Trolling for trolls: The pitfalls of the emerging market competition requirement for permanent injunctions in patent cases post-eBay

Michigan Law Review

Volumn 106, Issue 2, 2007, Pages 305-345

  Diessel, Benjamin H ^a  

^a NONE

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EID: 36048969786     PISSN: 00262234     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (251)

1. The holdup problem exists when a party makes an inefficient threat of litigation just to obtain bargaining power, See, e.g., N. Ind. Pub. Serv. Co. v. Carbon County Coal Co., 799 F.2d 265 (7th Cir. 1986) (denying specific performance because it would produce an inefficient result that the plaintiff was seeking only for bargaining power); see also Ian Ayres & Kristin Madison, Threatening Inefficient Performance of Injunctions and Contracts, 148 U. PA. L. REV. 45 (1999) (discussing holdup in the context of threats to perform inefficiently).
2. Patent trolls have been described in many ways. One popular way to describe patent trolls is to emphasize their lack of commercialization and their business model of thriving off of litigation and settlements. See Steve Seidenberg, Troll Control: The Supreme Court's eBay Decision Sets Back Pesky 'Patent Trolls'or American Innovation, Depending Upon Which Side You're On, 92 A.B.A. J. 50, 51 (2006) (noting that patent trolls have been described as "businesses that produce no products or services and have the sole purpose of obtaining money by licensing patents they own and winning infringement lawsuits against others"),
3. But see Terrence P. McMahon et al., Who is a Troll? Not a Simple Answer, 7 SEDONA CONF. J. 159, 163 (2006) ("[T]he line between troll and nontroll remains unclear."). This has caused renewed focus on finding a new definition that provides greater clarity. McMahon and his coauthors have proposed a new definition: (1 ) "First, a patent troll would be a company that receives no benefit from excluding others because it does not have a competitive product nor does it plan to develop one," id. at 166, and (2) "Second, a patent troll's tactic would be to use threat of litigation and its associated costs to force others into licensing agreements without closely scrutinizing the validity and strength of the patent," id. I will use the term "patent troll" to encapsulate the colloquial understanding as described by Steve Seidenberg above. It is important, however, to distinguish from patent trolls individual small-scale inventors who may wish to license their inventions. See infra text accompanying notes 207-208, 240-243.
4. For recent scholarship discussing patent trolls post-eBay, see, in general, Leslie T. Grab, Recent Development, Equitable Concerns of eBay v. Mercexchange: Did the Supreme Court Successfully Balance Patent Protection Against Patent Trolls?, 8 N.C. J.L. & TECH. 81 (2006);
5. Gerard N. Magliocca, Blackberries and Barnyards: Patent Trolls and the Perils of Innovation, 82 NOTRE DAME L, REV. 1809 (2007) (analogizing the current patent troll to the gilded age equivalent, the "patent shark");
6. Rebecca A. Hand, Note, eBay v. MercExchange; Looking at the Cause and Effect of a Shift in the Standard for Issuing Patent Injunctions, 25 CARDOZO ARTS SI ENT. LJ. 461, 473-79 (2007);
7. Damian Myers, Note, Reeling in the Patent Troll, 14 J. INTELL. PROP. L. 333 (2007).
8. See, e.g., FED. TRADE COMM'N, TO PROMOTE INNOVATION: THE PROPER BALANCE OF COMPETITION AND PATENT LAW AND POLICY ch. 3, at 40-41 (2003) [hereinafter FTC REPORTI, available at http://www.ftc.gov/os/2003/10/innovationrpt.pdf.
9. See David L. McCombs & Phillip B. Philbin, 2005 Year in Review: Intellectual Property, 69 TEX. BAR J. 29, 30 (2005) (discussing how the Patent Reform Act would authorize courts to limit the availability of the injunctive remedy based on equitable considerations); cf. Patent Reform Act, H.R. 2795, 113th Cong. (2005) ("In determining equity, the court shall consider the fairness of the remedy in light of all the facts and the relevant interests of the parties associated with the invention.").
10. eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837 (2006).
11. This case was decided without Justice O'Connor, before Justice Alito was confirmed.
12. eBay Inc., 126 S. Ct. at 1841 (quoting MercExchange, L.L.C. v. eBay Inc., 401 F.3d 1323, 1338-39 (Fed. Cir. 2005)).
13. eBay Inc., 126 S. Ct. at 1839.
14. Id. at 1840 (quoting MercExchange, L.L.C, v. eBay Inc., 275 F. Supp. 2d 695, 712 (E.D. Va. 2003)).
15. eBay Inc., 126 S. Ct. at 1840.
16. Id. at 1841.
17. Id. (Roberts, CJ., concurring, joined by Scalia & Ginsburg, JJ.);
18. id. at 1842 (Kennedy, J., concurring, joined by Stevens, Souter & Breyer, JJ.);
19. see also Hand, supra note 2, 464-65 (2007) (summarizing the opposite stances of the two concurring opinions).
20. eBay Inc., 126 S. Ct. at 1841 (Roberts, C.J., concurring) ("At the same time, there is a difference between exercising equitable discretion pursuant to the established four-factor test and writing on an entirely clean slate.").
21. Id. at 1841-42 ("Discretion is not whim, and limiting discretion according to legal standards helps promote the basic principle of justice that like cases should be decided alike." (quoting Martin v. Franklin Capital Corp., 126 S. Ct. 704, 710 (2005))).
