US Federal Circuit Suggests All Four eBay Factors Must be Satisfied for Injunctive Relief

The US Federal Circuit in Nichia Corp v Everlight Americas Inc, No. 16-1585 (Fed Cir 2017) suggests that all four “eBay factors” are necessary to grant permanent injunctive relief.

The test established in eBay Inc v MercExchange LLC, 547 U.S. 388 (2006) outlines four factors to consider when a party is seeking injunctive relief:

1. that it suffered 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 parties, a remedy in equity in warranted; and

4. that the public would not be disserved by a permanent injunction.

   After applying this test, the district court did not grant an injunction, despite finding that Everlight infringed three of Nichia’s patents. In affirming this decision, the Federal Circuit stated, “The movant must prove that it meets all four equitable factors… [a]nd it must do so on the merits of its particular case.”

   The district court held that Nichia did not provide sufficient evidence to show irreparable harm as a result of Everlight’s unauthorized use and also failed to show that other remedies at law were inadequate.

   The Federal Circuit agreed that there was only a very small area of possible competition due to the parties’ methods of distribution and confirmed that whether a party had previously granted licences to others may be considered when determining if a royalty could provide adequate compensation for infringement.

   This decision means that, depending on the circumstances, a patentee may not receive relief, despite having its patent infringed.