Cengage Advantage Books: Foundations of the Legal Environment of Business 3rd Edition by Marianne Jennings

تمرين 1

eBay, Inc. v. MercExchange, LLC 547 U.S. 388 (2006)
Whether "Buy It Now" Is Halted for 20 Years
Facts
eBay and its subsidiary, half.com, operate popular websites that allow private sellers to list goods they wish to sell at either an auction or a fixed price (its "Buy it Now" feature). MercExchange, LLC, sought to license its business-method patent to eBay, but the two companies could not reach an agreement. eBay still used the "Buy It Now" process. MercExchange filed suit for patent infringement and a jury found that eBay had infringed a valid patent and awarded MercExchange $29.5 million in damages. MercExchange requested a permanent injunction against eBay for use of its process, but the trial court denied the motion. The Court of Appeals reversed and the U.S. Supreme Court granted certiorari.
Judicial Opinion
THOMAS, Justice
According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a fourfactor test before a court may grant such relief: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate; (3) that, considering the balance of hardships, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
The Patent Act include[s] "the right to exclude others from making, using, offering for sale, or selling the invention." According to the Court of Appeals, this statutory right to exclude alone justifies its general rule in favor of permanent injunctive relief. But the creation of a right is distinct from the provision of remedies for violations of that right. Indeed, the Patent Act itself indicates that injunctive relief "may" issue only "in accordance with the principles of equity."
Because we conclude that neither court below correctly applied the traditional four-factor framework that governs the award of injunctive relief, we vacate the judgment of the Court of Appeals, so that the District Court may apply that framework in the first instance. In doing so, we take no position on whether permanent injunctive relief should or should not issue in this particular case, or indeed in any number of other disputes arising under the Patent Act …
[Reversed and Remanded]
CONCU RRING OPINI ON
Justice Kennedy, with whom Justice Stevens, Justice Souter, and Justice Breyer join, concurring … In cases now arising trial courts should bear in mind that in many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases. An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees.
For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent. When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest. In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.…
Case Questions
1. Why is this type of patent different from the traditional product patents?
2. What are the risks in granting a permanent injunction in cases such as these?
3. Why are the concurring judges raising the issue of undue leverage?