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The Newly Proposed RESTORE Patent Bill Aims To Give Patent Owners More Power
09/18/2024On July 30, 2024, United States Senators Christopher Coons (R-Delaware) and Thomas Cotton (R-Arkansas) introduced the “Realizing Engineering, Science, and Technology Opportunities by Restoring Exclusive Patent Rights Act of 2024” or the “RESTORE Patent Rights Act of 2024” to the Senate. This bill intends to give a patent owner a rebuttable presumption of permanent injunction when the patent owner prevails on its claim of patent infringement.
The bill is meant to offset the decision of the United States Supreme Court in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). In eBay, the Supreme Court reversed the United States Court of Appeals for the Federal Circuit’s application of the “general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.” The Supreme Court stated that “the Patent Act expressly provides that injunctions ‘may’ issue ‘in accordance with the principles of equity.’” And it held that “the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity.” The Supreme Court articulated that:
According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an 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 plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
Following eBay, there is no longer a presumption of a permanent injunction, and courts apply the four-factor test before granting such relief. A one-pager, which was issued with the RESTORE Patent Rights Act of 2024 and aims to summarize the bill’s key points, states that, since eBay, it has become increasingly difficult for patent owners to get a permanent injunction after a defendant was found to infringe the patent owner’s patent. The one-pager further states:
Post-eBay requests for permanent injunctions in patent cases fell by 65% for companies that use their patented technology to manufacture a product and grants of permanent injunctions to those companies also fell by more than 65%. Decreases in requests and grants for licensing patent owners, like universities and research clinics, were even more dramatic—requests fell by 85% and grants fell by 90%.
The RESTORE Patent Rights Act of 2024 intends to amend Section 283 of Title 35, United States Code. Section 283 currently states:
The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.
The amendment would change the statute to read as follows:
If, in a case under this title, the court enters a final judgment finding infringement of a right secured by patent, the patent owner shall be entitled to a rebuttable presumption that the court should grant a permanent injunction with respect to that infringing conduct.
RESTORE Patent Rights Act of 2024, Section 3.
In a press release supporting the bill, Senator Coons stated that, “[u]nder our current system, it is cheaper for large companies to steal patented technologies from our inventors and entrepreneurs than to license those technologies lawfully.” According to the press release, the eBay test “upended” more than two centuries of patent practice that granted injunctions in the majority of cases where a patent was infringed, and “[t]he RESTORE Patent Rights Act would undo the damage of the eBay decision” and “deter predatory infringers,” i.e., infringers who find it more cost-effective to infringe patents and risk litigation rather that negotiate licenses upfront.
Proponent of the bill David Kappos, Co-Chair of the Council for Innovation Promotion (C4IP) and former U.S. Patent and Trademark Office (“USPTO”) Director, was reported in IP WatchDog as saying that, “IP thieves can get away with a slap on the wrist, knowing they’ll likely face only a one-time fee, even if found liable.” Another proponent of the bill, former USPTO Director Andrei Iancu, was also reported in IP WatchDog as saying that, “inventors cannot effectively protect their inventions without the ability to exclude. The RESTORE Act defends American innovation from unlawful infringement, safeguarding our economy and national security.” Former Chief Judge of the United States Court of Appeals for the Federal Circuit, Paul Michel, told IP WatchDog:
I predict the RESTORE Act will indeed pass. The real question[] is, “how soon”? And will it be soon enough? Passage is not likely this year and maybe not next year, either. But it is becoming increasingly clear with the passage of time that the unavailability of injunctions for most patent owners even after proving infringement is crippling our patent system and discouraging the investments needed to retain the U.S. lead in advanced technologies.
Innovation is expensive and such investments are inherently risky. Patents reduce the risk, often to an acceptable level—but only if they can be enforced effectively. Barring further infringement is crucial to effective enforcement. Our commercial competitors in Europe and Asia routinely enjoin ongoing infringement, making it stop. So does China, our principal strategic rival. China is rapidly overtaking our technology leadership. Once Congress finally realizes all this, surely it will enact RESTORE.
On the other hand, opponent of the bill Tom Cotter, Professor at the University of Minnesota Law School, was reported in a Law360 article as contending that giving a patent owner, who is primarily interested in a royalty payment, a rebuttable presumption of permanent injunction “gives [the patent owner] more leverage, but maybe undue leverage in some [] cases.” Opponents contend that, when facing the possibility of being enjoined from selling a product, a company would pay a lot more than a patent’s technology is worth, just to avoid the risk. Opponents, however, do generally concede that they do not object to injunctions in patent disputes between competitors, when one company is using a competitor’s technology because, as Joshua Landau (patent counsel at the Computer & Communications Industry Association) said in a Law360 article, that is “kind of the quintessential irreparable harm” that injunctions are meant to remedy. What opponents profess to worry about are the patent infringement lawsuits in which the defendants are large companies selling widely available products and the plaintiffs are companies who do not make or sell anything, but merely own or license patents.
If enacted, the RESTORE Patent Rights Act of 2024 would place the burden on the party found infringing to show that permanent injunction is unwarranted. To rebut this presumption of permanent injunction, the party found infringing may show, for example, that the injunction would harm the public. Of note, a companion bill to the RESTORE Patent Rights Act of 2024 was introduced in the United States House of Representative by Representatives Nathaniel Moran (R-Texas) and Madeleine Dean (D-Pennsylvania) and is being cosponsored by Representatives Chip Roy (R-Texas), Hank Johnson (D-Georgia), and Deborah Ross (D-North Carolina).
