provided a detailed explanation of the

equitable origins of accounting of profits in trademark

infringement cases, closely parallel to the history

reviewed in Sheldon) for that remedy in patent and

copyright cases. The Hamilton-Brown Shoe Court did

not cite the Trademark Act’s then relatively

abbreviated authorization for the recovery of profits,

Act of Feb. 20, 1905, §19, 33 Stat. 724, at 729. Instead,

it relied solely on traditional equity power to justify

accounting as a remedy incident to an injunction. Id.

at 259 (where jurisdiction rests on the equitable

ground of “the right to an injunction . . . the court of

equity, having acquired jurisdiction upon such a

ground, retains it for the purpose of administering

complete relief[.]”).

13

2. The remedy of an accounting of profits from

infringement was clearly established in the lower

courts well before the first such cases reached this

Court. Justice Story explained in 1836, far in advance

of a remedy of accounting for profits being added to the

patent or copyright statutes, that damages were

generally an inadequate remedy for patent or

copyright infringement and that the equity court

would therefore enjoin infringement. 2 Joseph Story,

Commentaries

on

Equity

Jurisprudence

as

Administered in England and America §§931–32, at

210 (1st ed. 1836). His Commentaries explained that,

[I]n most cases of this sort, the bill usually

seeks an account, in one case of the books

printed, and in the other of the profits, which

have arisen from the use of the invention,

from the persons, who have pirated the same.

And this account will, in all cases, where the

right has been already established, or is

established under the direction of the Court,

be decreed as incidental, in addition to the

other relief of a perpetual injunction.

Id. §933 at 211 (emphasis added).

Thus, while disgorgement was “typically”

available in equity, it was available “in all cases” in

which infringement was enjoined. Id. This history and

the Court’s decisions in this area demonstrate that

disgorgement is not a recent notion or a mistaken

accompaniment to the power to issue an injunction,

but rather a long-standing and well-established

incidental power of equity.

3. These well-established principles of equitable

power to order restitution or disgorgement incidental

to injunctions are not limited to cases of intellectual

14

property infringement. They extend to courts’

equitable authority to enjoin violations of federal

regulatory statutes. In that context too, this Court has

held that courts have the power to order violators of

those statutes to disgorge their ill-gotten gains in the

absence of clear congressional language to the

contrary.

For example, this Court endorsed equitable relief

of an injunction and restitution in a case under the

National Bank Act. Osborn v. Bank of the United

States, 22 U.S. (9 Wheat) 738 (1824). The Court found

that a court of equity could decree restitution and

further found no error in the lower court’s equitable

restitution award coupled with an injunction:

so far as it directs restitution of the specific

sum of 98,000 dollars, which was taken out of

the Bank unlawfully, and was in the

possession of defendant . . . when the

injunction was awarded . . . to restrain him

from paying it away, or in any manner using

it[.]

Id. at 871.

Later, in Porter v. Warner Holding Co., 328 U.S.

395, 398–99 (1946), the Court interpreted a section of

the Emergency Price Control Act of 1942 that provided

for issuance of a permanent or temporary injunction,

restraining order, or other order. The Court indicated

that an order for the “recovery and restitution” of

illegal rents “may be considered as an equitable

adjunct to an injunction decree.” Id. at 399 (emphasis

added). It also emphasized the essential connection

between restitution and the injunction: “Nothing is

more clearly a part of the subject matter of a suit for

an injunction than the recovery of that which has been

15

illegally acquired and which has given rise to the

necessity for injunctive relief.” Id.

The Court found that the authority “to enjoin acts

and practices made illegal by the Act and to enforce

compliance with the Act” was equitable in nature, and,

[u]nless otherwise provided by statute, all the

inherent equitable powers of the District

Court are available for the proper and

complete exercise of that jurisdiction. And

since the public interest is involved in a

proceeding of this nature, those equitable

powers assume an even broader and more

flexible character than when only a private

controversy is at stake. . . . [T]he court may go

beyond the matters immediately underlying

its equitable jurisdiction . . . and give

whatever other relief may be necessary under

the circumstances.

Id. at 397–98.