22. See Sharon R. Bamer & Gregory S. Norrod, A Changing Landscape, NAT'L L.J., Aug. 2, 2006, at 9, 9 ("Chief Justice John G. Roberts Jr.'s concurrence emphasized that the long history of routinely granting injunctions should inform courts' exercise of discretion in applying the equitable balancing."):
23. Mark Vorder-Bruegge Jr., Injunctive Relief for Patent Infringement-A New Era?, FED. LAW., Jul. 2006, at 14, 15 ("[Justice Roberts's] concurrence arguably indicates that at least three justices are very comfortable with something close to the general rule the Court overturned.").
24. eBay Inc., 126 S. Ct. at 1842 (Kennedy, J., concurring) ("The lesson of the historical practice, therefore, is most helpful and instructive when the circumstances of a case bear substantial parallels to litigation the courts have confronted before").
25. W. Justice Kennedy implicated "patent trolls" without explicitly calling them out by name. See id. For a competing definition of patent trolls, see supra note 2.
26. eBay Inc., 126 S. Ct. at 1842 (Kennedy, J., concurring).
27. For a discussion of the guidance given by the Supreme Court in applying the four-factor test, see infra notes 170-172 and accompanying text.
28. For a discussion of other commentators hypothesizing a similar rule based on initial post-eBay cases, see infra notes 21-24 and accompanying text.
29. ROBERT J. GARREY & JOHN M. JACKSON, THE PERMANENT INJUNCTION THREAT IN PATENT CASES: HAS Ebay v. MercExchange CHANGED THE LANDSCAPE FOR PATENT LITIGATION IN TEXAS DISTRICT COURTS? 11 (2006), http://images.jw.com/com/publications/626.pdf.
30. Jeremy Mulder, Note, The Aftermath of eBay: Predicting When District Courts Will Grant Permanent Injunctions in Patent Cases, 22 BERKELEY TECH. L.J. 67, 80 (2007).
31. Hand, supra note 2, at 479-84 (arguing that four Fifth Circuit cases decided after eBay stand for the proposition that direct competition is the deciding factor and noting non-Fifth Circuit cases following the same rule).
32. Mark A. Lemley & Philip J. Weiser, Should Property or Liability Rules Govern Information?, 85 TEX. L. REV. 783, 799-800 (2007) ("[C]ourts shouid cast a skeptical eye at claims for injunctive relief where the patent owner is not a direct competitor of the defendant....").
33. As of July 27, 2007.
34. District court cases applying the four-factor test in other contexts such as copyright, trademark, and preliminary injunctions are beyond the scope of this Note, which deals specifically with permanent injunctions in patent cases.
35. See infra Table 1.
36. See infra Table 2.
37. z4 Techs., Inc. v. Microsoft Corp., 434 F. Supp. 2d 437 (E.D. Tex. 2006).
38. Finisar Corp. v. DirecTV Group, Inc., No. l:05-CV-264, 2006 WL 2709206 (E.D. Tex. Sept. 1, 2006).
39. Paice LLC v. Toyota Motor Corp., No. 2:04-CV-211 -DF, 2006 WL 2385139 (E.D. Tex. Aug. 16, 2006).
40. Voda v. Cordis Corp., No. CIV-03-1512-L, 2006 WL 2570614 (W.D. OkIa. Sept. 5, 2006).
41. Sundance, Inc. v. DeMonte Fabricating Ltd., No. 02-73543, 2007 WL 37742 (E.D. Mich. Jan. 4, 2007).
42. IMX, Inc. v. LendingTree, LLC, 469 F. Supp. 2d 203 (D. Del. 2007).
43. "N/A" for this cell and all others means that there is no clear answer in the opinion or in related litigation documents.
44. Praxair, Inc. v. ATMI, Inc., 479 F. Supp. 2d 440 (D. Del. 2007).
45. Wald v. Mudhopper Oilfield Servs., No. CIV-04-1693-C, 2006 WL 2128851 (W.D. Okla. July 27, 2006).
46. Telequip Corp. v. Change Exch., No. 5:01-CV-1748, 2006 WL 2385425 (N.D.N.Y. Aug. 15, 2006).
47. TiVo Inc. v. Echostar Commc'ns Corp., 446 F. Supp. 2d 664 (E.D. Tex. 2006).
48. Floe Int'l, Inc. v, Newmans' Mfg. Inc., No. 04-5120, 2006 WL 2472112 (D. Minn. Aug. 23, 2006).
49. 3M Innovative Props. Co. v. Avery Dennison Corp., No. 01-1781, 2006 WL 2735499 (D. Minn. Sept. 25, 2006).
50. Rosco, Inc. v. Mirror Lite Co. (Rosco II), No. CV-96-5658, 2006 WL 2844400 (E.D.N.Y Sept. 29, 2006).
51. Smith & Nephew, Inc. v. Synthes (U.S.A.), 466 F. Supp. 2d 978 (W.D. Tenn. 2006).
52. Black & Decker Inc. v. Robert Bosch Tool Corp., No. 04-C-7955, 2006 WL 3446144 (N.D. 111. Nov. 29, 2006).
53. Transocean Offshore Deepwater Drilling, Inc. v. GlobalSantaFe Corp., No. H-03-2910, 2006 WL 3813778 (S.D. Tex. Dec. 27, 2006).
54. MPT, Inc. v. Marathon Labels, Inc., No. V.04-CV-23S7, 2007 WL 184747 (N.D. Ohio Jan. 19, 2007).
55. Novozymes A/S v. Genencor Int'l, Inc., 474 F. Supp. 2d 592 (D. Del. 2007).
56. Ortho-McNeil Pharm., Inc. v. Mylan Labs. Inc., Nos. 04-1689, 06-757, 06-5166, 2007 WL 869545 (D.N.J. Mar. 20, 2007).
57. 02 Micro Int'l Ltd. v. Beyond Innovation Tech. Co., No. 2-04-CV-32, 2007 WL 869576 (E.D. Tex. Mar. 21, 2007).
