Patents, trolls, and personal property: will eBay auction away a patent holder's right to exclude?

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Patents, trolls, and personal property: will eBay auction away a patent holder's right to exclude?

INTRODUCTION

Trolls are attacking corporate America. They are ruining innovation, taxing the American people, and wreaking havoc on our legal system. Trolls must be stopped. At least, that is what many in the field of patent law, as well as some Supreme Court Justices, would lead you to believe. But, as with any fairy tale creature, there is more than one side to the story of these infamous "trolls." (1)

Since as early as the ratification of the United States Constitution, a patent holder has had an exclusive right to his patent. (2) The Founding Fathers believed that such an exclusive right would "scarcely be questioned" and that such a right was not only beneficial for the inventor, but equally so for the public good. (3) Congress reiterated this exclusive right under the current Patent Act in which it stated that "patents shall have the attributes of personal property." (4) These property attributes include "the right to exclude others from making, using, offering for sale, or selling the invention." (5) This right to exclude could come under attack for at least some patent holders, however, depending on how lower courts construe and interpret the recent Supreme Court decision of eBay Inc. v. MercExchange, L.L.C. (6)

In eBay, the Supreme Court handed down a unanimous opinion in which it stated that lower courts, when determining whether to grant permanent injunctive relief to a patent holder who has been infringed upon, must look to the "well-established principles of equity." (7) The Court held that plaintiffs should not be granted injunctions automatically upon findings of validity and infringement, but rather should have to pass the same equitable test used for other permanent injunction determinations. (8) Therefore, to obtain a permanent injunction to exclude others from making, using, or selling his patented product, 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. (9) This rule was put in place to clarify the Federal Circuit's prior existing "general rule" in patent cases "that a permanent injunction will issue once infringement and validity have been adjudged." (10)

The Court's holding, written by Justice Thomas, was not, in itself, necessarily a major change in policy. Patent law could see a major change, however, when the holding is applied in context with the two separate concurring opinions. This potential change depends on how lower courts use those concurring opinions to guide their decisions as to when to grant permanent injunctions. Chief Justice Roberts, with whom Justices Scalia and Ginsburg joined, concurred to indicate the historical fact that "[f]rom at least the early 19th century, courts have granted injunctive relief upon a finding of infringement in the vast majority of patent cases." (11) The Chief Justice warned against moving too far away from the general rule of granting injunctive relief, stating that when it comes to exercising equitable discretion pursuant to the four-factor test, "a page of history is worth a volume of logic." (12)

Justice Kennedy, with whom Justices Stevens, Souter, and Breyer joined, also wrote a concurring opinion. (13) Justice Kennedy expressed concern with new trends in patent cases, specifically regarding changes in technology and the manner in which patent licenses are dealt. He noted that an entire "industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees." (14) For these reasons, he indicated that past practices of granting injunctions may not be appropriate where the patent holder uses his patents primarily for obtaining licenses, where the patented invention is but a small component of the product the infringing party seeks to produce, or where the patent is for a business method. (15)

This Note addresses the effect eBay may have o...

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