The

Court

also

observed

that

the

“comprehensiveness of this equitable jurisdiction”

should not be limited or rejected “in the absence of a

clear and valid legislative command” that, “in so many

words, or by a necessary and inescapable inference,

restricts the court’s jurisdiction in equity.” Id. at 398.

Otherwise, ‘‘‘[t]he great principles of equity, securing

complete justice, should not be yielded to light

inferences,

or

doubtful

construction.’’

Id.

(quoting Brown v. Swann, 35 U.S. 497, 10 Pet. 497

(1836)). This Court cited Porter with approval in Liu

in concluding that a “mainstay of equity courts” has

been the power to strip wrongdoers of their illegal

profits. 140 S.Ct. at 1943.

16

Similarly, in Mitchell v. Robert DeMario Jewelry,

Inc., 361 U.S. 288 (1960), the Court reviewed a suit by

the Secretary of Labor to enjoin violations of the Fair

Labor Standards Act forbidding retaliatory firing of or

discrimination against employees who complained

under the FLSA. The Act confers on district courts the

power “to restrain violations” of the relevant section.

Section 17 of the Act, 52 Stat. 1069, as amended, 29

U.S.C. §217.

The Court rejected the lower court’s conclusion

that it lacked the power to award lost wages because

such authority “must be expressly conferred by an act

of Congress or be necessarily implied from a

congressional enactment.” 361 U.S. at 290. Instead,

the Court reiterated its holding in Porter that courts

had the “implied power to order reimbursement”

under their statutory power to enjoin violations, 361

U.S. at 291, and that unless otherwise provided by

statute, “all the inherent equitable powers . . . are

available for the proper and complete exercise of that

jurisdiction.” Id. (quoting Porter, 328 U.S. at 397–98).

As a result, the Court held that district courts’

authority “to restrain violations” of the FLSA also

includes the implied power to order the payment of lost

wages. 361 U.S. at 296.6 See also United States v.

RaPower-3, LLC, 960 F.3d 1240 (10th Cir. 2020)

(enjoining defendants, pursuant to 26 U.S.C. §7408,

from continuing to promote an abusive solar power

6 The Court did so even though the FLSA expressly provides that

courts do not have jurisdiction, in such injunctive proceedings, to

order the payment of unpaid minimum wages or overtime

compensation. Id. at 293–94. The Court found this express

limitation inapplicable to restitution of wages lost due to an

unlawful discharge. Id.

17

energy tax scheme and ordering disgorgement of gross

profits from the scheme).

This long history has not been abrogated or

undermined by this Court’s more recent cases. In fact,

just last Term the Court strongly confirmed what it

identified in its prior cases as the “‘protean character’

of the profits-recovery remedy.” Liu, 140 S.Ct. at 1943

(quoting Petrella v. Metro-Goldwyn-Mayer, Inc., 572

U.S. 663, 668, n.1 (2014)). Liu also described how the

Court's “‘transsubstantive guidance on broad and

fundamental’ equitable principles . . . thus reflects the

teachings of equity treatises that identify a

defendant’s net profits as a remedy for wrongdoing.

104 S.Ct. at 1944 (quoting Romag Fasteners, Inc. v.

Fossil Group, Inc., 140 S.Ct. 1492, 1496 (2020)).

Given the clarity of the Court’s determinations in

Porter and Mitchell, it is no surprise that, until the

Seventh Circuit’s outlier decision in FTC v. Credit

Bureau Center, 937 F.3d 764 (7th Cir. 2019), the courts

of appeals had been uniform for over 35 years in

holding that Section 13(b)’s authorization for courts to

grant permanent injunctions also included the

authority to order wrongdoers to disgorge their illegal

gains. See Brief of Respondent FTC (“Resp. Br.”), at 8.

iii.

Petitioners’ Claims that Statutory

Injunction Power Cannot Include

Disgorgement Authority Ignore This

History of Equitable Remedies and

This Court’s Decisions.

1. In the face of this clear and well-established

history, Petitioners’ advance a cramped and

artificially narrow view of the effect of statutory

authorization to grant injunctions as categorically

18

excluding the possibility of monetary relief incident to

those injunctions. Their claims that “as traditionally

understood, injunctions could not be used to compel

restitution or payment of monetary relief,” Petitioner’s

Opening Brief (“Pet. Br.”), at 2, and that injunctions

“traditionally excluded monetary relief, id. at 24, are

contradicted by the history of equitable remedies.

