Monday, November 26, 2007

The Aftermath of eBay V. MercExchange

Andrew Beckerman-Rodau from Suffolk University looked at 28 district court cases after the Supreme Court's eBay decision to determine how courts handled permanent injunctions. These cases were reviewed to see if the following factors affected the decision whether to grant or deny a permanent injunction for patent infringement:

  • Direct competition between patent owner and infringer
  • Non-practicing entity asserting patent rights
  • Willful infringement
  • Venue
  • Complex invention problem
  • Willingness of patent owner to license patent
  • Likelihood of future patent infringement
Beckerman-Rodau broke down each factor in light of the district court holdings:

Direct competition - The existence or non-existence of direct competition between the patent owner injunctions and the patent infringer appears to be the most significant predictor of whether a permanent injunction will be granted. In most every case in which a permanent injunction was issued the litigants were direct marketplace competitors.

Indirect Competition - the current crop of district court cases suggest that the patent owner would be entitled to an injunction against other companies selling competing products (e.g., product activation software) but not against a company that incorporated a patented product to a larger product but who did not directly compete with the patent owner.

Non-Practicing Entities (NPE's) - In almost every case in which a court denied a permanent injunction for patent infringement the patent owner was a non-practicing entity. The one exception to the general rule is CSIRO v. Buffalo Technology, where the court found it significant that CSIRO was a non-profit organization. Thus, nonprofit enterprises such as universities and research institutes - which typically engage in very basic research - may be able to obtain permanent injunctions despite being non-practicing entities. In contrast, for-profit commercial entities will routinely be denied such relief for infringement of their patents.

Willful Infringement - "['W]illful infringement does not appear to be a significant factor in predicting or explaining judicial decisions that grant or deny permanent injunctions. Of the thirteen cases in which the court found willful infringement, permanent injunctions were granted in nine cases and denied in four cases. Moreover, in the fifteen cases in which the there was no finding of willful infringement, a permanent injunction was granted in thirteen cases and denied in two cases."

Venue - The choice of venue did not appear to affect whether a court will issue or deny a permanent injunction. According to Beckerman-Rodau, "choosing a specific federal circuit or a specific district within a particular circuit, at least based on the limited judicial opinions to date, does not predict the remedy for infringement."

Complex Invention Problem - Justice Kennedy specifically mentioned the situation "when a patented invention is but a small component of the product the companies seek to produce" and stated that in such a situation, "legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest." Beckerman Rodau found that this factor was not determinative of whether or not an injunction would issue. This factor was specifically mentioned in only three cases. In one of these cases a permanent injunction was granted and in two of these cases it was denied.

Willingness of Patent Owner to License - Again, this came out as a wash. This factor was specifically mentioned in only six cases. In three of those cases a permanent injunction was granted and in three of those cases it was denied.

Likelihood of Future Infringement - here, the study found that it may be beneficial for a patent owner to demonstrate a likelihood of future infringement in order to obtain a permanent injunction. This factor was specifically mentioned in only ten cases, but in nine of those cases, a permanent injunction was granted for patent infringement while it was only denied in one.

  • Read/download Beckerman-Rodau, "The Aftermath of eBay V. MercExchange, 126 S. Ct. 1837 (2006): A Review of Subsequent Judicial Decisions" (link)

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