Ebay Inc. v. Mercexchange, L. L. C.
Decision Date | 15 May 2006 |
Docket Number | No. 05-130.,05-130. |
Citation | 164 L. Ed. 2d 625,547 U.S. 388,126 S. Ct. 1843 |
Parties | EBAY INC. et al. <I>v.</I> MERCEXCHANGE, L. L. C. |
Court | U.S. Supreme Court |
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.Nothing in the Act indicates such a departure.Pp. 391-394.
401 F. 3d 1323, vacated and remanded.
Kennedy, J., filed a concurring opinion, in which Stevens, Souter, and Breyer, JJ., joined, post, p. 395.
Carter G. Phillips argued the cause for petitioners.With him on the briefs were Richard D. Bernstein, Virginia A. Seitz, and Allan M. Soobert.
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.*
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 the Patent Act.We agree and, accordingly, vacate the judgment of the Court of Appeals.
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.RespondentMercExchange, 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.SeeU. S. PatentNo. 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 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(2005).
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(1982);Amoco Production Co. v. Gambell,480 U. S. 531, 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.
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 alsoAmoco, supra, at 542.Nothing in the Patent Act indicates 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
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(1932);see alsoid., at 127-128( ).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 follows a determination that a copyright has been infringed.See, e. g., New York Times Co. v. Tasini,533 U. S. 483, 505(2001)(citingCampbell v. Acuff-Rose Music, Inc.,510 U. S. 569, 578, n. 10(1994));Dun v. Lumbermen's Credit Assn.,209 U. S. 20, 23-24(1908).
Neither the District Court nor the Court of Appeals below fairly applied these traditional equitable principles in deciding respondent's motion for a permanent injunction.Although the District Court recited the traditional four-factor test, 275 F. Supp. 2d, at 711, it appeared to adopt certain expansive principles suggesting that injunctive relief could not issue in a broad swath of cases.Most notably, it concluded that a "plaintiff's willingness to license its patents" and "its lack of commercial activity in practicing the patents" would be sufficient to establish that the patent holder would not suffer irreparable harm if an injunction did not issue.Id., at 712.But traditional equitable principles do not permit such broad classifications.For example, some patent holders, such as university researchers or self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves.Such patent holders may be able to satisfy the traditional four-factor test, and we see no basis for categorically denying them the opportunity to do so.To the extent that the District Court adopted such a categorical rule, then, its analysis cannot be squared with the principles of equity adopted by Congress.The court's categorical rule is also in tension with Continental Paper Bag Co. v. Eastern Paper Bag Co.,210 U. S. 405, 422-430(1908), which rejected the contention that a court of equity has no jurisdiction to grant injunctive relief to a patent holder who has unreasonably declined to use the patent.
In reversing the District Court, the Court of Appeals departed in the opposite direction from the four-factor test.The court articulated a "general rule," unique to patent disputes, "that a...
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 7-day Trial
-
City of San Jose v. Trump, No. 20-CV-05167-RRC-LHK-EMC
...is warranted; and (4) that the public interest would not be disserved by a permanent injunction. eBay Inc. v. MercExchange, L.L.C. , 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). In the instant case, Plaintiffs have satisfied all four factors. As to the first two factors, both ......
-
Crossley v. California, Case No.: 20-cv-0284-GPC-JLB
...is warranted; and (4) that the public interest would not be disserved by a permanent injunction. eBay Inc. v. MercExchange, L.L.C. , 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). "A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the me......
-
Nelson v. Warner
...weighs in their favor; and (4) a permanent injunction would not disserve the public interest. eBay, Inc. v. MercExchange, L.L.C. , 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006) (citations omitted).These elements are easily satisfied. First, "[t]he loss of First Amendment freedom......
-
EQT Prod. Co. v. Wender
...is warranted; and [ ] that the public interest would not be disserved by a permanent injunction." eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006) ; see also PBM Prods., LLC v. Mead Johnson & Co., 639 F.3d 111, 126 (4th Cir.2011) (reciting the eBa......
-
Trademark Modernization Act Resolves Disparate Handling Of Presumption Of Irreparable Harm In Trademark Cases
...Court decisions spark change The first hint of a change came from the Supreme Court decisions in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393, 126 S.Ct. 1837, 164 L. Ed.2d 641 (2006) and Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 In eBa......
-
Trademark Modernization Act Resolves Disparate Handling Of Presumption Of Irreparable Harm In Trademark Cases
...Court decisions spark change The first hint of a change came from the Supreme Court decisions in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393, 126 S.Ct. 1837, 164 L. Ed.2d 641 (2006) and Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 In eBa......
-
Patent Law And The Supreme Court: Certiorari Petitions Pending
...is presumptively warranted after a verdict of infringement conflicts with this Court's decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). Cert. petition filed 5/6/13, waiver of respondent Edwards Lifesciences AG filed 5/9/13, response requested 5/20/13, conference CAFC Opin......
-
The Public Interest, EPROMs, and Domestic Industry Issues in Component Manufacturer S. 337 Investigations
...Products Containing the Same, Inv. No. 337-TA-841, Comm’n Op., at 24-40 (Jan. 9, 2014). [28] Id. View This Blog David Hickerson Debra Lange eBay decision where the primary remedy is monetary damages, most often in the form of a reasonable royalty. The threat of this remedy is often much les......
-
Table of Cases
...(Ohio Ct. App. 2004), 1063 Eames v. Nationwide Mut. Ins. Co., 412 F. Supp. 2d 431 (D. Del. 2006), 793 eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), 1265, 1306 Ebeling & Ruess Co. v. Int’l Collectors Guild, 462 F. Supp. 716 (E.D. Pa. 1978), 1320 Eckhardt v. Charter Hosp. of Albuqu......
-
A brief history of frand: analyzing current debates in standard setting and antitrust through a historical lens
...mandated under the U.S. Copyright Act and occurs on a widespread basis (17 U.S.C. §§ 115–116). 32 See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) (establishing that a permanent injunction need not issue automatically following a finding of patent infringement). 33 See James Packa......
-
2011 Ninth Circuit environmental review.
...present, and reasonably foreseeable future actions" (quoting 40 C.F.R. [section] 1508.7 (2008))). (478) eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006) (outlining the plaintiffs burden of showing: 1) an irreparable injury, 2) that legal remedies are inadequate compensation for t......
-
The Uses of Ip Misuse
...208, 215-18 (2014); Mayo Collab. Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 91-92 (2012).294. See eBay, Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006) (rejecting the Federal Circuit's "general rule" favoring patent injunctions and requiring federal courts to apply a "well-establish......