58. 800 Adept, Inc. v. Murex Sec, Ltd., No. 6:02-cv-1354-Orl-28DAB, 2007 WL 1101238 (M.D. Fla. Apr. 12, 2007).
59. MGM Well Servs., Inc. v. Mega Lift Sys., LLC, No. H-05-1634, 2007 WL 1231682 (S.D. Tex. Apr. 25, 2007).
60. Brooktrout, Inc. v. Eicon Networks Corp., No. 2:03-CV-59, 2007 WL 1730112 (E.D. Tex. June 14, 2007).
61. Commonwealth Scientific & Indus. Research Organisation v. Buffalo Tech. Inc., 492 F. Supp. 2d 600 (E.D. Tex. 2007).
62. Commonwealth Scientific and Industrial Research Organisation (CSIRO) formed Radiata Communications Pty Ltd., with Macquarie University in 1997, in order to commercialize the patented wireless technology, but Radiata was acquired by CISCO Systems in 2001. Id. at 602. The court, however, found that CSIRO "does not compete with [the defendant] for marketshare," but "does compete internationally with other research groups-such as universities-for resources, ideas, and the best scientific minds to transform those ideas into realities." Id. at 604.
63. Sanofi-Synthelabo v. Apotex Inc., 492 F. Supp. 2d 353 (S.D.N.Y. 2007).
64. See supra Table 1.
65. See supra Table 2.
66. See supra Tables 1 & 2.
67. Compare Finisar Corp. v. DirecTV Group, Inc., No. l:05-CV-264, 2006 U.S. Dist. LEXIS 76380, at *4 (E.D. Tex. July 7, 2006) (denying an injunction though DirecTV's electronic programming guide infringed on Finisar's patent), with TiVo Inc. v. EchoStar Commc'ns Corp., 446 F. Supp. 2d 664 (E.D. Tex. 2006) (granting an injunction).
68. See supra Table 2.
69. See supra Table 1.
70. See supra Table 2.
71. See supra Table 1.
72. See supra Table 1.
73. See supra Table 2.
74. See supra Tables 1 & 2.
75. See supra Table 2.
76. See supra Table 2.
77. See supra note 59.
78. See Mitchell G. Stockwell, Implementing eBay: New Problems in Guiding Judicial Discretion and Enforcing Patent Rights, 88 J. PAT, & TRADEMARK OFF. SOC'Y 747, 751-52 (2006) (offering that judicial discretion in patent infringement cases post-eBay should be informed by the traditional rule that any hardship the injunction would pose to the defendant should not be considered when the defendant's conduct was willful). For an example of how willful conduct affects the availability of an injunction in land encroachment cases, see Ariola v. Nigro, 156 N.E.2d 536, 540 (III. 1959), in which the court stated that "if the encroachment is intentional, neither the expense involved, nor the absence of damage to the land encroached upon will defeat the right to an injunction."
79. Willfulness refers to whether an infringing defendant is found by the court to have infringed deliberately or intentionally. Knorr Bremse Systeme Fuer Nutzfahrzeuge GMBH v. Dana Corp. , 383 F.3d 1337, 1342-44 (Fed. Cir. 2004) (en banc). If so, the defendant may be liable for increased damages for past infringement. 35 U.S.C, § 284 (2000).
80. See supra Tables 1 & 2. Entries labeled "N/A" indicate that willfulness was not discussed in the opinion.
81. See supra Table 1.
82. See supra Table 2.
83. See supra Tables 1 & 2 (showing that 4 out of 7 cases denying injunctions found willful infringement and that 7 out of 18 cases granting injunctions found willful infringement).
84. See infra Section U.C.
85. The importance of licensing makes sense, since willingness to license can be viewed as concomitant to a business model that is not based on profits earned through direct market competition of the invention. That is, licensing revenues may sustain those entities that do not practice their inventions directly by, for example, manufacturing a product.
86. See, e.g., IMX, Inc. v. LendingTree, LLC, 469 F. Supp. 2d 203, 225 (D. Del. 2007).
87. Id.
88. No. 2:04-CV-211-DF, 2006 WL 2385139 (E.D. Tex. Aug. 16, 2006).
89. Id. at *2 (noting that Paice "does not manufacture competing vehicles, but rather is geared toward licensing its technology").
90. 434 F. Supp. 2d 437, 440 (E.D. Tex. 2006).
91. No. CIV-03-1512-L, 2006 WL 2570614 (W.D. Okla. Sept. 5, 2006).
92. Complaintat 1-3, Voda, 2006 WL 2570614 (No. CIV-03-1512-L).
93. Voda, 2006 WL 2570614, at *6.
94. Complaint, supra note 84, at 3.
95. No. 02-73543, 2007 WL 37742, at *2 (E.D. Mich. Jan. 4, 2007).
96. 469 F. Supp. 2d 203, 226 (D. Del. 2007). The record was incomplete as to whether or not the plaintiff had in fact commercialized the invention. Id.
97. No. 1:05-CV-264, 2006 U.S. Dist. LEXIS 76380, at *4 (E.D. Tex. July 7, 2006).
98. See GARREY & JACKSON, supra note 21, at 10 (citing Transcript of Post Jury Verdict Hearing at 125, Finisar Corp. v. DirecTV Group. Inc., No. 1:05-CV-264, 2006 U.S. Dist. LEXIS 76380 (E.D. Tex. July 7, 2006)).
