1 (Slip Opini o n) OCTOBER T ERM , 20 05 Sy llabu s N O TE : Wh er e it i s feas ibl e , a s y llab u s (h ead n ot e) wil lbe rel e as ed , as is bein g d o n e incon n ecti onwithth is cas e , a tth e ti meth e op in i o n is is s u ed

. Th e s y ll abu s con s titu tes n o p a r t of th e op in i o nof th eC o u r t bu t h a s be en pre p are dbyt h e Re po rte ro f De ci sio n s fo r t h e co nveni e nce of t h e reade r . Se e United Statesv. Detro it Timbe r& Lumb er Co., 200U. S

. 3 21, 337

. 

## SUPREME CO URT O F THE UNI TED STATES
Sy llabu s EBAY IN C. ET AL
. v . M ERC EXC H ANGE, L. L

. C. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT No. 05–1 30. Ar g u ed M a r c h29, 200 6—D e c i ded M a y15, 200 6 Petition er s op er ate popu larIn ter n e t Web sites th at allo wpr iv ate sell

er s to lis t g oods th eyw i shto sell. Re spo n den tsou gh t to lic en se it s bu sin e ss met h od paten t t o petit i on er s, bu t n o ag r e emen t w a s rea ched. I nre s p ondent ’s s u bs eq uentpa t e n tinfringements u it , aj ury fou n dth at its paten tw a s v a lid, th at pe ti tion er s h a d in fr in g e d th e pa t e nt , a n d tha tda ma ges were a ppropri a t e . However , t h e Dis t rict Courtdenied res p ondent ’s mot i on for perma n entinj unct ive relief. I n revers ing , t h eFedera l Circuita pplied its “ g enera lrule t h a tcourt s will issue permanent inj unctions again s t patent infringement absent ex c e ption a l c i rc u m stan c e s.” 401 F. 3d 13 23 , 1339. Held: The t r a d it iona l four-fa ct or t e s tapplied b ycourt s of eq uit ywhe n

cons idering w h et her t o a w ard perma n entinj unct ive relief t o a pre vailing plainti ff applies to disputes arisi n g under the Patent Act. That test requ ires a plaintiff to de monstrate: (1) that it has suffered anir r e par able in ju r y ; (2) that r e medie s a v ailab l e atla war e in ade

qu ate to c o mp en sate forth at in ju r y ; (3) that c o n s ider in gth e balan c e of h a r d sh ips b e tw eenth e plain t iff an d def e n d an t, a r e medyinequ i ty is wa rra nt ed; a n d (4) t h atthe pub lic int e res twould not b e dis s e rved b yaperma n entinj unct ion. The decis i on t o gra n tor deny s uch relief is anac t of e q u i tab le di sc r e tionbyth e d i str i c tc o u r t , rev i ew able on appeal for abuse of discretion. Th es e principles a pply wit heq ual force t o Pa t e ntActdis p ut es . “ [A] ma j o r depa rt ure from t h e long t r a dition of equity practice sho u ld not be lightly implied. ” W e in be rgerv. Romero-Barcelo, 456 U. S. 3 05, 32 0. Not h in ginth e Ac t in dic ates such a departure. Pp. 2–6. 401 F. 3d 13 23 , v a c ated an d r e man d ed.

T HOMAS , J., delivered the opinion for a unanimous Cou r t. R OBERTS ,2 EBAY INC. v. M ERCEXCHA N GE, L. L. C. Sy llabu s C. J ., filed ac o ncu rrin gopinion, in whic hS CALI A an d G IN SB U R G , J J ., join ed. K ENN E DY , J ., filed aconc urri ng opinion, in w h ich S TEVENS , S OUTER , an d B REYER , JJ., joined._________________

_________________ 1 Cite as: 54 7 U

. S. ____ (2006) Opinion of t h eCourt
NOTICE: This op i n ion is subjec t to f o rmal revi si on bef o r e publicat ion in the p r eli m in ary p rin t of th e U n it edS t at es R e p o rts

. R e ad ers ar e r e qu es ted to n o tif yth e R e p o r t e rof D e c i s i on s , Su p r em e C o u r t of th e U n ited St at es , Wa s h

ington, D. C. 2054 3, of any typ o gra p hical or other f o rmal err o rs , in or der th atc o rr ect i on sm a y b e mad eb e f o r e th ep r e lim in aryp rin t go es t o p r es s . 