Similarly, the Seventh Circuit’s statement in Credit

Bureau Center, that “[r]estitution isn’t an

injunction. . . . [and] statutory authorizations for

injunctions don’t encompass other discrete forms of

equitable relief like restitution,” 937 F.3d at 771–72,

fares no better. Both claims reflect a formalistic and

simplistic view of injunction power that ignores the

long history of relief incident to injunctions.

Petitioners try to cast aside much of this equitable

history, characterizing Porter and Mitchell’s reliance

on core equitable principles as “a relic of that ancien

regime” that this Court “long ago rejected.” Pet. Br. at

36–37. Petitioners even assert that, “[w]here Porter

once assumed that ‘all the inherent equitable powers

of the District Court are available’ unless ‘restrict[ed]’

by ‘a clear and valid legislative command,’ the Court

now takes the opposite approach when considering

remedies ‘not explicit in the statutory text itself[.]’” Id.

(internal citations omitted). But Petitioners’ attempt

to rewrite the long history of equitable disgorgement

is squarely contradicted by Liu, where this Court

quoted with approval the very same language from

Porter: in “federal courts . . . ‘[u]nless otherwise

provided by statute, all . . . inherent equitable powers

. . . are available for the proper and complete exercise

of that jurisdiction.’” 140 S.Ct. at 1946–47 (quoting

Porter, 328 U.S. at 398). See also Tull v. United States,

481 U.S. 412, 414, 425 (1097) (disgorgement of

19

improper profits, traditionally considered an equitable

remedy, was still available under the remedies section

of the Clean Water Act, 33 U.S.C. §1313(b), that

allowed injunctions, even though separate provisions

of §1313 provided for legal relief in the form of civil

penalties).

2. But even without incorporating this historical

scope of the power incident to an injunction, the nature

of injunctions cannot be narrowed in the formalistic

way Petitioners urge. For one thing, authority to issue

an injunction inherently contains authority to issue

contempt sanctions for violation of that injunction.

Enforcement in equity relied on the contempt power

because equity operated in personam with “pressure

on the conscience of defendant” rather than in rem.

Dobbs & Roberts, supra, §2.2, at 60. Contempt power

cannot be divorced from injunctions, and contempt

power includes the ability to order defendant to pay

money as a coercive sanction to compel compliance or

as compensation for harms caused by violating the

injunction, Int’l Union, United Mine Workers v.

Bagwell, 512 U.S. 821, 829–30 (1994), or to disgorge

the profits of the violation. Leman v. Krentler-Arnold

Hinge Last Co., 284 U.S. 448, 455–57 (1932).

The threat of contempt is essential to the

functioning of injunctions. “For in personam to work,

the judge will wield contempt against a recalcitrant or

disobedient defendant.” Doug Rendleman & Caprice L.

Roberts, Remedies: Cases and Materials 298 (9th ed.

2018). The injunctive personal command must carry

force. On disobedience, the judge may seek to coerce

obedience by fine or imprisonment. 1 John Norton

Pomeroy, Treatise on Equity Jurisprudence (1881),

§428, at 469 (1881).

20

Nor is it an answer to suggest that the

disgorgement incident to an injunction is effectively a

damages award and thus inappropriate for an

equitable remedy. While an award of purely

compensatory damages would be beyond Section

13(b)’s injunctive power, an order to pay money is not

automatically or necessarily a damages remedy.

“Some money claims are not ‘damages’ representing

plaintiff’s loss but ‘restitution’ representing

defendant’s unjust gains . . . .” Dobbs & Roberts, supra,

§2.6, at 109; see also Douglas Laycock & Richard L.

Hasen, American Remedies: Cases and Materials 645

(5th ed. 2019) (“Damages are based on plaintiff’s loss;

restitution is based on defendant’s gains.”). The

disgorgement of wrongful gains authorized by Section

13(b) is restitution and not compensatory damages,

and it is a restitutionary remedy that has long been

available in equity as relief incident to an injunction.

