Will there be unintended consequences of the Supreme Court’s decision in eBay v. MercExchange?
Although it received most of the publicity as a possible step on the path to patent reform, eBay v. The MercExchange case may have altered the landscape for obtaining permanent injunctions generally and therefore may have unintended and unforeseen consequences in other areas of the law.
From the unanimous opinion (Thomas, J.) on eBay v. MercExchange, 126 S. Ct. 1837, 1839; 164 L. Ed. 2d 641, 645-646, 78 USPQ2d 1577 (2006):
According to well-established principles of fairness, a plaintiff seeking a permanent injunction must meet a four-factor test before a court can award such relief. A plaintiff must show: (1) that he has
suffered an irreparable [164 L.Ed. 2d 646] injury; (2) that the remedies available by law, such as monetary damages, are inadequate to compensate for that damage; (3) that, considering the balance of difficulties between the plaintiff and the defendant, a remedy is justified in equity; and (4) that the public interest would not be harmed by a permanent court order. See, for example, Weinberger v. Romero-Barcelo, 456 US 305, 311-313, 102 S. Ct. 1798, 72 L. Ed. 2d 91 (1982); Amoco Production Co. v. Gambell, 480 US 531, 542, 107 S. Ct. 1396, 94 L. Ed. 2d 542 (1987).
Odetics v. Storage Technology, 14 F. Supp. 2d 785, 794 (ED Va 1998), quotes Weinberger as follows:
The issuance of precautionary measures against STK is governed by traditional principles of equity, which require consideration of (i) whether the plaintiff would face irreparable damage if the court order is not issued, (ii) whether the plaintiff has an adequate legal recourse, (iii) if the granting of the court order is in the public interest, and (iv) if the balance of the difficulties leans in favor of the plaintiff. See Weinberger
v. Romero-Barcelo, 456 US 305, 312, 72 L. Ed. 2d 91, 102 S. Ct. 1798 (1982).
The district court decision on eBay, 275 F. Supp. 2d 695 (ED Va 2003), was based on this text.
EBay’s brief to the Supreme Court, 2005 US Briefs 130, quotes Weinberger as follows:
This Tribunal could stop there because “the equitable remedy is not available without a demonstration of irreparable
injury, “Los Angeles v. Lyons, 461 US 95, 111 (1983), and” insufficient legal remedies. “Weinberger v. Romero-Barcelo, 456 US 305, 312 (1982).
The naive reader might expect to find a four-factor test for obtaining a permanent injunction on page 312 of the Supreme Court case Weinberger v. Romero-Barcelo. The naive reader would be wrong.
Here’s some text around page 312 from Weinberger:
* Start text
It goes without saying that a court order is an equitable remedy. “It is not a remedy that is issued as, of course,” Harrisonville v. WS Dickey Clay Mfg. Co., 289 US 334, 337-338 (1933), or “to restrict an act the detrimental consequences of which are merely insignificant.” Consolidated Canal Co. [456 U.S. 312] v. Mesa Canal Co., 177 US 296, 302 (1900). A court order should be issued only when intervention by a court of law
equity “is essential to effectively protect property rights against damage that would otherwise be irreparable.” Cavanaugh v. Looney, 248 US 453, 456 (1919). The Court has repeatedly held that the basis for injunctive relief in federal courts has always been irreparable harm and insufficient legal remedies. Rondeau c. Mosinee Paper Corp., 422 US 49, 61 (1975); Sampson v. Murray, 415 US 61, 88 (1974); Beacon Theaters, Inc. v. Westover, 359 US 500, 506-507 (1959); Hecht Co. v. Bowles, supra, at 329.
In cases where the plaintiff and the defendant bring competing claims for injury, the traditional function of fairness has been to achieve a “good fit and reconciliation” between the competing claims, Hecht Co. v. Bowles, supra, at 329. In such cases, the court “balances the convenience of the parties and the possible harm to them according to what may be affected by the granting or denial of the court order.” Yakus v. United States, 321 US 414, 440 (1944). “The essence of equitable jurisdiction has been the power of the
Chancellor to make equity and mold each decree to the needs of the particular case. Flexibility rather than rigidity has distinguished it. “Hecht Co. v. Bowles, supra, at 329.
