A Better Way to RESTORE Injunctive Relief? The Federal Circuit Had the Answer

The ongoing debate over the nearly two-decades long battle to restore injunctive relief to prevailing patent owners is no doubt a vigorous one. Two different camps within the pro-strong-patent rights community have emerged. One camp consists of those backed by and/or supporting corporate innovators. The other camp consists of those supporting small, independent innovators.

Corporate innovators and their supporters prefer the “Realizing Engineering, Science, and Technology Opportunities by Restoring Exclusive Patent Rights Act of 2024″ (RESTORE Act) recently introduced in both the House and Senate. Small innovators prefer the injunction fixes set forth in the Restoring America’s Leadership in Innovation Act of 2024 (RALIA), introduced earlier this year in the House by Representatives Thomas Massie (R-KY) and Marcy Kaptur (D-OH).

At present, the unofficial spokesmen that have emerged for each camp appear to be Professor Adam Mossoff in favor of RESTORE and Paul Morinville in favor of RALIA, as evidenced by recent exchanges on blogs and video podcasts. See here, here and here.

Abrogating eBay

A central facet of the debate is whether RESTORE abrogates the Supreme Court’s decision in eBay v. MercExchange 547 U.S. 388 (2006). Mossoff asserts that it does. Morinville disagrees.

Much excellent research, including the recent work from Professor Acri of Colorado College, has documented the reduction in injunctions for prevailing patent owners since eBay was decided in 2006. With the causal connection not in dispute, eBay has contributed to the unreliability of U.S. patents by making them less able to deter predatory infringement and, as a result, put a significant governor on the U.S. innovation engine.

In eBay, SCOTUS eliminated the Federal Circuit’s general rule that a permanent injunction will issue once infringement and invalidity have been adjudged absent exceptional circumstances. eBay replaced it with the “traditional” four-factor test applied by courts of equity when considering whether to award permanent injunctive relief to a prevailing plaintiff in a dispute arising under the patent act. Thus, in order to rev back up the U.S. innovation engine, eBay must be done away with, once and for all.

Does it, or Doesn’t it?

During a recent Aurora patents video podcast, Mossoff stated that RESTORE, “brings back, it restores, the original doctrine that had existed in this country from 1790 until 2005 that a patent owner receives an injunction on finding of infringement of their property rights, continuing ongoing infringement.” He explained that the bill includes a rebuttable presumption “that you receive an injunction for continuing infringement.”

The single-sentence operative language of RESTORE is as follows:

“REBUTTABLE PRESUMPTION.—If, in a case under this title, the court enters a final judgment finding infringement of a right secured by patent, the patent owner shall be entitled to a rebuttable presumption that the court should grant a permanent injunction with respect to that infringing conduct.’’

In response to the host remarking that RESTORE neither “explicitly abrogate[s] eBay” nor gets rid of the four-factor test, Mossoff corrected him. He stated that “the four-factor test is gone” and that RESTORE “directly replaces” a four-factor test with a general doctrine, buoyed by over 200 years of history, that once infringement is found and the defendant failed to invalidate the patent, a presumption is created that an injunction issues. He added that “the function and purpose of this bill is to abrogate eBay.”

Mossoff also claimed that RESTORE’s Findings “explicitly say that the purpose of this sentence [the operative language] is to overrule eBay” and that the single-sentence operative language as written is “perfect” and “clear” in its abrogating effect.

Later in the podcast, however, Mossoff argued that explicit abrogation is not needed and pointed to the last sentence of Section 103 as support for his view. He stated that when it was added as part of the 1952 changes to the patent statute, it was “well-understood,” from the rules of statutory interpretation and the legislative history that the function of that sentence was to overrule the flash of creative genius test from the Supreme Courts’ decision in Cuno Engineering Corp. v. Automatic Devices Corp., 314 U.S. 84 (1941) even though the case is not mentioned in the added language.

