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After Ebay, Inc. v. Mercexchange: The Changing Landscape for Patent Remedies

30 Pages Posted: 30 Jun 2008 Last revised: 4 Aug 2014

Bernard Chao

University of Denver Sturm College of Law

Date Written: June 26, 2008

Abstract

In eBay, Inc. v. MercExchange, L.L.C., the Supreme Court overruled the longstanding practice of granting permanent injunctions to successful patent plaintiffs as a matter of course. When deciding whether to issue a permanent injunction, courts in patent cases now need to use the same four factor test that is used in other contexts. That test requires courts to analyze: (1) whether the plaintiff will suffer irreparable harm without the injunction; (2) whether there is an adequate remedy at law; (3) the balance of hardships on the respective parties; and (4) whether granting an injunction would disservice the public interest. This Article provides a critical analysis of the case law that has emerged after eBay applying these factors, and selects three categories of fact patterns that courts consider when deciding whether to issue a permanent injunction. In particular, this article views permanent injunctions from an economic perspective and assesses whether relying on these fact patterns to determine whether a permanent injunction successfully balances the goals of the patent system.

The article also discusses how, in the absence of a permanent injunction, some courts have granted a compulsory license to the losing party or "ongoing royalty" to provide the patent holder with a remedy for future infringement. These decisions either provide no or a poorly reasoned explanation for the authority underlying such a remedy. The article suggests that the courts do not have the authority to issue an on-going royalty, and should instead exercise judicial restraint and "do nothing" to remedy the possibility of future infringement. The doctrine of willful infringement already provides an adequate incentive to prevent defendants from continuing to infringe a successful plaintiff's patent.

Keywords: injunctions, ongoing royalty, patent, remedies, economic analysis

JEL Classification: K11, k41, 031, 034

Suggested Citation

Chao, Bernard, After Ebay, Inc. v. Mercexchange: The Changing Landscape for Patent Remedies (June 26, 2008). Minnesota Journal of Law, Science & Technology, Vol. 9, No. 2, 2008. Available at SSRN: https://ssrn.com/abstract=1151904

Bernard H. Chao (Contact Author)

University of Denver Sturm College of Law ( email )

2255 E. Evans Avenue
Denver, CO 80208
United States

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