U.S. Supreme Court Lilly & Co. v. Medtronic, Inc., 496
U.S. 661 (1990) Eli Lilly and Company v. Medtronic,
Inc. No. 89-243 Argued Feb. 26, 1990 Decided June 18, 1990 496
U.S. 661 CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FEDERAL CIRCUIT Syllabus Claiming infringement of two of its patents, petitioner Eli
Lilly's predecessor-in-interest filed suit to enjoin respondent
Medtronic's testing and marketing of a medical device. Medtronic
defended on the ground that its activities were undertaken to
develop and submit to the Government information necessary to
obtain premarketing approval for the device under § 515 of the
Federal Food, Drug, and Cosmetic Act (FDCA), and were therefore
exempt from a finding of infringement under 35 U.S.C. § 271(e)(1),
which authorizes the manufacture, use, or sale of a patented
device

															"solely for uses reasonably related to the development and
submission of information under a Federal law which regulates the
manufacture, use, or sale of drugs."

															The District Court concluded that § 271(e)(1) does not apply to
medical devices and, after a jury trial, entered judgment on
verdicts for Eli Lilly. The Court of Appeals reversed on the ground
that, under § 271(e)(1), Medtronic's activities could not
constitute infringement if they were related to obtaining
regulatory approval under the FDCA, and remanded for the District
Court to determine whether that condition had been met. Held: Section 271(e)(1) exempts from infringement the
use of patented inventions reasonably related to the development
and submission of information needed to obtain marketing approval
of medical devices under the FDCA. Pp. 496 U. S.
665 -679.

															(a) The statutory phrase of § 271(e)(1), "a Federal law which
regulates the manufacture, use, or sale of drugs," is ambiguous. It
is somewhat more naturally read (as Medtronic asserts) to refer to
the entirety of any Act, including the FDCA, at least some of whose
provisions regulate drugs, rather than (as Eli Lilly contends) to
only those individual provisions of federal law that regulate
drugs. However, the text, by itself, is imprecise, and not plainly
comprehensible on either view. Pp. 496 U. S.
665 -669.

															(b) Taken as a whole, the structure of the 1984 Act that
established § 271(e)(1) supports Medtronic's interpretation. The
1984 Act was designed to remedy two unintended distortions of the
standard 17-year patent term produced by the requirement that
certain products receive premarket regulatory approval: (1) the
patentee would, as a practical matter, not be able to reap any
financial rewards during the early years of the term while he was
engaged in seeking approval; and (2) the end of Page 496 U. S. 662 the term would be effectively extended until approval was
obtained for competing inventions, since competitors could not
initiate the regulatory process until the term's expiration.
Section 202 of the Act addressed the latter distortion by creating
§ 271(e)(1), while § 201 of the Act sought to eliminate the former
distortion by creating 35 U.S.C. § 156, which sets forth a
patent-term extension for inventions subject to a lengthy
regulatory approval process. Eli Lilly's interpretation of §
271(e)(1) would allow the patentee of a medical device or other
FDCA-regulated nondrug product to obtain the advantage of § 201's
patent-term extension without suffering the disadvantage of § 202's
noninfringement provision. It is implausible that Congress, being
demonstrably aware of the dual distorting effects of
regulatory approval requirements, should choose to address both
distortions only for drug products, and for other products named in
§ 201 should enact provisions which not only leave in place an
anticompetitive restriction at the end of the monopoly term but
simultaneously expand the term itself, thereby not only failing to
eliminate but positively aggravating distortion of the 17-year
patent protection. Moreover, the fact that § 202 expressly excepts
from its infringement exemption "a new animal drug or veterinary
biological product" -- each of which is subject to premarketing
licensing and approval under, respectively, the FDCA and another
"Federal law which regulates the manufacture, use, or sale of
drugs," and neither of which was included in § 201's patent-term
extension provision -- indicates that §§ 201 and 202 are meant
generally to be complementary. Interpreting § 271(e)(1) as the
Court of Appeals did appears to create a perfect "product" fit
between the two sections. Pp. 496 U. S.
669 -674.

															(c) Sections 271(e)(2) and 271(e)(4), which establish and
provide remedies for a certain type of patent infringement only
with respect to drug products, do not suggest that section
271(e)(1) applies only to drug products as well. The former
sections have a technical purpose relating to the new abbreviated
regulatory approval procedures established by the 1984 Act, which
happened to apply only to drug products. Pp. 496 U. S.
675 -678.

