Prospective Compensation in Lieu of a Final Injunction in Patent and Copyright Cases

In a 2006 decision, eBay Inc. v. MercExchange, L.L.C., the U.S. Supreme Court held that traditional equitable factors apply to injunctions in patent and copyright cases, and therefore the mere fact that a defendant has infringed a patent or a copyright does not necessarily mean a final injunction must issue. In the three years since, lower courts have denied final injunctions more frequently than before and are now struggling with what relief, if any, to give prevailing plaintiffs in lieu of an injunction. Some courts permit plaintiffs to sue again later. But most award prospective relief to plaintiffs¾sometimes a lump-sum damages award or more commonly a continuing royalty¾to compensate plaintiffs for the defendant’s anticipated postjudgment infringements. Plaintiffs often object to prospective-compensation awards as constituting compulsory licenses. This Article demonstrates that federal courts lack the authority, in either law or equity, to award prospective compensation for postjudgment copyright or patent infringements. Until Congress creates a new form of compulsory licensing, future-damage awards and continuing royalties can be granted in lieu of a final injunction only by consent of the parties. This Article reaches its conclusion only after undertaking the most comprehensive treatment of the subject to date. Apart from surveying the relevant statutory texts, it relies on a historical review of future-damage and continuing-royalty jurisprudence in England and the United States from 1660 to the present