Page 118 - Intellectual Property Disputes

changes in the parties bargaining positions, and the resulting changes in economic circumstances,
resulting from the determination of liability..." fn 28 Accordingly, the courts have concluded that a
reasonable royalty determined in a hypothetical negotiation — pre-infringement verdict — likely would
be inappropriate as the basis of a post-trial compulsory license, either under an injunction or not.

The issue of post-infringement, or future, damages was brought to the forefront by the Supreme Court’s
decision in eBay. Although the issue of whether a permanent injunction will be entered is a legal
question for the court, the quantification of a royalty if an injunction is not awarded has now entered the
domain of the damages expert. The following discussion describes the Supreme Court’s decision in
eBay as practitioner general knowledge, but it also provides information about case decisions relating to
the determination of future damages in those situations when an injunction was not entered, and the
court asked for a damages determination.

eBay fn 29 relates to the availability and appropriateness of permanent injunctions as a remedy for patent
infringement. Injunctive relief is an equitable remedy granted when monetary damages are not capable
of compensating the plaintiff’s violation of rights and preventing injustice. After a finding of
infringement, prior precedent suggested the imposition of a permanent injunction was all but a foregone
conclusion. eBay established that patent holders are subject to the same four-part analysis that is
applicable in every other context when permanent injunctive relief is sought as an equitable remedy, and
eBay and its progeny have established a new burden for parties seeking a permanent injunction.

The Court of Appeals for the Federal Circuit in eBay noted that there exists a "general rule that courts
will issue permanent injunctions against patent infringement absent exceptional circumstances." fn 30
However, the Supreme Court in eBay rejected this general rule in favor of applying the same framework
to the imposition of injunctive relief in patent infringement cases as is applied in all other cases.
Established principles of equity require that a party seeking permanent injunctive relief satisfy a four-
factor test demonstrating

a. "that [the plaintiff] has suffered an irreparable injury;"

b. "that remedies available at law, such as monetary damages, are inadequate to compensate for that
injury;"

c. "that, considering the balance of hardships between the plaintiff and defendant, a remedy in
equity is warranted; and,"

d. "that the public interest would not be disserved by a permanent injunction." fn 31

In eBay, Inc., the Supreme Court held that this paradigm applies "with equal force to disputes arising
under the Patent Statute," thereby eliminating the general rule of issuing permanent injunctions. The
Supreme Court held that the "decision whether to grant or deny injunctive relief rests within the
equitable discretion of the district courts, and that such discretion must be exercised consistent with

fn 28 Id.

fn 29 ebay, 547 U.S. at 388.

fn 30 MercExchange, LLC v. eBay, Inc., 401 F.3d 1323 (Fed. Cir. 2005).

fn 31 ebay, 547 U.S. at 388.

114 © 2020, Association of International Certified Professional Accountants