Reasonable Royalties After eBay

24 September 2007
By Dr. Christine Siegwarth Meyer and Dr. David Blackburn

The Supreme Court, in its decision in eBay Inc. et al. v. MercExchange LLC ("eBay"), clarified the legal standard for granting injunctive relief to a plaintiff in a patent infringement lawsuit. Rather than granting an automatic injunction in the event the patent in dispute is found to be valid and infringed, as was the past practice, courts must apply the traditional four-factor test to determine whether an injunction is appropriate. In this article from IP Law360, NERA Senior Vice President Dr. Christine Siegwarth Meyer and Vice President Dr. David Blackburn argue that while this decision should directly affect parties' expectations of relief in a patent matter, it could also potentially affect the calculation of damages, particularly the reasonable royalty component. eBay raises a number of important and complex issues in areas other than the determination of royalties, including the terms of compulsory licenses, when and how the terms of such a license would be determined, and, perhaps, even about the extent to which the broader goals of the patent system are served. This article focuses on the impact of eBay on the bargaining position of the parties in the hypothetical negotiation in which reasonable royalties are determined.