How does the American system differ from those countries that issue injunctions automatically?

The American system strikes the right balance between rewarding patent holders and providing safeguards against abuse by patent holders. As reiterated by the U.S. Supreme Court in its well-known eBaycase, granting an injunction in the U.S. requires balancing several equitable factors, such as whether the lack of an injunction will irreparably injure the patent owner, and whether money damages are inadequate to compensate the patent owner for the infringement.  The courts also consider other fairness issues, such as the public interest in maintaining access to innovative products and services.

How does the flexible U.S. standard for injunctions affect innovation?

The flexible standard for injunctions used in the U.S. is good for innovation. That approach ensures that an injunction remains available in appropriate circumstances when the patent holder meets the test set out by the Supreme Court in eBay, while also protecting companies that invest in developing innovative products from patent holdup. This system recognizes that the vast majority of patent infringement plaintiffs are ultimately seeking monetary compensation, and is designed to determine the correct amount without the coercive threat of an injunction hanging over the analysis.  A “one size fits all” approach to injunctions would make no sense in the context of the American judicial system.

Has the lack of automatic injunctions in America hurt innovation?

Just the opposite.  The traditional and flexible approach to injunctions has spurred decades of innovation throughout the American economy.

Critics of a flexible standard for injunctions claim that the lack of automatic injunctions harms innovation. But the facts do not back up this claim.  For example, scholars have found that patent applications were filed at faster rates in the U.S.—both before and after the Supreme Court’s 2006 eBaydecision—than in foreign countries where injunctions are issued automatically.  If the decision to pursue a patent turned on the availability of automatic injunctions, U.S. patent filings should have declined after eBaymade clear that the American approach was going to stay flexible. But that did not happen. 

This is actually intuitive, given that a patent owner suing for infringement almost always wants to monetize its patent through licensing.  The patent owner would only collect licensing royalties to the extent the product is actually sold.  Thus, stopping sales through an injunction is rarely the patent owner’s goal – rather, automatic injunctions are just used as tools to extract extra value away from companies that is unrelated to the value of the patented technology.