Twenty years after the US Supreme Court’s decision in eBay v. MercExchange, L.L.C. reshaped the law of patent injunctions, Washington is beginning to reconsider the balance it struck. Congress has proposed restoring a rebuttable presumption in favour of injunctive relief, while the Department of Justice (DOJ) and the United States Patent and Trademark Office (USPTO) have recently argued for stronger recognition of irreparable harm, including where patent owners commercialise their inventions through licensing rather than downstream manufacturing.
Europe, meanwhile, is not moving in a single direction. Reform of the Intellectual Property Rights Enforcement Directive (IPRED) itself now appears unlikely, while emerging Unified Patent Court (UPC) case law continues to treat injunctions as the normal consequence of infringement, subject to proportionality. Yet parts of the European patent debate continue to push for a more expansive proportionality assessment that would, in practice, move Europe closer to the US approach established by eBay.
Before eBay reached the Supreme Court, the Federal Circuit applied a general rule that a permanent injunction would normally follow a finding of patent infringement, except in exceptional circumstances. In 2006, the Supreme Court rejected that approach and required patent owners seeking equitable relief to satisfy a four-factor test before a permanent injunction could be granted. The Court replaced the Federal Circuit’s general rule in favour of injunctions with a case-by-case equitable assessment.
There is something faintly “Through the Looking-Glass” about this: Europe is debating elements of a model that the US itself is starting to question. Earlier, we argued that making injunctions an exceptional remedy risks weakening the patent holder’s ability to exclude others from using an invention. Taken far enough, such an approach could transform a patent, in practice, from an exclusionary right into something closer to a court-determined entitlement to compensation. That concern lies at the heart of the renewed US debate over the legacy of eBay, with policymakers asking whether the balance struck by the Supreme Court weakened patent protection too far.
This final Insight in our series on IP and injunctions asks what Europe should learn from that experience before moving further in the same direction.
What Does the US Experience Show?
Given that some proponents of greater proportionality in Europe have decided to draw inspiration from eBay, Europe should treat the decision’s consequences less as a model to emulate than as a warning to examine carefully. The post-eBay experience provides a useful record of where a more restrictive approach to injunctions can lead.
A Unanimous Judgment, Two Different Visions
In eBay, the Supreme Court unanimously held that a patent owner is not automatically entitled to a permanent injunction. The Court instructed lower courts to apply the four-factor test for equitable relief. The four factors require the patent owner to demonstrate that it has suffered an irreparable injury; that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; that, considering the balance of hardships between the parties, an equitable remedy is warranted; and that the public interest would not be disserved by a permanent injunction. At the same time, the Court made clear that a patent owner’s willingness to license its patents, or its decision not to practise them itself, does not establish the absence of irreparable harm. The Court specifically rejected a categorical rule that would deny injunctions on this basis.
The unanimity of the judgment, however, concealed an important disagreement over how this new discretion should be exercised. In his concurring opinion, Justice Kennedy, joined by Justices Stevens, Souter and Breyer, expressed concern that some patent holders could use the threat of an injunction to obtain “exorbitant fees”, particularly where a patent covered only a small component of a complex product. His concern was directed particularly at forms of opportunistic patent enforcement. Lower courts subsequently gave considerable weight to these considerations, and post-eBay case law became markedly less favourable to injunctions where patent owners did not compete with infringers in downstream product markets.
Chief Justice Roberts, joined by Justices Scalia and Ginsburg, emphasised a different aspect of the same four-factor framework. He pointed to the long-standing tradition of equity practice, under which injunctions had been granted in the vast majority of patent cases once infringement had been established. The reason was closely tied to the nature of the patent right itself: monetary compensation does not necessarily protect a right whose purpose is to allow its owner to exclude others from using the invention. Roberts therefore agreed that injunctions should not be automatic, but cautioned that equitable discretion should be exercised against the background of this historical practice.
Was the Four-Factor Test Really Traditional Patent Equity?
Given how much now rests on it, the test that produced these results is worth examining on its own terms. The Court presented the four-factor test as an application of traditional principles of equity. Yet the historical record casts serious doubt on that characterisation.
