Patent Compulsory Licensing System II

eBay v. MercExchange

The upcoming MercExchange case is important, but it will not lead directory to a compulsory patent licenses on any large scale.  In this case, patentee MercExchange won its infringement suit against eBay, but was denied a permanent injunction. The district court gave four reasons for denying the injunction.

1. General concern over the viability of business method patents;
2. A strong likelihood of continuing disputes based on eBay workarounds;
3. MercExchange’s willingness to license; and
4. MercExchange’s failure to request a preliminary injunction.

Reviewing them in turn, the Federal Circuit panel dismissed each of these reasons — finding each unpersuasive.  Ultimately, finding that the defendant had shown “no reason to depart from the general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.”

Now, this case has arrived at the Supreme Court to question this “general rule.” In the backdrop, the statute in question — 35 U.S.C § 283 — is written with the standard equitable language seemingly implying that injunctions are discretionary:

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.

It is unclear at this point what a damages calculation would be in a case where a permanent injunction is denied — probably most importantly is whether a patentee will be allowed treble damages for the ongoing infringement.

• Dennis Crouch: Discussion of the briefs on petition
• Dennis Crouch: Discussion of eBay’s petition
• Dennis Crouch: CAFC Opinion in MercExchange v. eBay
• Peter Zura: Reexam of MercExchange’s Patents