Will there be unintended consequences of the Supreme Court’s decision in eBay v. Merc Exchange?

Although it received most of the publicity as a possible step on the path to patent reform, eBay v. The MercExchange case may have altered the landscape in obtaining permanent injunctions in general and therefore may have unintended and unintended consequences in other areas of the law.

From the unanimous opinion (Thomas, J.) in eBay v. MercExchange, 126 S.Ct. 1837, 1839; 164 L. Ed. 2d 641, 645-646, 78 USPQ2d 1577 (2006):

In accordance with well-established principles of equity, a plaintiff seeking permanent injunctive relief must satisfy a four-factor test before a court can award such relief. A plaintiff must show: (1) that he has

suffered an irreparable [164 L.Ed. 2d 646] injury; (2) that the remedies available at law, such as monetary damages, are inadequate to compensate for that damage; (3) that, considering the balance of difficulties between the plaintiff and the defendant, a remedy in equity is justified; and (4) that the public interest would not be served by a permanent court order. See, for example, Weinberger v. Romero-Barceló, 456 US 305, 311-313, 102 S. Ct. 1798, 72 L. Ed. 2d 91 (1982); Amoco Production Co.v. Gambell, 480 US 531, 542, 107 S. Ct. 1396, 94 L. Ed. 2d 542 (1987).

Odetics v. Storage Technology, 14 F. Supp. 2d 785, 794 (ED Va 1998), quoting Weinberger as follows:

The issuance of injunctions against STK is governed by traditional equitable principles, which require consideration of (i) whether the claimant would face irreparable harm if the injunction were not issued, (ii) whether the claimant has adequate legal recourse, ( iii) if granting the precautionary measure is in the public interest, and (iv) if the balance of difficulties is in favor of the plaintiff. See Weinberger

v. Romero-Barceló, 456 US 305, 312, 72 L. Ed. 2d 91, 102 S. Ct. 1798 (1982).

District Court Decision on eBay, 275 F. Supp. 2d 695 (ED Va 2003), related to this text.

EBay’s brief to the Supreme Court, 2005 US Briefs 130, quotes Weinberger as follows:

This Tribunal could stop there because “equitable remedy is not available in the absence of a demonstration of irreparable

injury,” Los Angeles v. Lyons, 461 US 95, 111 (1983), and “insufficient legal remedies.” Weinberger v. Romero-Barcelo, 456 US 305, 312 (1982).

The naive reader might expect to find a four-factor test for obtaining a permanent injunction on page 312 of the Supreme Court case Weinberger v. Romero-Barcelona. The naive reader would be wrong.

Here is some text around page 312 from Weinberger:

*start text

It goes without saying that a court order is an equitable remedy. “It is not a remedy that is presented as of course”, Harrisonville v. W.S. Dickey Clay Mfg. Co., 289 US 334, 337-338 (1933), or “to restrain an act whose injurious consequences are merely insignificant.” Consolidated Canal Co. [456 U.S. 312] v. Mesa Canal Co., 177 US 296, 302 (1900). A mandate must be issued only when the intervention of a court of law

equity “is essential to effectively protect property rights against otherwise irremediable harm.” cavanaugh v. Looney, 248 US 453, 456 (1919). The Court has repeatedly held that the basis for injunctive relief in federal courts has always been irreparable harm and inadequate legal remedies. Rondeau v. Mosinee Paper Corp., 422 US 49, 61 (1975); Samson vs. Murray, 415 US 61, 88 (1974); Beacon Theaters, Inc. c. Westover, 359 US 500, 506-507 (1959); Hecht Cov Bowles, supra, at 329.

When the plaintiff and the defendant file conflicting claims for damages, the traditional function of equity has been to arrive at a “good fit and reconciliation” between the conflicting claims, Hecht Co. v. Bowles, supra, at 329. In such cases, the court “balances the convenience of the parties and the possible harm to them as they may be affected by the granting or withholding of the injunction.” Yakusv. United States, 321 US 414, 440 (1944). “The essence of equitable jurisdiction has been the power of

Chancellor to make fair and adapt each decree to the needs of the particular case. It has been distinguished by flexibility rather than rigidity.” Hecht Co. v. Bowles, supra, at 329.

In the exercise of their healthy discretion, equity courts must pay special attention to the public consequences of using the extraordinary injunction remedy. Common Rail v. Pullman Co., 312 US 496, 500 (1941). Thus, the Court has stated that “[the] the granting of interlocutory injunctive relief by courts of equity has never been strictly considered a matter of law, even if the plaintiff may otherwise suffer irreparable harm,” and that “when an injunctive relief is requested that will adversely affect to an audience

interest whose impairment, even temporarily, cannot be compensated by a security, the

The court may, in the public interest, withhold relief until a final determination of the rights of the parties, although postponement may be onerous for the court. [456 U.S. 313] plaintiff”. Yakus v. United States, supra, at 440 (footnote omitted). The grant of jurisdiction to enforce a law hardly suggests an absolute duty to do so in all circumstances, and a federal judge acting as chancellor is not mechanically required to issue an injunction for every violation of TVA v. Hill, 437 US, at 193, Hecht Co. v. Bowles, 321 US, at 329.