Let us start with a historical curiosity. A study of 899 published opinions from federal courts sitting in equity in patent cases filed between 1790 and 1880 found no instance in which a judge applied a four-factor test when deciding whether to grant either a permanent or preliminary injunction. The test that now sits at the centre of patent remedies appears not to have been a feature of traditional patent equity at all.
The same evidence supports Chief Justice Roberts’ observation in his eBay concurrence that injunctions had historically been granted as a matter of course following a finding of infringement. Where a defendant was found to infringe a valid patent, courts granted permanent injunctions in roughly 91 per cent of cases.
What is particularly important is how those courts understood the patent right itself. Patent injunctions were not treated as an exceptional remedy requiring a freestanding balancing exercise after infringement had been established. Courts drew on the same equitable principles used to restrain continuing violations of other property rights. Patents were protected through injunctions because they conferred a right to exclude.
Contemporary legal writing points in the same direction. Courts focused on whether the patent was valid, whether it had been infringed and whether the owner was entitled to exclude others from using the invention. Once those points were established, an injunction was the normal means of protecting the patent right.
Against that historical background, the modern four-factor test is difficult to describe as a continuation of traditional patent equity. It is better understood as a modern framework subsequently presented as an expression of that tradition.
If the four-factor test was not part of traditional patent equity, the next question is what its introduction changed in practice. eBay changed which patent owners were most likely to obtain injunctions, altered bargaining over licences and gave courts a larger role in determining the terms on which patented technologies could continue to be used.
A Bifurcated Regime
The immediate effect was a sharp reduction in access to permanent injunctions, but one that fell very unevenly across different types of patent owners. Empirical research estimates that, relative to the pre-eBay baseline for each group, grants of permanent injunctions fell by 91.2 per cent for non-practising entities and by 66.7 per cent for operating companies.
The divide becomes even clearer when looking at whether the patent owner competes directly with the infringer. Patentees competing with the infringer obtained injunctions in 84 per cent of cases, or 150 out of 179. Among patentees that did not compete with the infringer, the figure was just 21 per cent, or 8 out of 39. The divide was sharper still for PAEs: they obtained injunctions in only 16 per cent of cases, compared with 80 per cent for other patent owners.
This does not mean that injunctions disappeared after eBay. Patent owners that competed directly with infringers still obtained them in most cases. What changed was the position of patent owners that did not compete in the downstream market. After eBay, whether a patent owner could obtain an injunction depended much more on how it used the patent. Manufacturers competing with an infringer were far more likely to receive an injunction than inventors, specialised technology companies or other patent owners that did not compete directly with it. In other words, the practical strength of the exclusionary right came to depend much more heavily on the patent holder’s business model.
From Exclusion to Court-Set Royalties
eBay appears to have also affected the market for technology itself. The reduction in access to injunctions reduced US firms’ propensity to license their technology relative to comparable European firms. Crucially, the effect was driven mainly by small firms and was stronger for small firms in discrete-technology industries. The research links this result to the greater reliance of smaller firms on patent protection and the threat of exclusion to protect against appropriation and support licensing negotiations.
This matters because non-practising status does not necessarily imply opportunistic patent assertion. The near-categorical denial of injunctions to NPEs sits uneasily with the Supreme Court’s own warning in eBay against categorical rules based on whether a patent owner practises the invention. Start-ups, for example, may have developed valuable technology without yet bringing a product to market and may rely heavily on the patent right while raising capital or seeking commercial partners. Turning their patents effectively into liability-rule entitlements can therefore weaken precisely the bargaining power on which their ability to commercialise an invention depends.
Once injunctions are denied, courts may substitute ongoing royalties for negotiated licences, effectively determining the price at which continued use of an infringed patent may occur. This has raised substantial unresolved questions over how such royalties should be calculated and how courts can avoid under- or over-compensating patent owners.
