IP Law Daily, PATENT NEWS: Preliminary injunctions in patent cases get another look at Senate hearing, (Dec 20, 2024)

By Matthew Hersh, J.D.

Proposed legislation would overturn a 2006 Supreme Court decision that changed the landscape of patent litigation.

Witnesses at a Senate subcommittee hearing strongly disagreed over the extent to which a 2006 Supreme Court decision has reduced the number of applications for—and grants of—preliminary injunctions in patent cases. The four witnesses, who testified at a hearing of the Subcommittee on Intellectual Property of the Senate Judiciary Committee, also disagreed over whether a reduction in preliminary injunction grants has tilted the balance too far in favor of alleged patent infringers or whether it has had the beneficial impact of reducing abusive patent litigation.

The hearing revolved around proposed legislation entitled The RESTORE Patent Rights Act: Restoring America’s Status as the Global IP Leader (S.4840). The bill, which is just one sentence long, would establish a rebuttable presumption in favor of injunctive relief for patent infringement, thereby effectively overturning the Supreme Court’s decision in eBay v. MercExchange. In that 2006 decision, a unanimous Court found that there was nothing in the Patent Act indicating that Congress intended to alter “well-established principles of equity” by adding such a presumption on top of the traditional four-factor test for injunctive relief. Senators Christopher Coons (D-Del.) and Tom Cotton (R-Ark.) are the co-sponsors of the legislation.

The two top leaders of the subcommittee made clear their support for the legislation. “This is in no way a new or novel idea,” subcommittee majority member Senator Coons noted at the hearing. “Our founding father made it clear that inventors should have exclusive rights to their inventions.” For more than 200 years, Senator Coons noted, federal courts granted injunctions in nearly 100 pct of cases when patent owners sought them. “This system is predictable and orderly,” Senator Coons noted. Now, he noted, “predatory infringement is on the rise.” Senator Thom Thillis (R-N.C.), the committee’s ranking member, also supported the bill. “I’m here as a business person trying to solve problems,” he noted. “And I view this as another problem that is a threat to innovation.”

Jacob Babcock, the CEO of NuCurrent—Chicago-based technology company specializing in wireless power and data transfer solution—testified in favor of the proposal. His written testimony noted that “[e]ven though patents are supposed to grant inventors exclusive rights to their inventions for a limited time—in exchange for publicly disclosing how their technology works—that balance was shattered” by the eBay decision. Babcock gave an example of how one of his company’s patented technologies was stolen and shared by a major Korean original equipment manufacturer, allowing large printed circuit board manufacturers in China and Taiwan “to freely produce and sell what we had created.” Without tools like injunctive relief, he noted, the company couldn’t stop it. “Financial remedies arrived years later, after the damage was done,” Babcock testified.

Kristen Jakobsen Osenga, a Professor of Law at the University of Richmond School of Law, also testified in favor of the bill. Her written testimony noted that “[t]he shift from a presumption of injunctive relief for patent infringement to uncertainty about whether a patent owner can even stop an infringer, has had serious negative impacts on the patent system.” For example, she noted, when an injunction is unlikely to be granted, “parties who wish to use the patented technology have no need to negotiate in good faith—or at all.” If a patent owner cannot stop an infringer from using their patented technology, she testified, “the patent is essentially worthless.”

Jorge L. Contreras, Director of the Program on Intellectual Property and Technology Law at the University of Utah, testified against the proposal. His written testimony highlighted “misconceptions, inaccuracies and exaggerations that have characterized the rhetoric surrounding injunctive relief in patent cases and the Supreme Court’s decision.” For example, Contreras argued that permanent injunctions are still issued in roughly 75% of patent infringement cases and that U.S. courts have authorized un-enjoined infringement of patents only 32 times in 15 years. In fact, he noted, all of the top ten filers of patent litigation in the United States were non-practicing entities whose “main source of revenue is through suing larger companies for patent infringement.” Thus, he emphasized, “the romantic image of a modern-day Morse or Edison beset by corporate behemoths is largely a myth that is belied by the realities of corporate and institutional R&D.”

Joshua Landau, the Senior Counsel for Innovation Policy at the Computer & Communications Industry Association, also testified against the legislation. “The positive benefits of the eBay decision for investment in research and development, including in filing patents, continue to exist,” his written testimony noted. “Abusive patent litigation has not disappeared, but the rate of its growth has been reduced. Meanwhile, and contrary to the erroneous findings set out in the RESTORE Act, injunctive relief continues to be available according to the historical test for such relief.”

One particularly sharp point of debate at the hearing involved the extent to which patent owners have been less likely to seek injunctive relief when bringing cases against alleged patent infringers. Senators Coons cited a June 2024 paper asserting that the relative decrease in requests for permanent injunctions was 87% for non-practicing entities and 65% for operating companies since the eBay decision. Moreover, the study asserted, the relative decreases in grants of permanent injunctions were 91% for NPEs and 66% for operating companies. Professor Landau took issue with the statistics in that study, however. According to him, the study reports that in 2016 there were permanent injunctions in 12 cases and grants in 11 cases. He said he reviewed the numbers for that same year and located 22 cases filed that resulted in “not just a request but a grant of the study.” Thus, he concluded, “I don’t know how trustworthy those numbers are.” Kristen Jakobsen Osenga, on the other hand, defended the statistics and methodology of the study.

Members of the subcommittee also noted the practical realities of the looming end of the year and the likelihood that the legislation would be passed by the end of the current legislative section. “Outside of a hail mary, this is a dialogue to be continued—and hopefully we can continue it early next year,” Senator Thillis noted.

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