EBAY v. MERCEXCHANGE

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Case Basics
Docket No. 
05-130
Petitioner 
eBay Inc., et al.
Respondent 
MercExchange, L.L.C.
Advocates
(argued the cause for Respondent)
(argued the cause for Petitioner)
(argued the cause for Respondent)
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Facts of the Case 

MercExchange patented a design for an online marketplace in which a single company provides the trustworthy framework within which buyers and sellers can negotiate for goods. After negotiations with eBay and Half.com to license the patent failed, MercExchange brought suit in federal district court alleging patent violation under the Patent Act. The jury sided with MercExchange, ruling that its patent had been violated, but the district court judge refused to issue a permanent injunction. The injunction would have forced eBay and Half.com to stop using the contested framework, but the judge applied the traditional four-part test to determine whether an injunction was necessary and found that it was not. That decision was reversed, however, by the U.S. Circuit Court of Appeals for the Federal Circuit, which applied a "general rule that courts will issue permanent injunctions against patent infringements absent exceptional circumstances."

Question 

Under the Patent Act, should a permanent injunction always be issued when a patent has been violated, absent exceptional circumstances?

Conclusion 
Decision: 9 votes for eBay, 0 vote(s) against
Legal provision: 25 U.S.C. 1

No. Justice Clarence Thomas, writing for a unanimous Court, held that the appeals court's general rule was an unwarranted departure from the traditional four-part test applied to determine whether an injunction is necessary. That test requires the plaintiff to prove (1) that it has suffered an irreparable injury; (2) that the law does not provide other adequate ways to compensate it; (3) that considering the balance of hardships between the plaintiff and defendant, an injunction is warranted; and (4) that the public interest would not be harmed by a permanent injunction. The Court found no reason to make decisions on injunctions under the Patent Act different from other decisions on injunctions, and so the appeals court's general rule was rejected and the decision reversed.

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EBAY v. MERCEXCHANGE. The Oyez Project at IIT Chicago-Kent College of Law. 23 July 2014. <http://www.oyez.org/cases/2000-2009/2005/2005_05_130>.
EBAY v. MERCEXCHANGE, The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/2000-2009/2005/2005_05_130 (last visited July 23, 2014).
"EBAY v. MERCEXCHANGE," The Oyez Project at IIT Chicago-Kent College of Law, accessed July 23, 2014, http://www.oyez.org/cases/2000-2009/2005/2005_05_130.