Implications of eBay v. MercExchange

In eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837 (2006), the Supreme Court instructed district courts not to automatically grant injunctive relief after finding patent infringement. Instead, before granting such relief, the courts must require patentees to satisfy the same four-factor equitable test applied in other types of cases.

Since eBay, a number of district courts have applied the four-factor test in patent cases. While most courts still granted permanent injunctions, many did not. In fact, district courts denied injunctive relief in almost a quarter of those cases. Thus, in those instances where an injunction matters most—e.g., where the technology at issue has a short product life cycle or where market leadership can be forever lost—eBay adds an element of uncertainty to obtaining injunctive relief. In such cases, patentees should consider enforcing their patents at the ITC.

The ITC has jurisdiction to hear patent-infringement disputes under section 337 of the Tariff Act of 1930. Upon a finding of infringement, the ITC grants injunctive relief through exclusion orders prohibiting the importation of infringing articles into the United States. The U.S. Customs and Border Patrol then enforces those orders. Although the ITC cannot award monetary damages, patentees can (and frequently do) seek damages in parallel district-court litigation.

The ITC provides several advantages over district court litigation. First, because ITC investigations proceed at a very fast pace, exclusion orders can issue within 15 to 18 months of filing-a rate much faster than most district courts. Second, unlike permanent injunctions granted by district courts, exclusion orders are rarely stayed during an appeal. And finally, the equitable factors outlined by the Supreme Court in eBay don't apply to ITC proceedings.

Given these advantages, patentees have used the ITC with increasing frequency. In the last six years, the ITC's patent caseload has more than doubled, with 30 section 337 cases filed in 2006 alone. With the uncertainty of obtaining injunctions from district courts, this trend is expected to continue.

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