## Facts

- MercExchange, L.L.C. owned business-method patents covering aspects of an electronic marketplace, including technology used in eBay’s “Buy It Now” feature.
- eBay Inc. and Half.com, Inc. operated online platforms enabling private sellers to list and sell goods.
- After failed negotiations to purchase MercExchange’s patent portfolio, MercExchange sued eBay and Half.com for patent infringement.
- A jury found the asserted patents valid, found infringement, and awarded monetary damages.
- MercExchange sought a permanent injunction to stop continued infringement.
- The district court denied a permanent injunction, reasoning in part that monetary relief could compensate MercExchange and that MercExchange’s licensing posture and nonuse of the invention weighed against injunctive relief.
- The Federal Circuit reversed, applying a general rule favoring permanent injunctions in patent cases absent exceptional circumstances.

## Issues

1. Whether a prevailing patentee is presumptively entitled to a permanent injunction upon a finding of infringement.
2. Whether courts deciding patent injunction requests must apply the traditional four-factor test for equitable relief under 35 U.S.C. § 283.

## Decision

- The Supreme Court unanimously vacated the Federal Circuit’s judgment and remanded.
- Courts must apply the traditional four-factor test for permanent injunctions in patent cases.
- The Federal Circuit’s near-automatic rule favoring injunctions was rejected as inconsistent with equitable discretion.
- The Court also rejected categorical reasoning that would deny injunctions based solely on a patentee’s willingness to license or failure to practice the invention.

## Legal Principles

- A permanent injunction requires proof of: (1) irreparable injury; (2) inadequacy of legal remedies; (3) balance of hardships favoring equitable relief; and (4) no disservice to the public interest.
- 35 U.S.C. § 283 authorizes injunctions only “in accordance with the principles of equity,” preserving traditional equitable discretion.
- Appellate review of a district court’s grant or denial of permanent injunctive relief is for abuse of discretion.
- Historical frequency of injunctions in patent cases may inform, but cannot replace, the case-specific four-factor analysis.
- In evaluating equities, courts may consider the practical effects of injunctions, including situations where the patented feature is a small component of a larger product and monetary relief may be adequate.

## Conclusion

The Court held that permanent injunctions in patent cases are not automatic after a finding of infringement; instead, district courts must apply the traditional four-factor equitable test without categorical presumptions for or against injunctive relief.


eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)