“I’m not demonizing one end of the spectrum… But I still think we have a problem to solve here. I’d like for cooler heads to prevail and figure out ways to get to the root cause.” – Senator Thom Tillis
A hearing held today by the Senate Subcommittee on Intellectual Property featured witnesses both for and against the recently introduced Realizing Engineering, Science, and Technology Opportunities by Restoring Exclusive (RESTORE) Patent Rights Act of 2024 trading competing statistics and anecdotes about whether or not the Supreme Court’s 2006 eBay v. MercExchange decision has actually harmed patent owners.
The RESTORE Patent Rights Act was introduced by Senators Chris Coons (D-DE) and Tom Cotton (R-AR) in July 2024 with the goal of restoring the presumption of injunctive relief to patent owners facing infringement. Some believe it would merely abrogate the eBay decision and return patent litigation to pre-eBay times, while others don’t think it would go far enough to undo the harms of that decision. Still others, including two of the withnesses at today’s hearing, think eBay has been a net positive for the patent system, that injunctive relief is still readily available, and there is no need to make the change proposed by RESTORE.
The RESTORE Act is just one sentence long. It proposes to amend Section 283 of the patent law to add the following language:
“(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.”
Tillis told the witnesses in his opening remarks that he sees the situation around injunctive relief post-eBay as a problem and a threat to innovation, particularly for smaller and more under-resourced innovators. Jason Babcock, CEO of NuCurrrent, for instance, testified that he has seen an innovation and IP gap emerge over the last 20 years in which “mega tech special interests have driven judicial, legislative and administrative decisions that heavily tilt the system in their favor,” in part via the eBay decision. He gave the example of how NuCurrent’s patented technology was stolen by a Korean OEM, who enabled its suppliers in China and Taiwan to profit from the patent. “By the time financial remedies arrived years later, the damage was already done,” Babcock said. Babcock also said venture capital investment in his sector has dried up due to the “systematic failure of the U.S. patent system.”
The Computer & Communications Industry Association’s Senior Counsel, Innovation Policy, Joshua Landau, however, said the eBay decision has actually “encouraged innovation and commercialization.” According to Landau’s research, after 2006, R&D spending accelerated its rate of increase, patent filings accelerated and the types of patents filed have been better, and “some studies have even found an overall increase in social welfare due to the eBay decision.” The latter claim comes from a recent working paper by Samuel Antill that suggested “the eBay decision contributed to a 3.32% increase in social welfare by prompting an increase in innovative activity by both incumbent firms and new market entrants,” according to Landau’s written testimony. Ultimately, said Landau, the RESTORE Act is simply unnecessary because, for operating companies at least, injunctions still issue and the eBay decision has accelerated innovation.
Also opposed to the change proposed by RESTORE was Professor Jorge Contreras of the University of Utah S.J. Quinney College of Law, who said assertions about hordes of predatory patent infringers are overblown. According to Contreras, between 2006 and 2021, courts have authorized continuing infringement in exchange for an ongoing royalty after denying an injunction only 32 times, which amounts to just twice per year. Furthermore, other legal mechanisms like enhanced damages exist to deter infringement. Particularly since the Supreme Court’s Halo v. Pulse decision, willful infringement has been easier to prove and has been found in 65% of patent infringement cases between 2016 and 2020, Contreras said, adding: “This is a significant deterrent to infringement even without threat of an injunction.” He also claimed that RESTORE would not help the small inventors it may be intended for, but would mostly benefit large patent assertion entities (PAEs), which Bloomberg reported represented the top 10 filers of patent litigation in 2022.
Professor Kristen Jakobsen Osenga, however, said new research shows that patent owners, regardless of business type, are not even asking for injunctive relief at the same rate as before eBay, thus skewing all the statistics. Osenga’s written testimony referred to forthcoming research by Professor Kristina Acri showing that injunction grants are down 66% for operating companies and 91% for licensing firms, which has “serious negative effects on the patent system” and essentially forces the patent owner to litigate rather than negotiate. “A predatory infringer is basically a squatter living in a room of your house without your permission,” Osenga explained.
Landau objected to the Acri study, questioning its numbers and the denominator used for patent cases, but Osenga said it is one of the few studies to highlight how many patent cases no longer even include a request for an injunction due to eBay. Landau cited research showing the overall injunction rate pre-eBay was about 95% and now is just about 2% lower for operating companies, while for PAEs it’s in the 20-percentile range. But Babcock and Coons found these numbers suspect.
Attempting to find a middle ground, Tillis said the discussion needs to focus going forward on how to distinguish between “patent trolls” and legitimate PAEs. “I’m not demonizing one end of the spectrum,” Tillis said. “I came from Big Tech. But I still think we have a problem to solve here. I’d like for cooler heads to prevail and figure out ways to get to the root cause.”
Tillis seemed interested in a proposal by Landau that the presumption should be attached to a working requirement. “If you’re doing something with your patent you get the presumption,” he explained. But Osenga and Babcock said this would add a lot of burden for the patent owner and Osenga noted that even the eBay decision admits that injunctive relief historically has not required a working or operating company to receive it.
But with the 118th Congressional session essentially over and new leadership to come, Tillis, who admitted he does not take the position that the bill is perfect, as Osenga opined it is, seemed intrigued by Landau’s compromise and said he hopes to continue the dialogue in the new year.
Several IP organizations expressed support for RESTORE today. The Council for Innovation Promotion (C4IP) said the eBay decision “has greatly depressed the rates at which courts have been willing to stop ongoing infringement of patents adjudicated as valid with injunctive relief” and that RESTORE would fix the problem. The Innovation Alliance also applauded the hearing and urged Congress to pass the bill.
A version of the RESTORE Act has also been introduced in the House by Representatives Nathaniel Moran (R-TX), Madeleine Dean (D-PA), Chip Roy (R-TX), Hank Johnson (D-GA) and Deborah Ross (D-NC).
