THE TRADITIONAL BURDENS FOR FINAL INJUNCTIONS IN PATENT CASES C.1789 AND SOME MODERN IMPLICATIONS.

• Author: Gomez-Arostegui, H. Tomas

This Article reassesses the first two eBay factors for final injunctions-irreparable injury and the inadequacy of legal remedies--in light of traditional equitable principles. Tracking most closely with tradition would require the Federal Circuit to recognize that in patent cases: (1) an injury it seeks to redress with a final injunction is future infringement itself, not merely follow-on harms caused by future infringement; (2) it can presume future infringement from past infringement; (3) it can presume that legal remedies are inadequate to remedy future infringement; and (4) it need not require a plaintiff to show that alternative equitable remedies, like ongoing royalties, would inadequately redress future infringement. Moreover, the Federal Circuit can recognize, without relying on any presumptions, that the burden on the first two eBay factors is not onerous. A patentee can satisfy them by showing that a defendant is likely to infringe again and that any legal damages awarded at trial did not fully compensate the patentee for the life of the patent.

CONTENTS INTRODUCTION I. FINAL INJUNCTION PRACTICE IN PATENT CASES 1983-2020 II. ENFORCEMENT IN THE COURT OF CHANCERY C.1789 A. The Records B. Basic Procedures and Relief C. General Observations on Jurisdiction and Authority III. FINAL INJUNCTIONS A. Plaintiffs not Seeking a Final Injunction B. Plaintiffs Seeking a Final Injunction C. Subsequent Developments IV. MODERN IMPLICATIONS A. Cognizable Injury: Future Infringement B. Legal Relief: Retrospectively Limited and Inadequate C. Alternative Equitable Relief: Ongoing Royalties CONCLUSION INTRODUCTION

Not long after its creation in 1982, the Federal Circuit ruled that federal courts were to presume irreparable injury and the lack of an adequate remedy at law when considering requests for final injunctions in patent suits. Defendants bore the burden of rebutting these presumptions. (1) In 2006, the Supreme Court decided eBay Inc. v. Merc-Exchange, L.L.C., where it rejected a separate, broader rule from the Federal Circuit that final injunctions must issue absent exceptional circumstances to protect the public interest. (2) Although the parties in eBay asked the Court to address the Federal Circuit's separate rebuttable presumptions, it declined to do so. It instead confined itself to the broad observations that district courts must exercise their discretion "consistent with traditional principles of equity" and that "traditional equitable principles do not permit ... broad classifications" or "categorical rule[s]" that require a trial court to grant or deny a final injunction. (3) In light of these statements, which the Federal Circuit construed liberally, the Federal Circuit jettisoned its rebuttable presumptions in 2011. (4) To obtain a final injunction, a patentee must now always prove that some future injury is likely--one caused by, but exceeding, any future infringement itself--and that the identified injury is not otherwise redressable by legal or equitable remedies.

Nonetheless, the old presumptions of irreparable injury and the inadequacy of legal remedies remain top of mind. Scholars, for one, have criticized eBay for how its sweeping statements have indirectly laid waste to presumptions, not only in patent cases but in other areas as well. (5) Legislators have introduced bills in the Senate or House for each of the last four years in an effort to restore the rebuttable presumptions in patent cases on requests for final injunctions. (6) And there remains the possibility that the Federal Circuit will revisit the presumptions en banc or that the Supreme Court will take up the matter.

In light of the interest that members of the Federal Circuit, Supreme Court, Congress, and others have in this issue, this Article scrutinizes the assumption (for it is only an assumption) that in patent cases presumptions of irreparable injury and the inadequacy of legal remedies contradict "traditional equitable principles." Rather than concentrate on 19th-century American traditions, a task underway by Adam Mossoff, (7) we focus on equitable principles as they existed in England at the end of the 18th century. As well as directing courts to consider traditional equitable principles more generally, the Court has told us that, unless altered by Congress, the substantive prerequisites for obtaining injunctive relief in federal court depend on historical practices of the English Court of Chancery circa 1789. (8)

Investigating the enforcement of invention patents in the Court of Chancery is not for the faint of heart. No 18th-century practitioner ever wrote a treatise with a view to anticipating and answering all the questions that courts might care about 230 years later in some faraway and rebellious land. Today, judges and litigants tend to focus on a smattering of printed reports from the late 18th century, along with a handful of printed reports and treatises from the 19th century. That is understandable. Courts and litigants have neither the time nor the resources to delve deeply into 18th-century practice, and many probably believe that few records survive from the period. But in fact, there is a whole host of extant material. Hundreds of primary sources remain, some in print but most in manuscript, and they can help us reconstruct what would have been known to practitioners and others at the end of the 18th century--the known "course of the court." To know these materials is to know traditional equitable principles.

