Permanent Injunctions in Patent Litigation After eBay: An Empirical Study

Author:Christopher Seaman
Pages:1949-2019
SUMMARY

The Supreme Court's 2006 decision in eBay v. MercExchange is widely regarded as one of the most important patent law rulings of the past decade. Historically, patent holders who won on the merits in litigation nearly always obtained a permanent injunction against infringers. In eBay, the Court unanimously rejected the "general rule" that a prevailing patentee is entitled to an injunction, instead ... (see full summary)

 
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A5_SEAMAN (DO NOT DELETE) 7/4/2016 4:32 PM
1949
Permanent Injunctions in Patent
Litigation After eBay: An Empirical Study
Christopher B. Seaman*
ABSTRACT: The Supreme Court’s 2006 decision in eBay v.
MercExchange is widely regarded as one of the most important patent law
rulings of the past decade. Historically, patent holders who won on the merits
in litigation nearly always obtained a permanent injunction against
infringers. In eBay, the Court unanimously rejected the “general rule” that a
prevailing patentee is entitled to an injunction, instead holding that lower
courts must apply a four-factor test before granting such relief. Ten years later,
however, significant questions remain regarding how this four-factor test is
being applied, as there has been little rigorous empirical examination of
eBay’s actual impact in patent litigation.
This Article helps fill this gap in the literature by reporting the results of an
original empirical study of contested permanent injunction decisions in
district courts for a 7.5-year period following eBay. It finds that eBay has
effectively created a bifurcated regime for patent remedies, as operating
companies who compete against an infringer still obtain permanent
injunctions in the vast majority of cases that are successfully litigated to
judgment. In contrast, non-competitors and other non-practicing entities are
generally denied injunctive relief. These findings are robust even after
controlling for the field of patented technology and the particular court that
decided the injunction request. This Article also finds that permanent
injunction rates vary significantly based on patented technology and forum.
Finally, this Article considers some implications of these findings for both
participants in the patent system and policy makers.
*
Associate Professor of Law, Washington and Lee University School of Law. I thank Eri c
Claeys, Ryan Holte, Doug Rendleman, Karen Sandrik, Dave Schwartz, and participants of the First
Annual Workshop on Empirical Methods in Intellectual Property at IIT Chicago-Kent College of
Law, the 2015 Works in Progress in Intellectual Property Colloquium at the United States Patent
and Trademark Office, and the Fifth Annual Patent Conference at the University of Kansas
School of Law for their valuable feedback on this project. I also thank Sarah Kathryn Atkinson,
Ross Blau, Will Hoing, Sharon Jeong, and Richard Zhang for their excellent research assistance
on this project. The financial support of the Frances Lewis Law Center at Washington and Lee
University School of Law is gratefully acknowledged. Comments welcome at seamanc@wlu.edu.
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1950 IOWA LAW REVIEW [Vol. 101:1949
I. INTRODUCTION ........................................................................... 1950
II. PROPERTY RULES, LIABILITY RULES, AND INTELLECTUAL PROPERTY:
AN OVERVIEW ............................................................................. 1954
III. PATENTS AND THE RIGHT TO EXCLUDE ...................................... 1959
A. HISTORICAL DEVELOPMENT ................................................... 1959
1. Initial District Court Decision .................................... 1962
2. Federal Circuit Decision ............................................. 1963
3. Supreme Court Decision ............................................ 1964
4. After Remand .............................................................. 1967
B. EXISTING LITERATURE ON EBAYS IMPACT ............................. 1968
IV. METHODOLOGY .......................................................................... 1974
A. RESEARCH QUESTIONS ........................................................... 1974
B. STUDY DESIGN AND DATA COLLECTION .................................. 1975
C. LIMITATIONS ........................................................................ 1979
V. RESULTS AND DISCUSSION .......................................................... 1982
A. DECISIONS DATASET .............................................................. 1982
1. Overall Grant Rate ...................................................... 1982
2. Grant Rate by Patented Technology .......................... 1984
3. Grant Rate by District .................................................. 1985
4. Grant Rate by PAE Status ............................................ 1987
5. Grant Rate and Competition Between Litigants ....... 1990
6. Irreparable Harm Findings ........................................ 1992
7. Other eBay Factors ....................................................... 1994
8. Regression Analysis ..................................................... 1995
B. PATENTS DATASET ................................................................ 2000