In the exercise of their sound discretion, the courts of equity must pay special attention to the public consequences when employing the extraordinary remedy of precautionary measure. Railroad Comm’n v. Pullman Co., 312 US 496, 500 (1941). Thus, the Court has indicated that “[the] The adjudication of an interlocutory court order by the courts of equity has never been considered as a strictly matter of law, although the plaintiff may suffer irreparable damage, “and that” when a court order is requested that will negatively affect a public
interest for whose impediment, even temporarily, a judicial bond cannot compensate, the
The court may, in the public interest, withhold relief until a final determination of the rights of the parties, although the postponement may be onerous for the [456 U.S. 313] applicant. “Yakus v. United States, supra, at 440 (footnote omitted). The granting of jurisdiction to ensure compliance with a statute hardly suggests an absolute duty to do so in each and every circumstance, and a federal judge who acting as chancellor is not mechanically obligated to grant a warrant for each violation of the law, TVA v. Hill, 437 US, at 193; Hecht Co. v. Bowles, 321 US, at 329.
* End of text
As is clear from the text at the bottom of page 312, the court order in question in Weinberger was NOT a permanent court order, but a temporary court order in which the final resolution depended on another event. [for example, “[The district court] it refused, however, to ban Navy operations pending consideration of the permit application. “]Equitable balance issues for a temporary court order, which are considered before the final issues are resolved, are different from balance issues for a permanent court order, which are considered after the case has been decided on So, for example, the issue of “public interest” discussed on page 312 of Weinberger is the public interest BEFORE a final determination of the rights of the parties, NOT AFTER the final determination, as would be the case with a permanent court order. [However, one notes that Orin H. Lewis referred to Weinberger as the “landmark permanent injunction case” in 72 Tex. L. Rev. 849; in such view, one considers that the district court disposed of the final issues before the district court, even though the ultimate disposition of the rights [of the Navy] would be in another forum.]
The Weinberger case does not list a four-factor test for consideration when granting a permanent injunction. In fact, the Weinberger case was not strictly about the granting of a permanent injunction because the final merits would be resolved in the permit application. The decision on eBay v. MercExchange on the presence of a four factor test for permanent injunctions can have unintended consequences. In ZEN INVESTMENTS, 2006 US Dist. LEXIS 37171 (decided June 2, 2006), the court noted: “The Third Circuit has not been ruled n5 on whether a plaintiff must prove irreparable harm to receive a permanent injunction, in as opposed to a preliminary injunction that always requires a demonstration of irreparable damage. “eBay’s decision directly returns” irreparable damage “to the permanent injunction calculation without giving much guidance on how to assess irreparable damage. The immediate impact will be more uncertain.
Ironically, the citation of a non-existent four-factor test by the eBay court resonates with certain questionable citation practices in the Weinberger case. For example, the appropriateness of Weinberger’s court citations to other cases that appear on page 312 has been questioned by legal scholars. Thus, Douglas Laycock wrote about Weinberger in the Harvard Law Review in 1990 (103 Harv. L. Rev. 687):
The Court said it “has repeatedly held that the basis for injunctive relief in federal courts has always been irreparable damage and insufficient legal remedies.” He then cited Rondeau v. Mosinee Paper Corp., a moot case; Sampson v. Murray, a case on preliminary relief and deference to administrative agencies; Beacon Theaters, Inc. v. Westover, a trial by jury case; and Hecht Co. v. Bowles,
a case that doesn’t even mention the irreparable damage rule. Weinberger himself deals with undue hardship and deference to the military. Each of these cases is cited in a different section of this article; they have almost nothing in common except the phrase “irreparable damage.” Hecht doesn’t even have that; Hecht denied a court order claiming it would be useless. The Court misquoted him in Weinberger. Perhaps the paralegal assumed that any case that denied a court order and mentioned discretion must have been a case of irreparable injury.
Therefore, the cases cited in the Weinberger decision, which was used to justify eBay v. MercExchange does not really justify the proposition about “repeatedly held that the basis for injunctions is …” Also, there is no four-factor list listed in the Weinberger case. Arguably Weinberger v. Romero-Barcelo, 456 US 305, 311 (1982) taught that a court order will not “restrict an act whose detrimental consequences are merely insignificant” (citing Consolidated Canal Co. v. Mesa Canal Co., 177 US 296, 302 (1900) ), quite a different issue than the one you encountered on eBay v. MercExchange.
Although the unanimous decision on eBay is characterized by being a narrow decision that reiterates the previous law, it has the possibility of generating more uncertainty in the area of applying the concept of “irreparable damage” to the calculation of precautionary measures.
Other aspects of the eBay case were discussed in the Los Angeles Times Mistakes in the discussion on the Supreme Court case, eBay v. MercExchange
Considering that Thomas’s opinion cites the 1908 Continental Paper case, still valid, against the reasoning of eBay’s opinion of the district court, the four-factor analysis conducted by the Federal Circuit Court of Appeals in this case it could still be valid, and a permanent decision. a court order could still be issued. So ironically, despite all the smoke, MercExchange can still get its permanent injunction and we can almost get “business as usual” in the use of permanent injunctions in patent law, even when more uncertainty is injected into other areas.