EBay v. MercExchange: Automatic Injunction in Patent Cases

MercExchangePatent_small1eBay v. MercExchange (on petition for certiorari).

In July, 2005, eBay filed a petition for writ of certiorari, asking the Supreme Court to review the Federal Circuit’s decision to grant a permanent injunction to MercExchange.  In this case, the Federal Circuit held that, absent exceptional circumstances, a district court should issue a permanent injunction after a finding of infringement.

I. eBay’s Petition: In its petition for certiorari, eBay spells out the traditional four-factor injunctive relief test and argues that the four-factor test should apply to patent cases rather than the de facto per se test applied by the CAFC.  The four-factor test includes consideration of (i) irreparable harm from not issuing an injunction; (ii) whether an adequate remedy exists in law (damages); (iii) whether the injunction would be in the public interest; and (iv) whether a balance of hardships would tip in the plaintiff’s favor.  Download eBay Brief.pdf (4452 KB)

II. MercExchange’s Opposition: MercExchange opposes the petition.  In its brief, MercExchange first point to the statutory guidelines:

  • 35 USC 154: Every patent shall contain . . . a grant . . . of the right to exclude others from making, using, offering for sale, or selling the invention . . .
  • 35 USC 261: . . . patents shall have the attributes of personal property . .
  • 35 USC 283: . . . courts having jurisdiction . . . may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.

Citing a series of Supreme Court cases that support the patentee’s right to exclusivity, MercExchange argues that eBay’s argument would require overruling long established precedent. Additionally, MercExchange provides its own argument under the four-factor test — explaining how it would easily fit within that test as well. Download MercExchange Brief.pdf (3480 KB)

III. Electronic Frontier Foundation in Support: In support of eBay’s petition, the EFF argues that the CAFC’s ‘per se’ injunction is inconsistent with 35 USC 283 and does not consider “countervailing free speech interests.”

Regarding free speech, the EFF argues that patent rights are “increasingly affecting free expression online” and that consideration of the public interest should not be limited to exceptional cases — rather those considerations should be routine.

The most offensive element . . . is [the CAFC’s] promulgation of an impoverished vision of the public interest. While public health concerns are doubtless important . . . courts must be encouraged to consider other public interests as well. In particular, the Federal Circuit offers little, if any, room for consideration of an increasingly evident public interest in patent litigation—free speech. . . . [C]ourts of equity must be free to weigh the need for injunctive relief against the potential impact such relief may have on speech and speech related activities.

Download the EFF brief. 

IV. Computer & Communications Industry Association in Support: With a litany of complaints against the Federal Circuit and PTO, the CCIA asked the Supreme Court to turn the tide of potent, low quality patents.  Specifically, CCIA argues that:

  • The CAFC has made patents more potent.
  • The CAFC has made patents easier to get.
  • The CAFC has made patents more versatile and broadly available.
  • The CAFC has made patents easier to assert.
  • The PTO’s Bureaucracy undermines patent quality.
  • And, that the automatic injunction rule exacerbates these problems by encouraging litigation.

Download the CCIA Brief.