															872 F.2d 402 (Fed.Cir.1989), affirmed and remanded.

															SCALIA, J., delivered the opinion of the Court, in which
REHNQUIST, C.J., and BRENNAN, MARSHALL, BLACKMUN, and STEVENS, JJ.,
Joined. KENNEDY, J., filed a dissenting opinion, in which WHITE,
J., joined, post, p. 496 U. S. 679 .
O'CONNOR, J., took no part in the consideration or decision of the
case. Page 496 U. S. 663 Justice SCALIA delivered the opinion of the Court.

															This case presents the question whether 35 U.S.C. § 271(e)(1)
renders activities that would otherwise constitute patent
infringement noninfringing if they are undertaken for the purpose
of developing and submitting to the Food and Drug Administration
information necessary to obtain marketing approval for a
medical Page 496 U. S. 664 device under § 515 of the Federal Food, Drug, and Cosmetic Act,
90 Stat. 552, 21 U.S.C. § 360e (FDCA). I In 1983, pursuant to 28 U.S.C. § 1338(a), the
predecessor-in-interest of petitioner Eli Lilly filed an action
against respondent Medtronic in the United States District Court
for the Eastern District of Pennsylvania to enjoin respondent's
testing and marketing of an implantable cardiac defibrillator, a
medical device used in the treatment of heart patients. Petitioner
claimed that respondent's actions infringed its exclusive rights
under United States Patent No. Re 27,757 and United States Patent
No. 3,942,536. Respondent sought to defend against the suit on the
ground that its activities were "reasonably related to the
development and submission of information under" the FDCA, and thus
exempt from a finding of infringement under 35 U.S.C. § 27 l(e)(1).
The District Court rejected this argument, concluding that the
exemption does not apply to the development and submission of
information relating to medical devices. Following a jury trial,
the jury returned a verdict for petitioner on infringement of the
first patent, and the court directed a verdict for petitioner on
infringement of the second patent. The court entered judgment for
petitioner and issued a permanent injunction against infringement
of both patents.

															On appeal, the Court of Appeals for the Federal Circuit
reversed, holding that, by virtue of 35 U.S.C. § 271(e)(1),
respondent's activities could not constitute infringement if they
had been undertaken to develop information reasonably related to
the development and submission of information necessary to obtain
regulatory approval under the FDCA. It remanded for the District
Court to determine whether, in fact, that condition had been met.
872 F.2d 402 (1989). We granted certiorari. 493 U.S. 889
(1989). Page 496 U. S. 665 II In 1984, Congress enacted the Drug Price Competition and Patent
Term Restoration Act of 1984, 98 Stat. 1585 (1984 Act), which
amended the FDCA and the patent laws in several important respects.
The issue in this case concerns the proper interpretation of a
portion of section 202 of the 1984 Act, codified at 35 U.S.C. §
271(e)(1). That paragraph, as originally enacted, provided:

															"It shall not be an act of infringement to make, use, or sell a
patented invention (other than a new animal drug or veterinary
biological product (as those terms are used in the Federal Food,
Drug, and Cosmetic Act and the Act of March 4, 1913)) solely for
uses reasonably related to the development and submission of
information under a Federal law which regulates the manufacture,
use, or sale of drugs."

															35 U.S.C. § 271(e)(1) (1982 ed., Supp. II). [ Footnote 1 ] The parties dispute whether this
provision exempts from infringement the use of patented inventions
to develop and submit information for marketing approval of medical
devices under the FDCA. A The phrase "patented invention" in § 271(e)(1) is defined to
include all inventions, not drug-related inventions alone. See 35 U.S.C. § 10O(a) ("When used in this title unless
the context otherwise indicates . . . [t]he term invention'
means invention or discovery"). The core of the present controversy
is that petitioner interprets the statutory phrase, "a Federal law
which regulates the manufacture, use, or sale of drugs," to refer
only to those individual provisions of federal law that regulate
drugs, whereas respondent interprets it to refer to the entirety of
any Act (including, of course, the Page 496 U. S.
666 FDCA) at least some of whose provisions regulate drugs. If
petitioner is correct, only such provisions of the FDCA as § 505,
52 Stat. 1052, as amended, 21 U.S.C. § 355, governing
premarket approval of new drugs, are covered by § 271(e)(1), and
respondent's submission of information under 21 U.S.C. § 360e,
governing premarket approval of medical devices, would not be a
noninfringing use. On the basis of the words alone, respondent's interpretation
seems preferable. The phrase "a Federal law" can be used to refer
to an isolated statutory section -- one might say, for example,
that the judicial review provision of the Administrative Procedure
Act, 5 U.S.C. § 706, is "a Federal law." The phrase is also used,
however, to refer to an entire Act. The Constitution, for example,
provides that "Every Bill which shall have passed the House of
Representatives and the Senate, shall, before it becomes a
Law, be presented to the President of the United States." U.S.
Const., Art. I, § 7, cl. 2 (emphasis added). And the United States
Code provides that "[w]henever a bill . . . becomes a law or takes effect, it shall forthwith be received by the Archivist of
the United States from the President." 1 U.S.C. § 106a (emphasis
added). This latter usage, which is probably the more common one,
seems also the more natural in the present context. If § 271(e)(1)
referred to "a Federal law which pertains to the
manufacture, use, or sale of drugs," it might be more reasonable to
think that an individual provision was referred to. But the phrase
"a Federal law which regulates the manufacture, use, or
sale of drugs" more naturally summons up the image of an entire
statutory scheme of regulation. The portion of § 271(e)(1) that
immediately precedes the words "a Federal law" likewise seems more
compatible with reference to an entire Act. It refers to "the
development and submission of information under a Federal
law" (emphasis added). It would be more common, if a single section
rather than an entire scheme were referred to, to speak Page 496 U. S. 667 of "the development and submission of information pursuant
to a Federal law," or perhaps " in compliance with a
Federal law." Taking the action "under a Federal law" suggests
taking it in furtherance of or compliance with a comprehensive
scheme of regulation. Finally, and perhaps most persuasively, the
fact that § 202 of the 1984 Act (which established § 271(e)(1))
used the word "law" in its broader sense is strongly suggested by
the fact that the immediately preceding -- and, as we shall see,
closely related -- section of the 1984 Act, when it meant to refer
to a particular provision of law rather than an entire Act,
referred to "the first permitted commercial marketing or use of the
product under the provision of law." § 201, 98 Stat. 1598,
35 U.S.C. § 156(a)(5)(A) (emphasis added).

