eBay Inc. v. MercExchange, LLC

Supreme Court of the United States · 2006 · Property

547 U.S. 388 (2006)

Updated July 23, 2026

PropertyPatentsInjunctionsEquitypermanent injunctionpatent infringementequitable discretionfour-factor test

Facts

eBay and its subsidiary Half.com operated websites that facilitated sales by private sellers. MercExchange held patents, including a business method patent for an electronic market, and had sought to license the patent to eBay and Half.com, but no agreement was reached. MercExchange then sued for patent infringement, and a jury found the patent valid, found infringement, and determined that damages were appropriate. After the verdict, MercExchange sought a permanent injunction against further infringement.

Issue

Whether courts deciding requests for permanent injunctions in patent infringement cases must apply the traditional four-factor test used by courts of equity, or whether patent cases are governed by a general rule favoring injunctions absent exceptional circumstances.

Rule

A plaintiff seeking a permanent injunction must satisfy the traditional four-factor test by demonstrating (1) irreparable injury, (2) inadequacy of remedies at law such as monetary damages, (3) that the balance of hardships warrants equitable relief, and (4) that the public interest would not be disserved by a permanent injunction. This test applies with equal force in patent disputes, and the decision to grant or deny a permanent injunction rests in the district court's equitable discretion, reviewed for abuse of discretion.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In federal court in Chicago, Nora Lin proves that Driftwell Devices infringed her patent and wins a damages award. On Nora's motion for a permanent injunction, the judge states that once validity and infringement are established, an injunction should issue unless the defendant shows extraordinary circumstances.

Which is the best evaluation of the judge's approach?

Explanation. The majority held that patent cases are not governed by a general rule that injunctions issue after validity and infringement absent exceptional circumstances. A prevailing patentee must satisfy the traditional four-factor test, and the district court must exercise equitable discretion case by case.