Federal Circuit: eBay creates a four-element test (not “four-factors”)

Nichia Corp v. Everlight Americas (Fed. Cir. 2017)

Nichia is the world’s largest supplier of LEDs.   The defendant here also sells LEDs and was accused of infringing three Nichia patents. U.S. Patent Nos. 8,530,250, 7,432,589, and 7,462,870.

In a bench trial, the district court judge sided with the patentee – finding that it had proven infringement and the defendant had not proven the asserted claims invalid.  However, the district court refused to issue a permanent injunction – finding that the patentee had failed to show that it suffered irreparable harm due to the infringement or that the remedies available “at law” were inadequate.   On appeal, the Federal Circuit has affirmed — holding that the proof of irreparable harm is a necessary threshold test for permanent injunctive relief, regardless of whether the patentee is left with an adequate remedy at law.  The decision is important (and quite problematic) because it allows for the possibility of no remedy for the patentee.

The baseline comes from the Supreme Court’s decision in eBay v. Mercexchange that established a four-factor test for determining whether to grant permanant injunctive relief.  The patentee must prove: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

Prior to this decision, my conception of the four-factors were that the balance of the four must weigh in favor of injunctive relief and that the patentee must prove either (1) irreparable harm or (2) lack of remedy at law.  The decision here rejects both of my prior-conceptions.  Taking them in reverse order, the court holds that irreparable harm must be proven before relief can be granted.  In addition, the court wrote (likely dicta) that each factor must be individually proven for injunctive relief to issue.

The movant must prove that it meets all four equitable factors. i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 861 (Fed. Cir. 2010). And it must do so on the merits of its particular case. eBay. . . . Because Nichia failed to establish one of the four equitable factors, the court did not abuse its discretion in denying Nichia’s request for an injunction.

The court here appears to shift this from a four-factor test to a four-element test.  The result of this decision is that it becomes incrementally even more difficult for a patentee to obtain injunctive relief even after winning its infringement lawsuit and defending against validity challenges.   I also expect that any analysis of the historical equitable factors (the approach suggested by eBay) will recognize that this holding is incorrect.

98 thoughts on “Federal Circuit: eBay creates a four-element test (not “four-factors”)

  1. I just want to remind everyone that we got eBay because the Federal Circuit said that the district court must grant the injunction as a matter of course unless there are extraordinary circumstances. The Supreme Court got it exactly right in that case. the Federal Circuit was going crazy limiting the power of the district court.

    If you remember, the concurrence said that it seems that an injunction is often because, most of the time, the four factors favor granting a patent. Again, exactly right.

    The value of the patent is, and has been since old English times, the monopoly pricing. Ryan, James, A Short History of Patent Remedies, 6 Cybaris An Intell. Prop. L. Rev. 150, 154. Usually, monetary compensation is not enough. (As Robinson states, “The redress afforded by an action at law consisting simply in an award of damages for past infringements was early found to be inadequate for the protection of the patentee.” section 932).

    In this case, the patent owner licensed out the invention, so it wasn’t a “close monopoly”, and the district court properly weighed whether this was a competitor or not.

    Yes, it’s possible that there is no remedy for this patent owner. Try not to sue a non-competitor to extort them, next time. I think that is a good moral hazard for patent owners.

    Of course, the Federal Circuit might now go the other way with their “four element test.” Still making the same mistake interfering with district court discretion.

    1. Misstatement: “Try not to sue a non-competitor to extort them

      If found to infringe, then the notion of “competitor” has not bearing on the actual right.

      Patents are not granted “only against competitors.”

      1. If found to infringe

        LOL

        What if the patent is a total piece of junk? You know like some “edit video footage on a remote server, where the footage includes someone in a pre-marked seat” kind of junk?

        What should happen when you try to extort people with junk like that?

        Patents are not granted “only against competitors.”

        We all know it’s difficult for you to understand, “anon”, but everyone knows the game being played by the b0ttom-feeders who can’t help themselves. We’ve been watching you and your cohorts for literally a decade now. The Supreme Court decided eBay the way it did because of people like you. That’s one of the reasons it’s a great decision, and great for pretty much everybody.

        Has there been a notable shortage of progress in the “online auction arts” since eBay? How about the managing online bingo game arts? Big decrease in progress there?

        Fyi, I saw something that made think of you the other day. Wayne Pierre spouted off to his gun f0ndlers club that the biggest domestic threat in the US was “academic elites.” What a tough guy! Just like you.

        LOLOLOL

        1. Nice non sequitors, goal post moving, straw men and dust kicking, Malcolm.

          Instead of moving off point, maybe you want to say something about the actual legal point that I presented?

          If you have been found to infringe, the mere label of “competitor” is meaningless and then attempted goal post move to want to insert some type of “quality-defend-a-claim” has ZERO to do with my post.

          Try again – and try better by staying on point. Your feelings just are not on point.