99. 479 F. Supp. 2d 440, 443 (D. Del. 2007). There was insufficient information in the opinion in IMX to determine whether the plaintiff was a market competitor. See supra note 88.
100. Praxair, 479 F. Supp. 2d at 443.
101. Id. at 444.
102. Id.
103. See supra notes 21-24 and accompanying text.
104. No. CIV-04-1693-C. 2006WL 2128851 (W.D. Okla. July 27, 2006).
105. Id. at *5 (noting that defendant's infringement would decrease plaintiff's "market share").
106. No. 5:01-CV-1748, 2006WL2385425 (N.D.N.Y. Aug. 15, 2006).
107. See Telequip Home Page, http://www.telequip.com (last visited Aug. 25, 2007).
108. Telequip, 2006 WL 2385425, at * 1.
109. 446 F. Supp. 2d 664 (E.D. Tex. 2006).
110. Id. at 669 ("Defendants compete directly with Plaintiff-Defendants market their infringing products to potential DVR customers as an alternative to purchasing Plaintiff's DVRs.").
111. No. 04-5120, 2006 WL 2472112 (D. Minn. Aug. 23, 2006).
112. Id. at* 1.
113. No. 01-1781, 2006 WL 2735499 (D. Minn. Sept. 25, 2006).
114. Id. at *1.
115. See 3M US: Products and Services, http://solutions.3m.com/en_US/ Products/ (last visited Aug. 25, 2007).
116. 3M Innovative Props. Co., 2006 WL 2735499, at * 1.
117. Rosco II, No. CV-96-5658, 2006 WL 2844400 (E.D.N.Y. Sept. 29, 2006).
118. See Rosco, Inc. v. Mirror Lite Co. (Rosco 1), 139 F. Supp. 2d 287, 291 (E.D.N.Y. 2001 ).
119. Rosco II, 2006 WL 2844400, at *4 ("In this case it is undisputed that Mirror Lite manufactures mirrors covered by its 984 patent.").
120. 466 F. Supp. 2d 978, 984 (W.D. Tenn. 2006).
121. No. 04-C-7955, 2006 WL 3446144, at *4 (N.D. II). Nov. 29, 2006).
122. No. H-03-2910, 2006 WL 3813778. at *3 (S.D. Tex. Dec. 27, 2006).
123. No. 1:04-CV-2357,2007WL 184747, at * 14 (N.D. Ohio Jan. 19, 2007).
124. 474 F. Supp. 2d 592, 597-600 (D. Del. 2007).
125. See First Amended Complaint at 1-2, Ortho-McNeil Pharm.. Inc. v. Mylan Labs.. Inc.. No. 06-5166. 2007 WL 869545 (D.N.J. Mar. 20, 2007).
126. No. 2-04-CV-32, 2007 WL 869576, at *2 (E.D. Tex. Mar. 21, 2007).
127. No. 6:02-cv-1354-Orl-28DAB, 2007 WL 1101238, at *7 (M.D. Fla. Apr. 12, 2007).
128. No. H-05-1634, 2007 WL 1231682, at *14 (S.D. Tex. Apr. 25, 2007).
129. No. 2:03-CV-59, 2007 WL 1730112,at*1 (E.D. Tex. June 14, 2007).
130. 492 F. Supp. 2d 353 (S.D.N.Y. 2007).
131. 492 F. Supp. 2d 600 (E.D. Tex. 2007).
132. Id. at 600-02.
133. Id. at 602.
134. Id. at 604.
135. Id. (emphasis added).
136. eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1840 (2006) (quoting MercExchange, L.L.C. v, eBay Inc., 275 F. Supp. 2d 695, 712 (E.D. Va. 2003)).
137. eBay Inc., 126 S. Ct. at 1837.
138. Id. at 1842 (Kennedy, J., concurring) ("[C]ourts should apply the well-established, fourfactor test-without resort to categorical rules-in deciding whether to grant injunctive relief in patent cases."). Justice Kennedy's support for this principle is notable because his concurring opinion takes the most aggressive stance against plaintiffs that do no commercialize their inventions. See id.
139. Id. at 1841.
140. DOUGLAS LAYCOCK, MODERN AMERICAN REMEDIES 45 (3d ed. Supp. 2006) ("The only hint of what should have been the real issue in Ebay comes in the penultimate paragraph of Justice Kennedy's concurring opinion."). The penultimate paragraph of Justice Kennedy's concurring opinion is the only place where the Supreme Court mentions the elephant in the room: "An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees." eBay Inc., 126 S. Ct. at 1842 (Kennedy. J., concurring).
141. See supra note 2.
142. eBay Inc., 126 S. Ct. at 1841.
