Turn – Injunctions are crucial to the innovation of the pharmaceutical industry

Nevertheless, MercExchange contended that the remaining two factors, even if considered, would almost always favor the patentee. The balance of the hardships would rarely favor the infringing party, except 122. See Brief for Respondent, supra note 42, at 23 n.27. 123. See id. at 25 nn.28-29. 124. See id. at 26. Part of this argument is based on the underlying purpose of the Federal Circuit which was created, in part, to generate uniformity in intellectual property law. 125. 15 U.S.C. § 1116(a) (2006). 126. 17 U.S.C. § 502(a) (2006). 127. See Brief for Respondent, supra note 42, at 26. 128. See id. at 27 (arguing that Weinberger, 456 U.S. at 312, did not create any test for equitable relief). 129. See id. at 28. This is similar to a trespass on real property. Damages would be insufficient to recompense for the invasion since the trespasser would not be forced off the land. An injunction, therefore, is the only remedy that compensates for the trespass and prevents future trespass without the necessity for successive lawsuits. See Kaiser Aetna v. United States, 444 U.S. 164, 176-79 (1979) (holding that the right to exclude is a fundamental element of the property right); Smith Int’l, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1578 (Fed. Cir. 1983) (holding that the right to exclude would be of much less value without the injunctive remedy). 2007] MUCH ADO ABOUT NOTHING 197 in unusual circumstances where disproportionate harm would result. However, according to MercExchange, any financial benefits derived from the infringement should not be considered. Similarly, MercExchange argued that “[a]n injunction serves the public interest by protecting the value of patent rights . . . [such as] encouraging the creation, development, disclosure, and commercialization” of new inventions.130 Following this argument to its logical conclusion, the Federal Circuit’s general rule in favor of an injunction in all but extraordinary circumstances was, therefore, entirely consistent with the purpose, language, and historical practice surrounding the Patent Act. B. Biotech & Pharma Weigh In Although eBay and MercExchange were the primary parties to the dispute, other important players decided to weigh in through amicus briefs – especially players such as the pharmaceutical and biotechnology industries. The primary concern of the pharmaceutical and biotechnology industries surrounding the eBay case and its implications on the injunctive remedy for patent infringement revolves around economics“The promise of exclusionary rights . . . provides the investment incentive for the research and development of innovative products” that are essential for the public good.131 The primary asset of most small biotech companies is intellectual property, vis-à-vis patents, and the commensurate right to exclude is essential to justify the high cost and risk of investment.132 Consequently, an inability to enjoin infringement would diminish economic power and value of patent rights.133 As a whole, the biotech industry filed over forty thousand new patents in 2003.134 However, most of the companies that comprise the biotechnology sector are small and lack significant financial assets. As a result, their primary means of financing research and development is through private investment and negotiations. Consequently, they argued that any change or even uncertainty in the injunctive remedy could have a deleterious effect on negotiations with private investment sources, and thereby reduce the potential for future drug discovery.135 Additionally, many biotech companies and research institutions do 130. See Brief for Respondent, supra note 42, at 33. 131. Brief for Biotechnology Industry Organization as Amicus Curiae Supporting Respondent at 1, eBay, 126 S. Ct. 1837 (2006) (No. 05-130) [hereinafter Brief for BIO]. 132. See id. at 2; see also Brief for Pharmaceutical Research and Manufacturers of America Brief as Amicus Curiae Supporting Respondent at 7, eBay, 126 S. Ct. 1837 (2006) (No. 05-130) [hereinafter Brief for Pharma]. 133. See Brief for BIO, supra note 131, at 8. 134. Id. at 1. 135. See id. at 5. 198 J. ON TELECOMM. & HIGH TECH. L. [Vol. 6 not immediately practice or develop their patented inventions.136 In some circumstances this may be due to lack of financing, expertise, or manufacturing capacity. Also, licensing may not be strategically or economically beneficial. If the injunctive remedy was removed as a protection against infringement, the biotech industry would be forced to seek protections under different legal regimes, such as trade secrets, and this may not be in the best interests of the industry or the public as a whole.137 The rewards of new medicines and improvements to public heaalth and safety may be diminished or lost as a result. Likewise, the pharmaceutical industry argued that the presumption in favor of a permanent injunction as a remedy for patent infringement is essential. As their amicus brief stated, the “pharmaceutical industry depends for its very existence upon strong, reliable patent protection.”138 The high research and development costs associated with the long process from idea to FDA approval and the high likelihood of failure of most research compounds are subsidized by the products that successfully make it to the drug market.139 Pharmaceutical drugs usually contain a single, easily identifiable compound that may qualify for patent protection.140 While an injunction would lead parties to negotiate and reach a fair market price for use, compulsory licensing, as a judicial remedy, rarely factors in the true research and development costs.141 Therefore, according to the pharmaceutical industry, a failure of the right to exclude in any given circumstance could be disastrous. Nevertheless, Teva Pharmaceuticals, a generic drug manufacturer, presented a strong counterargument against a near-automatic injunction rule.142 It argued that injunctions should not issue where the infringement is due to the presence of a “de minimis” or “mere “trifling” 136. See id. at 17. 137. See id. at 9-10. The patent system protects innovation for a limited time in exchange for a dedication of the technology to the public domain at the end of that limited period. See, e.g., Universal Oil Prods. Co. v. Globe Oil & Ref. Co., 322 U.S. 471, 484 (1944). Trade secrets would be a disadvantage to both industry as well as the public. For example, industry would not be protected from reverse engineering or other copying of the technology. See, e.g., Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 475-76 (1974). And because trade secrets could, in theory, exist in perpetuity, many innovations may either never make it to market or be limited in supply or distribution, hurting access to it by the general public and limiting the potential innovation on that technology going forward. 138. Brief for Pharma, supra note 132, at 5. 139. See id. at 5-8. 140. See id. at 7. 141. See id. at 13-15. Research and development costs of patented drugs are not easily calculable because pharmaceutical companies usually offset the costs of failed drug candidates. See id. Consequently, the pharmaceutical industry argued that court-imposed licenses would “directly impact the number of new drugs brought to market. Pharmaceutical companies would be unable to raise as much money to invest in R&D, and the resulting decrease in R&D funding would translate directly into fewer new drugs.”