*finish text

As is apparent from the text at the bottom of page 312, the injunction at issue in Weinberger was NOT a permanent injunction, but a temporary injunction with final resolution contingent on another event. [for example, “[The district court] refused, however, to prohibit Navy operations while the permit application was considered.”]The issues of equitable balance for a temporary injunction, which are considered before the final issues are resolved, are different from those balancing issues for a permanent injunctive relief, which are considered after the case has been decided on the merits.So, for example, the “public interest” issue discussed on page 312 of Weinberger is the public interest BEFORE a final determination of the rights of the parties, NOT AFTER the final determination, as would be the case in a permanent injunction. [However, one notes that Orin H. Lewis referred to Weinberger as the “landmark permanent injunction case” in 72 Tex. L. Rev. 849; in such view, one considers that the district court disposed of the final issues before the district court, even though the ultimate disposition of the rights [of the Navy] I would be in another forum.]

The Weinberger case does not list a four-factor test to consider when granting a permanent injunction. In fact, the Weinberger case was not strictly about the granting of a permanent injunction because the final merits had to be settled on the permit application. The decision in eBay v. MercExchange’s statement about the presence of a four-factor test for permanent injunctions may have unintended consequences. In ZEN INVESTMENTS, 2006 U.S. Dist. LEXIS 37171 (decided June 2, 2006), the court noted: “The Third Circuit has not reached agreement #5 on whether a plaintiff must prove irreparable harm to receive a permanent injunction, as opposed to a preliminary injunction which always requires proof of irreparable harm.” eBay’s decision brings “irreparable damage” directly back into the permanent injunction calculation without giving much guidance on how to assess irreparable damage. The immediate impact will be more uncertainty.

Ironically, the eBay court’s subpoena of a non-existent four-factor test resonates with certain questionable subpoena practices in the Weinberger case. For example, the appropriateness of Weinberger’s court quotes in other cases appearing on page 312 has been questioned by legal scholars. Thus, Douglas Laycock wrote of Weinberger in the Harvard Law Review in 1990 (103 Harv. L. Rev. 687):

The Court said that it “has repeatedly held that the basis for injunctive relief in federal courts has always been irreparable harm and insufficient legal remedies.” He then cited Rondeau v. Mosinee Paper Corp., a moot case; Samson vs. Murray, a case on preliminary relief and deference to administrative agencies; Beacon Theaters, Inc. c. Westover, a jury trial case; and Hecht Co. v. bowling,

a case that does not even mention the irreparable damage rule. Weinberger itself is about undue hardship and deference to the military. Each of these cases is cited in a different section of this article; they have almost nothing in common except the phrase “irreparable damage.” Hecht doesn’t even have that; Hecht denied a warrant on the grounds that it would be futile. The Court misquoted him in Weinberger. Perhaps the paralegal assumed that any case where injunctive relief was denied and discretion mentioned must have been a case of irreparable injury.

Thus, the cases cited in the Weinberger decision, which was used for eBay to justify v. MercExchange doesn’t really justify the proposition about “repeatedly holding that the basis for injunctive relief is…” Furthermore, there is no list of four factors enumerated in the Weinberger case. Arguably, Weinberger v. Romero-Barceló, 456 US 305, 311 (1982) taught that a court order will not “restrain an act whose harmful consequences are merely insignificant” (citing Consolidated Canal Co. v. Mesa Canal Co., 177 US 296, 302 (1900). )), an issue quite different from the one faced in eBay v. MercExchange.

While the unanimous decision on eBay is characterized as a limited decision that reiterates prior law, it has the potential to create further uncertainty in the area of ​​applying the concept of “irreparable harm” to the calculation of permanent injunctive relief.

Other aspects of the eBay case were discussed in the Los Angeles Times Gets Facts Wrong in Discussion about Supreme Court case, eBay v. MercExchange

Given that Thomas’ opinion cites the still-valid 1908 Continental Paper case against the reasoning of the district court’s eBay opinion, the four-factor analysis conducted by the Court of Appeals for the Federal Circuit in this case it could still be valid, and a permanent court order could still be issued. So ironically, for all the smoke, MercExchange may still get its permanent injunction and we can almost get “business as usual” on the use of permanent injunctions in patent law, even as greater uncertainty is injected into other areas.