How trolls can circumvent eBay

• Published in: Managing Intellectual Property 2008-10
• Format: Magazinearticle
• Language: English
• Subjects: Competition; District courts; Infringement; Injunctions; Intellectual property; International trade; Jurisdiction; Licenses; Litigation; Patent law; Software; State court decisions; Supreme Court decisions
• ISSN: 0960-5002

Patent trolls were dealt a blow when the Supreme Court ruled in eBay v MercExchange that permanent injunctions should not be issued automatically in patent infringement cases. But at the International Trade Commission, injunctions are still standard, and this disparity - coupled with the expansion in 1988 of the ITC's jurisdiction to include "universities and other intellectual property owners who engage in extensive licensing of their rights to manufacturers" - may cause trolls to increasingly turn to the ITC. While money damages may be awarded in patent cases to redress past harm, patent owners typically seek an injunction, which may be leveraged into a broader settlement, a cross-licence to unrelated intellectual property, or simply used to exclude a competitor. This is particularly true for patent trolls who often use the mere threat of an injunction to achieve more than the reasonable royalty to which they would otherwise be entitled. By contrast, even though it cannot award monetary damages for patent infringement, the ITC still presumes that an injunction is the appropriate remedy if a violation is found. Indeed, ITC injunctions may be broader than district court injunctions, making them even more desirable to a patent owner and, especially, a patent troll. The Court held that the traditional test for permanent injunctions also applied to patent cases. Specifically, to obtain an injunction the patent owner must prove the following: 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. The ITC provides a rapid forum for patent owners to receive injunctive relief, but expediency should not come at the cost of fairness. As it stands now, the ITC presents a potential loophole for patent trolls to receive injunctive relief they could not receive in district court. To close this loophole, the standards applied in the ITC and in district courts with respect to injunctive relief should be reconciled.