															The centrally important distinction in this legislation (from
the standpoint of the commercial interests affected) is not between
applications for drug approval and applications for device
approval, but between patents relating to drugs and patents
relating to devices. If only the former patents were meant to be
included, there were available such infinitely more clear and
simple ways of expressing that intent that it is hard to believe
the convoluted manner petitioner suggests was employed would have
been selected. The provision might have read, for example,

															"It shall not be an act of infringement to make, use, or sell a
patented drug invention . . . solely for uses reasonably related to
the development and submission of information required, as a
condition of manufacture, use, or sale, by Federal law."

															Petitioner contends that the terms "patented drug," or "drug
invention" (or, presumably, "patented drug invention") would have
been "potentially unclear" as to whether they covered only patents
for drug products or patents for drug composition and drug use as
well. Brief for Petitioner 22. If that had been the concern,
however, surely it would have been clearer and more natural to
expand the phrase constituting the object of the sentence to
"patented invention for drug product, drug Page 496 U. S. 668 composition, or drug use" than to bring in such a limitation
indirectly by merely limiting the laws under which the information
is submitted to drug regulation laws.

															On the other side of the ledger, however, one must admit that
while the provision more naturally means what respondent suggests,
it is somewhat difficult to understand why anyone would want it to mean that. Why should the touchstone of
noninfringement be whether the use is related to the development
and submission of information under a provision that happens to be
included within an Act that, in any of its provisions, not
necessarily the one at issue, regulates drugs? The first response
is that this was a shorthand reference to the pertinent provisions
Congress was aware of, all of which happened to be included in Acts
that regulated drugs. But since it is conceded that all those
pertinent provisions were contained within only two Acts (the FDCA
and the Public Health Service Act (PHS Act), 58 Stat. 682, as
amended, 42 U.S.C. § 201 et seq. (1982 ed. and Supp.
II)), that is not much of a time-saving shorthand. The only
rejoinder can be that Congress anticipated future regulatory
submission requirements that it would want to be covered which
might not be included in the FDCA or the PHS Act, but would surely
(or probably) be included in another law that regulates drugs. That
is not terribly convincing. On the other hand, this same
awkwardness, in miniature, also inheres in petitioner's
interpretation, unless one gives "under a Federal law" a meaning it
simply will not bear. That is to say, if one interprets the phrase
to refer to only a single section or even subsection of federal law, it is hard to understand why
the fact that that section or subsection happens to regulate drugs
should bring within § 271(e)(1) other products that it also
regulates; and it does not seem within the range of permissible
meaning to interpret "a Federal law" to mean only isolated portions
of a single section or subsection. The answer to this, presumably,
is that Congress would not expect two products to be dealt with Page 496 U. S. 669 in the same section or subsection -- but that also is not
terribly convincing.

