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Publication Date

2008

Abstract

Until recently, when an accused patent infringer was found liable for infringement, the Federal Circuit would grant,upon request, a permanent injunction preventing the infringer from further engaging in the infringing activity. In eBay v. MercExchange, the Supreme Court, in a rare review of a patent case, changed the Federal Circuit's standard of automatically granting permanent injunctions upon a finding of infringement. As a result, district courts are faced with a new dilemma: How should damages be calculated when a permanent injunction is denied? Some district courts that denied the patent holder's request for a permanent injunction have imposed an ongoing royalty on the liable party for future infringement, thus allowing the infringement to continue. Imposing an ongoing royalty rate for future infringement in lieu of a permanent injunction is a relatively new concept in patent law and is bound to change the nature of patent litigation. This Note explores the potential effect of denying patent holders the remedy of a permanent injunction and seeks to show that the district courts' emerging practice of imposing an ongoing royalty is not the best solution. This Note argues that without the threat of a permanent injunction, accused infringers are encouraged to litigate their patent disputes. Finally,the Note seeks a solution that balances the judicial system's incentive of encouraging parties to settle out of court with the public's perception that non-practicing patent holders are using the patent system to hinder productive businesses.

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