TO: LAW FIRM
FROM: JANET CONSTANTIN
DATE: OCTOBER 7, 2007
RE: U.S. SUPREME COURT DECISION
Ebay v. MercExchange, 126 S.Ct. 1837 (2006).
SUMMARY
In order for a patentee to be awarded a permanent injunction against an infringer, the patentee must prove: 1) that he suffered an irreparable injury; 2) that remedies available at law are inadequate to compensate for the injury; 3) that considering the balance of hardships between the parties, a remedy in equity is warranted; and 4) that the public interest would not be disserved by a permanent injunction. Weinberger v. Romero-Barcelo, 456 U.S. 305, 311-313 (1982).
The United States Supreme Court also adds that patent holders are not excluded from the protection of the Patent Act simply because they choose to license their patent to others in order to promote their invention in the market place.
PROCEDURAL HISTORY
The United States District Court for the Eastern District of Virginia held that MercExchange’s patent was valid and had been infringed by EBay. The District Court awarded damages, but denied permanent injunctive relief. The United States Court of Appeals for the Federal Circuit reversed in part, finding that an injunction should have been granted to MercExchange. Certiorari was granted. The United States Supreme Court vacated the decision of the Court of Appeals and remanded the case for further proceedings.
ANALYSIS
One of the issues in this case is whether the Court of Appeals was justified in granting MercExchange injunctive relief based on its reasoning that the issuance of injunctions in cases of patent infringement is generally acceptable, except in “exceptional circumstances.†The Supreme Court holds that this rule of the Appeals Court is not appropriate, given the fact that standard criteria exist. The Supreme Court reasons that the use of the four-factor test, in addition to the express language in the Patent Act, indicate that cases should be reviewed using those criteria. The Patent Act explicitly states that injunctive relief MAY be issued in accordance with the principles of Equity. 35 U.S.C. § 283. This operative language distinctly indicates that the decision of a Court to issue an injunction is within the Court’s latitude. Therefore, in applying a blanket rule for all infringements, as the Court of Appeals did, it erred in its analysis.
The second issue addressed by the Supreme Court is the District Court’s conclusion that MercExchange was not entitled to an injunction because it did not enter the market place in order to promote its patent. The U.S. Supreme Court disagreed with the District Court’s analysis, finding that patent holders who license their patents to others to market are just as able to meet the criteria for injunctions as those who market their patent themselves. The Supreme Court again finds the lower Court’s reasoning to be in error.
The United States Supreme Court does not address the particular circumstances of infringement in this case. Ebay and MercExchange had been unable to reach an agreement as to the licensing of MercExchange’s business method patent. However, MercExchange was able to reach a licensing agreement with several other companies, thus allowing the public access to its product. While the Supreme Court clearly articulated that one who licenses his patent is not necessarily precluded from seeking an injunction, it does not address the issue of those inventors who are unmistakably infringed and still manage to extend the benefits of their invention to the public, being afforded timely due protection under the law.