143. Id. at 1840.
144. See id.
145. See id.
146. Though the Supreme Court in eBay states that irreparable injury and inadequacy of damages are two separate factors in the four-factor test, they are really corollaries of each other. In Wald v. Mudhopper Oilfield Services, Inc., the court noted that irreparable injury typically occurs where damages are inadequate. No. CIV-04-1693-C, 2006 WL 2128851, at *5 (W.D. Okla. July 27, 2006) (awarding an injunction to the plaintiff after applying the four-factor analysis, and noting that irreparable harm "is often suffered when the injury canfnot] be adequately atoned for in money ... or when the district court cannot remedy [the injury] following a final determination on the merits" (alterations in original) (quoting Prairie Band of Potawatomi Indians v. Pierce, 253 F.3d 1234, 1250 (10th Cir. 2001 ))). This Section treats the two factors as one, consistent with how district courts have applied the test. See Wald, 2006 WL 2128851, at *5; see also 3M Innovative Props. Co. v. Avery Dennison Corp., No, 01-1781, 2006 WL 2735499, at *1 (D. Minn. Sept. 25, 2006); Paice LLC v. Toyota Motor Corp., No. 2:04-CV-211-DF, 2006 WL 2385139, at *5 (E.D. Tex. Aug. 16, 2006) ("Irreparable harm lies only where injury cannot be undone by monetary damages."); Telequip Corp. v. Change Exch., No. 5:01-CV-1748, 2006 WL 2385425, at *2 (N.D.N.Y. Aug. 15, 2006).
147. See Mulder, supra note 22 (finding that the irreparable injury and inadequacy of damages analyses drive the outcome of the four-factor test in the first five poxt-eBay district court cases).
148. See z4 Techs., Inc. v. Microsoft Corp., 434 F. Supp. 2d 437, 443 (E.D. Tex. 2006) (relying on defendant's licensing and lack of market competition in order to find that any hardships suffered by plaintiff were "reparable," essentially collapsing the hardship inquiry into the irreparable injury and adequacy of damages inquiries).
149. Paice LLC, 2006 WL 2385139, at *5.
150. Id. at *4-5. The court stated as follows: It ... should also be noted that because Plaintiff does not compete for market share with the accused vehicles, concerns regarding loss of brand name recognition and market share similarly are not implicated.. . . [Plaintiff's] offer [to license] further demonstrates the adequacy of monetary relief from Plaintiff's point of view. Thus, the Court finds that Plaintiff has not demonstrated monetary damages are an inadequate remedy to compensate for Defendants' infringement. Id.
151. Finisar Corp. v. DirecTV Group, Inc., No. 1:05-CV-264, 2006 WL 2709206 (E.D. Tex. Sept. 1, 2006).
152. See GARREY & JACKSON, supra note 21, at 9.
153. z4, 434 F. Supp. 2d at 440.
154. Rosco II. No. CV-96-5658, 2006 WL 2844400, at *5 (E.D.N.Y. Sept. 29, 2006).
155. Id.
156. Id.
157. No. 2-04-CV-32, 2007 WL 869576, at *2 (E.D. Tex. Mar. 21, 2007).
158. 474 F. Supp. 2d 592, 613 (D. Del. 2007); see also 800 Adept, Inc. v. Murex Sec, Ltd., No. 6:02-cv-1354-Orl-28DAB, 2007 WL 1101238, at *6 (M.D. Fla. Apr. 12, 2007) (quoting Novozymes A/S).
159. No. 2:03-CV-59, 2007 WL 1730112, at *1 (E.D. Tex. June 14, 2007).
160. Smith & Nephew, Inc. v. Synthes (U.S.A.), 466 F. Supp. 2d 978, 983 (W.D. Tenn. 2006); see, e.g., 800 Adept, 2007 WL 1101238, at *6; MPT, Inc. v. Marathon Labels, Inc., No. 1:04-CV-2357, 2007 WL 184747, at *14 (N.D. Ohio Jan. 19, 2007); Transocean Offshore Deepwater Drilling, Inc. v. GlobalSantaFe Corp., No. H-03-2910, 2006 WL 3813778, at *5 (S.D. Tex. Dec. 27, 2006); Black & Decker Inc. v, Robert Bosch Tool Corp., No. 04-C-7955, 2006 WL 3446144, at *4 (N.D. 111. Nov. 29, 2006); 3M Innovative Props. Co. v. Avery Dennison Corp., No. 01-1781, 2006 WL 2735499, at *1 (D. Minn. Sept. 25, 2006); TiVo Inc. v. EchoStar Commc'ns Corp., 446 F. Supp. 2d 664, 669 (E.D, Tex. 2006)("Loss of market share in this nascent market is a key consideration in finding that Plaintiff suffers irreparable harm . . . ."); WaId v. Mudhopper Oilfield Servs., No. CIV-04-1693-C, 2006 WL 2128851, at *5 (W.D. Okla. July 27, 2006). But cf. Praxair, Inc. v. ATMI. Inc., 479 F. Supp. 2d 440, 443-44 (D. Del. 2007) (denying an injunction to a plaintiff who did not supply proof of lost market share, revenues, or customers).
161. eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1841 (2006) (Roberts, C.J., concurring) (noting the difficulty of protecting a right to exclude through monetary remedies).
162. Id. ("[This] difficulty ... often implicates the first two factors [irreparable injury and adequacy of remedy at law] of the traditional four-factor test.").
163. Id. at 1842 ("When it comes to discerning and applying those standards . . . 'a page of history is worth a volume of logic.'" (quoting New York Trust Co. v. Eisner, 256 U.S. 345. 349(1921))).
164. Barner & Norrod, supra note 15, at 12; Seidenberg, supra note 2, at 54 ("The concurrence of Chief Justice John G. Roberts Jr. . . . stressed that the new four-part test should produce much the same results as the old Federal Circuit test."); Vorder-Bruegge Jr., supra note 15, at 15 ("Chief Justice Roberts' concurrence suggests that future application of the new four-part test should still be guided by historical precedent favoring injunctions. . . .").
