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Damage Calculations Post eBay: The Economic Considerations

By Michael K. Milani and Trevor M. Blum
June 29, 2009

The May 2006 decision by the Supreme Court in eBay Inc. v. MercExchange L.L.C., 547 U.S. 388 (2006), ended the long-held belief that courts will routinely grant injunctive relief to successful plaintiffs in patent infringement matters. To the contrary, the Court highlighted that the Patent Act expressly provides that injunctions “may” issue “in accordance with the principles of equity.”

The Court further stressed that according to well-established principles of equity, a plaintiff seeking a permanent injunction 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 defendant, a remedy in equity is warranted; and 4) that the public interest would not be disserved by a permanent injunction. Such considerations are often referred to as the “four-factor test.”

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