Remedies for Wrongfully-Issued Preliminary Injunctions: The Case for Disgorgement of Profits

This Article demonstrates that the underlying aim of remedies for wrongfully issued preliminary injuntion leads to two central conclusions. First, it is desirable to award the remedy of restitution, which requires the moving party to disgorge all the benefits obtained at the expense of the defendant as a result of the wrongfully-issued preliminary injunction. Second, it may be unjustified to compel the plaintiff to compensate the defendant for all harms inflicted by the wrongfully-issued preliminary injunction. Part I of this Article summarizes the law of remedies for wrongfully-issued preliminary injunctions. Part I.A surveys the doctrinal reasons for imposing on the moving party only partial liability for the defendant\u27s harms, while Part I.B presents the very limited availability of the remedy of restitution for wrongfully-issued preliminary injunctions under current law. Part II lays the theoretical ground for the analysis. Part II.A discusses the underlying purpose behind issuing a preliminary injunction: the minimization of the irreparable loss of rights resulting from an erroneous assignment of entitlements at the preliminary stage. Part II.B presents the standard for issuing a preliminary injunction. Part II.C analyzes the possible paths by which the remedy for wrongfully-issued preliminary injunctions achieves this aim. Part III deals with the ex-post perspective, and shows that the remedy of restitution is better suited to achieve the aim of minimizing irreparable social harms. Part IV inquires into the role remedies for wrongfully-issued preliminary injunctions play in shaping the parties\u27 incentives in deciding whether to apply for a preliminary injunction, and shows the superiority of the restitutionary remedy in this respect