165. In 3M, the district court's analysis of irreparable injury cited precedent that endorsed Chief Justice Roberts's principle that damages are often inadequate and injury is often irreparable when one's right to exclude is compromised. 3M Innovative Props. Co., 2006 WL 2735499, at *1. In Smith & Nephew, the court repeated the standard from Telequip and added that defendant had "violated Plaintiff's exclusionary right in a manner that cannot be compensated adequately through pecuniary damages." Smith & Nephew, 466 F. Supp. 2d at 984. The Transocean court re-emphasized a point found in Chief Justice Roberts's concurrence that "the right to exclude remains a relevant issue for courts to consider when weighing the equities." Transocean, 2006 WL 3813778, at *3.
166. Telequip Corp. v. Change Exch., No. 5:01-CV-1748, 2006 WL 2385425, at *2 (N.D.N.Y. Aug. 15, 2005) ("[C]ourts have held that monetary damages are not an adequate remedy against future infringement because 'the principal value of a patent is its statutory right to exclude.' " (quoting Honeywell Int'l, Inc. v. Universal Avionics Sys. Corp., 397 F. Supp. 2d 537, 546 (D. Del. 2005))).
167. 3M Innovative Props. Co., 2006 WL 2735499, at *1 ("[W]here the infringing device will continue to infringe and thus damage Plaintiffs in the future, monetary damages are generally considered to be inadequate." (quoting Schneider (Europe) AG v. Scimed Life Sys., Inc., 852 F. Supp. 813,861 (D.Minn. 1994))).
168. Novozymes A/S v. Genencor Int'l, Inc., 474 F. Supp. 2d 592, 612 (D. Del. 2007); cf. 800 Adept, Inc. v. Murex Sec., Ltd., No. 6:02-cv-1354-Orl- 28DAB, 2007 WL 1101238, at *6 (M.Ò. Fla. Apr. 12, 2007) ("[I]rreparable harm flows from a competitor's attempts to usurp the pioneering company's market position and goodwill.").
169. Black & Decker Inc. v. Robert Bosch Tool Corp., No. 04-C-7955, 2006 WL 3446144. at *4 (N.D. 111. Nov. 29, 2006).
170. IMX, Inc. v. LendingTree. LLC, 469 F. Supp. 2d 203, 225 (D, Del. 2007); Sundance, Inc. v. DeMonte Fabricating Ltd., No. 02-73543, 2007 WL 37742, at *2 (E.D. Mich. Jan. 4, 2007) (holding that damages allegedly flowing from loss of the right to exclude "does not establish an inadequate remedy at law"); Paice LLC v. Toyota Motor Corp., No. 2:04-CV-211 -DF, 2006 WL 2385139, at *5 (E.D. Tex. Aug. 16, 2006); z4 Techs., Inc. v. Microsoft Corp., 434 F. Supp. 2d 437, 441 (E.D. Tex. 2006). The Finisar court likewise rebuffed application of Chief Justice Roberts's touchstone that losing exclusion be an irreparable injury in itself. Finisar Corp. v. DirecTV Group, Inc., No. 1:05-CV-264, U.S. Dist. LEXIS 76380 (E.D. Tex. July 7, 2006). Practitioners, commenting on Finisar, noted that the district judge had denied plaintiffs their ability to show irreparable injury and inadequate remedy from losing the exclusivity of their patent. GARREY & JACKSON, supra note 21, at 10 ("Judge Clark rejected Finisar's argument that the right to exclude others from using their patent "could be priceless.'" (quoting Transcript of Post Jury Verdict Hearing, supra note 90, at 123)).
171. Paice. 2006 WL 2385139, at *5 ("Infringing one's right to exclude ... is insufficient to warrant injunctive relief,"); z4,434 F. Supp. 2d at 441 ("[A] violation of the right to exclude does not inevitably lead to the conclusion that a patent holder cannot be adequately compensated by remedies at law such as monetary damages without first applying the principles of equity.").
172. IMX, 469 F. Supp. 2d at 225 (finding that plaintiff's contention that it suffered irreparable harm in the form of loss of its exclusive right amounted to "no evidence of irreparable harm").
173. eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1839 (2006) ("According to wellestablished principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief.").
174. Id. at 1840.
175. Id. at 1841 ("[T]he decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts....").
176. Id. at 1842 (Kennedy, J., concurring) ("[F]irms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees.").
177. Id. ("When the patented invention is but a small component of the product ... legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest.").
178. Id. at 1841.
179. Id. at 1840; see also supra Section II.A.
180. eBay Inc., 126 S. Ct. at 1841.
181. As opposed to substitutionary remedies, which seek to compensate the plaintiff or provide the plaintiff with a substitute to redress what she has lost, specific remedies seek to prevent the harm from occurring in the first place or to give back to the plaintiff the specific thing she has lost. Colleen P. Murphy, Money as a "Specific" Remedy, 58 ALA. L. REV. 119, 134 (2006).
182. Stockwell, supra note 70, at 751 ("In virtually all areas of law, when considering injunctive relief 'a court need not balance the hardship when a defendant's conduct has been willful.'" (quoting United States v. Marine Shale Processors, 81 F.3d 1329, 1358 (5th Cir. 1996))).
183. See id. ("'A court balances equities to avoid harsh results that strict application of law could inflict on a blameless party,' but policies that aim to protect innocent defendants and allow them 'to show undue harm from strict legal enforcement are not present' in the case of willful conduct." (quoting Louis W. Epstein Family P'ship v. KMART Corp., 13 F.3d 762. 769-70 (3d Cir. 1994))).
