Patent rights are under attack and have been in modern times at least since the Supreme Court’s decision in eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006), a decision that prevented permanent injunctions as a matter of right.
Prior to eBay, a victorious patent owner who had proved infringement would be able to routinely expect to obtain a permanent injuction. The Supreme Court found this rule distasteful because they believed it was a carve out for patent law. The Supreme Court has over recent years, perhaps even decades, strived to pound all square pegs into round holes. Every area of law is the same, so this business about victorious patent owners routinely getting injunctions when an injunction is supposed to be an extraordinary remedy just had to go.
Of course, the Supreme Court completely ignored that by its very nature and explicit terms a patent is an exclusive right. And an exclusive right must by necessary implication include the right to exclude, otherwise it is clearly erroneous to refer to it as an exclusive right.
The Supreme Court Got eBay Wrong
There is absolutely no doubt, the Supreme Court screwed up in eBay. The Supreme Court simply got it wrong. It happens, and in fact should be expected when a generalist Court dips its toe into specialized waters to decide issues once or twice a year in a rather archaic area of law that they clearly don’t understand.
It will no doubt be controversial to some to ponder the imponderable; namely that the Supreme Court could be wrong about anything. But a patent and its right to exclude actually by its specific terms grants the owner the right to prevent all others from making, using, selling, offering for sale or importing a product (for example) that would trespass on the right granted by the federal government. Ironically, a patent owner theoretically has an exclusive right up to the time that patent owner suddenly becomes a victorious plaintiff in a patent infringement litigation. Having proved infringement and withstood all validity challenges, that patent owner now no longer has an exclusive right because there is no right to a permanent injunction.
In what universe does it make any sense whatsoever for a victorious patent owner with a thoroughly litigated and confirmed valid set of patent claims to be worse off than they were before the verdict was finalized? That is, of course, why it can be said with such confidence that the Supreme Court was wrong. The Supreme Court violated the first rule of judging. They didn’t consider the ramifications of the holding they were foisting upon the industry. So, for twelve years now we’ve had to live with this remarkably illogical rendering. A patent is an exclusive right up to it has been proved to be stolen, then it no longer is an exclusive right at all.
The Nature of a Permanent Injunction
So why in the world wouldn’t a victorious patent owner in an infringement lawsuit be entitled to an Order from the District Court telling the defendant they can’t infringe moving forward? That is all a permanent injunction is, and it is already supposed to what the patent itself is supposed to prevent. A permanent injunction merely gives the District Court continued jurisdiction over the dispute in the event the defendant was to continue infringing. All a permanent injunction does is order the defendant to not do what they are already supposed to not be doing and at the same time make it unnecessary for the victorious patent owner to start over at ground zero and bring an entirely new enforcement action if infringement continues.
Does the Supreme Court even know what a permanent injunction is? Does the Supreme Court understand the basic bargained for exchange between government and innovator that leads to the issuance of a patent? Whether it is a property right like the statute says, or a government franchise like the Supreme Court recently ruled in Oil States Energy Services, LLC v. Greene’s Energy Group, 138 S.Ct. 1365 (2018), it is still exclusive. A permanent injunction does nothing to expand the patent right granted, whatever it may be in terms of its substance (i.e., property or government franchise). A permanent injunction only makes resolution of continued and recalcitrant infringement easier and quicker to deal with.
In other words, a permanent injunction allows the victorious patent owner who has demonstrated that the valid patent claims have been trespassed by a wrongdoer can simply return to the district court, go to the front of the line, and obtain relief. This makes all the sense in the world for what is a wasting asset. And let’s not forget that a patent, whether it is a property right or a government franchise, is a wasting asset. It is time limited and is specifically intended to give the owner a head start. But when those in the market making money using a patented technology are allowed to ignore the patent for years, even decades, and the patent owner has no right to obtain an order to get them to stop the infringement, exactly how is the patent exclusive?
That time limited asset, in many cases lasts for just 4 years, while many others last only 8 years. If the innovation is particularly valuable will last for 20 years from the original filing date. But even 20 years is a brief moment in time, particularly when infringement is allowed to continue unchecked and without any recourse. How is the patent owner supposed to get the benefit of the bargain if they are unable to have the full faith and enforcement power of the U.S. courts standing behind the exclusive right granted by the Executive Branch?
Patents are not self-enforcing, and there are no criminal remedies or enforcement of patents. Individual patent owners must enforce the exclusive rights granted, but without the right to an injunction the exclusive part of the promise is illusory at best. Without the federal courts standing behind the exclusive right the patent granted by the Executive Branch is simply not exclusive, regardless of whatever you want to call it — property or a franchise.
With the next Supreme Court term beginning in a few weeks we all need to come to terms with the fact that the U.S. has a compulsory licensing system, which is truly ironic. Trade missions, trade representatives, and governmental organizations travel the world preaching about the importance of a strong intellectual property system and how that starts with strong patent rights that are not subject to the whims and fancy of compulsory licensing. America should practice what it preaches.
For some time, the United States hasn’t had a property rights-based patent system. That was merely confirmed in Oil States with the Supreme Court calling patents a government franchise, but the seeds were sown over 12 years ago when the Court decided eBay and removed exclusivity from the patent bargain.
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