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Revisiting Injunctive Relief: Interpreting eBay in High-Tech Industries with Non-Practicing Patent Holders

Vincenzo Denicolò

University of Bologna

Damien Geradin

George Mason University School of Law; Tilburg Law & Economics Center (TILEC)

Anne Layne-Farrar

Charles River Associates; Northwestern University

Jorge Padilla

Compass Lexecon

December 3, 2007

The Supreme Court's 2006 eBay ruling marked a turning point in injunctive relief policy. Unfortunately, there seems to be considerable confusion about the implications of the decision. Some authors, concerned over patent holdup and excessive royalty rates, interpret the eBay decision as giving a green light to district courts to deny injunctive relief to non-manufacturing patent owners. Using an error cost framework, we examine the theory and evidence behind patent holdup concerns as they relate to injunctive relief policy. We find that the holdup theory justifying categorical limitations on injunctive relief rests upon overly narrow assumptions. As a result, categorical limitations are likely to result in substantial false positives, where patent holders with no designs of patent holdup are nonetheless denied injunctive relief. Instead of advocating categories of denial, we argue that the majority opinion in eBay can and should be read as a return to a balancing test, where costs and benefits are weighed carefully before granting or denying a patent injunction.

Number of Pages in PDF File: 41

Keywords: injunctive relief, patent holdup, patent injunction, IP policy, standard setting, patent compensation, eBay, royalty rates

JEL Classification: O34, O31, O38, O33, K11

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Date posted: October 7, 2007 ; Last revised: October 5, 2011

Suggested Citation

Denicolò, Vincenzo and Geradin, Damien and Layne-Farrar, Anne and Padilla, Jorge, Revisiting Injunctive Relief: Interpreting eBay in High-Tech Industries with Non-Practicing Patent Holders (December 3, 2007). Available at SSRN: http://ssrn.com/abstract=1019611 or http://dx.doi.org/10.2139/ssrn.1019611

Contact Information

Vincenzo Denicolo (Contact Author)
University of Bologna ( email )
Strada Maggiore 45
Bologna, 40125
Damien Geradin
George Mason University School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States

George Mason Law School Logo

Tilburg Law & Economics Center (TILEC)
Tilburg, 5000 LE
Anne Layne-Farrar
Charles River Associates ( email )
1 South Wacker Drive
Suite 3400
Chicago, IL 60606
United States
312-377-9238 (Phone)
HOME PAGE: http://www.crai.com
Northwestern University ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
Jorge Padilla
Compass Lexecon ( email )
Paseo de Recoletos 7-9
Madrid, 28004
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