The Injunction Function: How and Why Courts Secure Property Rights in Patents
- Author(s):
- Adam Mossoff
- Posted:
- 05-2025
- Law & Economics #:
- 25-05
- Availability:
- Full text (most recent) on SSRN
ABSTRACT:
Property rights facilitate market transactions and economic growth by securing exclusive rights to their owners. This economic principle is true for all property rights, whether in land or in inventions. Today, many judges, lawyers, and commentators misunderstand this fundamental truth in patent law. Patent owners are no longer able to obtain injunctions against continuing or willful violations of their property rights, especially if they are using the licensing business model that was first employed in the U.S. innovation economy in the 1790s. This alteration in patent remedies was wrought by the Supreme Court in its 2006 decision in eBay v. MercExchange.
Given the mistaken conventional wisdom today about injunctions, this article describes the economic and normative function of injunctions as the legal backstop for negotiations in the free market. Despite litigators and judges thinking this remedy is the end of the story, because it issues at the end of a hearing against a defendant found to be infringing a valid patent, an injunction is just the beginning of the commercial story. In cases of unauthorized commercial use of an asset in which the owner sues to stop this trespass, an injunction is what compels a company or person to negotiate with the property owner for the use of this asset. Injunctions facilitate arms-length negotiations and the setting of market prices through these contracts and licenses. This article reestablishes these key normative and economic insights in patent law. It describes how eBay altered the historical doctrine for securing patents with injunctions against continuing infringement, and how this has undermined the economic function of patents, which have been secured as property rights in the U.S. innovation economy from the early American Republic.