SCOTUS Holds that Traditional Rules Used in Considering Whether to Award Permanent Injunctive Relief Apply to Patent Act Disputes

Per eBay Inc. v. MercExchange, L.L.C., --- S.Ct. ----, 2006 WL 1310670 (Argued Mar. 29, 2006; decided May 15, 2006) (No. 05-130):

Syllabus

Petitioners operate popular Internet Web sites that allow private sellers to list goods they wish to sell. Respondent sought to license its business method patent to petitioners, but no agreement was reached. In respondent's subsequent patent infringement suit, a jury found that its patent was valid, that petitioners had infringed the patent, and that damages were appropriate. However, the District Court denied respondent's motion for permanent injunctive relief. In reversing, the Federal Circuit applied its “general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.”401 F.3d 1323, 1339.

Held: The traditional four-factor test applied by courts of equity when considering whether to award permanent injunctive relief to a prevailing plaintiff applies to disputes arising under the Patent Act. That test requires a plaintiff to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law 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. The decision to grant or deny such relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion. These principles apply with equal force to Patent Act disputes. “[A] major departure from the long tradition of equity practice should not be lightly implied.” Weinberger v. Romero-Barcelo, 456 U.S. 305, 320, 102 S.Ct. 1798, 72 L.Ed.2d 91. Nothing in the Act indicates such a departure. 401 F.3d 1323, vacated and remanded.

Thomas, J., delivered the opinion for a unanimous Court. Roberts, C.J., filed a concurring opinion, in which Scalia and Ginsburg, JJ., joined. Kennedy, J., filed a concurring opinion, in which Stevens, Souter, and Breyer, JJ., joined.