Availability of Injunctive Relief in Patent Cases: eBay, Inc. v. MercExchange, L.L.C. (CRS Report for Congress)
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| Release Date |
May 19, 2006 |
| Report Number |
RL33429 |
| Report Type |
Report |
| Authors |
Brian T. Yeh, American Law Division |
| Source Agency |
Congressional Research Service |
Summary:
The most significant legal right that patent law confers on the patent holder is "the right to
exclude
others" from making, using, offering for sale, or selling the patented invention throughout the United
States, or importing the invention into the United States. Injunctive relief is the usual remedy that
courts authorize to prevent violation of this patent right. However, as the recent BlackBerry patent
litigation demonstrated, the desirability of an injunction in patent cases could be questioned in
certain circumstances, such as when an injunction's disruptive effects on the public may outweigh
the interest in enforcing the patent holder's "right to exclude."
In another closely watched patent case, eBay was accused of patent infringement for its
website's "Buy It Now" fixed-price purchase feature. Although a jury had found eBay liable for
infringing a business method patent owned by MercExchange, the district court refused to grant a
permanent injunction against the Internet company. However, the U.S. Court of Appeals for the
Federal Circuit reversed the denial, asserting that the "general rule" in patent disputes is that courts
must issue permanent injunctions against patent infringement, absent exceptional circumstances. In
eBay, Inc. v. MercExchange, L.L.C., the United States Supreme Court unanimously
vacated the
appellate court's judgment and remanded the case to the district court. According to the opinion,
district courts have equitable discretion to award injunctive relief, and such decision is reviewable
on appeal only for abuse of that discretion. The Court explained that the four equitable
considerations that traditionally govern the grant of an injunction apply to the same degree in patent
cases as in other areas of law.
Despite the unanimity of the eBay Court, the two concurring opinions reveal an
apparent
disagreement among the justices. One concurrence observes that courts have granted injunctive
relief to the patent holder in "the vast majority of patent cases" and thus courts should respect this
historical practice. The other concurrence suggests that the recent emergence of patent holding
companies and the "suspect validity" of some business-method patents are appropriate considerations
for a court to "bear in mind" when applying the four-factor balancing test for injunctive relief.
The Patent Reform Act of 2005 ( H.R. 2795 ), currently being considered by the
House Subcommittee on Courts, the Internet, and Intellectual Property, would, among other things,
amend the injunction provision in the Patent Act to require that a court, in determining whether
injunctive relief should or should not issue in a patent infringement case, "consider the fairness of
the remedy in light of all the facts and the relevant interests of the parties associated with the
invention." As this amendment was originally proposed in part to address concerns with the Federal
Circuit's "general rule," it remains to be seen whether the eBay decision affects the status
of this
provision of the bill.
This report will be updated if events warrant such action.
