1. eBay v. MercExchange: Model or Monster?
Sapna Kumar
Law Foundation Professor of Law

2. Pre-eBay Landscape Early 2000s: Out of control Federal-Circuit
CAFC created rigid, bright-line tests
Form of judicial lawmaking violating the spirit of separation of powers
Injunctions: CAFC test
A permanent injunction will issue if patent is valid and infringed
Denied only under “exceptional circumstances” and “in rare instances to protect the public interest.”
Curtailed district court power

3. eBay v. MercExchange District Court proceeding Federal Circuit (CAFC)
MercExchange: NPE with business method patent that eBay violated
Jury: found eBay infringed
Judge: denied ME perm. injunction
Federal Circuit (CAFC)
Reverses, ordering injunction
Reminds lower courts they are obligated to award injunctive relief

4. eBay (cont) Supreme Court: Traditional equitable test applies:
(i) whether P would face irreparable injury if inj did not issue,
(ii) whether P has an adequate remedy at law,
(iii) whether granting the injunction is in the public interest, and
(iv) whether the balance of the hardships tips in P’s favor.
Reverses CAFC. No injunction should have issued.

5. Rationales for eBay Backlash against “patent exceptionalism”
CAFC was overreaching its power through bright-line rules
district courts have “considerable discretion”
Justice Kennedy: Troll concerns
Courts should be reluctant to grant NPEs injunctions

6. Must substantiate claims under 4-part Test
Voda v. Cordis Corp. (Fed. Cir. 2008)
Facts
Dr. Voda invents new technology, grants exclusive license
But: Voda is not practicing the patent
Cordis infringes, Voda sues
CAFC: affirms denial of perm. inj.
Only harm is to exclusive licensee
Monetary damages are enough

7. Willingness to license doesn’t bar injunction
District courts: patent holder’s refusal to license supports inj.
But reverse isn’t necessarily true
Acumed LLC v. Stryker Corp. (Fed. Cir. 2008): "[a]dding a new competitor to the market may create an irreparable harm that the prior licenses did not."

8. Narrow injunctions okay
Apple v. Samsung IV, 809 F3d 633 (Fed. Cir. 2015).
Apple sought narrow injunction
30-day delay so Samsung could design around it
Dct: No irreparable injury
CAFC reverses
Customers value patented features, Apple’s losses were hard to measure, 30-day delay minimized hardship

9. Must meet each factor of eBay test
Nichia Corp v. Everlight America, 855 F.3d 1328 (Fed. Cir. 2017)
“The movant must prove that it meets all four equitable factors.”
Previously, many of us believed test was a “balancing test”
CAFC converted it into a 4 element test, not clear why.

10. Empirical Study Gupta/ Kesan (unpublished)
Drop in seeking injunctions
67% drop from practicing entities
93% drop from NPEs.
Steep decline in injunction rate
Preliminary: 1.79% (2000), 0.89% (2006), 0.25% (2012)
Permanent: 1.96% (2000), 1.24% (2006), 0.23% (2012).

11. Impact on NPEs Small emp. study (C. Seaman)
Average injunction grant rate of only 16% for NPEs.
District courts heavily rely on Kennedy concurrence
Use concurrence to justify not granting injunctions to NPEs

12. Have courts gone too far? Judge Reyna says yes
Apple v. Samsung IV (Reyna conc.)
CAFC warned courts to not "ignore the fundamental nature of patents as property rights granting the owner the right to exclude."
“Yet, our recent cases have done precisely that, ignoring the right to exclude in determining whether to issue an injunction.”

13. Overruling eBay? Some legislation has been proposed in prior years
STRONGER Patent Act would overrule eBay
Unfortunately, it would also severely limit PTAB’s powers
Democrat take-over of House makes reform unlikely

14. Model or Monster? Both. Model Monster
eBay restores power back to district court judges
Forced CAFC to follow common-law principles like other courts
Monster
Rigidly applied, injunctions are too difficult to get
Kennedy’s concurrence given too much weight

15. Thank you! skumar@central.uh.edu My websites: http://kumar.ms
main.asp?PID=4715