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U.S. Supreme Court Holds That Injunctive Relief for Patents Is Discretionary
The U.S. Supreme Court handed a victory to advocates for patent-reform this past Monday in eBay Inc. et al. v. MercExchange, L.L.C. by unanimously holding that patent holders are not automatically entitled to injunctive relief against patent infringers: “We hold that the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards.” The case surrounded the granting of injunctive relief for a number of business methods patents held by MercExchange that eBay had been found to infringe. Although the Court clarified the law on this issue, it sent the matter back to the lower court for application to the particular case. eBay continues to challenge the validity of the MercExchange patents at the U.S. Patent and Trademark Office.
Interestingly, in two concurring opinions, the Justices disagreed on the usefulness of earlier patent cases that had established a long tradition of granting injunctive relief. Chief Justice Brown rationalized the tradition by emphasizing the “difficulty of protecting a right to exclude through monetary remedies that allow an infringer to use an invention against the patentee’s wishes”. Justice Kennedy disagreed with this part of the Chief Justice’s opinion, noting 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”. In particular, the fact that there are “firms [that] use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licenses” means that monetary damages may be sufficient as compensation for infringement where the patent(s) covers only a small component of the infringer’s product and injunctive relief is sought simply for “undue leverage in negotiations” for licensing fees. Justice Kennedy also noted that “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”. Justice Thomas, who wrote the opinion of the court, did not assent to either of the concurring opinions.
For a copy of the decision, visit: