Permanent Injunctions in Patent Litigation after eBay: An Empirical Study

I. IntroductionThe Supreme Court's 2006 opinion in eBay v. MercExchange, which held that prevailing patentees in litigation are not automatically entitled to a permanent injunction,1 is widely regarded as one of the most significant patent law decisions of the past decade.2 It has been extensively cited by lower federal courts,3 and is the subject of numerous law review articles.4 The case has also spawned a significant transformation in the field of remedies, reshaping the test for permanent injunctive relief in numerous areas outside of patent law.5Despite its perceived importance, however, there has been little rigorous empirical examination of eBay's actual impact in patent litigation.6 This is significant because the eBay decision-which was unanimous-contains two concurring opinions that express seemingly divergent perspectives regarding the availability of permanent injunctions in future patent cases.7 In particular, it remains hotly contested whether so-called patent assertion entities ("PAEs")8-firms who principally exploit their patents through litigation and/or licensing rather than directly practicing them and who are sometimes pejoratively referred to as "patent trolls"9-should be able to obtain injunctive relief.10This Article helps fill this significant gap in the literature by reporting the results of an original empirical study of contested permanent injunction decisions in the federal district courts for a 7.5 year period following eBay, representing the most in-depth effort to date to assess the post-eBay landscape. The data in this study reveal that, while the vast majority of patentees still obtain injunctive relief following eBay, PAEs rarely do.11 This finding remains robust even after controlling for the field of technology of the infringed patents and the district court that decided the case.12 Furthermore, PAEs often cannot establish the type of injury deemed "irreparable" following eBay, which is a prerequisite to obtaining a permanent injunction.13 In sum, district courts appear to have adopted a de facto rule against injunctive relief for PAEs and other patent owners who do not directly compete in a product market against an infringer-a rule which, ironically, is in tension with the Supreme Court's conclusion in eBay that "the District Court erred in its categorical denial of injunctive relief' to a non-practicing patentee.14This Article also evaluates the impact of other considerations on permanent injunction decisions after eBay. It finds that grant rates vary significantly by field of technology, with injunctions nearly always granted in cases involving patented drugs and biotechnology, but much less often for disputes involving computer software.15 The study also finds that grant rates differ by district, even after controlling for the propensity of PAE litigants to file lawsuits in particular courts.16 Furthermore, it assesses whether several other factors mentioned in the concurring opinions in eBay and the district court's decision after remand-such as the patentee's willingness to license the patented technology, whether the patented technology covers only a small component of an infringing product, and a finding that the defendant willfully infringed the patent-are correlated with injunction decisions.17Finally, this Article reports the results of a second, related dataset that explores whether traditionally accepted indicators of patent value are correlated with injunction decisions.18 Somewhat surprisingly, it finds that these indicators are not predictive of whether a patentee is likely to receive an injunction.19The balance of this Article is organized as follows. Part II provides an overview of the theoretical distinction between property rules and liability rules for enforcing legal rights, focusing on their application to intellectual property ("IP") rights. Part III traces the historical development of the right to exclude in patent law. It then analyzes the eBay litigation and concludes with an overview of the existing literature on eBay's impact in patent litigation. …