															As far as the text is concerned, therefore, we conclude that we
have before us a provision that somewhat more naturally reads as
the Court of Appeals determined, but that is not plainly
comprehensible on anyone's view. Both parties seek to enlist
legislative history in support of their interpretation, but that
sheds no clear light. [ Footnote
2 ] We think the Court of Appeals' interpretation is confirmed,
however, by the structure of the 1984 Act taken as a whole. B Under federal law, a patent

															"grant[s] to the patentee, his heirs or assigns, for the term of
seventeen years, . . . the right to exclude others from making,
using, or selling the invention throughout the United States."

															35 U.S.C. § 154. Except as otherwise provided,

															"whoever without authority makes, uses or sells any patented
invention, within the United States during the term of the patent
therefor, infringes the patent."

															35 U.S.C. § 271(a). The parties agree that the 1984 Act was
designed to respond to two unintended distortions of the 17-year
patent term produced by the requirement that certain products must
receive premarket regulatory approval. First, the holder of a
patent relating to such products would, as a practical matter, not
be able to reap any financial rewards during the early years of the
term. When an inventor makes a potentially useful discovery, he
ordinarily protects it by applying for a patent at once. Thus, if
the discovery relates to a product that cannot be marketed without
substantial testing and regulatory approval, the "clock" on Page 496 U. S. 670 his patent term will be running even though he is not yet able
to derive any profit from the invention.

															The second distortion occurred at the other end of the patent
term. In 1984, the Court of Appeals for the Federal Circuit decided
that the manufacture, use, or sale of a patented invention during
the term of the patent constituted an act of infringement, see 35 U.S.C. § 271(a), even if it was for the sole
purpose of conducting tests and developing information necessary to
apply for regulatory approval. See Roche Products, Inc. v.
Bolar Pharmaceutical Co., 733 F.2d 858 (CA Fed.), cert.
denied, 469 U.S. 856 (1984). [ Footnote 3 ] Since that activity could not be commenced by
those who planned to compete with the patentee until expiration of
the entire patent term, the patentee's de facto monopoly
would continue for an often substantial period until regulatory
approval was obtained. In other words, the combined effect of the
patent law and the premarket regulatory approval requirement was to
create an effective extension of the patent term.

															The 1984 Act sought to eliminate this distortion from both ends
of the patent period. Section 201 of the Act established a
patent-term extension for patents relating to certain products that
were subject to lengthy regulatory delays and could not be marketed
prior to regulatory approval. The eligible products were described
as follows:

															"(1) The term 'product' means:"

															" (A) A human drug product. " Page 496 U. S. 671 " (B) Any medical device, food additive, or color additive
subject to regulation under the Federal Food, Drug, and Cosmetic
Act."

															"(2) The term 'human drug product' means the active ingredient
of a new drug, antibiotic drug, or human biological product (as
those terms are used in the Federal Food, Drug, and Cosmetic Act
and the Public Health Services Act) including any salt or ester of
the active ingredient, as a single entity or in combination with
another active ingredient."

															35 U.S.C. § 156(f). Section 201 provides that patents relating
to these products can be extended up to five years if, inter
alia, the product was "subject to a regulatory review period
before its commercial marketing or use," and

															"the permission for the commercial marketing or use of the
product after such regulatory review period [was] the first
permitted commercial marketing or use of the product under the
provision of law under which such regulatory review period
occurred."

															35 U.S.C. § 156(a).

															The distortion at the other end of the patent period was
addressed by § 202 of the Act. That added to the provision
prohibiting patent infringement, 35 U.S.C. § 271, the paragraph at
issue here, establishing that

															"[i]t shall not be an act of infringement to make, use, or sell
a patented invention . . . solely for uses reasonably related to
the development and submission of information under a Federal law
which regulates the manufacture, use, or sale of drugs."

															35 U.S.C. § 271(e)(1). This allows competitors, prior to the
expiration of a patent, to engage in otherwise infringing
activities necessary to obtain regulatory approval.

															Under respondent's interpretation, there may be some relatively
rare situations in which a patentee will obtain the advantage of
the § 201 extension but not suffer the disadvantage of the § 202
noninfringement provision, and others in Page 496 U. S. 672 which he will suffer the disadvantage without the benefit.
[ Footnote 4 ] Under petitioner's
interpretation, however, that sort of disequilibrium becomes the
general rule for patents relating to all products (other than
drugs) named in § 201 and subject to premarket approval under the
FDCA. Not only medical devices, but also food additives and color
additives, since they are specifically named in § 201, see 35 U.S.C. § 156(f), receive the patent-term extension; but since
the specific provisions requiring regulatory approval for them,
though included in the FDCA, are not provisions requiring
regulatory approval for drugs, they are (on petitioner's view) not
subject to the noninfringement provision of § 271(e)(1). It seems
most implausible to us that Congress, being demonstrably aware of
the dual distorting effects of regulatory approval requirements in
this entire area -- dual distorting effects that were roughly
offsetting, the disadvantage at the beginning of the term producing
a more or less corresponding advantage at the end of the term --
should choose to address both those distortions only for drug
products; and for other products named in § 201 should enact
provisions which not only leave in place an anticompetitive
restriction at the end of the monopoly term but simultaneously
expand the monopoly term itself, thereby not only failing to
eliminate but positively aggravating Page 496 U. S. 673 distortion of the 17-year patent protection. It would take
strong evidence to persuade us that this is what Congress wrought,
and there is no such evidence here. [ Footnote 5 ]

