U.S. Supreme Court to Decide: Will Patent Infringers Continue to Be Routinely Enjoined?

The U.S. Supreme Court has agreed to consider whether a permanent injunction should ordinarily issue after a patent is found valid and infringed. A decision in the case — eBay Inc. et al. v. MercExchange, L.L.C. — is expected by July 2006.

At trial, a jury ruled for MercExchange, holding that eBay and its subsidiary, Half.com, infringed two patents; but the trial court refused MercExchange's request for a permanent injunction against the infringers. The trial court based its refusal on what it called a growing concern over the issuance of business-method patents; concerns that design-arounds by the infringers could result in repeated questions about whether infringement was continuing; public statements that MercExchange was willing to license its patents; and MercExchange's failure to ask for a preliminary injunction. Rejecting these bases on appeal, the Court of Appeals for the Federal Circuit upheld the validity and infringement of one of MercExchange's patents, but ruled that the trial court's denial of the injunction was improper because of the general rule that, absent exceptional circumstances such as issues of public health or safety, courts will issue permanent injunctions against adjudged infringers.

eBay petitioned the U.S. Supreme Court to review the question whether the general rule in patent cases is proper, arguing that it is contrary to the applicable statute and to standards usually applied in other areas of law when an injunction is sought. On November 28, 2005 the Supreme Court not only granted eBay's petition on the question it presented, the Court also took the unusual step of posing as an additional question whether one of its earlier decisions on injunctions in patent cases — the nearly 100-year-old case of Continental Paper Bag Co. v. Eastern Paper Bag Co. — should be reconsidered.

Of course, should the U.S. Supreme Court do away with the long-recognized rule that permanent injunctions will usually be entered against adjudged infringers, patent enforcement in the U.S. could be seriously affected. A number of friend-of-the-court briefs had already been filed while the petition for review was pending, and this will likely be repeated now that the Supreme Court has agreed to take a case that U.S. patent lawyers will be watching very closely.