Can An Individual Inventor Beat Big Business?
Can An Individual Inventor Beat Big Business? The PROBLEM in the decision of Ebay v. MercExchange
The ability of individual inventors to obtain permanent injunctions was placed in jeopardy due to the May 15, 2006 decision in the United States Supreme Court case of eBay, Inc. v. MercExchange, L.L.C.
Prior to the decision, if a district court determines that a patent is valid and is being infringed, the patent owner may ask for a permanent injunction to keep the patent infringer from using the technology contained in the patent. A permanent injunction bars the use of infringing technology and may bring an entire business operation to a halt, as was threatened in the recent Research in Motion (maker of BlackBerry) case. (Research in Motion's petition for writ of certiorari to the United States Supreme Court was later denied.) The threat of a permanent injunction is a powerful bargaining chip and may be used to coerce the infringing party into licensing negotiations. In the event that a patent owner is unable to obtain a permanent injunction, the alleged infringer may drag on litigation to drain the patent owner of financial resources generally required to litigate patent lawsuits. This possible scenario serves as a disincentive for litigation-adverse individual inventors--or small companies--while allowing larger companies to appropriate intellectual property without the consent of its owner.
In eBay, Inc. v. MercExchange, L.L.C., the Supreme Court rejected the general rule of the Court of Appeals for the Federal Circuit that courts will issue permanent injunctions against patent infringement absent exceptional circumstances. Instead, the Court held that district courts should instead apply a four-factor test traditionally used in non-patent cases. The test requires that in order for a court to grant a permanent injunction, the plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and the defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
With its decision, the Court placed a sizable burden of proof on individual inventors that must be met before a court will issue a permanent injunction. For patent holders that do not market or sell the invention contained in the patent, satisfying all four prongs of the test may be difficult. Unfortunately, many individual inventors do not market or sell their own patented inventions due to their inability to bring their invention to the market themselves. If an individual inventor cannot satisfy the test, an infringer has no incentive to negotiate for a license and will only have to pay court-ordered damages. The Court appears to be carving out a separate rule or exception even though patent laws grant a patent holder the right to exclude, regardless of what they do with the invention, that which is claimed in the patent. Furthermore, whether large corporations want to admit it or not, many individual inventors throughout the country are acting as research and development for these large corporations by patenting certain technologies that these individual inventors created. The entire basis of the patent system is for the inventors to disclose their technologies to the U.S. Patent Office, and in turn, if novel and non-obvious, to be granted an exclusive right to exclude others from making, using and selling the invention. This exclusive right seems to be eroded by the eBay decision.
The holding of the Court will serve as a disincentive for individual inventors to disclose their inventions and patenting their inventions when someone--like a large corporation--may simply swoop in and appropriate the invention--that the same large corporation's R&D was not able to invent on their own and through their own deep pockets. The holding also encourages patent infringers to treat the steam rolling of the rightful claims of patent holders as mere operating expenses. Furthermore, if the individual inventor cannot guarantee their patent confers the exclusive rights to the invention contained in the patent, companies will become further hesitant
to pay to purchase the patent or license the product--and continue to trample on the rights of the inventor irrespective of the rights once clearly conferred by the patent laws of the United States.
In conclusion, the Court's decision is contrary to innovation and places an individual inventor or small business at the mercy of large corporations. Whether this decision drives inventors from the court system remains to be seen; but, it will likely change the landscape of patent litigation and the strategies that corporations consider to settle with individual inventors.
The ability of individual inventors to obtain permanent injunctions was placed in jeopardy due to the May 15, 2006 decision in the United States Supreme Court case of eBay, Inc. v. MercExchange, L.L.C.
Prior to the decision, if a district court determines that a patent is valid and is being infringed, the patent owner may ask for a permanent injunction to keep the patent infringer from using the technology contained in the patent. A permanent injunction bars the use of infringing technology and may bring an entire business operation to a halt, as was threatened in the recent Research in Motion (maker of BlackBerry) case. (Research in Motion's petition for writ of certiorari to the United States Supreme Court was later denied.) The threat of a permanent injunction is a powerful bargaining chip and may be used to coerce the infringing party into licensing negotiations. In the event that a patent owner is unable to obtain a permanent injunction, the alleged infringer may drag on litigation to drain the patent owner of financial resources generally required to litigate patent lawsuits. This possible scenario serves as a disincentive for litigation-adverse individual inventors--or small companies--while allowing larger companies to appropriate intellectual property without the consent of its owner.
In eBay, Inc. v. MercExchange, L.L.C., the Supreme Court rejected the general rule of the Court of Appeals for the Federal Circuit that courts will issue permanent injunctions against patent infringement absent exceptional circumstances. Instead, the Court held that district courts should instead apply a four-factor test traditionally used in non-patent cases. The test requires that in order for a court to grant a permanent injunction, the plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and the defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
With its decision, the Court placed a sizable burden of proof on individual inventors that must be met before a court will issue a permanent injunction. For patent holders that do not market or sell the invention contained in the patent, satisfying all four prongs of the test may be difficult. Unfortunately, many individual inventors do not market or sell their own patented inventions due to their inability to bring their invention to the market themselves. If an individual inventor cannot satisfy the test, an infringer has no incentive to negotiate for a license and will only have to pay court-ordered damages. The Court appears to be carving out a separate rule or exception even though patent laws grant a patent holder the right to exclude, regardless of what they do with the invention, that which is claimed in the patent. Furthermore, whether large corporations want to admit it or not, many individual inventors throughout the country are acting as research and development for these large corporations by patenting certain technologies that these individual inventors created. The entire basis of the patent system is for the inventors to disclose their technologies to the U.S. Patent Office, and in turn, if novel and non-obvious, to be granted an exclusive right to exclude others from making, using and selling the invention. This exclusive right seems to be eroded by the eBay decision.
The holding of the Court will serve as a disincentive for individual inventors to disclose their inventions and patenting their inventions when someone--like a large corporation--may simply swoop in and appropriate the invention--that the same large corporation's R&D was not able to invent on their own and through their own deep pockets. The holding also encourages patent infringers to treat the steam rolling of the rightful claims of patent holders as mere operating expenses. Furthermore, if the individual inventor cannot guarantee their patent confers the exclusive rights to the invention contained in the patent, companies will become further hesitant
to pay to purchase the patent or license the product--and continue to trample on the rights of the inventor irrespective of the rights once clearly conferred by the patent laws of the United States.
In conclusion, the Court's decision is contrary to innovation and places an individual inventor or small business at the mercy of large corporations. Whether this decision drives inventors from the court system remains to be seen; but, it will likely change the landscape of patent litigation and the strategies that corporations consider to settle with individual inventors.
posted by Patents+TMS, P.C. at 10:07 AM
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