															Apart from the reason of the matter, there are textual
indications that sections 201 and 202 are meant generally to be
complementary. That explains, for example, § 202's exception
for

															"a new animal drug or veterinary biological product (as those
terms are used in the Federal Food, Drug, and Cosmetic Act and the
Act of March 4, 1913)."

															35 U.S.C. § 271(e)(1). Although new animal drugs and veterinary
biological products are subject to premarket regulatory licensing
and approval under the FDCA, see 21 U.S.C. § 360b (new
animal drugs), and the Act of March 4, 1913, see 21 U.S.C.
§§ 151, 154 (veterinary biological products) -- each "a Federal law
which regulates the manufacture, use, or sale of drugs" -- neither
product was included in the patent-term extension provision of §
201. They therefore were excepted from § 202 as well. Interpreting
§ 271(e)(1) as the Court of Appeals did Page 496 U. S. 674 here appears to create a perfect "product" fit between the two
sections. All of the products eligible for a patent term extension
under § 201 are subject to § 202, since all of them -- medical
devices, food additives, color additives, new drugs, antibiotic
drugs, and human biological products -- are subject to premarket
approval under various provisions of the FDCA, see 21
U.S.C. § 360e (medical devices); § 348 (food additives); § 376
(color additives); § 355 (new drugs); § 357 (antibiotic drugs), or
under the PHS Act, see 42 U.S.C. § 262 (human biological
products). And the products subject to premarket approval under the
FDCA and the Act of March 4, 1913, that are not made eligible for a
patent term extension under § 201 -- new animal drugs and
veterinary biological products -- are excluded from § 202 as well.
[ Footnote 6 ] Page 496 U. S. 675 III According to petitioner, "[t]he argument for a broad
construction of Section 271(e)(1) is refuted by the companion
Sections (e)(2) and (e)(4)." Brief for Petitioner 17. The latter
provide:

															"(2) It shall be an act of infringement to submit an application
under section 505(j) of the Federal Food, Drug, and Cosmetic Act or
described in section 505(b)(2) of such Act for a drug claimed in a
patent or the use of which is claimed in a patent, if the purpose
of such submission is to obtain approval under such Act to engage
in the commercial manufacture, use, or sale of a drug claimed in a
patent or the use of which is claimed in a patent before the
expiration of such patent."

															" * * * *" "(4) For an act of infringement described in paragraph (2) --
"

															" (A) the court shall order the effective date of any approval
of the drug involved in the infringement to be a date which is not
earlier than the date of the expiration of the patent which has
been infringed,"

															" (B) injunctive relief may be granted against an infringer to
prevent the commercial manufacture, use, or sale of an approved
drug,"

															"and"

															" (C) damages or other monetary relief may be awarded against an
infringer only if there has been commercial manufacture, use, or
sale of an approved drug."

															"The remedies prescribed by subparagraphs (A), (B), and (C) are
the only remedies which may be granted by a court for an act of
infringement described in paragraph " Page 496 U. S. 676 "(2), except that a court may award attorney fees under section
285."

															35 U.S.C. §§ 271(e)(2), (4). Petitioner points out that the
protections afforded by these provisions are conferred exclusively
on the holders of drug patents. They would, he contends, have been
conferred upon the holders of other patents if Congress had
intended the infringement exemption of § 271(e)(1) to apply to them
as well.