184. Helene Curtis Indus., Inc. v. Church & Dwight Co., 560 F.2d 1325, 1333 (7th Cir. 1977). There is also a body of cases that has held that in land encroachment cases, where the encroachment was willful, hardship to defendant should not be considered even if damage to the plaintiff is slight. See, e.g., Ariola v. Nigro, 156 N.E.2d 536, 540 (111. 1959) (collecting cases discussing the standard that willful encroachment leads to an injunction, even when the injunction would be costly to defendant and would only benefit plaintiff slightly).
185. See supra Table 1.
186. See id. Willful infringement was found in four cases where the injunction was denied, but this did not affect the analysis under the four-factor test, See id.
187. See supra notes 173-176 and accompanying text.
188. See supra Section II.A. 1.
189. See z4 Techs., Inc. v. Microsoft Corp., 434 F. Supp. 2d 437, 442-43 (E.D. Tex. 2006) (noting that it was "quite likely" that the "resources, time, and expense required to redesign its Windows and Office software products would create a significant hardship on Microsoft").
190. Id. at 443.
191. See id. at 444 (noting that the public interest weighed "only slightly" in favor of plaintiff).
192. The court's original argument that plaintiff would not be harmed because it wasn't losing market share and wouldn't suffer loss of brand name recognition would be unavailing. See id. at 440.
193. ALAN V. DEARDORFF, GLOSSARY OF INTERNATIONAL ECONOMICS, http://wwwpersonal.umich.edu/ ~alandear/glossary/e.html (last visited Aug. 25, 2007) (defining "Efficient allocation").
194. Hanoch Dagan, The Craft of Property, 91 CAL. L. REV. 1517, 1545 (2003).
195. See supra note 1.
196. Ayres & Madison, supra note 1, at 46.
197. Thomas P. Lyon & Eric Rasmusen, Buyer-Option Contracts Restored: Renegotiation, Inefficient Threats, and the Hold-Up Problem, 20 J.L. ECON. & ORG. 148, 150 (2004).
198. See, e.g., Mark A. Lemley, Patenting Nanotechnology, 58 STAN. L. REV. 601, 630 (2005).
199. Id.
200. FTC REPORT, supra note 3, at ch. 3, 40-41.
201. Bilateral monopoly exists when "two parties can deal only with each other." Walgreen Co. v. Sara Creek Prop. Co., 966 F.2d 273, 276 (7th Cir. 1992).
202. Id.
203. Id.
204. Ser Robert P. Merges, Comment, Of Property Rules, Coase, and Intellectual Property, 94 COLUM. L. REV. 2655, 2664 (1994) (explaining that injunctions in IP cases are preferable to court ordered damages because of the valuation problems associated with commercially deployed intellectual assets); cf. Sara Creek Prop. Co., 966 F.2d at 276 ("[P]rices and costs are more accurately determined by the market than by government.").
205. Merges, supra note 196, at 2664.
206. See FTC REPORT, supra note 3, at 40-41.
207. eBay Inc. v. MercExchange, L.L.C., 126 S. Ct, 1837, 1842 (2006) (Kennedy, J., concurring)
208. Id.
209. See supra notes 192, 198 and accompanying text.
210. Cf Grab, supra note 2, at 113-14.
211. See id.
212. See z4 Techs, Inc. v. Microsoft Corp., 434 F. Supp. 2d 437, 444 (E.D. Tex. 2006) (denying an injunction to z4 amid arguments and evidence that z4 had exerted tremendous effort to commercialize its patent, and failed only because of Microsoft's infringement).
213. For example, the inventions could have benefited consumers by providing competition that reduced prices or by providing superior goods or services.
214. A related, similar loss occurs when a court incorrectly classifies a market-competing plaintiff (or indeed any plaintiff) as a party who would use an injunction as a holdup device and then denies that party an injunction.
215. eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1840 (2006).
216. See id. For example, cardiologist Jan K. Voda was denied an injunction for his invention of a medical device. See Complaint, supra note 84.
217. But cf. Commonwealth Scientific & Indus. Research Organisation v. Buffalo Tech. Inc., 492 F. Supp. 2d 600, 600-02 (E.D. Tex. 2007) (granting an injunction to an Australian government run research institution that previously had been a market competitor in its inventive area although it was not at the time of the opinion, but it was a competitor in the market of ideas and scientific minds at the time of the opinion).
218. The transfer of wealth entails the established competitor achieving a larger share of the market than otherwise would have been possible if the would-be small scale inventor had successfully been able to penetrate the market and capture some of the share.
219. See United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 391 (1956) ("Monopoly power is the power to control prices or exclude competition.").
220. Maureen A. O'Rourke, Shaping Competition on the Internet: Who Owns Product and Pricing Information?, 53 VAND. L. REV. 1965, 1968 (2000) (arguing that the monopolist may "price above marginal cost, imposing deadweight losses on consumers").
221. HERBERT HOVENKAMP, THE ANTITRUST ENTERPRISE: PRINCIPLE AND EXECUTION 174 (2005) ("Antitrust's purpose is to promote competition, which it does by encouraging competitive market structures and intervening selectively when practices pose a genuine threat to competition.").
222. PHILLIP AREEDA ET AL., ANTITRUST ANALYSIS 11 (6th ed. 2004); Thomas G. Krattenmaker & Steven C. Salop, Anticompetitive Exclusion: Raising Rivals' Costs To Achieve Power over Price, 96 YALE L.J. 209. 279 (1986) ("An increase in price, caused by the exercise of market power, harms consumers ... [through the] unambiguously harmful 'deadweight' loss of sales occasioned by the shift from the lower, more competitive price.").
