Overturning EBay is not the status quo.

“In an effort to make it harder for patent trolls to obtain injunctions, a bad decision from the Supreme Court weakened the patent system for everyone. Overruling eBay would instantly shift the balance of negotiating power back to even. Unfortunately, that is not going to happen anytime soon.”

https://depositphotos.com/216836112/stock-photo-fake-dictionary-dictionary-definition-word.htmlAs anyone who follows the United States Supreme Court knows, the Court has historically been extremely fond of taking important cases with cutting edge issues, only to dodge the real issues and address some insignificant procedural or hyper-technical issue. Such disappointment is all too frequent, so Supreme Court watchers are seldom surprised when the Court passes on an opportunity to breathe clarity into otherwise unsettled waters. But what the Supreme Court did in eBay Inc. v. MercExchange LLC, 547 U.S. 388 (2006) was far more disappointing. In eBay, the Supreme Court decided to throw out longstanding and well-established Federal Circuit jurisprudence and offered little or nothing in its place. The result has been an extraordinary shift in the balance of power between patent owners and infringers.

A New Landscape

Although there never was a mechanical rule from the Federal Circuit that mandated an injunction in all cases, permanent injunctions for victorious patent owners could be routinely expected. So, the Supreme Court’s decision in eBay v. MercExchange has been one that significantly altered the patent litigation landscape and, therefore, is easily one of the most important Supreme Court patent cases in recent memory.

In order to understand the decision, we must rewind the clock, beginning with the well-established law that was in place up until the early morning hours of May 15, 2006—the day the Supreme Court issued the decision in question.

Prior to May 15, 2006, when a patent owner prevailed on the merits in a patent infringement lawsuit, there was a well-established general rule that an injunction should ordinarily issue absent the presence of a sound reason for denying it. In reality, what this general rule meant was that permanent injunction should issue, and if an injunction did not issue the district court was required to explain the rationale for denying the injunction. While the routine issuance of a permanent injunction to the victorious patent owner may seem reasonable given the exclusive nature of the patent grant itself, such a bright-line rule was believed by some to be inconsistent with well-established equitable principles that apply to all areas of law. This view, however, ignores the essence of the patent grant, which by its very nature and verbiage grants to the patent owner the right to exclude others. In other words, the patent is a de facto injunctive right earned by the patent owner against the world and granted by the U.S. federal government.

In addressing the issues in eBay, the Supreme Court determined that the familiar principles of equity as applied to permanent injunctions should apply to disputes arising under the Patent Act. Translation: What the Supreme Court incorrectly viewed as a bright-line rule was erased in favor of the traditional four-factor test for granting injunctions.

Four Fateful Factors

Starting late in the morning on May 15, 2006, in order to receive a permanent injunction in a patent litigation the victorious plaintiff needs to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

This would not be so bad if irreparable harm would be presumed, which it should be because a patent is a time limited – or wasting asset – that will become a nullity after a prescribed period of time has passed. Once the patent falls into the public domain it is free to be used by anyone and everyone, as are all obvious variations of the invention described. Therefore, the patent owner must derive all economic benefit from the patented invention during the finite period of time the patent is in force. This means the finite period of exclusivity must really be exclusive. No amount of monetary damages can pay the patent owner for the loss of the right to the exclusive marketplace for the proscribed period of time. In fact, the law does not even recognize the loss of the exclusive right to the market as a recognizable or quantifiable monetary damage, although it most certainly does cause harm when the true innovator is forced to share the market they created with a callous, calculating, free-riding infringer. That exclusive marketplace for a period of time not only allows the patent owner to reap the rewards of invention alone, but to establish themselves alone as the source. Thus, free-riding patent infringers cause an identifiable yet uncompensated trademark and unfair competition damage upon patent owners. That is why, with a wasting asset like a patent, irreparable harm must be presumed.

Sadly, since the Supreme Court decided eBay, irreparable harm is not presumed in patent infringement litigation.