Supreme Court Decision in eBay Reverses Federal Circuit Permanent Injunction Rule
05/15/2006Under the unanimous U.S. Supreme Court decision issued today in the eBay v. Mercexchange case, the grant of a permanent injunction is no longer the "general rule" in patent cases where the patent owner prevails. Rather, the "decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts." In exercising that discretion, the district courts have been instructed to apply the "traditional principles of equity."
According to the Supreme Court, section 283 of the patent statute "expressly provides that injunctions 'may' issue 'in accordance with the principles of equity,' " which trumps the personal property attribute of patents and the exclusionary right grant. The Court found fault with the district court's conclusion that a willingness to license coupled with lack of commercial activity precludes irreparable injury. It also found fault with the U.S. Court of Appeals for the Federal Circuit's pronouncement that absent "exceptional circumstances," the "general rule," unique to patent cases, is "that a permanent injunction will issue once infringement and validity have been adjudicated." Rather, the Court held that "in patent disputes no less than in other cases" where the matter rests within the equitable discretion of the district court, that "discretion must be exercised 'consistent' with traditional principles of equity."
We expect that in the future, many patent owners will consider section 337 actions before the International Trade Commission, where exclusion orders and cease and desist orders (the functional equivalent of an injunction) are available essentially as a matter of right to a prevailing petitioner.