## SUPREME CO URT O F THE UNI TED STATES

No. 05–1 30 EBAY IN C. , ET AL ., PE TITIONE R S v. MERC EXC H A N GE, L. L. C. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE FEDERAL CIRC UI T [M ay15, 2006 ] J USTICE T HOMA S delivered the opinion of the C o urt. Ordinarily, a federal court consider ing whetherto awar d permanent injunctive relief to aprevailing plaintiff a p plies the four-factor te st historic ally employed by courts of equity. Petitioners eBay Inc. a n d Half.co m , Inc., argue that this traditional test app lies to disputes arising under the Patent Act. We agree and, accordingl y, vacate t h e judgment of the Court of Appeals. I Petitioner eBay operates a popular Internet Web site that allows private sellers to li st goods they wish to sell , either through an auction or at a fixed price. Petitioner Half.com, n o w a wholly owned subsidiary of eBay, oper

ates a similar Web s i te. Resp ondent MercExchange , L. L. C., holds a number of patents, including a business method patent for an e l ectronic m a rket designed to facili

tate the sale of goo d s between private individuals by establishing a centralauthority to promote trust among participants. See U. S. Patent No. 5,845,265. MercEx

change sought to license its paten tto eBa ya n d Half.co m , as it had p r eviously done with ot her companies, but the2 EBAY INC. v. M ERCEXCHA N GE, L. L. C. Opinion of t h eCourt parties failed to reach an agreement. MercExchange subsequentl yfiled a patent infringement s u it against eBay and Half.com in t h e United States District Court for the Eastern District of Virginia. A jury found that Mer

cExchange’s patent wa s valid, that eBay and Half.com had infringed that patent, and that an award of damages wa s appropriate

. 1 Following the jury ve rdict, the District Court denied MercEx c ha nge’s motion for perm anent injunctive relief. 275 F. Supp. 2d 695 (2003). The Court of Appeals for the Federal Cir c uit revers ed, applyin gits “general rule th at courts will issue permanent injunctions against pate n t infringement absent exceptional circumstances.” 401 F. 3d 1323, 1339 (200 5). We granted certiorari to deter

mine the a ppropriateness of th is general rule. 546U. S ___ (2005). II Accordin g to well-established principles of equity, a plaintiff seeking a pe rmanent injunction must satisfy a four-factor test before a cou rt may g r ant su c hrelief. A plaintiff must demons trate: (1) that it has suffered a n irreparable injury; (2) that remedies available at law, such as monetary damages, are inadeq uate to compensate for that injury; (3) that, consid ering the balance of hardships between the plaintiff a n d defendant, a remedyin equity is warran t ed; and (4) tha tthe public interest w o uld not be disserved by a permanent injunction. See, e.g. , We inberger v. Rome ro-Barcelo, 4 5 6U. S. 30 5 , 3 1 1 –31 3 (198 2); A m oco Product i onC o . v. Gambell, 480U. S. 5 31, 5 42 (19 8 7)

. T h e decision to grant or de ny perm ane nt injunctive relief is a n act of equit able discretion bythe district court , reviewable on appeal for abuse of discretion. See, e.g. , Romero

-

——————

1 EBa y a n d Ha lf.com cont inu e t o challenge the validity of M e rcEx

c h a n g e’s pate n tinpr oc eedin g s pen d in gbefor e th e Un it ed State s P ate n t an d Tr ademar k O ffic e .3 Cite as: 54 7 U

. S. ____ (2006) Opinion of t h eCourt Barc elo , 456 U. S., at 3 20. These fami liar principles apply with equal force to disputes arising under the Patent Act. As this Court has long recognized, “a major de partu re from the long tradi

tion of equity pra cti ce should not be lightly implied.” Ibid.;see al so Amoco , su p ra , at 54 2. Nothing in the Pat

ent Ac t ind i cates thatCongress i n tended su ch a depar

ture. To the contrary , the Patent Act ex pre ssly provid es that injunct i ons “may” issue “in ac cordance wi th the prin

