Mark A. Lemley


In eBay Inc. v. MercExchange, L.L.C., the United States Supreme Court correctly concluded that courts had both the power and the responsibility to decide whether a successful patent owner needed injunctive relief and whether the imposition of that relief would unduly harm either the defendant or the public. The Court's application of the traditional four-factor equity test led, for the first time, to a significant number of cases in which courts found patent infringement but refused to enjoin continued infringement. That, in turn, has raised the question "what happens then?" As a matter of policy, the basic answer seems clear: while the patentee can't enjoin infringement, the infringer should have to pay for the right to continue infringing. But that answer conceals three subsidiary questions. First, do courts have the authority to award an ongoing royalty? Second, who decides what that royalty should be? Finally, how should that royalty be calculated? To date, courts have spent little time thinking about the first and second questions. While they have addressed the third question, they haven't done so in a satisfactory manner. In this article, I endeavor to answer these questions.

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