Restricting access to injunctive relief also changes the bargaining position of the patent holder. Without the credible possibility of stopping unauthorised use, an implementer has a greater incentive to adopt a “technology first, negotiate later” strategy, a concern often described as “efficient infringement.” This weakens the patent holder’s position in licensing negotiations and draws courts into determining licence prices that would otherwise have been negotiated between the parties. In this sense, denying an injunction does not simply alter the remedy available after infringement; it can also shift the process of price formation from private bargaining towards judicial determination.
The effects are also visible in university licensing. Data on university patent licensing between 1996 and 2021 show that, before eBay, exclusive and non-exclusive licensing followed broadly similar trends. After 2006 they diverged sharply: higher-value exclusive licences declined or remained stagnant, while lower-value non-exclusive licences increased substantially. Since around 2011, the gap widened further. The economic link is straightforward. An exclusive licence is worth more because it gives the licensee the ability to exploit a technology without competing users. If the patent owner cannot credibly stop unauthorised use, that exclusivity becomes less valuable. The loss of injunctive relief affects not only litigation outcomes but also the value of what a patent owner can offer in a licensing agreement. In doing so, eBay weakened the practical force of the right to exclude and, with it, the economic value attached to patent rights.
The Rule Did Not Stop With eBay
The consequences of eBay were not settled by the Supreme Court judgment alone. Subsequent decisions determined what the four factors would require in practice and, in doing so, extended the significance of the ruling. In Robert Bosch LLC v. Pylon Manufacturing Corp., the Federal Circuit held that eBay had eliminated the presumption of irreparable harm that had previously benefited patent owners once infringement and validity had been established. This was not something the Supreme Court had expressly decided previously. Indeed, the Federal Circuit acknowledged that the question had remained open before Bosch, but used the case to “put the question to rest” and held that eBay had “jettisoned the presumption.”
The court ultimately granted Bosch an injunction, but the doctrinal interpretation of eBay meant that patent owners could no longer rely on the infringement of a valid exclusionary right itself to establish irreparable harm. They now had to prove that harm separately as part of the four-factor test.
The significance of Bosch goes beyond the presumption itself. It illustrates how the practical meaning of an open-ended equitable test can continue to change through subsequent case law. The Supreme Court established the four-factor framework; lower courts then had to determine what evidence would satisfy each factor and what presumptions, if any, survived within it.
That experience is directly relevant to Europe. A broader proportionality inquiry would not simply alter the wording of the legal test for injunctions. It would give courts greater scope to determine, case by case, which circumstances justify withholding them, and the meaning of that standard could evolve as subsequent cases interpret it.
The institutional setting in Europe also differs from that of the US. IPRED already leaves courts considerable room when applying the requirement that remedies be “effective, proportionate and dissuasive”. The UPC is creating a more unified body of European patent case law, but Article 83 of the UPC Agreement preserves national jurisdiction over conventional European patents during the transitional period and permits patents to be opted out of the UPC system. A more open-ended injunction standard would therefore develop across a judicial landscape that remains less unified than the US federal patent system.
From Hold-Up to Holdout?
There is a second reason to be cautious about drawing too readily from the US experience. eBay was shaped in part by concerns over enforcement practices that were particularly pronounced in the US, including the activities of PAEs. PAEs remain far more prevalent in the US than in Europe. That makes it important to consider the other side of the problem: weakening patent enforcement can also change the incentives of firms using patented technologies.
There is emerging empirical evidence consistent with this concern. Restrictions on injunctions do not automatically produce strategic infringement, but weaker and less predictable enforcement can make delay more attractive and reduce the incentive to reach a licence agreement. Examining SEP disputes in the US, Germany, the Netherlands, the UK and India, researchers identified at least 54 unique cases in which courts found conduct consistent with patent holdout, alongside 98 total holdout cases identified by courts.
Almost half of the findings involved repeat behaviour by implementers towards multiple SEP holders. The conduct went well beyond disagreements over royalty levels. Courts encountered implementers that ignored infringement notices, avoided substantive negotiations, delayed for years before making a counter-offer, refused to take a licence unless individual patents had first been litigated, or rejected terms that courts themselves had found to be FRAND. These strategies had one important feature in common: they allowed the technology to continue being used while payment was delayed.