We advance several critical points respecting final injunctions at the end of the 18th century. First, patentees faced no separately articulated requirement of demonstrating "irreparable" injury. Irreparable harm was an inquiry that played a role, if at all, on requests for interim injunctions and it concerned, in part, whether an alternative equitable remedy would suffice instead. No similar inquiry occurred at the final-injunction stage. Second, the inadequate-remedy-at-law requirement--the test for equitable jurisdiction--turned principally on the likelihood of future actionable wrongs (and not solely on the harms that might stem from those wrongs). Third, the Chancery could' presume that future wrongs were likely from the fact of a defendant's past wrongs. And lastly, the legal remedy of damages was presumptively inadequate because it could not redress future wrongs, meaning that additional retrospective actions were needed against recalcitrant defendants. It was this prospect that triggered equitable jurisdiction.

Turning to modern implications, we show that eBay and Congress have done nothing to alter these precepts. Tracking most closely with tradition would thus call on the Federal Circuit to recognize that: (1) an injury it seeks to redress with a final injunction is future infringement itself, not just follow-on harms caused by future infringement; (2) it can presume future infringement from past infringement; (3) it can presume that legal remedies are inadequate to remedy future infringement; and (4) it need not require a plaintiff to show that alternative equitable remedies, like ongoing royalties, would inadequately redress future infringement. Congress can endorse these same steps without fear of uprooting traditional principles or eBay.

Moreover, the Federal Circuit can simply recognize, without using any presumptions, that a patentee can satisfy eBay's irreparable injury and inadequate-remedy-at-law requirements by showing that a defendant is likely to infringe again without a final injunction and that any legal damages awarded at trial did not fully compensate the patentee for the life of the patent.

Part I briefly outlines U.S. law on patent injunctions from 1983 to the present. Part II turns to the Court of Chancery of the 18th century. Apart from explaining why cases from this period remain doctrinally relevant, it describes the usual course of patent suits in Chancery and its jurisdictional limitations. Lastly, Parts III and IV home in on final injunctions. They treat historical practices and explore the modern ramifications of those practices. Importantly, our Article takes no position on whether final injunctions should, as a matter of policy, be granted freely in patent cases, nor do we endorse or condemn the Supreme Court's focus on 18th-century practices and principles.

1. FINAL INJUNCTION PRACTICE IN PATENT CASES 1983-2020

   For the first 28 years or so of its existence, the Federal Circuit employed presumptions of irreparable harm and the inadequacy of legal remedies on injunction requests. The court often expressed the two concepts interchangeably, with irreparable harm used as the favored term. For preliminary injunctions, the court instructed judges to presume irreparable harm when a patentee could make out a "clear" or "strong" showing of likelihood of success on the merits. (9) A weaker case required an actual showing of irreparable injury. (10) On final injunctions, the Federal Circuit directed judges to presume irreparable harm unconditionally because the patentee had already proven validity and infringement. (11) A defendant could rebut either of these presumptions by producing "clear" or "persuasive" evidence to "establish" that the presumed harm was absent. (12)

   But the Federal Circuit went further. Building from cases that acknowledged final injunctions as the norm, the court adopted a broader rule that final injunctions "will issue when infringement has been adjudged, absent a sound reason for denying it." (13) In 2005, the court stiffened the rule when it demanded near-automatic grants. Under MercExchange, L.L.C. v. eBay, Inc., denials became proper only in "exceptional" cases to protect the "public interest." (14) This mandate produced an irrebuttable presumption on all the criteria for a final injunction, except for the public interest. The court achieved as much by overruling its own precedent sub silentio. (15)

   In 2006, the Supreme Court granted...