C. IMPLICATIONS ....................................................................... 2002
VI. CONCLUSION .............................................................................. 2006
APPENDIX A: LIST OF INJUNCTION DECISIONS ....................................... 2007
I. INTRODUCTION
The Supreme Court’s 2006 opinion in eBay v. MercExchange, which held
that prevailing patentees in litigation are not automatically entitled to a
permanent injunction,1 is widely regarded as one of the most significant
1. See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393–94 (2006) (holding that the
Federal Circuit erred in “articulat[ing] a general rule, unique to patent disputes, that a
permanent injunction will issue once infringement and validity have been adjudged”).
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2016] PERMANENT INJUNCTIONS IN PATENT LITIGATION 1951
patent law decisions of the past decade.2 It has been extensively cited by lower
federal courts,3 and is the subject of numerous law review articles.4 The case
has also spawned a significant transformation in the field of remedies,
reshaping the test for permanent injunctive relief in numerous areas outside
of patent law.5
Despite its perceived importance, however, there has been little rigorous
empirical examination of eBay’s actual impact in patent litigation.6 This is
significant because the eBay decision—which was unanimous—contains two
2. See Colleen V. Chien & Mark A. Lemley, Patent Holdup, the ITC, and the Public Interest, 98
CORNELL L. REV. 1, 8 (2012) (“The Supreme Court’s 2006 decision in eBay represented a sea change
in patent litigation.” (footnote omitted)); Ryan Davis, Top 15 High Court Patent Rulings of the Past 15
Years, LAW360 (July 1, 2015, 8:27 PM), http://www.law360.com/articles/674205/top-15-high-court-
patent-rulings-of-the-past-15-years (ranking eBay as the second most important patent law decision since
2000).
3. A recent search of WestlawNext finds that eBay has been cited in over 2000 federal court
opinions. See Citing References for eBay Inc. v. MercExchange L.L.C., WESTLAWNEXT (last visited May 10,
2016); see also Dennis Crouch, Most Cited Supreme Court Patent Decisions (2005–2015), PATENTLY-O (Mar.
11, 2015), http://patentlyo.com/patent/2015/03/supreme-court-cases.html (listing eBay as the
second most cited U.S. Supreme Court patent case of the past decade).
4. For examples of significant eBay-related scholarshi p, see generally Andrew Beckerman-
Rodau, The Aftermath of eBay v. MercExchang e, 126 S. Ct. 1837 (2006): A Review of Subsequent
Judicial Decisions, 89 J. PAT. & TRADEMARK OFF. SOCY 631 (2007); Michael W. Carroll, Patent
Injunctions and the Problem of Uniformity Cost, 13 MICH. TELECOMM. & TECH. L. REV. 421 (2007);
Bernard H. Chao, After eBay, Inc. v. MercExchange: The Changing Landscape for Patent Remedies, 9
MINN. J.L. SCI. & TECH. 543 (2008); Chien & Lemley, supra note 2; Eric R. Claeys, The Conceptual
Relation Between IP Rights and Infringement Remedies, 22 GEO. MASON L. REV. 825 (2015); Vincenzo
Denicolò et al., Revisiting Injunctive Relief: Interpreting eBay in High-Tech Industries with Non-
Practicing Patent Holders, 4 J. COMPETITION L. & ECON. 571 (2008); Douglas Ellis et al., The
Economic Implications (and Uncertainties) of Obtaining Permanent Injunctive R elief After eBay v.
MercExchange, 17 FED. CIR. B.J. 437 (2008); Mark P. Gergen, John M. Golden & Henry E. Smith,
The Supreme Court’s Accidental Revolution? The Test for Permanent Injunctions, 112 COLUM. L. REV.
203 (2012); John M. Golden, “Patent Trolls” and Patent Remedies, 85 TEX. L. REV. 2111 (2007)
[hereinafter Golden, Patent Trolls]; John M. Golden, Principles for Patent Remedies, 88 TEX. L. REV.
505 (2010) [hereinafter Golden, Principles]; Ryan T. Holte, The Misinterpretation of eBay v.
MercExchange and Why: An Analysis of the Case History, Precedent, and Parties, 18 CHAP. L. REV. 677
(2015) [hereinafter Holte, Misinterpretation of eBay]; Ryan T. Holte, Trolls or Great Inventors: Case
Studies of Patent Assertion Entities, 59 ST. LOUIS U. L.J. 1 (2014) [hereinafter Holte, Trolls or Great
Inventors]; Sarah R. Wasserman Rajec, Tailoring Remedies to Spur Innovation, 61 AM. U. L. REV. 733
(2012); Doug Rendleman, The Trial Judge’s Equitable Discretion Following eBay v. MercExchange,
27 REV. LITIG. 63 (2007); and Karen E. Sandrik, Reframing Patent Remedies, 67 U. MIAMI L. REV.
95 (2012).
5. See Gergen et al., supra note 4, at 205 (“[T]he four-factor test from eBay has, in many
federal courts, become the test for whether a permanent injunction should issue, regardless of
whether the dispute in question centers on patent law, another form of intellectual property,
more conventional government regulation, constitutional law, or state tort or contract law.”); see
also Shyamkrishna Balganesh, Demystifying the Right to Exclude: Of Property, Inviolability, and
Automatic Injunctions, 31 HARV. J.L. & PUB. POLY 593, 598–99 (2008) (discussing eBay’s impact
in real and personal property law); Jiarui Liu, Copyright Injunctions After eBay: An Empirical Study,
16 LEWIS & CLARK L. REV. 215, 218 (2012) (examining “how much the eBay decision has guided,
and should guide, copyright cases”).
6. See infra Part III.C (discussing the existing empirical work on this subject).

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