															That is not so. The function of the paragraphs in question is to
define a new (and somewhat artificial) act of infringement for a
very limited and technical purpose that relates only to certain
drug applications. As an additional means of eliminating the de
facto extension at the end of the patent term in the case of
drugs, and to enable new drugs to be marketed more cheaply and
quickly, § 101 of the 1984 Act amended § 505 of the FDCA, 21 U.S.C.
§ 355, to authorize abbreviated new drug applications (ANDAs),
which would substantially shorten the time and effort needed to
obtain marketing approval. An ANDA may be filed for a generic drug
that is the same as a so-called "pioneer drug" previously approved, see 21 U.S.C. § 355(j)(2)(A), or that differs from the
pioneer drug in specified ways, see 21 U.S.C. §
355(j)(2)(C). The ANDA applicant can substitute bioequivalence data
for the extensive animal and human studies of safety and
effectiveness that must accompany a full new drug application. Compare 21 U.S.C. § 355(j)(2)(A)(iv), with § 355(b)(1). In
addition, § 103 of the 1984 Act amended § 505(b) of the FDCA, 21
U.S.C. § 355(b), to permit submission of a so-called paper new drug
application (paper NDA), an application that relies on published
literature to satisfy the requirement of animal and human studies
demonstrating safety and effectiveness. See 21 U.S.C. §
355(b)(2). Like ANDAs, paper NDAs permit an applicant seeking
approval of a generic drug to avoid the costly and time-consuming
studies required for a pioneer drug.

															These abbreviated drug-application provisions incorporated an
important new mechanism designed to guard against Page 496 U. S. 677 infringement of patents relating to pioneer drugs. Pioneer drug
applicants are required to file with the FDA the number and
expiration date of any patent which claims the drug that is the
subject of the application, or a method of using such drug. See 21 U.S.C. § 355(b)(1). ANDAs and paper NDAs are
required to contain one of four certifications with respect to each
patent named in the pioneer drug application: (1) "that such patent
information has not been filed," (2) "that such patent has
expired," (3) "the date on which such patent will expire," or (4)
"that such patent is invalid or will not be infringed by the
manufacture, use, or sale of the new drug for which the application
is submitted." 21 U.S.C. §§ 355(b)(2)(A), 355(j)(2)(A)(vii).

															This certification is significant, in that it determines the
date on which approval of an ANDA or paper NDA can be made
effective, and hence the date on which commercial marketing may
commence. If the applicant makes either the first or second
certification, approval can be made effective immediately. See 21 U.S.C. §§ 355(c)(3)(A), 355(j)(4)(B)(i). If the
applicant makes the third certification, approval of the
application can be made effective as of the date the patent
expires. See 21 U.S.C. §§ 355(c)(3)(B), 355(j)(4)(B)(ii).
If the applicant makes the fourth certification, however, the
effective date must depend on the outcome of further events
triggered by the Act. An applicant who makes the fourth
certification is required to give notice to the holder of the
patent alleged to be invalid or not infringed, stating that an
application has been filed seeking approval to engage in the
commercial manufacture, use, or sale of the drug before the
expiration of the patent, and setting forth a detailed statement of
the factual and legal basis for the applicant's opinion that the
patent is not valid or will not be infringed. See 21
U.S.C. §§ 355(b)(3)(B), 355(j)(2)(B)(ii). Approval of an ANDA or
paper NDA containing the fourth certification may become effective
immediately only if the patent owner has not initiated a lawsuit
for infringement within 45 days of receiving notice of the
certification. If the Page 496 U. S. 678 owner brings such a suit, then approval may not be made
effective until the court rules that the patent is not infringed or
until the expiration of (in general) 30 months, whichever first
occurs. See 21 U.S.C. §§ 355(c)(3)(C),
355(j)(4)(B)(iii).

															This scheme will not work, of course, if the holder of the
patent pertaining to the pioneer drug is disabled from establishing
in court that there has been an act of infringement. And that was
precisely the disability that the new § 271(e)(1) imposed, with
regard to use of his patented invention only for the purpose of
obtaining premarketing approval. Thus, an act of infringement had
to be created for these ANDA and paper NDA proceedings. That is
what is achieved by § 271(e)(2) -- the creation of a highly
artificial act of infringement that consists of submitting an ANDA
or a paper NDA containing the fourth type of certification that is
in error as to whether commercial manufacture, use, or sale of the
new drug (none of which, of course, has actually occurred) violates
the relevant patent. Not only is the defined act of infringement
artificial, so are the specified consequences, as set forth in
paragraph (e)(4). Monetary damages are permitted only if there has
been "commercial manufacture, use, or sale." 35 U.S.C. §
271(e)(4)(C). Quite obviously, the purpose of (e)(2) and (e)(4) is
to enable the judicial adjudication upon which the ANDA and paper
NDA schemes depend. It is wholly to be expected, therefore, that
these provisions would apply only to applications under the
sections establishing those schemes -- which (entirely
incidentally, for present purposes) happen to be sections that
relate only to drugs, and not to other products. [ Footnote 7 ] Page 496 U. S. 679 " * * * *" No interpretation we have been able to imagine can transform §
271(e)(1) into an elegant piece of statutory draftsmanship. To
construe it as the Court of Appeals decided, one must posit a good
deal of legislative imprecision; but to construe it as petitioner
would, one must posit that and an implausible substantive intent as
well.

