On May 15, the Supreme Court ruled that, in deciding whether to issue permanent injunctions in patent infringement actions, the trial courts should apply the traditional four-prong test for granting injunctive relief. In eBay, Inc. v. MercExchange, the Court, in a unanimous decision, rejected the use of categorical rules and reversed the Federal Circuit's decision for applying the incorrect standard. Justice Clarence Thomas’s opinion states that courts should apply the traditional following four traditional factors in deciding whether to issue an injunction:
A 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 defendant, a remedy in equity is warranted; and ((4)) that the public interest would not be disserved by a permanent injunction.
The Court noted that the decision to grant or deny injunctive relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion. The court reversed the Federal Circuit's decision because it had applied its "general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances." The Court also reversed the district court's decision because in denying injunctive relief, the district court appeared to have adopted a general rule that patent holding companies are not entitled to injunctive relief. The Court rejected such a per se rule.
The decision was unanimous but there were two concurring opinions, which differ in regard to how the court's discretion should be exercised. It can be expected, however, that permanent injunctions will be issued less frequently in patent cases.
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