547 U.S. 388 (2006), 05-130, eBay Inc. v. MercExchange, L.L.C.

Docket Nº:No. 05-130.
Citation:547 U.S. 388, 126 S.Ct. 1837, 164 L.Ed.2d 641
Party Name:EBAY INC. et al., Petitioners, v. MERCEXCHANGE, L.L.C.
Case Date:May 15, 2006
Court:United States Supreme Court

Page 388

547 U.S. 388 (2006)

126 S.Ct. 1837, 164 L.Ed.2d 641

EBAY INC. et al., Petitioners,

v.

MERCEXCHANGE, L.L.C.

No. 05-130.

United States Supreme Court

May 15, 2006

Argued March 29, 2006.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

SYLLABUS[*]

Petitioners operate popular Internet Web sites that allow private sellers to list [126 S.Ct. 1838] 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. Pp. 391-394.

401 F.3d 1323, vacated and remanded.

COUNSEL

Carter G. Phillips argued the cause for petitioners. With him on the briefs were Richard D. Bernstein, Virginia A. Seitz, and Allan M. Soobert.

Page 389

Jeffrey P Minear argued the cause for the United States as amicus curiae in support of respondent. With him on the brief were Solicitor General Clement, Assistant Attorney General Barnett, Acting Assistant Attorney General Katsas, Deputy Solicitor General Hungar, Anthony J. Steinmeyer, David Seidman, Mark R. Freeman, John M. Whealan, Cynthia C. Lynch, and Heather F. Auyang.

Seth P. Waxman argued the cause for respondent. With him on the brief were Paul R. Q. Wolfson, Scott L. Robertson, Gregory N. Stillman, Jennifer A. Albert, David M. Young, and Brian M. Buroker [*]

ROBERTS, C. J., filed a concurring opinion, in which SCALIA and GINSBURG, JJ., joined, post, p. 394. KENNEDY, J., filed a concurring opinion, in which STEVENS, SOUTER, and BREYER, JJ., joined, post, p. 395.

Page 390

OPINION

THOMAS, JUSTICE

Ordinarily, a federal court considering whether to award permanent injunctive relief to a prevailing plaintiff applies the four-factor test historically employed by courts of equity. Petitioners eBay Inc. and Half.com, Inc., argue that this traditional test applies to disputes arising under [126 S.Ct. 1839] the Patent Act. We agree and, accordingly, vacate the judgment of the Court of Appeals.

I

Petitioner eBay operates a popular Internet Web site that allows private sellers to list goods they wish to sell, either through an auction or at a fixed price. Petitioner Half.com, now a wholly owned subsidiary of eBay, operates a similar Web site. Respondent MercExchange, L. L. C., holds a number of patents, including a business method patent for an electronic market designed to facilitate the sale of goods between private individuals by establishing a central authority to promote trust among participants. See U.S. Patent No. 5,845,265. MercExchange sought to license its patent to eBay and Half.com, as it had previously done with other companies, but the parties failed to reach an agreement. MercExchange subsequently filed a patent infringement suit against eBay and Half.com in the United States District Court for the Eastern District of Virginia. A jury found

Page 391

that MercExchange's patent was valid, that eBay and Half.com had infringed that patent, and that an award of damages was appropriate. 1

Following the jury verdict, the District Court denied MercExchange's motion for permanent injunctive relief. 275 F.Supp.2d 695 (2003). The Court of Appeals for the Federal Circuit reversed, applying its "general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances." 401 F.3d 1323, 1339 (2005). We granted certiorari to determine the appropriateness of this general rule. 546 U.S. 1029, 126 S.Ct. 733, 163 L.Ed.2d 567 (2005).

II

According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, 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. See, e.g., Weinberger v. Romero--Barcelo, 456 U.S. 305, 311-313, 102 S.Ct. 1798, 72 L.Ed.2d 91 (1982); Amoco Production Co. v. Gambell, 480 U.S. 531, 542, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987). The decision to grant or deny permanent injunctive relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion. See, e.g., Romero-Barcelo, 456 U.S., at 320, 102 S.Ct. 1798.

These familiar principles apply with equal force to disputes arising under the Patent Act. As this Court has long recognized, "a major departure from the long tradition of equity practice should not be lightly implied." Ibid.; see also Amoco, supra, at 542, 107 S.Ct. 1396. Nothing in the Patent Act indicates

Page 392

that Congress intended such a departure. To the contrary, the Patent Act expressly provides that injunctions "may" issue "in accordance with the principles of equity." 35 U.S.C. §283. 2

[126 S.Ct. 1840] To be sure, the Patent Act also declares that "patents shall have the attributes of personal property," §261, including "the right to exclude others from making, using, offering for sale, or selling the invention," §154(a)(1). According to the Court of Appeals, this statutory right to exclude alone justifies its general rule in favor of permanent injunctive relief. 401 F.3d, at 1338. But the creation of a right is distinct from the provision of remedies for violations of that right. Indeed, the Patent Act itself indicates that patents shall have the attributes of personal property "[s]ubject to the provisions of this title," 35 U.S.C. §261, including, presumably, the provision that injunctive relief "may" issue only "in accordance with the principles of equity," §283.

This approach is consistent with our treatment of injunctions under the Copyright Act. Like a patent owner, a copyright holder possesses "the right to exclude others from using his property." Fox Film Corp. v. Doyal, 286 U.S. 123, 127, 52 S.Ct. 546, 76 L.Ed. 1010 (1932); see also id., at 127-128, 52 S.Ct. 546 ("A copyright, like a patent, is at once the equivalent given by the public for benefits bestowed by the genius and meditations and skill of individuals, and the incentive to further efforts for the same important objects" (internal quotation marks omitted)). Like the Patent Act, the Copyright Act provides that courts "may" grant injunctive relief "on such terms as it may deem reasonable to prevent or restrain infringement of a copyright." 17 U.S.C. §502(a). and as in our decision today, this Court has consistently rejected invitations to replace traditional equitable considerations with a rule that an injunction automatically

Page 393

follows a determination that a copyright has been infringed. See, e.g., New York Times Co. v. Tasini, 533 U.S. 483, 505, 121 S.Ct. 2381, 150 L.Ed.2d 500 (2001) (citing Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 578, n. 10, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994)); Dun v. Lumbermen's Credit Assn., 209...

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