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May 15, 2006

Supreme Court Decides eBay Patent Case: You're Both Wrong on Injunctions

The Supreme Court clarified the use of injunction as a remedy in patent dispute cases.  The case was between eBay and MercExchange L.L.C. over the use of the "Buy It Now" feature on eBay's site.  The District Court found MercExchange's patent valid but refused to issue an injunction.  The District Court justified its refusal on the patent holder not having exploited the technology in practice, but rather only as a licensing company.  The Court of appeals for the Federal Circuit, on the other hand, overruled stating that the general rule is an injunction issuing as a matter of course absent exceptional circumstances.

The Supreme Court disagreed with both positions.  Justice Thomas in a short opinion (5 slip pages) said both courts got it wrong.  The appropriate rule to be applied is the traditional four part test for injunctions:

  1. The plaintiff has suffered an irreparable injury;
  2. Remedies available at law, such as money damages, are inadequate to compensate for that injury ;
  3. Considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted ;
  4. That the public interest would not be disserved by a permanent injunction.

Justice Thomas quoted sections of the Patent Act that favored this approach.  The Court's decision was unanimous, with short concurring opinions by Chief Justice Roberts (joined by Justices Scalia and Ginsberg) and Justice Kennedy (joined by Justices Stevens, Souter, and Breyer)

No doubt Research In Motion could have used this opinion in their recent dispute.

The Opinion is here.

May 15, 2006 | Permalink


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