GMU Center for Intellectual Property x Innovation Policy: The Importance of Injunctive Relief and the RESTORE Patent Rights Act
Executive Summary:
• In the 2006 eBay Inc. v. MercExchange LLC decision, the U.S. Supreme Court abandoned the longstanding principle that a patent owner is presumptively entitled to an injunction once it defends validity and demonstrates infringement. The ruling reduced the issuance of injunctions for all types of patent owners, both licensors and manufacturers, thus ushering in a period of tremendous uncertainty for patent owners.
• The consequences of the eBay decision are of particular note because injunctions are critical to a healthy innovation ecosystem: not only do they serve to stop an infringer’s activities or terminate competition in the marketplace, they also safeguard efficient markets and facilitate the determination of fair market value by market actors. Without injunctions, the efficient markets that previously facilitated financial negotiations and established the fair market value of innovations vanished. In their place a system emerged in which predatory infringers are favored over patent owners, and the ‘infringe now, pay later’ strategy is rewarded.