This is the other side of the bargaining problem. Much of the policy debate surrounding patent injunctions has focused on the possibility that a patent owner can exploit the threat of exclusion to extract excessive royalties. But making exclusion substantially harder can change the incentives of implementers as well. If continued use remains possible while litigation and negotiations proceed, delay itself can acquire economic value. The lesson here is that the design of patent remedies can affect bargaining incentives on both sides.
The US Reconsiders eBay
Given the consequences, it is perhaps unsurprising that the US is now reconsidering its approach. Because the Supreme Court interpreted Section 283 of the Patent Act, Congress can change the statutory framework governing injunctions, while recent executive-branch interventions have urged courts and tribunals to give greater weight to the exclusionary character of patent rights.
Congress Reconsiders the Presumption
Earlier proposals, such as the STRONGER Patents Act and the Restoring America’s Leadership in Innovation Act of 2024 (RALIA) Act, sought to do exactly that by restoring a stronger presumption in favour of injunctive relief. That effort has continued with the RESTORE Patent Rights Act of 2025.
At the centre of the bill is a rebuttable presumption that a permanent injunction should be granted once a court has entered a final judgment of patent infringement. The proposal does not make injunctions automatic. A defendant would still be able to rebut the presumption where the circumstances justify it. But it would reverse the post-eBay starting point by placing greater weight on the right to exclude once infringement has been established.
The reasoning behind the proposal is, however, explicit. The bill describes the ability to prevent unauthorised use as the “core of the patent right” and states that courts historically presumed injunctive relief in cases of continuing or wilful infringement, subject to equitable defences. It also links the disappearance of that presumption to what its sponsors describe as “predatory” infringement, particularly where large companies use technologies owned by individual inventors, universities, start-ups and smaller firms while treating eventual damages as a cost of doing business. It therefore reflects a bipartisan effort in Congress to restore the connection between the patent’s exclusionary character and the remedy available when that right is infringed. In that respect, the direction of the US debate is striking. Nearly two decades after eBay weakened the presumption in favour of injunctive relief, lawmakers from both parties are now seeking to move the law back towards it.
The Executive Branch Weighs In
Recent US government interventions have also backed this direction. In Radian Memory Systems LLC v. Samsung Electronics Co., the Department of Justice (DOJ) and the United States Patent and Trademark Office (USPTO) filed a joint statement of interest addressing the availability of injunctive relief to a patent owner that commercialises its inventions through licensing. The agencies argued that patent infringement can cause irreparable harm even where the patent owner does not itself manufacture a competing product. Patents are unique assets, they argued, and monetary compensation is not necessarily an adequate substitute for the ability to control how an invention is used and licensed. Calculating an appropriate royalty can itself be highly uncertain, as illustrated by the number of patent damages awards subsequently overturned because of defective damages methodologies.
The same argument resurfaced in Collision Communications Inc. v. Samsung Electronics Co. Ltd. After a jury found that Samsung had infringed four Collision patents and awarded USD 445.5 million in damages for past infringement, Collision sought a permanent injunction against continued infringement of one of the patents at issue. The DOJ and USPTO again intervened. Their statement argued that ongoing infringement can cause irreparable harm even where the patent owner is a non-practising entity and has already received monetary compensation for past infringement. A damages award, they argued, does not necessarily compensate the owner for the continuing loss of control over a unique asset, particularly where the value of future use and an appropriate ongoing royalty are difficult to determine.
The same broader direction is visible at the International Trade Commission. In Certain Dynamic Random Access Memory (DRAM) Devices, Products Containing the Same, and Components Thereof, the DOJ and USPTO argued that exclusionary remedies following proven infringement should not be displaced simply because the respondent’s products or technology are economically important. Public-interest considerations, they argued, should operate as genuine exceptions rather than as preliminary obstacles to patent enforcement. The agencies noted that the ITC has withheld exclusionary relief only in a small number of cases involving “truly extraordinary circumstances” concerning public health or safety, and warned against attempts to “weaponise” the public-interest inquiry to frustrate otherwise meritorious infringement complaints. Together, these interventions mark a clear change in the direction of US patent-enforcement policy.
