Judge John Kness, a federal judge in the Northern District of Illinois, recently issued the opinion that many scholars and other observers have been waiting for, demolishing an IP litigation technique that Professor Eric Goldman has dubbed the “SAD Scheme.” A plaintiff runs a SAD scheme by filing an IP complaint (mostly trademark claims, but copyright and patent have been used, as well) against a list of defendants named on a sealed “Schedule A” exhibit, obtaining a temporary restraining order (TRO) from the court based on ex parte proceedings (i.e., without participation by any defendant), then using that TRO to get online marketplaces and other intermediaries to shut down or freeze the defendants’ operations. This is a catastrophic event for the defendants, and it creates coercive pressure for a settlement regardless of the merits of the complaint. Advocates for SAD Schemes say that the perpetrators are “foreign counterfeiters” who will evade justice unless their activities are addressed quickly and decisively—without the due process that would ordinarily precede the seizure of a major economic asset like an online store and its proceeds. And SAD Scheme filings have been so successful that their use has exploded in recent years:

If this all sounds vaguely familiar, it’s because SAD Schemes have a few things in common with proposals for site-blocking as a remedy against alleged foreign infringing websites, an idea that dates back to SOPA and popped up most recently as the goofily-named “Block BEARD Act.” Like SAD Schemers, siteblocking advocates want the power to shut down websites based on one-sided allegations of infringement. Also, both mechanisms can lead to large-scale takedowns, with hundreds or thousands of sites potentially impacted by a single order. Finally, advocates for both mechanisms rely on charged moral rhetoric (“counterfeit” and “piracy”) to short circuit critical thinking and due process.

Judge Kness’s opinion explains eloquently what’s wrong with this one-sided approach to IP enforcement. IP rights are subtle, and that “complexity renders the sound adjudication of the TRO request all but impossible in the absence of adversarial briefing.” Accordingly, “Schedule A TRO motions, in this case and others, should fail at the outset because it is all but impossible for the Court to discern the likelihood of success from the one-sided evidence provided.” Indeed, “without appearances from defendants in the case, courts have no reliable way to assess how the proposed injunctive relief will harm the nonmoving parties. That fact renders balancing the private interests impossible.” Judge Kness concludes that the entire SAD Scheme mechanism is fatally flawed and should never have been allowed to move forward.

Perhaps the most important takeaway from the SAD Scheme phenomenon is that, given the chance, some IP owners will abuse enforcement mechanisms to throttle competition and extract excessive remedies. Goldman has documented the explosion of SAD Scheme actions, with thousands of complaints resulting in seizure of millions of sites and associated assets. Site-blocking’s congressional champions have expressed skepticism bordering on hostility to the notion that site-blocking could result in overblocking or abuse. Who cares what happens to “foreign pirate websites”? The proliferation of SAD Scheme shakedowns, despite its obvious flaws, should inspire a lot more humility from these lawmakers. Site-blocking advocates say due process is just too slow and difficult for foreign-owned sites, but as Goldman explains, the lesson from SAD Schemes is clear, “Due process is expensive and slow, but skipping due process predictably leads to major, avoidable, and inexcusable mistakes.”