Section 283 of the Patent Act provides that a court “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.” Historically, courts routinely entered injunctions as a matter of course following an infringement finding. The only hesitation arose when an issuance of an injunction could threaten public health.238
The Supreme Court’s decision in eBay Inc. v. MercExchange, LLC239 raised the threshold for obtaining injunctive relief in patent cases. An injunction may be issued only if the patent holder demonstrates:
(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.240
The Federal Circuit has interpreted eBay to eliminate the long-recognized presumption of irreparable injury to a patent holder after a judgment of infringement and no invalidity.241 The Federal Circuit also has held that there must be a “causal nexus” between any such irreparable injury and patent infringement.242
Although eBay generally forbids “broad classifications” of cases for purposes of determining when an injunction is proper or improper, courts generally find the eBay test satisfied and issue an injunction in cases between direct or indirect competitors or where, as a result of an infringing feature, the infringer’s product supplants the market for the patent holder’s product. Even if the patent owner does not practice the patent, but rather sells a competing product, an injunction against a competitor may be proper. Additionally, an injunction against a competitor may be proper even when the patent holder previously licensed the patent to another competitor or its customer, when other unlicensed competitors employ the patent, when the patented product is not core to the patent holder’s business, or when the injunction may put an infringer out of business. In some cases, the court will include a “sunset provision” that allows continued sales of the infringing product pursuant to a royalty to allow the infringer time to eliminate the disputed features from its product.243 The broad use of injunctions in these competitor cases, when properly supported by other factors, stems from the fundamental nature of patents as a grant to the owner of the right to exclude.
In the aftermath of eBay, courts have denied permanent injunctions in cases where the patentee merely licensed its technology and did not offer its own commercial embodiment, where only the patentee’s licensee competes with an infringer, where the scope of the requested injunction was overly broad, or where an injunction created important public health concerns.
In connection with standard-setting proceedings and otherwise, patent owners sometimes commit to provide a fair, reasonable and nondiscriminatory (FRAND) license to any potential licensee (see Section 10.13.1). While there is no per se rule precluding an injunction to such a patent owner, an injunction is unlikely. Establishing irreparable harm is difficult, and allowing the use of a standard resulting from a FRAND commitment better serves the public interest.244