In the U.S., injunctive relief has always been subject to a balancing test.

In eBay Inc. v. MercExchange, the U.S. Supreme Court noted that the balancing test for injunctions is well-established law:

According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief.  A plaintiff 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.

eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006) (emphasis added.)

Nevertheless, some U.S. courts had not always applied that well-established test faithfully.  As but one egregious example. just before the eBay case in 2006, an intellectual property holding company during litigation was able to use the threat of an injunction that would shut down Blackberry’s business to force Blackberry to pay a $612,500,000 settlement.  Even in the eBay case, the Federal Circuit had claimed an incorrect “general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.”  401 F.3d 1323, 1339 (2005). 

eBay restored the consistent application of the traditional equitable test for injunctions.

• The Supreme Court in eBay corrected those courts that had strayed from the well-established balancing test for injunctions in patent cases.  Specifically, the Supreme Court confirmed that injunctions should only be ordered in limited circumstances.  The Court reiterated the traditional four-part test for determining whether an injunction is appropriate for patent infringement.

•  Ever since the eBay opinion issued in 2006, all U.S. courts have applied that four-part test to ensure that injunctions are only used when damages are an inadequate remedy for infringement.  Such situations only arise where a patent holder has a particular interest in keeping its patented technology exclusively to itself and is unwilling to license it.  An example of such a situation is when a patent holder sues a competitor for infringement of a patented invention that the patent holder uses as a competitive advantage and has not licensed.  There, money damages would not make the patent holder whole; only an injunction would work to protect the patent holder.  And as anyone can see – American innovation has not just persisted but prospered in the years since eBay, as American companies have built technologies, medicines, and other innovations unlike the world has ever before seen.

Did eBay effectively kill injunctions in patent cases?

Hardly.  A 2012 study of post-eBay rulings found that courts granted permanent injunctions 75% of the time.  Thus, injunctive relief is clearly still available in the appropriate cases post-eBay.  Courts are more than capable of understanding when injunctions are needed and when they are not, and have not hesitated to grant injunctions when money damages are insufficient.

Not all countries implement a flexible balancing approach.

While the U.S. has affirmed its commitment to a balanced approach to injunctions, a few other countries have experimented with automatic injunctions.  The threat of an automatic injunction gives patent holders disproportionate negotiating power, as the risk of losing in litigation could mean that the business is shut down in that jurisdiction.  For example, when Microsoft was found to infringe Motorola’s patents in Germany, the risk of an injunction caused Microsoft to move its European distribution facility from Germany to the Netherlands.  That preemptive move not only cost Microsoft millions of dollars, but it meant that Germany lost the jobs and taxes from Microsoft's 330,000 square-feet facility, which had handled shipments of over 25 million units of products annually.  It also meant that Motorola, as the patent owner, lost its chance to get royalties at all since there would be no more sales in the country.

The increasing importance of standards has made automatic injunctions even more dangerous.

 Various owners of SEPs have attempted to “hold-up” implementers of standards in order to extract exorbitant royalties.  In response, many standards-setting organizations (“SSOs”) have implemented intellectual property policies that require member to agree to license their SEPs to anyone.  Some SSOs require that such licenses be royalty-free, while others require the SEP owners to license their SEPs on terms that are fair, reasonable, and non-discriminatory (“FRAND”).  It is generally left to the SEP owner and the potential licensee to negotiate a FRAND license, which should not be skewed by the existential threat of an injunction if the licensee doesn’t accept the patent owner’s exorbitant demand.

What happens when parties cannot agree on FRAND terms?

• The SEP owner and licensee may not always be able to agree on FRAND royalties for SEPs. In those circumstances, the parties may take their dispute to court, where the SEP owner has to prove that its SEP is infringed.  If the SEP owner meets its burden of proving infringement and the SEP is found valid and enforceable, a court can set a FRAND royalty so that the SEP holder is compensated for the use of its patent.  If the SEP is not infringed, no license is required.  

• An SEP owner’s commitment to licensing on FRAND terms necessarily indicates a willingness to license its SEPs.  In such situations, money damages are adequate to compensate the SEP owner for any infringement.  In the U.S., a court would not issue an injunction.  

• Regulators such as the U.S. Federal Trade Commission (FTC) may also play a part in preventing SEP holders from abusing the potential holdup power conferred on them by having their patented technology standardized.  In the past, the FTC has brought enforcement actions against SEP holders attempting to use injunctions to hold up users of the standard. 

• The U.S. Federal Circuit has made clear in Apple v. Motorola that eBay applies in the context of SEPs just like it does for other patents.