The award of restitution of unjust gains under

Section 13(b) is not simply a matter of labels. What

governs classification and corresponding equitable

power is the nature and function of the remedy. Here,

the award keys to the wrongdoer’s gain rather than

the victim’s loss. This feature renders it an equitable

restitution award and not a legal damages

compensatory award.

B. Congress Enacted Section 13(b) Against the

Backdrop of These Well-Established

Equitable Principles.

Thus, at the time Congress enacted §13(b) in 1973,

the availability of accounting for profits or restitution

was a well-established, integral part of equity practice

under statutes authorizing injunctions. Congress

21

acted with that understanding and against the

backdrop of the settled principle that the power to

issue an injunction also includes the power to order

restitution or disgorgement. In determining the

meaning of “permanent injunction” as used in §13(b),

this Court should not interpret that term in a way that

contravenes this longstanding, well-established

history and practice.7

1. Liu reiterates Porter’s conclusion that “all . . .

inherent equitable powers . . . are available for the

proper and complete exercise of that jurisdiction”

unless a statute provides otherwise. 140 S.Ct. at 1947

(quoting Porter, 328 U.S. at 398)). Congress, in using

the term “permanent injunction” in §13(b), provided

no other language or provisions that would limit those

“inherent equitable powers.”

When, as in Section 13(b), Congress explicitly

authorizes injunctions, that language necessarily

carries with it the historic equitable principles

detailed above regarding restitution, accounting of

profits, and disgorgement. And, of course, it also

carries historical equitable limits. Any use of the

injunction

remedy

by

Congress

necessarily

incorporates the history of equitable principles. Thus,

when Congress uses a statutory term like “injunction”

7

Petitioner advances a separate argument that the other

statutes that provide the FTC with remedial powers in the

context of its own administrative proceedings, Section 19

(enacted two years after §13(b)) and Section 5(l), demonstrate

that Congress must have intended, sub silentio, to alter the

settled meaning of “injunction” when it used that term in §13(b).

Pet. Br. at 25–32. Amici agree with Respondent, Resp. Br. at 37–

49, that this argument is unavailing but leave the details of the

rebuttal to Respondent and other amici.

22

in a statute, it “brings the soil with it.” Taggart v.

Lorenzen, 139 S.Ct. 1795, 1801 (2019).

Statutory silence on general equitable principles

cannot divorce injunction power from its source and

function. The specific history of injunction is rich and

varied. An essential feature of equitable principles

grounding injunctions is the ability for the judge to

shape the equitable relief necessary to stop the

wrongdoing and to return to the victims the

wrongdoer’s its ill-gotten fruits, whether that relief is

called restitution, disgorgement, or accounting of

profits—it’s all the same remedy. See Liu, 140 S.Ct. at

1942 (“Equity courts have routinely deprived

wrongdoers of their net profits from unlawful activity,

even though that remedy may have gone by different

names”); see also George Palmer, The Law of

Restitution §1.5(c) (1978) (exploring the equitable

nature of accounting); see also Rendleman & Roberts,

supra, at 287) (coupling together, as equitable

remedies, accounting for profits and accountingdisgorgement). These remedies coexisted as part of

equitable relief in historic equity courts:

Plaintiff could seek certain restitutionary

remedies in the old equity courts, notably

equitable liens, constructive trusts, and an

accounting for profits . . . . Lurking behind the

constructive trust is the in personam power of

the old equity courts. Implicitly, if not

actually, defendant who is subjected to a

constructive trust will be subjected to a

coercive order to make the required transfer

of property or funds.

Dobbs & Roberts, supra, §1.4, at 14–15. See also Snepp

v. United States, 444 U.S. 507 (1980) (per curiam)

23

(imposing a constructive trust that effectively stripped

profits from a book published without prepublication

clearance from the former employer, the Central

Intelligence Agency).

2. “‘[A] major departure from the long tradition of

equity practice should not be lightly implied.”’ eBay

Inc. v. MercExhange, L.L.C., 547 U.S. 388, 391 (2006)

(quoting Weinberger v. Romero-Barcelo, 456 U.S. 305,

320 (1982)). Here, there is nothing in the text or

operation of 13(b) that gives any reason to think

Congress intended its choice of the term “permanent

injunction” to alter the well-settled principle that the

power to issue an injunction includes the power to

order restitution or disgorgement incident to that

injunction.