															The judgment of the Court of Appeals is affirmed, and the case
remanded for further proceedings consistent with this opinion. So ordered. Justice O'CONNOR took no part in the consideration or decision
of this case.

															[ Footnote 1 ]

															Unless otherwise specified, references to sections of the United
States Code are to those sections as they existed upon the
effective date of the 1984 Act.

															[ Footnote 2 ]

															Petitioner's principal argument is that the legislative history
of § 202 mentions only drugs -- which is quite different, of
course, from its saying (as it does not) that only drugs are
included. "It is not the law that a statute can have no effects
which are not explicitly mentioned in its legislative history. . .
." Pittston Coal Croup v. Sebben, 488 U.
S. 105 , 488 U. S. 115 (1988). As respondent notes, even the legislative history of § 201
-- whose text explicitly includes devices -- contains only scant
references to devices.

															[ Footnote 3 ]

															Petitioner suggests that it was "the 1984 Roche decision which prompted enactment of [§ 202]," Brief for Petitioner
20, n. 13, which should therefore be regarded as quite independent
of the simultaneously enacted patent-term extension of § 201.
Undoubtedly the decision in Roche prompted the proposal of
§ 202, but whether that alone accounted for its enactment is quite
a different question. It seems probable that Congress -- for the
reasons we discuss in text -- would have regarded § 201 and § 202
as related parts of a single legislative package, as we do.

															[ Footnote 4 ]

															We cannot readily imagine such situations (and petitioner has
not described any), except where there is good enough reason for
the difference. Petitioner states that disequilibrium of this sort
will often occur because the § 271(e)(1) noninfringement provision
applies "whether the patent term is extended or not," and even with
respect to "patents which cannot qualify for a term extension."
Reply Brief for Petitioner 11. But if the patent term is not
extended only because the patentee does not apply, he surely has no
cause for complaint. And the major reason relevant patents will not
qualify for the term extension is that they pertain to "follow-on"
drug products, rather than "pioneer" drug products, see §§
156(a)(5)(A), 156(f)(2); Fisons PLC. v. Quigg, 876 F.2d 99
(CA Fed.1989). For these, however, the abbreviated regulatory
approval procedures established by Title I of the 1984 Act, 98
Stat. 1585, see 21 U.S.C. §§ 355(b)(2), (j), eliminate
substantial regulatory delay at the outset of the patent term, and
thus eliminate the justification for the § 156 extension.

															[ Footnote 5 ]

															Petitioner argues that there was good reason for Congress to
establish an infringement exemption with respect to drugs but not
devices, since testing of the latter does much greater economic
harm to the patentee. Devices, petitioner contends, are much more
expensive than drugs ($17,000 apiece for respondent's allegedly
infringing defibrillators), and many have only a small number of
potential customers, who will purchase only a single device each,
so that depleting the market through testing may do substantial
harm. Brief for Petitioner 30-31. These concerns, however, apply
with respect to certain drugs as well. According to one source, a
year's dosage of Cyclosporine (used to suppress rejection of new
organs) costs from $5,000 to $7,000; of AZT (used to treat AIDS)
$8,000; of Monoclate (used to speed blood clotting in hemophiliacs)
$25,000; and of Growth Hormone (used to treat dwarfism) $8,000 to
530,000. A. Pollack, The Troubling Cost of Drugs That Offer Hope,
N.Y. Times, Feb. 9, 1988, p. Al, col. 3. Another new drug, Tissue
Plasminogen Activator, used in the treatment of heart attacks to
dissolve blood clots, costs $2,200 per dose, and is prescribed for
only a single dose. Ibid. Moreover, even if the factors
petitioner mentions could explain the omission from § 271(e)(1) of
medical devices, they could not explain the omission of food
additives and color additives.

															[ Footnote 6 ]

															It is true that § 202, if interpreted to apply to all products
regulated by the FDCA and other drug-regulating statutes, has a
product coverage that includes other products, in addition to new
animal drugs and veterinary biological products not numbered among
the specifically named products in § 201 -- for example, food,
infant formulas, cosmetics, pesticides, and vitamins. But for the §
202 exemption to be applicable, the patent use must be "reasonably
related to the development and submission of information under" the
relevant law. New animal drugs and veterinary biological products
appear to be the only additional products covered by
drug-regulating statutes for which the requirement of premarket
approval -- and hence the need for "development and submission of
information" -- existed. With respect to food, infant formulas,
cosmetics, and pesticides, for example, the FDCA merely established
generally applicable standards that had to be met. See,
e.g., 21 U.S.C. § 341 (food); § 350a (infant formula); § 361
(cosmetics); § 346a (pesticides); cf. § 350
(vitamins).