ciples of eq uity.” 35 U. S. C. §283. 2 To be sure, the PatentAc t also d e clares that “pa t ent s shall have the attrib u tes of personal property,” §261, including “t he right to exclude others from m a king, usin g, offering for sale, or selling the invention,” §154(a)(1). Accordin g t o the Court of Appeals, this statutory righ t t o exclude alone justifies its generalrule in favor of perma

nent injunctive relief. 401 F. 3d, a t1338. Bu t the creatio n of a right is distinct from the provision of remedies for violations of that righ t. Indeed, the Pat e nt Act its e lf indicates that patents shall have the attributes of personal property “[ s]ubject to the provisions of this title,” 35 U. S. C. §2 61, including, presum ably, the provision that injunctive r e lief “may” issue only “in accordan ce with the principles of equity,” §283. This approach is consistent with our treatment of in

junctions u n der the Copyrigh t Act. Li ke a pa t e nt owner, a copyrigh t h o lder possesses “the right to exc l ude others from using his property.” Fox Fi lm C o rp. v. Do ya l, 28 6 U. S. 123 , 127 (1 93 2); s e e a l s o id. , at 127– 128 (“A copy right, like a patent, is at once the equivalent given by the public for b e nefits b e stowed by the genius andmeditation s

——————

2 Sec t ion283 p r ov ides th at “[ t]h e sev e r a l c o u r t s h av i n gjur i sdic tionof ca s e s under this t i t l e ma y gra n tinj unc t i ons in a ccorda nce wit ht h e principles of equity to pre v ent th e violation of any ri ght secured b y paten t , onsu chter m s as th e c o ur t deems r e ason ab le.”4 EBAY INC. v. M ERCEXCHA N GE, L. L. C. Opinion of t h eCourt and skill of individuals, and the incentive to fu rther efforts for the same important objects ” (internal quotation marks omitted)). Like the Pa tent Ac t, th e Copyrigh tActprovide s that cour ts “may” gran t injun cti ve relief “on such terms a s it may deem reasonab le to prevent or restrain infringe

ment of acopyright.” 17 U. S. C. §502(a). An d as in ou r decision today, this Court has consistently rejected invita

tions to replace traditional equitable consider ations with a rule that a ninjunction automatically follows a determina

tion that a copyrigh t has been infringed. See, e.g. , New Y

o rk Times Co. v. Tas i ni, 53 3 U. S. 48 3, 50 5 (2 0 0 1 ) ( c i t i n g Ca mp bel l v. Acuff-RoseMus i c, Inc., 510 U. S. 56 9, 5 7 8 , n. 10 ( 1 99 4) ) ; Dunv. Lumbermen’sCre d itAss n ., 20 9 U

. S

. 20 , 23– 24 (1 90 8). Neither the District Court nor the Court of Appeals below fairly applied these traditional equitable principles in deciding respondent’s mo tion for a permanent injunc

tion. Although the District Courtrecited the traditiona l four-factor test, 275 F

. Supp. 2d, at 711, it appeared to adopt certa in expansive principles suggesting that injunc

tive relief c o uld not iss u e in a broad swath of cases. Most notably, it concluded that a “plaintiff’s willingness to license its patents” an d “its lac k of commercial activity in practicin g the patents ” would be sufficient to establish that the patent holder would not suffer irrepa rable harm if an injunction did not issue. Id. , at 712. But traditiona l equitable p r inciples do not pe rmit such broad classifica

tions. For example, some patent holders, such as univer

sity researchers or self -made inventors, might reasonabl y prefer to license their patents, rather tha nundertake efforts to secure the financing necessary to bring thei r works to m a rket them selves. Such patent holders may be able to satisfy the t r ad itional four-factor test, and we see no basis for categorical l y deny ing them the o pportunity to do so. To t h e extent that the District Court adopted such a categorical rule, then, its analysis cannot be squared5 Cite as: 54 7 U

