The Supreme Court’s holding in eBay, Inc. et al. v. MercExchange, L.L.C., No. 05-131 (May 15, 2006) may cost patent trolls millions, if not billions, of dollars in future licensing revenue by potentially denying them a powerful tool in future settlement negotiations — the threat of a permanent injunction. In eBay, the Court rejected a historically honored rule that district courts nearly automatically issue a permanent injunction upon a finding of patent infringement. The Court found that nothing in the Patent Act indicated that Congress intended to depart from a traditional four-factor test applied by courts in determining the equitable issue of whether an injunction should issue. According to the Court, to obtain a permanent injunction against a defendant, “[the patent] plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and the defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.” Under this rule, the grant or denial of an injunction is within the trial court’s discretion. In short, the days of per se patent injunctions are a thing of the past.

THE PATENT TROLL

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