HOW WILL EBAY V. MERCEXCHANGE AFFECT PRELIMINARY INJUNCTION?

In eBay Inc. v. MercExchange LLC, 126 S.Ct. 1837 (2006), the Supreme Court unanimously held on May 15, 2006 that a permanent injunction under the Patent Act, 35 U.S.C. § 283, is to be granted under the 'principles of equity,' traditionally used by the courts of equity instead of the prior Federal Circuit's presumption that an injunction must be issued, 'absent a sound reason for denying it.' This paper explores the injunction relief cost problem between patentee and patent infringer after the eBay case. From a patentee's standpoint, their purpose in bringing the patent litigation is to obtain royalties or compensatory damages, and to immediately exclude damages caused from patent infringement. On the contrary, a patent infringer's basic desire is to obtain a beneficial position during the process of negotiation and end the litigation for a minimum cost. In order to equitably and rationality distribute cost between patentee and patent infringer, I propose four different methods of economic analysis of the preliminary injunction. These approaches are likelihood of success, patentee's damage and award compensation, the influence of the court that issued the preliminary injunction and transaction costs.