            1. “He actually said “academic elites, political elites and media elites””

              Oh, well in that case yes, he definitely got it 100% correct.

      2. Because an infringement on the right entitles someone to a remedy? Have you never heard of nominal damages?

        Oh! but patent law is different!, you might say. Yes, the statute allows at least a reasonable royalty. But there is no similar language in the statute that says that an infringer is entitled to an injunction.

    2. We got eBay in part because the patent at issue was a business method patent, which even then was of very suspect validity even despite State Street Bank. But, give SSB, the lower court could not invalidate the patent because of that factor. But it refused to grant an injunction. That would be left up to the Supreme Court in Bilski a few years later.

      1. Correct. Thank you for the essential historical context.

        Note that thanks to the CAFC’s relentless pushback on the Supreme Court, very little about the context has changed, except around the margins. There’s still an incredibly huge pile of “do it on a computer” junk out there, the PTO continues to grant it, and it continues to be asserted with zeal.

        1. Because “equity” was an End desiring to swallow the law and rewrite that law that the judicial branch has no business attempting to rewrite.

          This type of judicial legislating from the bench is the bug and not the feature.

        2. …ignoring the legal ramifications of that same historical context is only showcasing your wanton ignorance – but you already know that, eh Malcolm?

      2. Please forgive the (potential) double post due to the hyper filter…

        Once again Ned (how many times have we been on this particular Merry Go Round?), you want to reference Bilski as some type of declaration against business method patents, when that is just not so.

        You should be aware that you only hurt your own credibility by so blatantly Chasing Windmills.

        1. It is entirely unclear as to what you are referring to as “a misguided legal analysis,” let alone why you might be feeling that whatever that analysis was, why exactly it was misguided.

          Can you elucidate, J?

          1. Sure anon, the message board format sometimes is difficult to follow.

            This misguided analysis was by the Federal Circuit that said injunctions should be granted to valid patents as a matter of course unless there are extraordinary circumstances. I said, “that is why we got ebay.”

            Ned replied that we got ebay because it was a business method patents that would have never gotten to the remedy stage because it would have been invalidated.

            I was saying, yes, not a good patent patent. But that made it an ideal vehicle for the Supreme Court to strike down the Federal Circuit’s faulty thinking.

    3. “The value of the patent is, and has been since old English times, the monopoly pricing.”

      Uh, no. A monopoly means that the seller is the only supplier of the good or service; that necessarily means there are no competing goods or services. Rarely if ever does a patent confer a monopoly. One of the points of the patent system is to encourage others to design other ways of doing the same thing that don’t infringe the patent, whereby to lower prices overall for products competing in the relevant market.

      Additionally, “monopoly pricing” implies that a patent owner must actually manufacture and sell a product that’s protected by the patent. But that’s not the case in the USA, the EU or China, the three biggest consumer markets in the world. In those markets, a patent owner can in principle prevent others for making or selling an infringing product, regardless of whether or not the patent owner actually manufactures products; at the very least, the patentee is entitled to royalties from infringers. In many situations that means it is the ability to license the patent, and not the ability to set high prices for one’s own goods, as the primary source of value in a patent.

      /end of tutorial for patent newbie/

      1. Did I say monopoly? No, I did not. Those words are deliberately chosen. I understand the point of the patent system, the benefit for the entire country, is to encourage design of better inventions. But the value to the PATENT OWNER is securing part of the market just for himself.

        And did I say monopoly pricing on the particular invention? No, the business is looking for monopoly pricing on some sort of corner on the market.

        Condescension is neither productive nor admirable.

        1. It serves as a reminder to young attorneys that fancy titles and fame do not equal wisdom.

          I’ll repeat what I’ve said previously: Prometheus v. Mayo was not a particularly difficult case to understand, factually or legally. If you’re a patent attorney or patent judge and you can’t say something intelligent about the case that demonstrates that you clearly understand the facts of the case and the issue before the Supreme Court, then you’re basically a hack. Judge Michel is a hack and a shill. Note that it’s a curable condition. But Michel won’t cure it because … shill.

          1. You mistake your feelings for wisdom and are rather full (f00l) of yourself to think that those feelings are “a good thing.”

            They are not.

            They are a blight.

            They are mere emotions that have no nexus with any actual legal underpinnings.

  2. Recall also the concurring opinion of Justice Kennedy in eBay, which included:


    Both the terms of the Patent Act and the traditional view of injunctive relief accept that the existence of a right to exclude does not dictate the remedy for a violation of that right. Ante, at 3–4 (opinion of the Court). To the extent earlier cases establish a pattern of granting an injunction against patent infringers almost as a matter of course, this pattern simply illustrates the result of the four-factor test in the contexts then prevalent.
    (…)
    In cases now arising trial courts should bear in mind that in many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases. An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees. See FTC, To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy, (…)
    For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent. See ibid. When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest. In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.