Europe’s Existing Proportionality Framework
Europe already has a proportionality framework capable of addressing some of the concerns incorporated into the eBay test. The UPC’s decision in Edwards Lifesciences v Meril Life Sciences illustrates the point. The Court of Appeal held that, once infringement has been established, an injunction should follow unless there are special reasons not to grant one. Those reasons can include proportionality and the interests of third parties. In that respect, European proportionality overlaps with eBay’s inquiry into whether an injunction would disserve the public interest.
But the structure is different. Under the UPC framework, patent holders do not have to satisfy four separate conditions before an injunction becomes available. Injunctive relief remains the normal consequence of continuing infringement, while proportionality allows courts to limit or tailor that relief where the circumstances justify it.
Meril shows exactly how this can work in practice. The Court identified a concrete medical need for Meril’s larger XL heart valves and allowed their use where a physician determined that they were the only available treatment for a particular patient. At the same time, it rejected the broader proportionality and public-interest arguments where the evidence did not justify limiting the injunction. The case shows that proportionality need not come at the expense of the right to exclude. It gives courts the flexibility to respond to exceptional circumstances, including genuine risks to patient welfare, without turning the injunction itself into an exceptional remedy.
The UPC in Practice
The UPC Court of Appeal had made that distinction particularly clear in Rematec v Europe Forestry already. It held that, once patent infringement has been established, the Court must grant a permanent injunction unless there are special reasons not to do so, which may arise in particular from the proportionality requirements of the Enforcement Directive.
At the same time, the Court showed how proportionality can shape the remedy itself. Although it ordered the recall, removal and destruction of the infringing forestry machines, it held that the destruction requirement could be satisfied by replacing the infringing components rather than destroying the machines in their entirety. Proportionality therefore operated as a means of tailoring enforcement without displacing the injunction as the normal response to infringement.
Other UPC litigation further reinforces this point. In 10x Genomics and Harvard v NanoString, NanoString argued that an injunction would be disproportionate because the patented method covered only a small part of a much larger and more complex product, because Harvard did not practise the patent itself, and because removing the accused products from the market could disrupt research into serious diseases. The Munich Local Division considered each of these arguments and rejected them before granting a provisional injunction. Neither the limited share of the final product covered by the patent nor Harvard’s status as a non-practising patent owner was enough to displace injunctive relief.
Some caution is however necessary in drawing conclusions from that decision. The case concerned provisional rather than permanent relief, where the UPC expressly balances the interests of the parties under Article 62 UPCA. Moreover, the Court of Appeal subsequently revoked the injunction because it considered the patent likely invalid; it did not endorse or reject the Local Division’s proportionality analysis. The case nevertheless illustrates that the UPC is already capable of considering the kinds of circumstances that feature prominently in the eBay debate without turning them into categorical rules against injunctive relief.
How Far Would Europe Move Towards eBay?
Set against that US reassessment, the direction some in Europe are aiming towards looks harder to justify. There is some “awareness” in European circles that the US model cannot simply be transposed into EU law. Yet many of the factors proposed for adapting the eBay four-factor test look remarkably similar in substance to the eBay framework itself, even if expressed in different policy language.
The technical contribution of the patent to the overall product, the economic consequences of an injunction for both parties, the patentee’s primary commercial interest and the relationship between the scope of the patent and the product affected correspond, to varying degrees, to eBay’s inquiries into irreparable harm, the adequacy of monetary compensation and the balance of hardships.
The last two factors make this particularly clear. If a patent covers only a small part of a complex product, that weighs against an injunction because the patent holder may gain leverage over the whole product. If the patent holder primarily licenses rather than commercialises the technology, damages are treated as a more appropriate remedy. The result is rather straightforward: a greater role for monetary compensation and a smaller role for injunctions.
Europe is not importing eBay word for word, nor is there any settled move in the EU towards such a model, given that the reform of IPRED appears unlikely. But that does not rule out European enforcement developing in a similar direction eventually. In a previous Insight, we already argued that there is little convincing evidence that patent injunctions in the EU are excessive or that IPRED needs to be reformed. Proportionality is already rooted in EU law and reflected in national practice, while courts retain the ability to refuse or tailor injunctions in exceptional circumstances. In this regard, the system is working.
