A Call for a Return to Injunctions

Cassidy Serger, Contributing Member 2024-2025

Intellectual Property and Computer Law Journal

I. Introduction

Patent infringement litigation can take on average three to five years and costs around $3.5 million.[1] At the end of the long journey, if a patent owner wins, she is typically only entitled to a “reasonable royalty.” Under such conditions, is enforcing a patent even worth it? The answer, for many, is no!

Enter Amazon’s APEX program. A registered patent attorney decides if a valid patent exists and if a competing product infringes.[2] If the “mediator” finds infringement, the infringing product’s listing is taken down from Amazon. Amazon boasts 40.6% of the e-commerce market.[3] So, what remedy could be more desirable than that?

The answer: a court-ordered injunction. But many courts don’t offer injunctions anymore. This blog explores the history of patent infringement remedies, where courts went wrong, and how faux mediation has become the only way patent rights are protected in the United States. Part II provides background on the history of patent infringement remedies as well as Amazon’s current APEX program. Part III discusses how patent owners are now turning to Amazon’s internal mechanisms to enforce patents and the consequences that patent owners and alleged infringers may face as a result. Finally, Part IV calls for a return to injunctive relief as the default remedy for patent infringement.

II. Background

History of Patent Infringement Remedies

Infringement of a patent is not a crime; instead, remedies for patent owners lie in the civil courts.[4] Historically, the Federal Circuit looked to uphold this right to exclude by issuing injunctions when infringement was found.[5] In fact, the Federal Circuit called the right to exclude the “essence of the concept of property.”[6] Therefore, until 2006, the default remedy in patent litigation against infringement was a permanent injunction, issued by a United States Federal Court.[7]

Unfortunately, in 2006, the Supreme Court blundered and precluded the Federal Circuit’s general rule for the issuance of an injunction.[8] In eBay v. MercExchange, a corporation held a patent for a business method of selling online products that it sought to license to eBay, who was utilizing the process to facilitate online sales.[9] After the Eastern District Court of Virginia found that eBay was infringing MercExchange’s patent, the court denied MercExchange’s motion for an injunction.[10] On appeal, the Federal Circuit reversed, applying the general rule that courts issue permanent injunctions against patent infringement absent exceptional circumstances.[11] However, the Supreme Court held that this general rule was improper and instead ruled that plaintiffs seeking a permanent injunction must satisfy a traditional four-factor test according to traditional rules of equity.[12]

These four factors that the Court demanded a patent holder satisfy are: (1) the patent holder has suffered an irreparable injury, (2) remedies at law–like money damages–are inadequate, (3) balancing hardships between plaintiff and defendant, an injunction is warranted, and (4) that the public interest would not be disserved by a permanent injunction.[13] The Court held that the Federal Circuit’s ruling failed to assess these important factors when deciding an equitable remedy.[14]

However, the concurring opinion exposed a logical flaw in the majority’s opinion: the majority highlighted that a departure from the long tradition of equity practice should not be lightly implied.[15] Here, however, as the concurring opinion notes, there was a long-standing rule that injunctions were issued for patent infringement from the Federal Circuit.[16] The majority changed this remedy, and consequently, sharply departed from the recent history of equitable remedies in patent law.

Without the default of injunctive relief, courts now must turn to remedies in law–i.e., money–in cases of patent infringement. One supposed monetary remedy for a patent holder is lost profits.[17] In BIC v. Windsurfing, a district court awarded lost profits to Windsurfing LLC, a manufacturer of sailboards, when a competitor infringed their patents and sold a competing item.[18] The Federal Circuit overturned this award, ruling that to recover lost profits, a patent owner must prove a causal relation between the infringement and its loss of profits.[19] The Federal Circuit held that the lower court improperly found a but-for link between the infringement and lost profits, and consequently, returned the case to the district court.[20] As a result, the Federal Circuit instituted a higher standard for the remedy of lost profits and added yet another barrier for patent holders to be made whole.

Ultimately, patent holders are entitled to no less than a reasonable royalty upon a finding of infringement.[21] A reasonable royalty is “merely the floor below which damages shall not fall.”[22] To determine what a reasonable royalty is, courts look to a hypothetical negotiation, called the “willing licensor-willing licensee” approach. This approach ascertains what the royalty would have been had the parties successfully negotiated a licensure agreement prior to the start of the litigation.[23] To accomplish this, the inquiry comprises of fifteen factors, ranging from the profitability of the product to the patent holder’s licensing policy.[24]

Consequently, patent holders must reach a high, almost unattainable standard to receive a court-ordered remedy. In addition, if patent holders are able to meet this challenging burden, then the courts are faced with a nearly impossible test to determine the appropriate remedy.

APEX in Detail

Amazon’s Patent Evaluation Express (“APEX”) program is far simpler. First, a patent owner initiates a claim against a seller by submitting an APEX form identifying the seller and proof of the alleged infringed patent.[25]  A seller can identify up to twenty infringers in one APEX form.[26] Next, the seller may agree to an informal APEX proceeding with a neutral evaluator to resolve the claim with the holder, or the seller may turn to the courts and seek to have the patent invalidated.[27] If the seller fails to respond in 21 days, Amazon will remove the seller’s listing from their website.[28]

By 2026, Amazon is expected to hold almost 15% of the market share in United States retail.[29] For perspective, Wal-Mart holds the second-largest share at 12.7%, and Costco comes in third at 4.4%.[30]  Consequently, the impact of removing a seller on Amazon is extremely significant, and for some patent holders, is the same remedy as a permanent injunction.