    1. In cases now arising trial courts should bear in mind that in many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases.

      Absolute liberal-left hogwash.

      The patent itself – a negative right has not changed. The use of – and the identity of the use – are of NO concern to the officious Court.

      None.

      It simply is not within their sphere to impress on anyone what anyone can or should do with their own personal property right.

      the threat of an injunction is employed simply for undue leverage in negotiations,

      Do without – or better yet, invent something else to take the place of the “offensive” item.

      The notion here of “and an injunction may not serve the public interest.completely misses the point that the bargain of exclusivity ITSELF is what serves the public interest.

      The potential vagueness and suspect validity” – expressly NOT within the “equity” realm of the Court.

      Potential and suspect…?
      Prove your damm case as to that vagueness being illegally vague.
      Prove your damm case as to the item NOT being valid.

      You haven’t done that? Then there is ZERO justification for a judge or a Justice to “feel” any different and to insert there feelings. That is just NOT what equity is for.

      There is ZERO room for this type of insertion of liberal left “feelings” into the equation of equity and what role equity has for the transgressed and transgressor.

      1. Of course the patent maximalist will pretend that logic patents and “do it on a computer junk” (“my screen has a brown button and a sliding bar for entering grandmas weight!”) have always been a huge part of the system.

        Keep the l i e s coming, “anon”.

        1. Your feelings – as wrong and off as they are – are noted.

          But you may want to reply to what I actually stated here if you want to make any type of point.

          Yeah, that’s what I thought.

            1. As the filter has yet again gone hyper, please excuse any possible dual posting…

              You replied with feelings – as I noted – and those feelings are not on point with anything that I stated.

              So your reply here is simply not responsive.

              Try again (and try better).

        1. You do understand the Quid Pro Quo patent bargain, eh Malcolm?

          You do understand why we have a patent system in the first place, eh Malcolm?

      2. “Absolute liberal-left hogwash.

        The patent itself – a negative right has not changed. The use of – and the identity of the use – are of NO concern to the officious Court.

        None.

        It simply is not within their sphere to impress on anyone what anyone can or should do with their own personal property right.”

        While I do understand the feeling I think you’re talking about a tool/remedy, “injunctions” that were solely at the discretion (indeed literally the conscience) of a court to impose, and would not otherwise be imposed. That you must recall brosefus.

        “Do without – or better yet, invent something else to take the place of the “offensive” item.”

        I’m sure they’d be happy to in many instances, though in those instances as you well know the “patentee” has claimed an entire abstract idea. Tough to “invent around” such claims. But of course if we didn’t give you those claims then your patent would be worthless amirite?

        “completely misses the point that the bargain of exclusivity ITSELF is what serves the public interest.”

        Nobody ever offered you complete and total exclusivity. “The several courts having jurisdiction of cases under this title 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.” MAY (not shall), in accordance with the principles of equity (not in accordance with every single request for an injunction). I know “may” might be a new word for you.

        1. You are missing the basics of what equity is for, 6; and how equity for the transgressed in patent cases is best achieved with the power of the injunction. I have posted that a problem that judges have is that in general (read that as non-patent) law, “injunction” is deemed to be a harsh measure. But to blindly take that same tact without understanding the context of what a patent is, IS the legal mistake that I am pointing out.

          As such, this is just not a matter of following statutory law (which appears to be influencing your comment here).

          1. “You are missing the basics of what equity is for, 6; and how equity for the transgressed in patent cases is best achieved with the power of the injunction.”

            Mhmmm, somehow I get the feeling that myself and nearly the entirety of the legislature and general lawlyer population, outside the patent lawlyer population, are actually the ones “getting” the basics of what equity is for, and how equity for the transgressed in any case involving an equitable dispute, patent cases included, is best achieved. And that instead it is the patent lawlyer population that has been doing the “missing”. Though I understand completely your hypothesis on the subject, so you need not pontificate about that matter further here.

            “I have posted that a problem that judges have is that in general (read that as non-patent) law, “injunction” is deemed to be a harsh measure. ”

            Indeed you have posted it, and indeed it is so. That’s because it is a harsh measure. Regardless of whether or not it would be appropriate to do it in all patent cases, it is still harsh. Hundreds of years of jurisprudence show as much. Literally going back to like the 1500’s. And the more injunctions get put in place the more they get whined about.

            For that matter, in patent cases it can often be said to be especially harsh as it can cost huge dollars to obey the injunction and take much away from the public.

            “But to blindly take that same tact without understanding the context of what a patent is, IS the legal mistake that I am pointing out.”

            It isn’t a common lawl legal mistake. It’s literally equity lawl.

            “As such, this is just not a matter of following statutory law”

            Correct, it’s a matter of equity which the statutory lawl punts over to. The only problem in our current conversation is that you (at least appear to) have a bizarro world view of equity lawl. Which I really don’t know where you managed to get, or how you managed to dream it up all by your lonesome. Though I suspect you dreamed it up all on your own.

