Patent Injunctions

Competing companies

Before eBay

Before eBay: injunctions were near-automatic. A successful lawsuit stopped a competitor's product entirely.

After eBay (today)

After eBay: competing companies can still usually get injunctions — they can show irreparable competitive harm, lost customers, and inadequate royalty remedy.

Non-practicing entities (NPEs)

Before eBay

Before eBay: NPEs used the threat of injunction as a massive negotiating weapon — defendants settled to avoid losing product lines.

After eBay (today)

After eBay: NPEs almost never get permanent injunctions. Their business is licensing, so money royalties are the perfect remedy. They've lost their biggest stick.

What did eBay v. MercExchange hold about patent injunctions?

eBay Inc. v. MercExchange, L.L.C. (Supreme Court 2006, unanimous) held that a plaintiff in a patent infringement case is not automatically entitled to a permanent injunction upon a finding of infringement. Before eBay, the Federal Circuit had applied a 'general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.' The Supreme Court abolished this rule and held that courts must apply the traditional four-factor test for equitable relief: (1) the plaintiff has suffered irreparable harm; (2) monetary damages are inadequate compensation; (3) the balance of hardships warrants an injunction; and (4) the public interest would not be disserved. The practical impact was enormous: non-practicing entities (NPEs) that license patents but do not make competing products can rarely satisfy the irreparable harm and inadequate-remedy prongs, because monetary royalties are an adequate remedy for a licensing business.

What is the 4-factor test for a permanent patent injunction?

After eBay, courts apply this four-factor test for permanent patent injunctions: (1) Irreparable harm: the plaintiff must show it would suffer irreparable harm from the continued infringement — harm that cannot be adequately compensated by money alone. Competing companies that lose market share, customers, and goodwill often satisfy this. NPEs that only license generally do not. (2) Inadequacy of monetary remedies: money damages must be an inadequate remedy for the harm. If a royalty can make the plaintiff whole, courts often deny the injunction. (3) Balance of hardships: the burden to the defendant of complying with an injunction must not substantially outweigh the benefit to the plaintiff. Courts consider whether enjoining the defendant would harm third parties (employees, customers). (4) Public interest: the public interest must not be disserved by an injunction. Courts weigh public access to products, healthcare, safety, and consumer impact. All four factors must weigh in the plaintiff's favor for an injunction to issue.

Can a non-practicing entity (NPE or patent troll) get a patent injunction?

After eBay, non-practicing entities (NPEs, sometimes called 'patent trolls') almost never obtain permanent injunctions, because: (1) They cannot show irreparable harm — since they don't compete with the infringer, their only loss is the unpaid royalty, which is a money injury, not irreparable harm. (2) Money damages are adequate — a royalty award fully compensates a licensing-only business. Without the threat of an injunction, NPEs lose a key piece of negotiating leverage. Before eBay, the threat of an injunction (which could shut down a defendant's product line) forced many defendants to settle for large sums even when the patent was of questionable validity. After eBay, defendants are more willing to litigate and accept ongoing royalty payments, which has significantly reduced the practical power of NPE patent campaigns.

What is a preliminary injunction in a patent case?

A preliminary injunction (PI) stops the defendant from infringing while the case is pending — before trial. The standard for a preliminary injunction is higher than for a permanent injunction: (1) Likelihood of success on the merits — the plaintiff must show a reasonable likelihood of proving infringement and defeating invalidity defenses. (2) Irreparable harm in the absence of preliminary relief — immediate, not speculative. (3) Balance of equities — the harm to the plaintiff from denying the PI must outweigh the harm to the defendant from granting it. (4) Public interest. Preliminary injunctions in patent cases are rare because the defendant can usually raise legitimate invalidity arguments that undercut likelihood of success. Courts have held that a strong invalidity argument eliminates the probability of success even if infringement is clear. Preliminary injunctions are more common in design patent cases (where the accused product directly copies the patented design) than in complex utility patent cases.

What remedies are available if a court denies a patent injunction?

When a court denies a permanent injunction, the patent owner is still entitled to monetary damages for past infringement (reasonable royalty or lost profits). Courts in post-eBay cases have also developed 'ongoing royalty' awards — a forward-looking royalty rate that the infringer must pay for continued infringement after the trial verdict. This is distinct from a pre-verdict reasonable royalty and is often set at a higher rate to reflect the defendant's post-verdict status as a 'willful' infringer. Some courts also impose enhanced damages (up to 3× under 35 U.S.C. § 284, per Halo Electronics v. Pulse Electronics 2016) if infringement was willful. The practical result in NPE cases is often an 'ongoing royalty' order that functions like a compulsory license — the defendant can keep operating, but must pay a court-set rate.