III. Discussion

Currently, monetary damages are the only realistic remedy for patent holders, and courts continue to set higher bars for patent holders to be awarded lost profits or other significant damages, culminating in a convoluted fifteen-part test.[31] This ensures litigation is slow and difficult for both parties.[32] With such poor and convoluted remedies, enforcing a patent has become nearly impossible in federal courts.

Amazon Steps In

Amazon has provided a path for patents to actually exclude infringers. By taking down infringing listings, Amazon is granting the injunctions that courts ditched in 2006. This gives patent holders a real remedy and an actual right to exclude. However, Amazon does not give potential infringers a trial in front of their peers. Instead, a patent attorney acts as a mediator and decides if a claim of a patent is infringed. In addition, the alleged infringer’s only opportunity to ‘appeal’ an APEX decision is by initiating a declaratory judgment suit in federal court.[33]

While this may look like a quasi-trial, it also resembles mediation or facilitating a settlement. In mediation, parties typically settle. Here, parties in the court actually don’t settle; Amazon instead issues an injunction. This means that the seller can no longer sell the product on Amazon’s site because of a process with no jury and really no oversight.

However, the mediator is a patent attorney. In a district court infringement proceeding, typically the jury consists of laypeople, and the judge is an attorney, often with no technical, scientific, or engineering training. Therefore, although trial procedures offer some safeguards, those typically reviewing the patent and technology have no training and are–in most cases–learning about patent law for the first time.

Although APEX offers many benefits for patent holders–like a real injunction and an expert mediator–patent holders should not have to turn to a private corporation to enforce their rights. In addition, alleged infringers are not able to have a full and fair trial. Therefore, federal courts should reinstate the injunction as the default remedy for patent infringement. This will incentivize patent holders to turn to the federal courts–rather than a private corporation–and will protect the rights of both patent holders and alleged infringers.

IV. Conclusion

Because of the Supreme Court and Federal Circuit’s convoluted patent infringement remedy jurisprudence, patent holders have been left without a viable method to protect their right to exclude. To fill this gap, Amazon–a private corporation with an enormous market share–has begun taking down listings when infringement occurs. This leaves alleged infringers stripped of their Seventh Amendment protections without a jury trial in front of their peers. Consequently, federal courts should reinstate an injunction as the default remedy to protect both patent holders and alleged infringers.

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[1] Gregory Day & Steven Udick, Patent Law and the Emigration of Innovation, 94 Wash. L. Rev. 119 (2019).

[2] Robert Payne, Informal Resolution of Patent Disputes through Amazon’s APEX Program: Do You Want the Good News First, or the Bad News?,ABA Bus. L. Today (July 12, 2024), [https://perma.cc/EE4D-2TCT].

[3] AMAZON.COM, INC., MarketScreener, https://www.marketscreener.com/quote/stock/AMAZON-COM-INC-12864605/company%5Bhttps://web.archive.org/web/20230801073911/https:/www.marketscreener.com/quote/stock/AMAZON-COM-INC-12864605/company%5D.

[4] 35 U.S.C. § 281.

[5] Richardson v. Suzuki Motors, 868 F.2d 1226, 1247 (Fed. Cir. 1989) (quoting pre-AIA 35 U.S.C. S 261).

[6] Connell v. Sears, Roebuck & Co., 722 F.2d 1542, 1548 (citing Schenck v. Nortron Corp., 713 F.2d 782 (Fed. Cir. 1983)).

[7] W.L. Gore & Associates, Inc. v. Garlock, Inc., 842 F.2d 1275, 1281 (Fed. Cir. 1988).

[8] eBay v. MercExchange, 547 U.S. 388, 389 (2006).

[9] Id. at 390.

[10] Id. at 391.

[11] Id. (quoting Mercexchange, LLC v. eBay, Inc., 401 F.3d 1323, 1339 (2005)).

[12] Id. at 392.

[13] Id.

[14] eBay v. MercExchange, 547 U.S. 388, 395 (2006).

[15] Id. at 395.

[16] Id. at 397 (quoting Weinberger v. Romero-Barcelo, 456 U.S. 305, 320 (1982) (Roberts, C.J., concurring)).

[16] Id.

[17] BIC Leisure Prods. v Windsurfing Int’l, Inc., 1 F.3d 1214, 1216 (Fed. Cir. 1993).

[18] Id.

[19] Id.

[20] Id. at 1220.

[21] 35 U.S.C. § 284.

[22] Bandag, Inc. v. Gerrard Tire Co., 704 F.2d 1578, 1583 (Fed. Cir. 1983).

[23] Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970).

[24] Id.

[25] Payne, supra note 2.

[26] Id.

[27] Id.

[28] Id.

[29] Ecommerce Shakes up the Top Five Retailers in the US: New Report by Edge by Ascential, Businesswire (June 1, 2022), https://www.businesswire.com/news/home/20220601005183/en/Ecommerce-Shakes-up-the-Top-Five-Retailers-in-the-US-New-Report-by-Edge-by-Ascential [https://perma.cc/58DP-G8HC].

[30] Id.

[31] BIC Leisure Prods., 1 F.3d at 1216.

[32] Georgia-Pacific Corp, 318 F.Supp. at 1120.

[33] Payne, supra note 2.