The RESTORE Patent Rights Act: One Little Sentence that Could Change Everything

by Dennis Crouch

The Senate Judiciary Committee’s Subcommittee on Intellectual Property recently held a new hearing focusing on the RESTORE Patent Rights Act, a deceptively simple one-sentence bill that could dramatically reshape patent enforcement in the United States. The hearing highlighted the stark divide between those who believe stronger injunctive relief is needed to protect patent rights and those who warn that presumptive injunctions could harm innovation.

At its core, the RESTORE Act would establish a rebuttable presumption that courts should grant permanent injunctions when patent infringement is found. The key language is as follows:

If . . . the court enters a final judgment finding infringement of a right secured by patent, the patent owner shall be entitled to a rebuttable presumption that the court should grant a permanent injunction with respect to that infringing conduct.

This would partially reverse the Supreme Court’s 15-year-old decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) which eliminated the near-automatic granting of injunctions in patent cases and instead required courts to apply a four-factor test considering irreparable harm, adequacy of monetary damages, balance of hardships, and the public interest.  Under the proposal, the four factors would (I presume) continue to apply, but with the burden shifted to adjudged infringers to show that they do not support injunctive relief.  In my mind, the bill also highlights an aspect of eBay that is not much discussed. The Supreme Court said nothing explicit about whether a presumption of irreparable harm persists — that elimination of even a presumption of irreparable harm came from the Federal Circuit most notably in Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142 (Fed. Cir. 2011).  In Bosch, the Federal Circuit took the additional step of interpreting eBay to eliminate the presumption of irreparable harm.  Overruling Smith Int’l, Inc. v. Hughes Tool Co., 718 F.2d 1573 (Fed. Cir. 1983) (“where validity and continuing infringement have been clearly established, immediate irreparable harm is presumed.”).

The December 18, 2024 hearing was led by Senators Coons and Tillis and included four witnesses.

• Watch the Hearing.
• 2024-12-18_-_testimony_-_babcock
• 2024-12-18_-_testimony_-_osenga
• 2024-12-18_-_testimony_-_contreras
• 2024-12-18_-_testimony_-_landau

Jacob Babcock, CEO of wireless technology company NuCurrent that has a history developing and licensing technology, testified about the real-world impact of uncertain injunctive relief. He described how his company had its patented technology “stolen” by a major Korean manufacturer, leading to widespread unauthorized use throughout the industry. Without the credible threat of an injunction, Babcock argued, there was little deterrent to this type of “efficient infringement” where large companies calculate that it’s cheaper to infringe and pay damages later rather than negotiate licenses upfront.

Professor Kristen Osenga of Richmond Law School (and key leader of the “Inventors Defense Alliance) emphasized how the current post-eBay framework has fostered what she terms “predatory infringement.” She argued that when injunctive relief is uncertain, potential licensees have little incentive to negotiate in good faith, knowing that at worst they’ll eventually have to pay court-determined royalties that are often lower than negotiated rates. Drawing from historical precedent, she noted that for over two centuries before eBay, courts generally granted permanent injunctions when a valid patent was found to be infringed. See, e.g., Adam Mossoff, The Injunction Function: How and Why Courts Secure Property Rights in Patents, 96 NOTRE DAME L. REV. 1581 (2021).

Professor Osenga likened patent infringers to squatters who refuse to leave someone’s property but are merely required to pay back rent rather than vacate. She pointed to empirical evidence supporting this concern, citing recent AUTM data showing that exclusive licenses, which typically command higher values, have decreased post-eBay, while lower-valued non-exclusive licenses have increased.

Joshua Landau, representing the Computer & Communications Industry Association, is on the other side of these arguments.  Landau presented data suggesting that operating companies can still readily obtain injunctions when they practice their patents, with grant rates only dropping about 2% post-eBay. The real impact, he argued, has been on non-practicing entities that don’t make products themselves, and that he referred to as patent trolls. Landau warned that presumptive injunctions could allow trolls to extract excessive settlements by threatening to shut down entire product lines over minor features.

Professor Jorge Contreras of the University of Utah provided perhaps the most detailed empirical analysis, noting that courts have only rarely authorized “unenjoined infringement” — approximately twice per year in the 15 years following eBay.

My own work shows that during the 15-year period from 2006 to 2021, Courts have authorized continued infringement in exchange for an ongoing royalty after denying a permanent injunction only 32 times. That’s just twice per year across thousands of patent infringement lawsuits in this country. Hardly an avalanche of infringement that will derail the innovation economy.

Prof Contreras does acknowledge that non-practicing entities are much less likely to obtain injunctive relief.  He did not discuss the selection bias — that few NPEs request injunctive relief under the current law because it would likely be deemed a frivolous claim. See Kristina M.L. Acri née Lybecker, Injunctive Relief in Patent Cases: The Impact of eBay, HARV. J.L. & TECH. (forthcoming 2025) (patent owners, regardless of their business model, are increasingly reluctant to even seek injunctive relief).

Contreras also suggested that enhanced damages for willful infringement remains a “strong legal mechanism in place to deter what has been called holdout and predatory infringement.”  Professor Contreras also pushed back on claims that eBay has made the U.S. an outlier, noting that other jurisdictions like Germany are actually moving toward more flexible approaches to patent injunctions.

A key point of contention was the bill’s likely beneficiaries. Supporters portrayed it as helping “undercapitalized entities” stand up to large corporations. However, critics argued that the main beneficiaries would be patent assertion entities receiving litigation funding from Wall Street, noting that the top 10 patent litigants in 2022 were all non-practicing entities focused on licensing and litigation rather than product development.  But as Babcock argued these days the “time, money, and power is now on the side of the infringers.” Of course, that is generally the way of civil litigation — the cost of litigation is only worth if for plaintiffs if the defendant has money to pay the damages.

The hearing also explored constitutional arguments, with supporters citin Article I’s provision for securing “exclusive Rights” to inventors. Professor Contreras pushed back, arguing that while the Constitution gives Congress power to create patents, it does not establish patent rights as constitutionally protected individual rights akin to those in the Bill of Rights.

Several witnesses discussed the international competitiveness angle, with Babcock warning that uncertain patent rights are causing investment to flow overseas. However, Professor Contreras noted that many countries are actually looking to eBay as a model as they develop more flexible approaches to patent injunctions that consider proportionality.

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I want to note that some inventor advocacy groups are opposing the RESTORE Act  — arguing that it does not go far enough in protecting patent rights.  Rather, the bill would allow a somewhat attenuated eBay to remain the law rather than returning to historical practice.  I agree that even under the new approach, the many accused infringers would be able to, for instance, show a lack of irreparable harm.