Morinville, on the other hand, strongly disagrees. He has argued in his blogposts that there is no such explicit abrogation of eBay anywhere in RESTORE, not in the operative language and certainly not in the Findings, as Mossoff claimed. He argued that RESTORE merely shifts the burden from the victorious patent owner needing to show why an injunction is warranted to the adjudged infringer needing to show why an injunction is not warranted. By failing to explicitly abrogate eBay and speaking of irreparable harm in Finding (5), Morinvillle claimed that RESTORE actually codifies the effects of eBay and that, by failing to explicitly abrogate it, the adjudged infringer will naturally and undoubtedly utilize eBay’s four factors in its argument against an injunction, i.e., to rebut the presumption.

Morinville said he fears that allowing the eBay factors to endure, especially the first factor, will result in patent owners continuing to be denied injunctive relief; particularly those patent owners who do not manufacture a product. In other words, he fears the fact that many patent owners do not manufacture a product will motivate adjudged infringers to argue successfully in rebuttal that no injunction is warranted since, under eBay, courts rarely find irreparable injury for such patent owners. Thus, Morinville believes that RESTORE will have little to no impact on the number of permanent injunctions being issued.

Morinville said he prefers the language of RALIA. He pointed to language that not only expressly abrogates eBay but also ensures RALIA’s provisions apply even when the patent owner does not make or sell a product.

Who is Right?

I’m not sure it matters. The fact that there is such a vigorous debate is what matters. The debate strongly suggests a lack of clarity. Given the harm that both the conventional wisdom and the available data agree has befallen the system since eBay, we cannot afford ambiguity. We will likely get one shot at this badly needed fix for the foreseeable future. As such, we owe it to ourselves, the innovation ecosystem, and the country to get it right.

So, regarding the abrogation of eBay, my view is not to take the risk. If we all agree that eBay has been a disaster, why not expressly abrogate it? Why not be sure? This isn’t 1952 anymore. We live in a lawless, post-Constitutional society (for evidence, note (i) the ongoing attempts at expanding Bayh-Dole march-in and (ii) Supreme Court rulings that patents are government franchises that can be taken away by an agency tribunal). Therefore, it seems naïve to base the fix on hoping agency officials or enough federal judges will suddenly return to interpreting and applying they law the way they once did. We can do better. We must do better.

Moreover, patents and the patent system are not presently viewed in the best light. As such, even agency officials and judges who properly interpret the law, because of the negative narrative promulgated by Big Tech and Big Implementer, are likely to look hard for ways to avoid granting an injunction while complying with the law. We must not provide them the opportunity. RESTORE ought to include the express abrogation language of RALIA and limit any reference to irreparable harm to the context of a preliminary injunction. Doing so certainly won’t hurt.

Will that be enough? Not likely. Even if RESTORE expressly abrogates eBay, its ambiguous, waffling language is still problematic. As above, a rebuttable presumption that a court “should grant” an injunction leaves judges disinclined to grant them plenty of opportunity not to do so. “Should” indicates a recommendation or an expectation not a requirement. Couple that with a rebuttable presumption and I see plenty of opportunity for judges to not grant an injunction.

Is RALIA the answer? I don’t think so. Morinville’s arguments against RESTORE unwittingly reveal the fatal logical flaw in RALIA’s approach to injunctions. On one hand, it expressly abrogates eBay. That is good. But, on the other hand, it relies on a presumption of irreparable harm in its operative language to deliver more injunctions. Irreparable harm is factor 1 of the four-factor eBay test. That is not so good. If eBay is abrogated, why are we relying on its first, and most important, factor to deliver its fix? If eBay is abrogated, so is factor 1, so is the need for irreparable harm.

What is the Answer?

Look no further than the Federal Circuit. The Federal Circuit had it right. The Federal Circuit’s pre-eBay “general rule” was simple and clear. It was predictable and certain. Most importantly, it worked and worked well. It promoted innovation by helping to make patents reliable.

Prior to 2006, under the Federal Circuit’s rule, injunctive relief was not automatic but very common (Professor Acri’s recent work also shows a permanent injunction grant rate of over 90% during the years 2000-2005) and the U.S. patent system was still the envy of the world, one that other countries were attempting to emulate. You might say the rule was “perfect.”