      3. “You haven’t done that? Then there is ZERO justification for a judge or a Justice to “feel” any different and to insert there feelings. That is just NOT what equity is for.”

        Brosef the whole point of equity is literally to do what is on the judge’s conscience. You keep on getting confused because our society started letting actual judges to the judging of equitable matters instead of keeping that function with the clergy. I bet that if the clergy still had to decide matters of equity we wouldn’t hear such nonsense issuing forth from your mouth. It would be apparent to you on its face that they have every single justification for a judge to “feel” different and insert their “feelings”. That being because it would be apparent that the only reason you’d get an injunction is if their “feelings” were on your side.

        1. Again – you are misconstruing the conversation as somehow dealing with a “statutory/equitable” divide when no such issue is being discussed.

          1. I know you’re not discussing it, in your mind. And that’s why your statement that I quoted above is mistaken. You need to take that divide into account instead of leaving it out of the conversation and your thinking on those lines as it is integral thereto.

            1. My statement is not mistaken.

              Rather, it is you that are mis-taking the statement.

              Your attempted “integration” is nothing but trying to change the statement to a discussion on something else.

              Please stay on point.

    2. “In cases now arising trial courts should bear in mind that in many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases.”

      This has to go down as one of most historically uninformed statements ever made by a Justice or just object self delusion. What were the turn of the century patent cartels? Motion Pictures Patent Co. being one of the more famous and creating the first sale doctrine. Indeed, within the four corners of the Continental Paper Bag decision itself (the second Cert question presented), the patent was purchased for the purpose of enjoining a better, faster, cheaper means of making a bag and preserving the market share of the old non-infringing bag making process. Oh, and the Bag case was specifically upheld in the eBay holding.

      1. A process for making a physical object? Crazy stuff. I mean how do make money on something like that? Real money, I mean. What would be the point?

  3. The eBay case relied on Weinberger, which did not in fact enumerate a four factor test, and which itself employed questionable citation practice. From an article in 2006:

    The Weinberger case does not enumerate a four factor test for consideration in granting a permanent injunction. In fact, the Weinberger case was not strictly about the grant of a permanent injunction because the ultimate merits were to be resolved in the permit application. The decision in eBay v. MercExchange about the presence of a four factor test for permanent injunctions may have unintended consequences. In ZEN INVESTMENTS, 2006 U.S. Dist. LEXIS 37171 (decided June 2, 2006), the court noted: “The Third Circuit has been unsettled n5 on whether a plaintiff must prove irreparable harm to receive a permanent injunction, as opposed to a preliminary injunction which always requires a showing of irreparable harm.” The eBay decision squarely brings back “irreparable harm” into the permanent injunction calculus without giving much guidance on how to evaluate irreparable harm. The immediate impact will be more uncertainty.

    Ironically, the cite to a non-existent four factor test by the eBay court resonates with certain questionable citation practices in the Weinberger case. For example, the appropriateness of citations of the Weinberger court to other cases which appear on page 312 has been questioned by legal academics. Thus, Douglas Laycock wrote of Weinberger in the Harvard Law Review in 1990 (103 Harv. L. Rev. 687) (…)

    Article Source: link to EzineArticles.com

  4. Is Ebay ripe for a constitutional challenge in that it violates Article 1, Section 8? Perhaps calling it a “patent” is the peg. These things cannot be reconciled. But if you call it something else, say a “registered design”, then it can fall under the commerce clause. Calling it a patent after 2006 is chicanery. This would solve the PTAB problem as well. We don’t have patents anymore in the U.S. Let’s be honest.

    1. Exactly! But don’t expect the Court to do anything about it.

      The Constitution only allows The Congress to “secure…the exclusive Right…to Inventors…” The Congress does not have the right to give non-exclusive rights. I think the use of the word “exclusive” is significant. This is why injunctions are required in all cases, no questions asked. Otherwise it ceases to be an exclusive Right.

      I don’t see where the Courts have been given the authority to convert this exclusive Right into a non-exclusive one. Somebody needs to rein in these judges.

      1. I don’t see where the Courts have been given the authority to convert this exclusive Right into a non-exclusive one.

        This – as opposed to 35 USC 101 – is an easy one:

        See 35 USC 283: The several courts having jurisdiction of cases under this title 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.

        The problem is NOT that the courts have been provided this “sharing” of power from Congress.

        The problem is that the courts are not applying that power appropriately, as the principles of equity to prevent the violation of any right secured by patent has fallen to the court’s bias against patents – for what patents are.

        This is of course symbolized by my posts regarding what a true view of the principles of equity would be (making the aggrieved as whole as possible) and in that context realizing that injunctions simply do not – and cannot – maintain the “typical view” of being “harsh.”

        Somebody needs to rein in these judges.

