eBay Inc v. MercExchange, L.L.C., 547 U.S. 388 (2006) is a case in which the Supreme Court of the United States unanimously determined that an injunction should not automatically issue based on a finding of patent infringement, but also that an injunction should not be denied simply on the basis that the plaintiff does not practice the patented invention. Instead, a federal court must still weigh the four factors traditionally used to determine if an injunction should issue whenever such relief is requested.
"That test requires a plaintiff to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. The decision to grant or deny such relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion. (...) Neither the District Court nor the Court of Appeals below fairly applied these principles."
"Although the District Court recited the traditional four-factor test, 275 F.Supp.2d, at 711, it appeared to adopt certain expansive principles suggesting that injunctive relief could not issue in a broad swath of cases. Most notably, it concluded that a “plaintiff's willingness to license its patents” and “its lack of commercial activity in practicing the patents” would be sufficient to establish that the patent holder would not suffer irreparable harm if an injunction did not issue. Id., at 712. But traditional equitable principles do not permit such broad classifications. For example, some patent holders, such as university researchers or self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves. Such patent holders may be able to satisfy the traditional four-factor test, and we see no basis for categorically denying them the opportunity to do so."
Chief Justice Roberts wrote a concurring opinion, joined by Justices Scalia and Ginsburg, pointing out that from "at least the early 19th century, courts have granted injunctive relief upon a finding of infringement in the vast majority of patent cases", by applying the four-factor test.
"In cases now arising trial courts should bear in mind that in many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases. An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees. ... For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent. ... When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest. In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test."
Thus, the Roberts opinion would seem to lean more heavily in favor of granting an injunction, while the Kennedy opinion expresses more skepticism, particularly where the validity of the patent has also been challenged and remains unsettled. Neither of these concurring opinions carries the force of law, since they were supported by only minorities of the Court.
New Environmentally Friendly Hanwha L&C USA Manufacturing Plant to Begin Servicing the US Architectural and Design Industries.(Company overview)
Sep 11, 2009; Hanwha L&C USA, the leading manufacturer of innovative surfacing products, will hold a celebratory event today to commemorate the...