Although it received most of the publicity as a possible step on the road to patent reform, eBay v. The MercExchange case may have altered the landscape of obtaining permanent injunctions in general, and therefore may have unintended and unforeseen consequences in other areas of the law.
Of 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 money damages, are inadequate to compensate for that damage; (3) that, considering the balance of the difficulties between the plaintiff and the defendant, a remedy in equity is warranted; and (4) that the public interest would not be served by a permanent injunction. 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), cites Weinberger as follows:
The issuance of injunctions against STK is governed by traditional equitable principles, which require consideration of (i) whether the plaintiff would face irreparable harm if the injunction were not issued, (ii) whether the plaintiff has adequate legal recourse, ( iii) if granting the precautionary measure is in the public interest, and (iv) if the balance of difficulties tips in favor of the plaintiff. See Weinberger
v. Romero-Barceló, 456 US 305, 312, 72 L. Ed. 2d 91, 102 S. Ct. 1798 (1982).
The district court’s 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 showing 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 unsuspecting reader might expect to find a four-factor test for 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 of Weinberger:
*Start text
It goes without saying that a court order is an equitable remedy. “It is not a resource 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 the injurious consequences of which are merely insignificant.” Consolidated Channel Co. [456 U.S. 312] v. Mesa Canal Co., 177 US 296, 302 (1900). An order should be issued only when the intervention of a court of law
equity “is essential to effectively protect property rights against harm that would otherwise be irremediable.” Cavanaugh v. Looney, 248 US 453, 456 (1919). The Court has repeatedly held that the basis for injunctive relief in federal court has always been irreparable harm and the inadequacy of legal remedies. Rondeau v. Mosinee Paper Corp., 422 US 49, 61 (1975); Samson vs. Murray, 415 US 61, 88 (1974); Beacon Theatres, Inc. c. Westover, 359 US 500, 506-507 (1959); Hecht Cov Bowles, supra, at 329.
When plaintiff and defendant bring competing claims for damages, the traditional function of equity has been to achieve a “good fit and reconciliation” between the competing 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 make equity and mold 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 sound discretion, the courts of equity must pay special attention to the public consequences when using the extraordinary remedy of injunction. Common Rail v. Pullman Co., 312 US 496, 500 (1941). Thus, the Court has stated that “[the] the granting of an interlocutory injunction by the courts of equity has never been strictly considered a matter of law, even though the plaintiff may otherwise suffer irreparable harm”, and that “when an injunction is requested that will adversely affect to an audience
interest whose impairment, even temporarily, cannot be offset by a bond, the
The court may, in the public interest, withhold relief pending a final determination of the rights of the parties, although the postponement may be burdensome to the court. [456 U.S. 313] Plaintiff.” Yakus v. United States, supra, at 440 (footnote omitted). The granting of jurisdiction to enforce a law hardly suggests an absolute duty to do so in any circumstance, and a federal judge serving as chancellor es is not mechanically bound to grant an injunction for every violation of the law TVA v. Hill, 437 US, at 193, Hecht Co. v. Bowles, 321 US, at 329.
*Finish text
As is clear from the text at the bottom of page 312, the injunction at issue in Weinberger was NOT a permanent injunction, but rather a temporary injunction where the final resolution depended on another event. [for example, “[The district court] refused, however, to prohibit Navy operations while the permit application was being considered.”]The equitable balancing issues for a temporary injunction, which are considered before the final issues are resolved, are distinct from those balancing issues for a permanent injunction, which are considered after the case has been decided on the merits Thus, for example, the issue of “public interest” 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’d 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 resolved in the permit application. The decision in eBay v. MercExchange about the presence of a four-factor test for permanent injunctions may have unintended consequences. In ZEN INVESTMENTS, 2006 US 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 a showing of irreparable harm.” eBay’s decision brings “irreparable damage” right 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 citation of a nonexistent four-factor test resonates with some questionable citation practices in the Weinberger case. For example, the adequacy of Weinberger’s court citations in other cases appearing on page 312 has been questioned by legal scholars. Thus, Douglas Laycock wrote about Weinberger in the Harvard Law Review in 1990 (103 Harv. L. Rev. 687):
The Court said it “has repeatedly held that the basis for injunctive relief in the federal courts has always been irreparable harm and insufficient legal remedies.” He then cited Rondeau v. Mosinee Paper Corp., a contentious case; Samson vs. Murray, a case on preliminary relief and deference to administrative agencies; Beacon Theatres, Inc. c. Westover, a jury trial case; and Hecht Co.v. bowling,
a case that doesn’t even mention the irreparable harm rule. Weinberger himself is about excessive 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 court order on the grounds that it would be futile. The Court misquoted him in Weinberger. Perhaps the paralegal assumed that any case in which an injunction was denied and discretion was mentioned must have been a case of irreparable injury.
Thus, the cases cited in the Weinberger decision, which was used to justify eBay v. MercExchange does not actually justify the proposition about “repeatedly holding that the basis for injunctive relief is…” Also, there is no list of four enumerated factors in the Weinberger case. Arguably Weinberger c. Romero-Barceló, 456 US 305, 311 (1982) taught that an injunction will not “restrain an act whose detrimental 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 in eBay is characterized as a limited decision reiterating prior law, it has the potential to create more uncertainty in the area of applying the concept of “irreparable harm” to the calculation of permanent injunctions.
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’s opinion cites the still valid 1908 Continental Paper case against the reasoning of the district court’s eBay opinion, the Federal Circuit Court of Appeals’ four-factor analysis in this case could still be valid, and a permanent court order could still be issued. So ironically, despite all the smoke, MercExchange can 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.