        Absolutely.

        Unfortunately, Congress is asleep at the switch.

  5. I found it strange that an injunction would not issue against a competitor, but the bench decision below [sustained here] established in detail that they were not actually competitors, and that the patent owner had failed to prove a single lost sale, nor would suffer future irreparable harm.

      1. To your point, Ned, must the (Black’s Law legal) definition of “irreparable harm” necessarily include the notion that a patent holder must also be a goods-manufacturer or service provider?

        Let’s not do a knee-jerk Court reaction to that question (to the affirmative) and take a moment and a step back to realize that a patent is not a positive right at all and that harm then must be not to any accoutrements (or by-products) of having a patent, but harm should be looked at as harm to the patent.

        (it’s a slightly different perspective…)

  6. Judiciary Act of 1789, ch. 20, § 16, 1 Stat. 82 (“And be it further enacted, That suits in equity shall not be sustained in either of the courts of the United States, in any case where plain, adequate and complete remedy may be had at law.”)

    This reflects the jurisdictional requirement of an equitable remedy from England.

    1. Black’s Law Dictionary:

      Irreparable Injury: This phrase does not mean such an injury as is beyond the possibility of repair, or beyond possible compensation and damages, or necessarily great damage, but includes an injury, whether great or small, which ought not be submitted to, on the one hand, or inflicted, on the other; and which, because it is so large or so small, or is of such constant and frequent occurrence, or because no certain pecuniary standard exists for the measurement of damages, cannot receive reasonable redress in a court of law. Wrongs of a repeated and continuing character, or which occasion damages that are estimated only by conjecture, and not by any accurate standard, are included.

      1. This raises the second important problem of eBay (the first being that infringement does not create a presumption of irreparable harm). Irreparable harm has historically been directly linked to an inadequate remedy at law – by logically separating them into separate factors, the Supreme Court created this potential mess.

        1. Dennis, I read your post and said “WTF?!” for just this reason – until now irreparable harm has meant that monetary compensation is insufficient, they’re not two separate tests.

          Haven’t looked at the decision yet, so I don’t know who the judges were (it would be helpful if you would include that info in your case write-ups), but clearly Judge Newman wasn’t on this panel.

          BTW, can’t it be argued that previous CAFC panels have previously held, at least implicitly, that under eBay, irreparable harm = monetary compensation inadequate, and that therefore this panel decision is not only non-binding but flat-out wrong?

    2. [B]y 1789, the Chancery’s jurisdiction to issue copyright injunctions had become concurrent and incontestable. The Supreme Court could thus hold today, without running afoul of traditional equitable principles, that a copyright injunction can issue without regard to the adequacy of legal remedies. This Article reaches its conclusion only after undertaking the most comprehensive treatment of the subject to date. It relies primarily on the original manuscript records of 220 infringement suits brought in the Court of Chancery from 1660 to 1800, which are stored at the National Archives in London, England, and a further review of earlier copyright-infringement suits from 1557 to 1680 in antecedent tribunals, many of which are also only available in manuscript form. The topic of this Article is particularly timely given the Supreme Court’s recent decision in eBay Inc. v. MercExchange, L.L.C., where it discussed the standard for issuing injunctions in patent cases, and where Chief Justice Roberts stated in a concurring opinion that lower courts should consider the inadequacy requirement in light of historical practices.

      Gomez-Arostegui, Tomas, What History Teaches Us About Copyright Injunctions and the Inadequate-Remedy-At-Law Requirement (October 19, 2008). Southern California Law Review, Vol. 81, p. 1197, 2008; Lewis & Clark Law School Legal Studies Research Paper No. 2008-13. Available at SSRN: link to ssrn.com

    3. Curtis is often an excellent source of English and American law.

      This ditty from Section 419:

      §419. If the question of infringement is doubtful, it must be
      tried by a jury; and in a case of this kind, Sir L. Shadwell, V. C.,
      dissolved an injunction, and ordered an action to be brought to try the infringement, the respondents being ordered to keep an account, and to admit the plaintiff’s title to the patent.2 The same rule would be applicable to the granting an injunction in the first instance.

      Morgan v. Seaward, 1 Webs. Pat. Cas. 167.

      1. This is consistent with the apparent idea that legal issues were tried to juries in all cases. The idea that court can deny jury trials when the issue being tried is legal, such as with infringement or validity, is nonsense.

