Introduction
On December 18, 2024, the Senate Judiciary Committee held a hearing concerning S. 4840, a bill introducing the RESTORE Patent Rights Act of 2024[1] (“RESTORE Act”). As stated on its face, the purpose of S. 4840 is to amend Title 35 of the United States Code—the Patent Act—“to establish a rebuttable presumption that a permanent injunction should be granted in certain circumstances, and for other purposes.” Currently, courts have authority to grant injunctive relief pursuant to 35 U.S.C. § 283, which recites:

“The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.”

The proposed legislation amends § 283 by adding to the above:

“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.”

S. 4840 only proposes a single sentence of legislation, but it has the potential to dramatically alter the landscape of patent litigation. Supporters of the bill argue that without this presumption, patent owners are left with weaker, less valuable patents, which discourages future innovation. Those opposed to the bill argue that the lack of presumption favors non-practicing patent owners, which harms the U.S.’s innovation and economy.Both sides zealously advocate that their respective position will strengthen innovation and position the patent system to thrive.

Background
Prior to the 2006 Supreme Court decision in eBay Inc. v. MercExchange,[2] injunctions were routinely granted upon a finding of patent infringement. That is because, before eBay, there was a “general rule” that an injunction would issue when infringement was found “absent a sound reason for denying it.”[3] In eBay, the Supreme Court found this “general rule” to be improper and set forth the current framework for determining when to grant injunctive relief relating to a claim of patent infringement.[4] More specifically, the Supreme Court held that granting injunctions based on categorical rules (e.g., granting injunctions upon a finding of infringement and absent a sound reason for denying it) was not permitted by traditional equitable principles.[5] The Court then confirmed that an award of injunctive relief in patent cases is governed by the “traditional four factor test” established in Weinberger v. Romero-Barcelo.[6] This traditional test requires a plaintiff to demonstrate: 1) that it has suffered an irreparable injury; 2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; 3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and 4) that the public interest would not be disserved by a permanent injunction, before a court will grant injunctive relief.[7]

The imposition of the traditional four factor test placed a much higher burden on patent owners seeking an injunction and has led to a sharp decline in requests for injunction, as well as decline in the rate at which they’re granted.[8] Indeed, conservative estimates show that, before the eBay ruling, injunctions were granted in 95% of cases where infringement was found and requested nearly 100% of the time. By 2013, injunctions were granted in just 17% cases where infringement was found (though injunctions were granted in 72.5% of cases where an injunction was requested, injunctions were requested in only 24% of cases).[9]

The RESTORE Act is the second attempt by the Senate to legislate around the eBay decision in an effort to return to a system where injunctive relief is a standard remedy for patent infringement. The Senate’s first attempt was the STRONGER Patents Act of 2019 (“STRONGER Patents Act”), which was introduced in July 2019 by Senators Coons and Cotton.[10] The STRONGER Patents Act included, inter alia, a provision to reinstate the presumption of injunctive relief when there is infringement of a valid patent. Ultimately, the bill died in committee.[11] The same senators introduced the RESTORE Act in 2024, hopeful for a different outcome than its predecessor bill.[12]

The Hearing
The December 18th hearing featured a four-person panel consisting of Mr. Jacob Babcock, the CEO of NuCurrent, a Chicago-based tech company; Professor Kristen Jakobsen Osenga, Professor of Law at the University of Richmond School of Law; Mr. Joshua Landau, Senior Counsel for Innovation Policy at the Computer & Communications Industry Association; and Professor Jorge L. Contreras, the James T. Jensen Endowed Professor for Transactional Law and Director of the Program on Intellectual Property and Technology Law at the University of Utah S.J. Quinney College of Law. Each panelist made an opening statement before engaging in several rounds of questioning.[13] The panel was evenly split, with Mr. Jacob Babcock and Professor Osenga (“Proponents”) supporting the proposed legislation and Mr. Joshua Landau and Professor Contreras (“Opponents”) opposing it.

