IP News

On May 15, 2006, the U.S. Supreme Court vacated a permanent injunction issued against eBay Inc. and remanded the case back to the district court. eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837 (2006). The Court rejected the general rule articulated by the Federal Circuit that permanent injunctions should issue in patent once infringement and validity have been decided, absent exceptional circumstances.

In this case, a jury found that eBay had infringed MercExhange's patents, but the district court declined to issue a permanent injunction. The district court justified its denial of MercExchange's motion for a permanent injunction arguing that 1) the public interest favored the denial in light of a growing concern over the issuance of business-method patents; 2) the defendants would attempt to design around the injunction, resulting in numerous contempt hearings to determine if changes to the defendants' systems violate the injunction; 3) MercExchange had made public statements regarding its willingness to license its patents; and 4) MercExchange had not moved for a preliminary injunction. On appeal, the Federal Circuit reversed the denial of the permanent injunction, stating that the 'general rule is that a permanent injunction will issue once infringement and validity has been adjudged.' MercExchange, L.L.C. v. eBay Inc., 401 F.3d 1323, 1338 (Fed. Cir. 2005).