    4. Curtis:

      § 400. WE have seen that the common law and the statute both
      afford a remedy, by an action for damages, for the infringement of patent rights. But this remedy would be wholly inadequate to
      the protection of such rights, if it were not accompanied and fortified by another remedy, which flows from that great principle of equity jurisprudence, that where there is a legal right, and the nature of the injury to which it is exposed is. such that a preventive remedy is indispensable, equity will afford that remedy by an injunction. The grounds of the equity jurisdiction in cases of patents are, the prevention of irreparable mischiefs, the suppression of a multiplicity of suits and vexatious litigation, and the more complete discovery, from the party guilty of infringement, of the extent of the injury done to the patentee, than can be obtained in an action at law) It does not belong to the purposes of this work, to trace the origin of this branch of equity jurisdiction, nor is it necessary to do so, since the patent laws have expressly adopted in the broadest terms the remedy which it affords for the protection of patent rights, and have directed the proper courts “to grant injunctions according to the course and principles of courts of equity, to prevent the violation of the rights of any inventor, as secured to him by any law of the United States, on such terms and conditions as the said courts may deem reasonable.” 2

      1 2 Story’s Eq. Jurisp. § 980, 981, 982, 988.
      • Act of July 4, 1886, ch. 857, § 17. Enlarged, as to powers of appeal, by act of February 18, 1861, ch. 87.

      Later in the text, is clear that the patent owner was presumed to be entitled to an injunction — but it was rebuttable by suggesting, for example, invalidity or non infringement. If either was at issue, it was sent to the law courts to be tried to a jury. See, Section 418.

      Equitable defenses, such as laches, were also available.

      1. I admit that Robinson and Curtis tended to think that injunctions should be granted immediately once it was found that the patent was valid and there as an infringement.

        But I think they are wrong. Yes, they were most often granted (at least when the federal courts finally got original jurisdiction in 1819), but these highly qualified men underestimated the very important traditional equitable factors that have always been in place when granting an injunction.

        This is what Judge Rader missed, as well. He would often write something to the effect that the public interest always weighs in favor of enforcing the patent. Not necessarily. In 19th century case the injunction was denied in part because they were effective fire escape ladders, and they didn’t want to force a city to take them down.

        1. underestimated the very important traditional equitable factors that have always been in place when granting an injunction.

          I would posit that they in fact did not underestimate those factors.

          There is a world of difference between “underestimate[ing] those factors” and seeing those factors in the proper context of what the patent right is and the fundamental reason for equity (to make the transgressed as whole as possible).

          Quite in fact, J, it is the underestimating (purposefully or otherwise) of what a patent means that leads to the improper and over-impact “caution” of ‘injunction as a harsh measure‘ that is the true issue here.

          The efficient infringer lobby know this only too well.

          1. When should an injunction not be granted in a patent case where the patent is valid and infringed, in your view? Come up with any hypothetical you like

            1. If a patent has been judged to be valid, there is NO room for the Supreme Court insertion of suspicion on its validity.

              If a patent has been judged to be infringed, there is NO room for the Supreme Court insertion of “gee, the infringer should be somehow let to continue to be infringing.”

              In this case, the injunction simply is NOT the “harsh” thing that injunctions are considered to be when dealing with other rights that need to be remedied.

              In this case, the injunction simply is the best manner of making the aggrieved as whole as possible.

              Equity demands that the injunction be put into place.

              As to any possible hypothetical that would move off of this plain understanding of equity and what equity is for, one possible hypothetical would be in case of a real national emergency, such as an epidemic where the government needs to step in and perform a takings so as to meet the national health needs.

              As you might surmise, the actual instances of the imposition of any type of “nanny-state” interference should be rare indeed.

              1. So… never?Got it.

                The problem with that is that it goes against the traditional use of equity and the district court’s discretion to grant it… which, by the way, was interfered with by the Federal Circuit. The Supreme Court got involved because the Fed. Cir. went rogue.

                1. Clearly I provided an example so your quip of “never” is spurious.

                  And as I have abundantly pointed out, the attempt to make “injunction” match a non-patent view of “harsh” absolutely misses the fact of what a patent is, as well as misses the fact of what equity for a transgressed means.

                  NONE of this has anything to do with a district court’s discretion, and discretion simply does not mean that you are free to do completely whatever.

                  J, that’s three strikes in one short reply from you.

                  You should consider paying better attention.

                2. It was a joke, anon. Sheesh.

                  I never have said that injunctions shouldn’t be used because they are “harsh.” You keep ascribing that word to me, unfairly I might ask.

                  Injunctions are the excecise of the court’s extraordinary. What’s more important than enforcement of any single patent, restraining order, or mandamus is that the court does not extend its power and swallow legislative and executive powers. I KNOW you appreciate that, anon, you complain all the time.

                  The four traditional factors are an important check on a court’s power. Patents are not an exception to the rule.

                  I’m not anti patent. I actually favor strong remedies. I just think the legal analysis is wanting in this case.

                3. J,

                  The weakening of the patent right is no joke.

                  And while you personally may have never used the word “harsh,” you have impliedly used it as that is the very basis of any attempt to avoid the the use of injunctions as the single best remedy for making the aggrieved whole when it comes to patent cases. The minute you attempt to use equity in less than the full meaning of that word, the minute you attempt to say “injunction is too much,” you have said the same thing as injunctions are too harsh.

