| Review and Analysis of eBay Inc. v. | | | | 748, 52 L. Ed. 1122 (1908), which rejected the |
| Mercexchange, LLC, No. 05-130, SUPREME COURT | | | | contention that a court of equity has no |
| OF THE UNITED STATES, 126 S. Ct. 1837; 164 L. | | | | jurisdiction to grant injunctive relief to a patent |
| Ed. 2d 641; 2006 U.S. LEXIS 3872; 74 U.S.L.W. | | | | holder who has unreasonably declined to use the |
| 4248; 78 U.S.P.Q.2D (BNA) 1577, Decided May 15, | | | | patent." |
| 2006 | | | | The Federal Circuit reversed the district court, |
| I. SUMMARY OF OPINION | | | | applying a "general rule" favoring injunctions in |
| In this case, the Supreme Court split the | | | | patent cases. According to the Supremes, the |
| differences between the District Court and the | | | | Federal Circuit's "general rule" was improper, and |
| Court of Appeals for the Federal Circuit. The | | | | went to far in the other direction from the |
| Supreme Court summarized the prior proceedings | | | | District Court. The Supremes stated that the |
| as follows: | | | | Federal Circuit: |
| Following the jury verdict, the District Court | | | | "court articulated a "general rule," unique to patent |
| denied MercExchange's motion for permanent | | | | disputes, "that a permanent injunction will issue |
| injunctive relief. 275 F. Supp. 2d 695 (2003). The | | | | once infringement and validity have been |
| Court of Appeals for the Federal Circuit reversed, | | | | adjudged." 401 F.3d, at 1338. The court further |
| applying its "general rule that courts will issue | | | | indicated that injunctions should be denied only in |
| permanent injunctions against patent infringement | | | | the "unusual" case, under "exceptional |
| absent exceptional circumstances." 401 F.3d 1323, | | | | circumstances" and "'in rare instances . . . to |
| 1339 (2005). We granted certiorari to determine | | | | protect the public interest.'" Id., at 1338-1339. Just |
| the appropriateness of this general rule. 546 U.S. | | | | as the District Court erred in its categorical denial |
| ___, 126 S. Ct. 733, 163 L. Ed. 2d 567 (2005). | | | | of injunctive relief, the Court of Appeals erred in |
| The District Court had denied an injunction, | | | | its categorical grant of such relief. Cf. Roche |
| applying its version of the traditional 4-factors | | | | Products v. Bolar Pharmaceutical Co., 733 F.2d |
| test whether to grant an injunction. However, | | | | 858, 865 (CAFed 1984) (recognizing the |
| according to the Supremes, the District Court | | | | "considerable discretion" district courts have "in |
| went to far, indicating that the District Court: | | | | determining whether the facts of a situation |
| "appeared to adopt certain expansive principles | | | | require it to issue an injunction"). |
| suggesting that injunctive relief could not issue in a | | | | Thus, the Supremes concluded that both lower |
| broad swath of cases. Most notably, it concluded | | | | courts got it wrong, and that instead the |
| that a "plaintiff's willingness to license its patents" | | | | traditional test for an injunction should apply in |
| and "its lack of commercial activity in practicing | | | | patent cases, stating that: |
| the patents" would be sufficient to establish that | | | | Ordinarily, a federal court considering whether to |
| the patent holder would not suffer irreparable | | | | award permanent injunctive relief to a prevailing |
| harm if an injunction did not issue. Id., at 712. But | | | | plaintiff applies the four-factor test historically |
| traditional equitable principles do not permit such | | | | employed by courts of equity. Petitioners eBay |
| broad classifications. For example, some patent | | | | Inc. and Half.com, Inc., argue that this traditional |
| holders, such as university researchers or | | | | test applies to disputes arising under the Patent |
| self-made inventors, might reasonably prefer to | | | | Act. We agree and, accordingly, vacate the |
| license their patents, rather than undertake | | | | judgment of the Court of Appeals. |
| efforts to secure the financing necessary to bring | | | | II. ANALYSIS |
| their works to market themselves. Such patent | | | | The Supremes were careful to clarify that the |
| holders may be able to satisfy the traditional | | | | traditional test for injunctive relief be applied fairly, |
| four-factor test, and we see no basis for | | | | that is, clarifying for example that "willingness to |
| categorically denying them the opportunity to do | | | | license," per se, was insufficient to establish lack |
| so. To the extent that the District Court adopted | | | | of irreparable harm. However, they have still |
| such a categorical rule, then, its analysis cannot be | | | | raised the bar on obtaining injunctions. As a result, |
| squared with the principles of equity adopted by | | | | their decision will reduce patent infringement |
| Congress. The court's categorical rule is also in | | | | litigation. For those patentees that do sue, the |
| tension with Continental Paper Bag Co. v. Eastern | | | | prospects for obtaining an injunction are less likely. |
| Paper Bag Co., 210 U.S. 405, 422-430, 28 S. Ct. | | | | |