According to the U.S. Supreme Court in the EBay v. MercExchange, No. 05-130, (May 15, 2006) in order to obtain an injunction in a patent case, the patent owner must demontsrate, "according to well-established principles of equity,"
that it has suffered an irreparable injury;
that remedies available at law, such as monetary damages, are inadequate to compensate for that injury;
that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
that the public interest would not be disserved by a permanent injunction.
Neither the District Court nor the Court of Appeals below fairly applied these traditional equitable principles in deciding respondent's motion for a permanent injunction. Although the District Court recited the traditional four-factor test, 275 F. Supp. 2d, at 711, it appeared to adopt certain expansive principles suggesting thatinjunctive relief could not issue in a broad swath of cases. Most notably, it concluded that a "plaintiff's willingness to license its patents" and "its lack of commercial activity in practicing the patents" would be sufficient to establish that the patent holder would not suffer irreparable harm if an injunction did not issue. Id., at 712. But traditional equitable principles do not permit such broad classifications.For example, some patent holders, such as university researchers or self-made inventors, might reasonably prefer to license their patents, rather than undertakeefforts to secure the financing necessary to bring their works to market themselves.
In reversing the District Court, the Court of Appeals departed in the opposite direction from the four-factor test. The court articulated a "general rule," unique topatent disputes, "that a permanent injunction will issue once infringement and validity have been adjudged." 401 F. 3d, at 1338. The court further indicatedthat injunctions should be denied only in the "unusual" case, under "exceptional circumstances" and "in rare instances . . . to protect the public interest." Id., at 1338, 1339. Just as the District Court erred in its categorical denial of injunctiverelief, the Court of Appeals erred in its categorical grant of such relief. Cf. Roche Products v. Bolar Pharmaceutical Co., 733 F. 2d 858, 865 (CAFed 1984) (recognizingthe "considerable discretion" district courts have "in determining whether thefacts of a situation require it to issue an injunction").
An industry has developed in which firms use patents not as a basis forproducing and selling goods but, instead, primarily for obtaining licensingfees. . . . When the patented invention is but a small component ofthe product the companies seek to produce and the threat of an injunction isemployed simply for undue leverage in negotiations, legal damages may well besufficient to compensate for the infringement and an injunction may not servethe public interest. In addition injunctive relief may have differentconsequences for the burgeoning number of patents over business methods, whichwere not of much economic and legal significance in earlier times. The potentialvagueness and suspect validity of some of these patents may affect the calculusunder the four-factor test.