                  This has NOTHING to do with keeping the court’s power in check. Nothing at all, and the floating of that balloon in your latest response is merely a sign that you are seeking for any port in the storm of my taking you to task here.

                  So no, my posts are not unfair to you.

  7. Dennis writes: “The decision is important (and quite problematic) because it allows for the possibility of no remedy for the patentee.”

    Patent holders who cannot get a permanent injunction (which is most of them) can still ask for a post-judgment “running royalty” to obtain compensation for infringement occurring after the jury’s verdict. The theory is that the jury awarded fair compensation for infringement, but only up until trial. So for anything after that, to the extent the defendant continues to infringe, you apply a going-forward, running royalty, to compensate the patentee for those post-verdict acts of infringement. The plaintiff thus has a remedy and continues being compensated as long as the defendant’s use of the invention continues. The defendant, on the other hand, is always free to argue that a hypothetical negotiation would have yielded a one-time lump sum, and can advocate that position to a jury and can seek a verdict awarding that.

    In any case, it is simply not true that a patentee who is denied a permanent injunction is in all cases denied a remedy. The Eastern District of Texas has been doing running royalty awards this since at least 2007, the year after the eBay decision. (I haven’t seen the argument yet, but I think a crafty defendant could argue that a post-judgment “running royalty” award is actually a form of injunctive relief, and thus, the plaintiff must comply with eBay and show irreparable harm.)

    But I do agree that dicta suggesting that all four eBay “factors” are elements” is analytically wrong. For example, the third and fourth factors in eBay, balance of hardships and public interest, are really not “elements” in any real way, and rarely get anything more than lip service in the analysis. For example, the balance of hardships routinely tips in favor of the defendant, yet that doesn’t stop courts from entering an injunction where the first two factors are established.

    1. Excellent comment. I also agree with Dennis (and others) that it’s more than a bit weird to refer to “balancing hardships” and “weighing public interest” as “elements”. The whole point of the exercise (I thought) was to achieve a gestalt understanding which, in theory, leads one to the conclusion (injunction, or not). Treating the parts of the analysis as elements which must each be “met” individually by the patentee completely undermines that point.

    2. Logically should not a running royalty for continued future infringement by the defendant should be at a rate enhanced by the enhanced damages statute since the patent is no longer contestable by the defendant?

      1. There are far too many times in which logic does not appear to be a consideration under “equity.”

        (those eschewing efficient infringement are very much aware of this)

      2. No, because the enhanced damages provision is for LEGAL damages, and the running royalty is equitable.

        I’m not sure courts should have the power to award ongoing royalties. It’s awarding a monetary remedy without a jury. Is there a historical basis for a court to do this in equity? I don’t know if there is…

        1. As noted, J, the “running royalty” is a joke and simply does not make the aggrieved whole, as is the basic purpose of equity.

    3. What about the patents supposedly being “exclusive” rights (US Const. Art. 1, Sec. 8)? If a patent owner no longer can truly “exclude” others from making, using, offering for sale, selling or importing the invention (35 USC 154(a)) during the life of a patent, but must simply accept compensation for the infringement, what is it really? While it might seem on its face that injunctive relief is built into the patent statute as inherent content of the patent grant, some exclusive rights are apparently now more exclusive than others.

    4. To the extent that you think a running royalty can be imputed from some notion of a rate established in a court of law, you are incorrect. As I recall, that is the exact issue that was remanded in i4i out of the E.D.Tx. Post the legal trial you are in the zone of equity and in my view the patent statute is silent as to any post trial remedy but for a prayer to equity. Mossinghoff disagrees with me on this but I have yet to see something dispositive from him on this point. My view, is consistent with Story’s view of equity, it’s place and purpose, as cited by Ned, and the remand in i4i. Logically, therefore, computing damages in equity, at this stage of a case, would be under a theory that can be recognized in equity –> unjust enrichment. In other words, the infringer should not profit from the unlawful use of another’s legal property. Of course, this is the same remedy available from a contempt proceeding from an injunction granted in the first instance. I believe there is a SCOTUS case, Westinghouse? directly on point. First trial case Westinghouse wins and court issues injunction order in equity. Second trial case Westinghouse wins again, but this time post trial, Westinghouse prays in equity under a contempt theory of the first injunction. Holding: The burden shifts to the ‘wrongdoer’ under of theory of unjust enrichment to disgorgement of all profits without regard to apportionment (recall, this was back in the day that apportionment of profits was the legal theory of recovery). fn. Anyway the court seemed very pleased with itself, in saying disgorgement of profits is the remedy for contempt of a injunction. In other words, the Court appeared pleased with the logic of it’s ‘balance,’ i.e., the notion of the wrongdoer continuing to infringe but having to turn over all of it’s profits to the patent owner. So, economically, the wrongdoer would finally get the point, and obey the injunction.

      fn, Ironically, apportionment of profits, was being gamed by the defendants and the statute was changed to ‘no less than a reasonable royalty’ to stop the gamesmanship. While I don’t want to speak for Mossinghoff here, hopefully he changed his views!, I believe he thinks in this amendment to the damages statute my ‘old’ view of equity was overturned. My point being, this the statute concerns legal damages, not equitable relief.