The Proponents emphasized the importance of injunctive relief as a remedy for patent infringement by pointing out that the constitutional grant of an exclusive right to one’s discoveries is the foundation of the U.S. patent system. They also appealed to property law concepts to bolster their arguments in support of the legislation. As an example, Professor Osenga likened a patent infringer to a squatter unlawfully occupying a home. It is typically understood that because you own your home, you have a right to remove anyone who is there without your consent; this right to exclude is part of what it means to own property.[14] Professor Osenga analogized that, under the current system, without a presumption for an injunction, the equivalent would be that you would have no presumption the squatter would be removed from the home—even after you proved it was your house and the squatter was there unlawfully. Continuing the analogy, Professor Osenga argued that under this system, squatters are essentially permitted to invade your home, with the most likely consequence being ordered to pay restitution years after the squatting first began.

Proponents spoke of the effects of this type of “predatory infringement” characterized by the “infringe now, pay later” system that they contend has emerged in the post-eBay world. Without the threat of injunction, predatory infringement arguably allows infringers to ultimately pay less than they would have had they sought a license before beginning to produce, sell, or engage in infringing activities. In effect, patent owners lose bargaining power.Proponents argued that patent owners should be guaranteed the ability to stop any and all infringement, regardless of the traditional four-factor injunctive relief test.They also argued that the general unavailability of injunctive relief has devalued patents as an asset class and led to less venture capital investment in innovative small businesses. Ultimately, they asserted that the ability to achieve an injunction makes patents more valuable, encouraging future innovation and stimulating the U.S. economy.

As pointed out by supporters of the legislation, separate and apart from the hearing, a rebuttable presumption of an injunction would arguably make patent litigation more efficient and cheaper because the threat of injunction would do more to encourage settlement.[15]

Mr. Babcock also spoke of his own experience in the tech industry. His company’s technology was stolen by an overseas company and they had no remedy to stop the infringement. Mr. Babcock estimates that this cost his company two billion dollars, most of which he contends would have eventually been invested back into the American innovation economy and American workers. He was adamant that one of the biggest harms caused by the eBay decision is that there are inventions that have never come to market because there is not enough incentive and protection for small inventors in the U.S. Mr. Babcock argued that this loss is unquantifiable because it will forever be unknown what could have and would have been invented had the patent system been different.

On the other side of the issue, Mr. Landau and Professor Contreras emphasized that there has been an increase—not a decline—in research and development funding since the eBay decision. Additionally, both disagree with the idea that there has been a substantial change in the injunction landscape and point out that patent owners who practice their inventions have seen even less change than Non-Practicing and Patent Assertion Entities (NPEs and PAEs). They insist that patent owners who are making their inventions can obtain an injunction under the four-factor test established in eBay. The opponents of the bill argue that changing the standard to a rebuttable presumption of injunction would allow NPEs to stop manufacturers from producing infringing products, even though the NPE is not producing the invention themselves. They argue that this “patent trolling” is more harmful to U.S. innovation and economic growth than the current standard for receiving an injunction.

Professor Contreras argued that the post-eBay system is beneficial to American companies because it prevents NPEs, who he argues are often foreign companies, from obtaining an injunction against American companies who are manufacturing or otherwise practicing the invention in a way that stimulates the economy and provides jobs.

Mr. Landau suggested adding language to the bill that would require patent owners to prove they were practicing their invention before they would be entitled to the presumption of an injunction. He argued that this would address the concern for the small practicing inventor, whom Proponents purport to be helping, while also maintaining a mechanism to control patent trolling. Mr. Landau’s approach would essentially require the patent owner to show the first two steps of the current four-factor test.

The tension between the two positions boils down to whether the potential harm of a patent owner not being able to receive an injunction is outweighed by the positive effects of preventing patent trolls. Proponents of the bill feel the threat of patent trolls is not a valid reason to deny a patent owner their right to exclude others from making their invention. Opponents feel that requiring patent owners to jump through the hoops of the four-factor test is a small, minimally harmful price to pay to prevent patent trolling.

Status
S. 4840 was introduced during the 118th Congress, which ran from January 3, 2023, to January 3, 2025. Legislation that does not pass before a congressional session ends is removed from the book. As a result, the RESTORE Act must be reintroduced in the 119th Congress or will otherwise be a second failed attempt to restore the rebuttable presumption for an injunction.[16]

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