Congress knows how to impose limitations on

well-established meaning. And this Court has

required it to be express in cabining equity

jurisdiction. See, e.g., Mitchell, 261 U.S. at 296.

Congress did nothing of the sort here; it certainly did

not, silently and entirely by implication, impose

significant statutory limits on the traditional

incidents of the power to issue injunctions. See Cook

Cnty. v. United States ex rel. Chandler, 538 U.S. 119,

122 (2003) (finding it unlikely that Congress intended

to repeal municipal liability sub silentio by enacting a

law to strengthen the government’s ability to fight

false claims, even though the text arguably implied

otherwise); Hecht v. Bowles, 321 U.S. 321, 330 (1944)

(“[I]f Congress desired to make such an abrupt

departure from traditional equity practice as is

suggested, it would have made its desire plain.”).

3. In the face of the well-settled history of

disgorgement and restitution as incident to injunction,

24

Petitioners rely primarily on Meghrig v. KFC W., Inc.,

516 U.S. 479, 484 (1996), an action under the citizen

suit provision of the Resource Conservation and

Recovery Act of 1976 (RCRA), 42 U.S.C. §6972(a). See

Pet Br. at 17 (“Meghrig is all but controlling here.”).

But Meghrig represents none of the sweeping

departure from historical practice that Petitioners

attribute to it.

Unlike the Court’s careful review of that history

in its subsequent Liu decision and its confirmation

that restitution of unlawful profits has been “a

mainstay of equity courts,” 140 S.Ct. at 1943, the

decision in Meghrig engages in no review of historical

equity practices and no analysis of Porter or Mitchell

or the many other equitable disgorgement cases. Nor

is Meghrig cited, at all, in Liu. Instead, Meghrig

stands only for the unremarkable proposition that,

where a statute presents a complex and

comprehensive statutory scheme (in that case one

with interrelated private, federal, and state

enforcement authority) that demonstrates Congress’s

clear intent to restrict the available remedies, that

clear legislative command may overcome the usual

equitable authority for restitution. See 516 U.S. at

487–88. Here, the very different FTC Act does not

foreclose equitable power incident to an injunctive

order.

II. DISGORGEMENT UNDER SECTION 13(b)

MUST COMPLY WITH THE LIMITS

ARTICULATED IN LIU v. SEC

The history of equity also includes limits on

fashioning disgorgement awards to undo unjust

enrichment. But these limits are not as narrow as

25

petitioner contends. Guidance on the scope of such

limits is evident from this Court’s recent precedent. As

the Court clarified in Liu, several limits ensure that

disgorgement of gains fits within the boundaries of

equitable principles as well as the law of restitution

and unjust enrichment. 140 S.Ct. at 1044–47.

Acknowledging that Section 13(b)’s injunction power

authorizes the Commission to seek and the court to

award restitutionary awards does not equate with the

power to punish. A restitution award for disgorgement

on unjust gains must conform to Liu. Therefore, the

restitution award must be limited to net rather than

gross profits. To do more would create a penalty.

Moreover, it appears that the FTC returns

virtually all the money obtained under 13(b) to injured

consumers, at least whenever it is feasible. See Resp.

Br. at 53. In accordance with Liu, the Commission

must endeavor to continue to distribute the restitution

award to victims of the wrongdoing that is being

remedied whenever possible.

III. SOUND POLICY REASONS SUPPORT

PERMITTING COURTS TO CONTINUE TO

ORDER DISGORGEMENT UNDER

SECTION 13(b).

Significant policy considerations support reading

§13(b) to continue to permit courts to award a

defendant’s profits when they enter permanent

injunctions. It should not be lightly implied that

Congress meant to leave courts powerless to strip

serious wrongdoers of the ill-gotten fruits of their

fraud or other misconduct and limit courts only to

preventing future harm. See Liu, 140 S.Ct. at 1493

(disgorgement to reverse unjust enrichment “reflected

26

a foundational principle:” that it would be

“inequitable” for a wrongdoer to “‘make a profit out of

his own wrong.’” (internal citations omitted)).

