Prospective Compensation in Lieu of a Final Injunction in Patent and Copyright Cases

Abstract

In eBay Inc. v. MercExchange, L.L.C. (2006), the Supreme Court held that traditional equitable factors apply to injunctions in patent and copyright cases, and that therefore the mere fact a defendant has infringed a patent or a copyright does not necessarily mean a final injunction must issue. In the three years since, lower courts have denied final injunctions more frequently than before and are now struggling with what relief, if any, to give prevailing plaintiffs in lieu of an injunction. Some courts permit plaintiffs to sue again later. But most award prospective relief to plaintiffs - sometimes a lump-sum damages award or more commonly a continuing royalty - to compensate plaintiffs for the defendant's anticipated post-judgment infringements. Plaintiffs often object to prospective-compensation awards as constituting compulsory licenses.

This Article demonstrates that federal courts lack the authority, in either law or equity, to award prospective compensation to plaintiffs for post-judgment copyright or patent infringements. Until such time as Congress creates a new form of compulsory licensing, future-damage awards and continuing royalties can only be granted in lieu of a final injunction by consent of the parties. This Article reaches its conclusion only after undertaking the most comprehensive treatment of the subject to date. Apart from surveying the relevant statutory texts, it relies on an historical review of future-damage and continuing-royalty jurisprudence in England and the United States from 1660 to the present.

Keywords: ebay, injunctions, royalties, copyright, patent, remedies, equity, future damages, legal history