As articulated by the Federal Circuit in its 2005 eBay decision, drawing from at least as far back as a 1989 case, “the general rule is that a permanent injunction will issue once infringement and validity have been adjudged.” Later in the opinion, it stated the following: “[w]e see no reason to depart from the general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.” The Supreme Court cited the latter in its eBay opinion. The single-sentence rule contains no rebuttable presumption, no “should grant.” In both recitations, the language is “will.”  “Will issue” delivers certainty not a recommendation or an expectation.

Mossoff’s own research validates the Federal Circuit’s rule. In his forthcoming paper, “Injunctions for Patent Infringement: Historical Equity Practice Between 1790 – 1882” which he referenced in the video podcast, he finds that during the period from 1790 to 1880, “[a]n overwhelming majority (93.7%) of patent owners seeking a permanent injunction received this remedy after a court found infringement of a patent that survived any validity challenges by the defendant.” He goes to great lengths to point out that a four-factor test was not used in any of those cases.

He then wisely goes on to explore what doctrine was used. Here, however, is where I question the distinguished Professor Mossoff. He points out that equity courts of the day used a two-step inquiry. First, “[i]f a plaintiff succeeded in (1) proving continuing or willful infringement by the defendant and (2) rebutting patent validity challenges by the defendant, then this created the presumptive right of the plaintiff to an injunction.” (Emphasis in original). Okay, fine. I take issue with it being a “presumptive right” but put a pin in that for now.

Then, he claims that for step two: “[o]nce a patent owner established this ‘presumptive’ right to an injunction, the defendant had a right to attempt to rebut it by convincing the court to dismiss plaintiff’s complaint and thus deny the injunction by pleading equitable defenses. If a defendant succeeded in proving either noninfringement or invalidity of the patent, the complaint was dismissed and the injunction denied.” (Emphasis added). It seems circular.

He claims that the defendant could rebut the plaintiff’s “presumptive” right to an injunction by proving what the defendant already failed to prove. In other words, the defendant has already been found to be infringing and the patent has already survived the validity challenge. These results created the “presumptive” right in the first place. But, according to Mossoff, the defendant could rebut the presumption and avoid the injunction by proving noninfringement or invalidity. We are back where we started. Did the defendant get a second bite at the apple? It seems unlikely.

What’s the Takeaway?

To me, this means it was not a “presumptive” right to an injunction. Instead, it was essentially an automatic right. If your patent was valid and infringed, the defendant was a wrongdoer and the patent owner got an injunction. End of inquiry.

The Federal Circuit’s rule embodies that concept and Mossoff’s statistics validate it. If it was only a “presumptive” right, you would expect an injunction significantly less than 93.7% of the time. In other words, you’d expect the advocates of the day to be able to rebut the presumption more than 6% of the time. Moreover, Mossoff’s research finds that “[c]ourts granted these injunctions by applying the same legal doctrines they applied when redressing continuing trespasses of real property, protecting patents as much as they protected real estate and other property interests.”  Does the home or car owner have only a “presumptive” right to an injunction? Consistent with the Federal Circuits’ rule, perhaps so in extremely rare or unusual circumstances but, for all intents and purposes, experience demonstrates that home and car owners get their injunctions once infringement (i.e., trespass or theft) and validity (i.e., ownership) are established.

A Better Way to RESTORE

A better approach to restoring the ability to obtain injunctive relief, then, might be to simply codify the Federal Circuit’s pre-eBay rule. It is one-sentence, clear and effective. The current version of RESTORE’s rebuttable presumption that a court “should grant” an injunction is neither consistent with recent history nor that of the nineteenth century and will likely allow disinclined judges to far too often not grant a permanent injunction. RALIA suffers from a logical flaw that will similarly allow disinclined judges to not grant a permanent injunction by plausibly questioning whether Congress really meant to abrogate eBay. Codify the Federal Circuit’s pre-eBay rule and let the American innovation engine roar.

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