Injunctive Relief in Patent Cases: the Impact of eBay

Abstract

The U.S. Supreme Court’s 2006 decision on eBay Inc. vs MercExchange LLC marked a turning point in the history of patent enforcement and policy. Prior to 2006, the legal community perceived that when lower courts faced patent infringement cases they frequently granted injunctions, almost as a matter of course to those who sought them. However, Chief Justice Kennedy’s concurrence linked the rejection of a general rule regarding permanent injunctions to concerns surrounding non-practicing entities. This raises the question of whether the courts provide preferential treatment to practicing entities over non-practicing entities (NPEs). If operating companies are favored, in terms of the likelihood of granting an injunction, then NPEs have reduced bargaining power in both litigation and licensing negotiations. This study analyzes the set of all patent cases filed in the United States District Courts (USDC) from 2000-2023 in which there was a motion for either a preliminary or a permanent injunction. This work examines the difference in the rate at which both preliminary and permanent injunctions were sought and granted, based on the rate at which these motions were filed pre-eBay and post-eBay. The analysis finds that the eBay ruling significantly reduced both the request for and grant of injunctions, relative to the pre-eBay baseline, and that the decision differentially impacted different categories of plaintiffs. Specifically, the relative decrease in requests for permanent injunctions was 87.4% for non-practicing entities and 65.0% for operating companies. Surprisingly, requests for preliminary injunctions also fell, relative to the baseline: 48.4% for NPEs and 53.2% for operating companies. Finally, the relative decreases in grants of permanent injunctions were 91.2% for NPEs and 66.7% for operating companies. This paper describes the significant unique role of injunctions as a remedy in patent cases, describing why there is no clear economic substitute to such a remedy, and highlighting the importance of the impact of eBay on the availability of injunctions as a remedy.

Keywords: permanent injunction, preliminary injunction, injunctive relief, eBay Inc. vs MercExchange LLC, non-practicing entities (NPEs), patent

JEL Classification: D8, K10, K41, O31, O38