  8. The part about people getting to prove either irreparable harm OR lack of remedy at law strikes me as likely mistaken on D’s part. Gotta have the former as far as I know.

    Still, the part about having to prove all 4 factors, whew, idk about that. That’s not traditional equity that much is for sure. I think D is correct about the weights.

    1. The difficulty in reading old cases is that the first two elements of eBay were traditionally collapsed into a single factor that was a necessary element. The Supreme Court in eBay separated them, but suggested that they did not intend to alter the general approach to injunctions.

      1. “a single factor”

        So like a “irreparable harm because of no remedy at law”?

        Or are you talking about the factors/elements?

  9. “The decision is important (and quite problematic) because it allows for the possibility of no remedy for the patentee.”

    How would there be no remedy? You mean because monetary damages would be way too small?

    1. Depends on what “monetary damages” are taken to mean.

      If they mean only “meh, let them pay only what would have otherwise may have been negotiated,” you have a de facto anti-patent stance because then the absolute worst case is that the infringer (after being brought through the entire gauntlet) merely and only has to pay a typical “use fee” while the patentee is saddled with all the expense of getting to that point, and may not want to let that particular entity even have use (for any fee).

      What you have essentially done is force a conscripted mandatory license (a la India).

      And that is best case for the patentee – talk about your Free Rider problems…

      1. Unlike someplace where you have a mandatory license, it seems that once there is a judgment of infringement and validity and the infringer continues to infringe in the absence of an injunction, the remedy is not just the potential “use fee” but also treble damages and attorneys’ fees for willful infringement.

        1. …not if the remedy of a forced “user fee” (running royalty) is put in place – you will not get the running royalty and treble damages.

      2. [T]he patentee… may not want to let that particular entity even have use (for any fee).

        I agree with everything else you just said, but to my mind this is the most important bit. There are perfectly sensible reasons why a business may simply not want competitors in a given market, even if those competitors pay royalties. Imposing a reasonably royalty on the infringement does not, in those circumstances, make the patentee whole.

        Imagine if the same reasoning were applied to real estate. I have a field and you invade a plant corn on it. Maybe I had in mind to lease it to someone else, who was planning to plant a higher value crop, in which case, I could have extracted more rent. In that case it might be an adequate damages to have the trespasser cough up the difference in cash. On the other hand, maybe I planned to live on this land myself this year. Or to let it lie fallow, because this particular plot has reached that point in the crop rotation cycle. In those cases, merely paying money does not really address the benefit of ownership of which I am being denied. I want the trespasser off my land, and merely imposing a given “rent” on the trespasser does not make me whole.

  10. You are likely correct that proof of irreparable harm will not be an absolute requirement, even if only because absolute requirements and the doing of equity are in natural tension.

    Surely the patent right inherently grants the patentee a strong right to exclude others from practicing the invention, but in this case the invention is used in a mass-scale commodity that is easily priced and important to the public. The balance of hardships between the litigants and the public interest are usually going to be entwined in a fact-intensive, unique arrangement where reasonable people can disagree about proportions.

    That’s why equity has it’s critical place in patent jurisprudence and why I believe equitable principles will sooner or later inform the subject matter debate.

    1. Equity – as far as that goes – is often not properly evaluated in the patent world wherein the number one task is to make the aggrieved as whole as possible, and the very nature of the patent is best matched by an injunction.

      One problem that the judiciary has is that for other areas of law the injunction is viewed as “the harshest possible” equitable relief.

      Not appreciating that such “harshness” is not only out of place in the patent sphere, but is actually detrimental to arriving at true equity for the aggrieved, the application of equitable principles is likely to (continue to) be slanted against patentees.

      Of course, this is one reason why the efficient infringement crowd loves to mouth the importance of equity all the while not recognizing primary considerations of the context of the patent right.

      1. Well said. To modestly paraphrase Stephen Colbert: “Ebay v. Mercexchange, terrible patent decision or worst patent decision ever?”

    2. Under your reasoning, you can kiss bio and pharma goodbye, because the benefit to the public of something curative will always trump the private right to exclude. The land example, and the Bag case itself – paraphrasing ‘under a property right system, questions of motive of the property owner have no place in the injunction analysis,’ the ramification of holding otherwise, immediately gives rise to ‘optimal use,’ balancing and all the other mumbo jumbo.

      1. “equity” (purposefully in quotes) swallows law…

        Mow down the laws of man, and what then will you do when the devil turns on you? – Sir Thomas More

Comments are closed.