Eliminating the ability of courts to award

restitution in §13(b) cases would cause serious harm

in many cases. It would unjustly enrich defendants,

leave wrongdoing under-deterred, and fail to carry out

the very purposes of the FTC Act—protecting against

exactly this type of wrongful profiting from consumers.

CONCLUSION

The judgment should of the court of appeals

should be affirmed.

Respectfully submitted,

Phillip R. Malone

Counsel of Record

JUELSGAARD INTELLECTUAL

PROPERTY AND INNOVATION

CLINIC

MILLS LEGAL CLINIC AT

STANFORD LAW SCHOOL

559 Nathan Abbott Way

Stanford, CA 94305

(650) 725-6369

pmalone@law.stanford.edu

27

Caprice L. Roberts

Visiting Professor of Law

GEORGE WASHINGTON

UNIVERSITY LAW SCHOOL

2000 H Street NW

Washington, DC 20052

(202) 994-0966

croberts@law.gwu.edu

December 7, 2020

A1

APPENDIX

Amici curiae are the law professors and scholars

listed below. Affiliation is provided for identification

purposes only; all signatories are participating in their

individual capacity and not on behalf of their

institutions.

Professor John R. Allison

University of Texas McCombs School of Business

Professor BJ Ard

University of Wisconsin Law School

Professor Bernard Chao

University of Denver Sturm College of Law

Professor Tuneen Chisolm

Campbell University School of Law

Professor Joshua P. Davis

University of San Francisco School of Law

Professor Sidney DeLong

Seattle University School of Law

Professor Kurt Eggert

Chapman University Fowler School of Law

Professor Samuel F. Ernst

Golden Gate University School of Law

A2

Professor Robin Feldman

University of California Hastings Law

Professor William T. Gallagher

Golden Gate University School of Law

Professor Shubha Ghosh

Syracuse University College of Law

Professor Christopher L. Griffin, Jr.

University of Arizona

James E. Rogers College of Law

Professor Marsha Griggs

Washburn University School of Law

Professor Jack B. Harrison

Northern Kentucky University

Salmon P. Chase College of Law

Professor Richard L. Hasen

University of California Irvine School of Law

Professor F. Andrew Hessick

University of North Carolina School of Law

Professor Jeremiah A. Ho

University of Massachusetts School of Law

Professor David Hricik

Mercer University School of Law

Professor Timothy S. Jost

Washington and Lee University School of Law

A3

Professor Margot Kaminski

University of Colorado Law School

Professor Kay P. Kindred

University of Nevada Las Vegas

William S. Boyd School of Law

Professor Candace Kovacic-Fleischer

American University Washington College of Law

Professor Jennifer A. Kreder

Northern Kentucky University

Salmon P. Chase College of Law

Professor Douglas Laycock

University of Virginia Law School

Professor Mark A. Lemley

Stanford Law School

Professor David I. Levine

University of California

Hastings College of the Law

Professor Yvette Joy Liebesman

Saint Louis University School of Law

Professor Cortney E. Lollar

University of Kentucky

J. David Rosenberg College of Law

Professor Carol A. Needham

Saint Louis University School of Law

A4

Professor Portia Pedro

Boston University School of Law

Professor David Pimentel

University of Idaho College of Law

Professor C. Delos Putz

University of San Francisco School of Law

Professor Doug Rendleman

Washington and Lee University School of Law

Professor Caprice L. Roberts

George Washington University Law School

Professor Cassandra Burke Robertson

Case Western Reserve University School of Law

Professor John E. Rumel

University of Idaho College of Law

Professor Michael L. Rustad

Suffolk University Law School

Professor Pamela Samuelson

University of California Berkeley School of Law

Michael Traynor

Former President (2000-08) and Chair of the

Council (2008-11), American Law Institute

Professor Spencer Weber Waller

Loyola University Chicago School of Law

A5

Professor Mary Jo Wiggins

University of San Diego School of Law

Professor Ramsi Woodcock

University of Kentucky

J. David Rosenberg College of Law

Professor Karen E. Woody

Washington and Lee University School of Law