Compulsory Licensing Under TRIPS and the Supreme Court of the United States’ Decision in eBay v. MercExchange

Abstract

The compulsory licensing of patents is a contentious issue in international patent law. The dispute over whether and when a government may issue a compulsory license has focused, in part, on the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Recently, the question of allowed unauthorized use of a patented invention has also arisen under United States patent law in a unique context. In its 2006 decision in eBay Inc. v. MercExchange L.L.C., the Supreme Court of the United States decided that courts must use a four-factor equitable test to decide whether an injunction should be awarded in patent cases. As a result of this opinion, injunctions have been denied by United States district courts in at least seven cases, allowing the infringer to continuing practicing the patented technology without the patentee's consent. The reason the eBay decision and its application are mentioned in the same context as TRIPS and compulsory licensing is that one of the arguments before the Supreme Court, advanced by the United States and others, is that a move away from automatic permanent injunctions potentially puts the United States in noncompliance. The Supreme Court did not address this question. But with the denial of injunctions and resulting unauthorized use due to eBay, the question is ripe for answering. This Chapter does just that, first placing the eBay decision in the context of compulsory licensing and then evaluating the decision under TRIPS. The Chapter evaluates the effect of an injunction denial pursuant to eBay both under the exceptions in TRIPS Articles 30 and 31 and the remedial provision - Article 44. While this discussion is important on a micro-level, the discussion also has macro-ramifications, potentially prompting a shift in the overall discourse concerning compulsory licensing and TRIPS. Furthermore, eBay may identify an optimal method for Member States to address social objectives by giving their judiciaries the flexibility to allow unauthorized uses on a case-by-case basis. This approach may protect the public's interest while doing minimal violence to the patentee's rights and ability to recoup research and development costs.