. S. ____ (2006) Opinion of t h eCourt with the p r inciples of equity adopted by Congress. Th e court’s cate gorical rule is a l so in t e nsionwith Con t in en ta l Pa per Bag C o . v. Easter n Paper Bag Co., 210U. S. 40 5, 42 2 – 430 (19 0 8) , w h i c hr ej e c t e dt h e c o n t e n t i o nt h a tac o u r t o f equity has no jurisdiction togrant injunctive relief to a patent holder who has unreasonably declined to use the patent. In reversing the Distr i ct Co urt, t h e Court of Appeals departed in the opposite di rection from the four-factor test. The court arti c u lated a “g eneral rule,” unique to patent disputes, “that a permanent injunctio nwill issue once infrin gement and validity have been adj u dged.” 401 F. 3d, at 1338. The c o urt further indicated that injunc

tions shoul dbe deniedonly in th e “unusual” case, under “exceptional circumsta nces” and “ ‘in rare instances . . . t o protect the public inte rest.’ ” Id. , at 1338–1 339. Just as the DistrictCourt erre d in its categorical denial of injunc

tive relief, the Court of Appe als erred in its categorical gr a n to f s u c hr e l i e f

. C f

. Roche Products v. Bol a r Pharma

ceuti cal Co. , 733 F. 2d 858, 865 (CAFed 1984) (recognizin g the “considerable disc retion” district courts have “in de

termining whether th e facts of a situationrequire itto issue an inj unction”). Because we conclude that neither court below correc t l y applied the traditional four-fa ctor f r amework t hat governs the award of injunctive relief, we vacate the judgment of the Court of Appeals, so that the District Court may ap ply that frame w ork in the first instance. In doing so, we take no position on whether permane nt injunctive relief should or should n o t issue in t h is particular case, or indeed in any number of other disputes arising under the Patent Act. We hold on ly that the decisi on whether to grant or deny injunctive r e lief rests within th e equitable discretion of the district courts, and tha tsuch discretion must be exercised consistent with traditi onal prin ciples of equity, in paten t disputes no less thanin other cases governed by such standards.6 EBAY INC. v. M ERCEXCHA N GE, L. L. C. Opinion of t h eCourt Accordin gly , we va cat e the judg ment of th e Court of Appeals, and remand for further proceedings consisten t with this opinion. It is so orde red._________________

_________________ 1 Cite as: 54 7 U

. S. ____ (2006)

R OBERTS , C. J

. , con c u rrin g 

## SUPREME CO URT O F THE UNI TED STATES

No. 05–1 30 EBAY IN C. , ET AL ., PE TITIONE R S v. MERC EXC H A N GE, L. L. C. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE FEDERAL CIRC UI T [M ay15, 2006 ] C HIEF J U S TICE R OBER TS , with whom J US TICE S CALI A and J USTIC E G INSBUR Gjoin, conc urring. I agree wi th the Co urt’s holdi n g that“t he decision whether to grant or de ny inj uncti ve relief rests within th e equitable discretion of the distric tcourts, a n d that su ch discretion must be exercised consistent wit htradition al principles of equity, in patent disputes no less than in other cases governed b ysuch stan dards,” ante, at 5, and I join the opinion of the Court. That opinion rightly rests on the proposition that “a major departure fro m the long tradition of equity pra ctice should not be lightly implied.” Weinberger v. Ro m e ro- Ba rce lo, 4 5 6 U. S. 3 05, 3 20 (1 98 2); s e e an te, at 3. From at l e ast the early 19th century, courts have granted injunctive relief upon a fi nding of infringement in the vast majority of patent cases. This “long tradition of equity prac tice” is not surprising, given the difficulty of protecting a right to excludethro ugh monetary remedies that allow an infringer to usean invention against the patentee’s wishes—a difficulty that often implicates the first two fa ctors of the traditi onal four-factor test. This historical practice, as the Court holds, do e s n o t ent i tle a p a t e nt ee t oap e r m a n e nti n j unc ti on orj u s t if y a genera l rule th a ts u ch i n jun c tio n s shou l dis su e. The Fe de ra l Ci rcu it its e lf so re co gn ized in Roche Products, Inc. v. Bola r Pharma