223. Christopher R. Leslie, The Anticompetitive Effects of Unenforced Invalid Patents. 91 MINN. L. REV. 101, 179 (2006) (discussing how monopolists may exclude competitors by asserting invalid patents, resulting in deadweight loss and reduced innovation).
224. Other solutions to the holdup problem resulting from injunctions have also been offered, including the proposal by Professors Ayres and Madison to award inalienable injunctions that render settlement after injunction impossible. Ayres & Madison, supra note 1, at 72-78.
225. See supra note 54.
226. MercExchange, L.L.C. v. eBay, Inc., 401 F.3d 1323. 1338-39 (Fed. Cir. 2005).
227. See supra Section I.D and Part II.
228. U.S. CONST, art. I., §8, cl. 8.
229. See Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 230 (1964) (describing the strict prerequisites to obtaining a patent and the strict enforcement on the limitations on the exercise of a patent after it has been issued).
230. Id. (quoting Kendall v. Winsor, 62 U.S. (21 How.) 322. 329 (1858)).
231. Smith Int'l, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1577-78 (Fed. Cir. 1983), cert, denied, 464 U.S. 996 (1983); see also Applera Corp. v. MJ Research Inc., 389 F. Supp. 2d 365, 366-67 (D. Conn. 2005) (citing Smith Int'l, 718 F.2d at 1577-78); A & H Sportswear Co. v. Victoria's Secret Stores, Inc., 967 F. Supp. 1457, 1475 (E.D. Pa. 1997) (same).
232. Smith Int'l, 718 F.2d at 1577-78.
233. Einer Elhauge, Defining Better Monopolization Standards, 56 STAN. L. REV. 253, 301 (2003).
234. Id. at 302 (arguing that there would be no ex post allocative efficiency if the diminution in profits deters investment in innovation).
235. See id. at 301 ("[O]nce judicial decisions ... create such a legal risk of compulsory patent licensing, that risk would apply to all future innovations that might get patented by any firm.").
236. Merges, supra note 196, at 2667 (quoting Smith Int'l, 718 F.2d at 1577).
237. Smith Int'l, 718 F.2d at 1578.
238. E.g., Honeywell Int'l, Inc. v. Universal Avionics Sys. Corp., 397 F. Supp. 2d 537, 547 (D. Del. 2005); Wesley Jessen Corp. v. Bausch & Lomb, Inc., 209 F. Supp. 2d 348, 403 n.12 (D. Del. 2002) (citing Smith Int'l, 718 F.2d at 1577-78); Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp., 106 F. Supp. 2d 696, 703-04 (D.N.J. 2000) (same).
239. Novartis Corp. v. Teva Pharm. USA, Inc., Nos. 04-4473, 06-1130, 2007 WL 1695689, at *31 (D.N.J. June 11, 2007) (citing Smith Int'l, 718 F.2d at 1577-78); Telequip Corp. v. Change Exch., No. 5:01-CV-1748, 2006 WL 2385425, at *2 (N.D.N.Y Aug. 15, 2006) (same).
240. Merges, supra note 196, at 2667.
241. See supra notes 228-230 and accompanying text.
242. Voda v. Cordis Corp., No. CIV-03-1513-L, 2006 WL 2570614, at *6 (W.D. OkIa. Sept. 5, 2006); z4 Techs., Inc. v. Microsoft Corp., 434 F. Supp. 2d 437, 444 (E.D. Tex. 2006) (expressly noting that the court-created damages remedy would need to be crafted to respond to "Microsoft's continuing post-verdict infringement of z4's patents").
243. Voda, 2006 WL 2570614, at * 1 ; z4,434 F. Supp. 2d at 441-42, 444.
244. Voda, 2006 WL 2570614, at *6; z4, 434 F. Supp. 2d at 444.
245. See supra note 196 and accompanying text.
246. RICHARD POSNER, ECONOMIC ANALYSIS OF THE LAW 68 (2007) ("[O]nly rarely can a court determine the value of competing uses accurately.").
247. See id. at 69 (discussing the objection to liability rules that courts are likely to systematically underestimate damages due to the fact that plaintiffs carry the burden of proof for damages issues, and defendants contrary speculative evidence is allowed); supra note 196 and accompanying text.
248. Voda, 2006 WL 2570614, at * 1.
249. See FTC REPORT, supra note 3, at ch. 3, 41 ("[I]nnovation may suffer because some companies will 'refrain from introducing certain products for fear of hold-up.' " (quoting Carl Shapiro, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting, in INNOVATION POLICY AND THE ECONOMY 119, 126 (Adam Jaffe et al. eds., 2001))). The increase in ex ante incentives for the group of winners may be small given the fact that corporate entities have access to markets giving them ample commercial incentives to innovate already. Any gain realized by a particular market-competing entity would be further mitigated, if not eliminated, because it too could be denied injunctions under the market competition requirement if not competing in the market in the inventive area covered by the patent in question.
250. NAT'L SCI. BD., NAT'L SCI. FOUND., SCIENCE AND ENGINEERING: INDICATORS 2000, at 7-20 (2000), available at http://www.nsf.gov/statistics/seind00/ pdf/c7/c07.pdf (noting that individuals own at least twenty percent of all U.S. patents, to say nothing of the number patents that individuals are responsible for filing).
251. PATENT TECH. MONITORING BRANCH, U.S. PAT. & TRADEMARK OFFICE, PATENTING BY ORGANIZATIONS: 2005, at A1-1 (2006), available at http://www.uspto.gov/web/offices/ac/ido/oeip/taf/topo_05.pdf.