Senators Re-Introduce RESTORE Patent Rights Act

Senators Chris Coons (D-DE) and Tom Cotton (R-AR) have reintroduced the Realizing Engineering, Science, and Technology Opportunities by Restoring Exclusive (RESTORE) Patent Rights Act.

The Act, first introduced in July of 2024, would restore the rebuttable presumption that a patent owner proving infringement in a US district court should be entitled to injunctive relief preventing further infringing conduct.

This presumption was abrogated by the US Supreme Court in its 2006 eBay v. MercExchange decision.

In the eBay case, MercExchange had patented a design for an online marketplace in which a single company provides the trustworthy framework within which buyers and sellers can negotiate for goods.

After negotiations with eBay and Half.com to license the patent failed, MercExchange sued for patent infringement.

The jury sided with MercExchange, ruling that its patent had been violated. However, the district court judge refused to issue a permanent injunction that would have forced eBay and Half.com to stop using the MercExchange technology.

The district court judge applied the traditional four-part test to determine whether an injunction was necessary.

That test requires the plaintiff to prove

• that it has suffered an irreparable injury;
• that the law does not provide other adequate ways to compensate it;
• that considering the balance of hardships between the plaintiff and defendant, an injunction is warranted; and
• that the public interest would not be harmed by a permanent injunction.

The district court found that this test had not been met.

That decision was reversed by the Federal Circuit, which applied a "general rule that courts will issue permanent injunctions against patent infringements absent exceptional circumstances."

The question presented to the US Supreme Court was,

Under the Patent Act, should a permanent injunction always be issued when a patent has been violated, absent exceptional circumstances?

In a unanimous decision, the Court held that injunctions in patent cases should be granted (or not) based on the same criteria used in other types of cases.

According to the preamble to the RESTORE Act,

(5) Given the irreparable harm that is caused by multiple acts of infringement or willful infringement of a patent, courts historically presumed that an injunction should be granted to prevent such acts, with a burden on defendants to rebut such a presumption with standard equitable defenses.

(6) Recently, courts have ended the approach described in paragraph (5), which contradicts the traditional, historical practice governing the equitable remedy described in that paragraph.

(7) Eliminating the traditional, historical equitable practice of applying a rebuttable presumption of injunctive relief in the case of continuing acts of infringement or willful infringement of a patent has—

(A) substantially reduced the ability of patent owners to obtain injunctions to stop continuing or willful infringement of patents; and

(B) created incentives for large, multinational companies to commit predatory acts of infringement, especially with respect to patents owned by undercapitalized entities, such as individual inventors, institutions of higher education, startups, and small or medium-sized enterprises.

According to a press release that accompanied the re-introduction of the bill, since the eBay decision,

requests for permanent injunctions in patent cases fell by 65% for companies that use their patented technology to manufacture a product; grants of permanent injunctions to those companies fell even more significantly. Requests and grants for licensing patent owners like universities and research clinics dropped even further: Requests fell by 85%, and grants fell by 90%.

The RESTORE Act would amend Section 283 of the patent law to add the following:

(b) REBUTTABLE PRESUMPTION.—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.

At hearings in December of 2024, after the Act was introduced for the first time, witnesses testified both for and against the change.

Kristen Jakobsen, a Professor at the University of Richmond School of Law, testified that

This shift, from a presumption of injunctive relief for patent infringement to uncertainty about whether a patent owner can even stop an infringer, has had serious negative impacts on the patent system. In cases where injunctive relief is unlikely, there are few deterrents to infringement.

There are some infringers who, knowing they are unlikely to be enjoined, decide to “infringe now, pay later.” Not only is the patent owner forced to use litigation, rather than negotiation, to obtain payment for use of their patented technology, but there is evidence that court-determined fees are lower than negotiated fees.

Jorge L. Contreras, a Professor at the University of Utah, testified that

Much of the recent commentary concerning injunctive relief in patent cases gives the impression that, following eBay, permanent injunctions are no longer available to patent holders. Yet as every published study conducted since the eBay decision has clearly demonstrated, permanent injunctions continue to be issued by district courts in approximately 75% of patent cases….

Despite claims that eBay has instigated widespread “predatory infringement” by firms that no longer fear injunctions, the reality is that courts have authorized the unenjoined infringement of valid patents only a handful of times. In a study that I co-authored in 2023, we reviewed every district court case decided between 2006 and 2021 in which a finding of patent infringement was made and a permanent injunction was denied. Of 272 such cases, a permanent injunction was denied in only 77 (28%). Of these 77 cases, 45 were dismissed or settled prior to a judicial ruling on compensation. Accordingly, during the time we studied, courts authorized an infringer to continue infringing a valid patent only 32 times in 15 years, which is approximately twice per year. This is hardly an avalanche of infringement that will derail the U.S. innovation economy, as critics have claimed.

According to him,

The RESTORE Patent Rights Act claims that it will help “undercapitalized entities, individuals, and institutions of higher education” that are victimized by the “predatory acts of infringement” of “large multinational companies”. Yet the romantic image of a modern-day Morse or Edison beset by corporate behemoths is largely a myth that is belied by the realities of corporate and institutional R&D, not to mention modern patent litigation. As reported by Bloomberg, in 2022, all ten of the top ten filers of patent litigation in the United States were non-practicing entities whose “main source of revenue is through suing larger companies for patent infringement” (patent assertion entities or PAEs).

(PAEs are sometimes referred to as “patent trolls.”)

Since the Act has the support of both Democrats and Republicans, it may have a good chance of becoming law.