As others have pointed out, some proposals for complex technological products are in fact aiming to go further. One suggestion has been to introduce tailored rules for component patents, including a rebuttable presumption that an injunction is disproportionate where the patent covers only a small part of a complex product. But the share of the final product covered by a patent is a poor measure of the importance of the invention.
Take semiconductors. A patent may cover one element of a transistor architecture and therefore only a tiny part of the final chip, while still being critical to its performance. The same difficulty arose in Apple v. Samsung, where the Federal Circuit rejected an approach that would make injunctions effectively unavailable simply because a patented feature was one among thousands in a multifunction product. In complex technologies, a patent can cover only one part of the final product and still make an important contribution to it.
For long, scholars have, in fact, argued that US courts should instead draw lessons from the European approach, and particularly from the ETSI framework. The ETSI IPR Policy is built around a balance between access to standards and the rights of patent holders, including their right to be fairly rewarded (Clause 6.1). It also leaves room for injunctions where licensing negotiations fail.
At the same time, as noted earlier, proportionality is already part of the European enforcement framework. The Commission has long recognised that injunctions may be appropriate against unwilling licensees, while leaving it to the courts to take account of the circumstances of each case. In practice, the European model has long combined effective enforcement with proportionality.
The Value Question: Europe’s Innovation Act
All of this bears directly on another debate now underway in Brussels about what a patent is actually worth. The Commission recently proposed the European Innovation Act, aimed at making it easier for innovative ideas to be financed, developed and scaled in Europe. One element of the proposal is a common EU framework for valuing intellectual property (IP), including patents and other IP assets. That raises a fundamental question for the policy debate: what determines the value of a patent in the first place?
There is already good evidence that patents themselves matter for the financing and growth of innovative firms. A quasi-experimental study of 34,215 first-time US startup patent applications conducted in 2020, found that obtaining a first patent increased employment growth by 55 per cent and sales growth by 80 per cent after five years, while also increasing subsequent innovation and improving access to finance. Similarly, startups that filed patents at the early-growth stage were associated with a 6.4-times higher likelihood of subsequently obtaining venture-capital funding.
Patents therefore remain economic assets which can affect firms’ ability to finance, develop and commercialise new technologies. While a valuation framework can help investors assess an asset, it cannot, by itself, create value independently of the rights attached to it. For patents, much of that value comes from exclusivity and, crucially, from the ability to enforce it.
Conclusion – the Injunction Divide Remains
Two decades after eBay weakened the link between patent infringement and injunctive relief in the US, policymakers there are reconsidering its effects. There is no agreement on what should replace the post-eBay framework, and neither congressional proposals nor executive-branch interventions have yet displaced the Supreme Court’s test. But the consequences of eBay for licensing, bargaining power and the treatment of non-competing patent owners are now part of the policy debate.
Europe starts from a different position. It does not need to choose between automatic injunctions and unconstrained enforcement on the one hand, and the US four-factor framework on the other. The emerging UPC case law suggests that proportionality can address exceptional circumstances while preserving injunctions as the normal response to continuing infringement. Yet proposals that would weaken the practical force of the right to exclude remain part of the wider European debate.
The US experience matters because it shows that changing the legal starting point can reshape much more than litigation outcomes. eBay altered the relative position of practising and non-practising patent owners, affected licensing incentives and shifted part of the economic relationship between innovators and implementers away from voluntary agreement and towards judicially determined compensation.
That lesson is particularly relevant as Europe seeks simultaneously to improve patent valuation and strengthen the financing of innovative firms. A patent whose exclusionary force becomes uncertain is also a less certain economic asset. If Europe wants patents to carry greater economic value, it should preserve the credibility of the right to exclude while allowing proportionality to address genuinely exceptional cases.
Author: European Centre for International Political Economy (ECIPE) (Source: https://ecipe.org/insights/the-injunction-divide/)