-2 EBAY INC. v. M ERCEXCHA N GE, L. L. C.
R OBERTS , C. J

. , con c u rrin g
ce utic al Co. , 733 F. 2 d 858 , 86 5– 8 67 (198 4). At the sa m e ti m e , th er e i sa di f f er en ceb e twe e nex erc i si ng e qu i t abl e dis c re ti on p u r s u a n tto the e s tablis hed fou r -f a c to r t e s t a n d w ri ti n g o n a ne n ti r e l y c l e a ns l a t e . “ D iscretion i s not whim, and limiting discretion accordin g to legal standards helps promote the basic principle of justice that lik e cases should be decided alike.” Mart inv. Fra n k l i nC a

pi tal Co rp. , 546 U. S. __ _, ___ (2005) (sli p o p ., at 6). When it co mes to dis c e r nin g an d a p pl yi ng tho s e s t an da rds , i nthis a r ea as othe rs, “a page of histo ry is wo rth a vo lu me of logi c.” New Yo rkT r u s t Co. v. Eisner , 25 6 U. S. 345 , 3 49 (1 921 ) (o pini o n fo r th e Cou rt b y H o lme s , J

. )

._________________

_________________ 1 Cite as: 54 7 U

. S. ____ (2006)
K ENNEDY , J ., c o ncu rrin g 

## SUPREME CO URT O F THE UNI TED STATES

No. 05–1 30 EBAY IN C. , ET AL ., PE TITIONE R S v. MERC EXC H A N GE, L. L. C. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE FEDERAL CIRC UI T [M ay15, 2006 ] J USTICE K ENNEDY , with who m J USTIC E S TEVEN S , J USTICE S OUTER , and J USTICE B RE YERjoin, concurring. The Court is correct, in my view, to hold that court s should apply the well-established, four -factor test— without res o rt to categ o rical ru les—in decidin g whether t o grant inju nctive relief in patent cases. T HE C HIEF J USTICE is also correct that hist ory may be instructive in applying th is test. Ante, at 1–2 (c oncurring opinion). The traditional practice of issuing inj unctions against patent infringers, however, does not seem to rest on “the diffi

culty of pr otecting a right to ex cludethrou gh monetary remedies that allow an infringer to usea ninvention against the patentee’s wishes.” An te, at 1 (R OBERTS , C. J., concurring). Both the terms of the Patent Act and th e traditional view of inj unctive relief accept t hat the exi s tence of a r i ght to ex cl ude does not dicta te th e remedy fo r a violationof that ri ght. An te, at 3–4 (opinion of the Court). To the extent earlier cases establish a patternof granting aninjunction against patent infringers almost a s a matter of course, this pattern simply illustrates th e result of the four-factor test in th e contexts then preva

lent. The lessonof t h e historic al practice, therefore, is most helpful and instructive whe nthe circu mstances of a case bear s ubstantial parallels to litigation the courts have confronted before.2 EBAY INC. v. M ERCEXCHA N GE, L. L. C.
K ENNEDY , J ., c o ncu rrin g In cases now arising trial courts should bea rin min d that in ma ny instances the nature of the patent being enforced and the economic functio nof the patent holder present considerations quite un like earliercases. An indus try ha s develo pe d in whi c h fi rms use pa tents no t as a basis for produ c in g a n d sellin g goo d s b u t, ins t ead, prima r ily for ob ta inin g li censi n g fees. See FTC, To Pro m ote Inno va tion: The Prope rBalance of Comp etitio n a n dPa ten tLa w and Poli cy, ch . 3 , pp. 38–39 (Oct. 2 003 ), avai lablea t http://www.ftc.go v /os/20 03/10 /i nnovat i onrpt.pdf ( a s v i s i t e d May 11, 2006, and available in Cl erk of Court’s case file)

. For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbi tant fees to companies that seek to buy licenses to practice the patent. See ibi d

. When the patented invention is but a small component of the produc tthe compa n ies seek to produce an d the threa t of an injunction is em ployed sim p ly for undue leveragein negotiations, legal damages may well be sufficient to compensate for the inf r ingement and an inj unction may not serve the public interest. In addition injunctive relief may have different consequences f o r the burgeoning num

ber of patents over business met h ods, which were not o f much economic and l e gal signifi c ance in earlier times. The potential vagueness and sus p ect validity of some of these patents may affect the calcu l us under the four-fact or test. The equitab l e discretio noverinjunctions, granted by the Patent Ac t, is well suited to allow courts to adapt to t h e rapid techn o logical and legal developments in the patent system. For these re asons it sh ould be rec o gnized that district courts must determine wh ether past practice fit s the circums tances of t h e cases before them. With these observations, I join the opinion of t h e Court.