															It must be acknowledged that the seemingly complete product
correlation between § 201 and § 202 was destroyed in 1986 when,
without adding "new infant formula" to the defined products
eligible for the patent-term extension under § 156, Congress
established a premarket approval requirement for that product, and
thus automatically rendered it eligible for the § 271(e)(1)
exemption from patent infringement. See Pub.L. 99-570, §
4014(a)(7), 100 Stat. 3207-116, codified at 21 U.S.C. §
350a(d). That subsequent enactment does not change our view of what
the statute means. That isolated indication of lack of correlation
between § 156 and § 271(e)(1) is, in any event, contradicted by the
1988 amendment that added most new animal drugs and veterinary
biological products to § 156 and simultaneously deleted from §
271(e)(1) the infringement exception for those products. See Generic Animal Drug and Patent Term Restoration Act,
102 Stat. 3971, 3984-3989.

															[ Footnote 7 ]

															Although petitioner has not challenged § 271(e)(1) on
constitutional grounds, it argues that we should adopt its
construction because of the

															"serious constitutional question under the takings clause of the
Fifth Amendment . . . [that would arise] if the statute is
interpreted to authorize the infringing use of medical
devices."

															Brief for Petitioner 31. We do not see how this consideration
makes any difference. Even if the competitive injury caused by the
noninfringement provision is de minimis with respect to
most drugs, surely it is substantial with respect to some of them
-- so the "serious constitutional question" (if it is that) is not
avoided by petitioner's construction either.

															Justice KENNEDY, with whom Justice WHITE joins, dissenting.

															Petitioner contends that respondent infringed its patents by
testing and marketing a medical device known as a cardiac
defibrillator. The Court holds that 35 U.S.C. § 271(e)(1), a
provision of the patent law, may give respondent a defense to this
charge. It rules, in particular, that § 271(e)(1) will excuse
respondent if it acted for the sole purpose of developing
information necessary to obtain marketing approval for the device
under § 515 of the Federal Food, Drug, and Cosmetic Act (FDCA), 90
Stat. 552, 21 U.S.C. § 360(e). I dissent because I find the Court's
decision contrary to the most plausible reading of the statutory
language.

															The applicable version of § 271(e)(1) states:

															"It shall not be an act of infringement to make, use, or sell a
patented invention (other than a new animal drug or veterinary
biological product (as those terms are used in the Federal Food,
Drug, and Cosmetic Act and the Act of March 4, 1913)) solely for
uses reasonably related Page 496 U. S. 680 to the development and submission of information under a Federal
law which regulates the manufacture, use, or sale of drugs."

															35 U.S.C. § 271(e)(1) (1982 ed., Supp. II). The Court says that
Congress used the phrase "a Federal law which regulates the
manufacture, use, or sale of drugs" to refer to the entirety of any
Act, at least some portion of which regulates drugs. The FDCA fits
this description. As a result, even though respondent sought
marketing approval under the FDCA for a medical device instead of a
drug, the Court concludes that § 271(e)(1) may serve as a defense
to patent infringement. I disagree.

															Section 271(e)(1), in my view, does not privilege the testing of
medical devices such as the cardiac defibrillator. When § 271(e)(1)
speaks of a law which regulates drugs, I think that it does not
refer to particular enactments or implicate the regulation of
anything other than drugs. It addresses the legal regulation of
drugs, as opposed to other products. Thus, while the section would
permit a manufacturer to use a drug for the purpose of obtaining
marketing approval under the FDCA, it does not authorize a
manufacturer to use or sell other products that, by coincidence,
the FDCA also happens to regulate. Respondent, in consequence, has
no defense under § 271(e)(1).

															The Court asserts that Congress could have specified this result
in a clearer manner. See ante at 496 U. S.
667 -668. That is all too true. But we do not tell
Congress how to express its intent. Instead, we discern its intent
by assuming that Congress employs words and phrases in accordance
with their ordinary usage. In this case, even if Congress could
have clarified § 271(e)(1), the Court ascribes a most unusual
meaning to the existing language. Numerous statutory provisions and
court decisions, from a variety of jurisdictions, use words almost
identical to those of § 271(e)(1), and they never mean what the
Court says they mean here. Page 496 U. S. 681 For instance, in delineating the scope of preemption by the
Employee Retirement Income Security Act of 1974 (ERISA), Congress
stated that

															"nothing in this title shall be construed to exempt or relieve
any person from any law of any State which regulates insurance,
banking, or securities. "

															88 Stat. 897, 29 U.S.C. § 1144(b)(2)(A) (1982) (emphasis added).
Interpreting this language as the Court interprets § 271(e)(1)
would imply that Congress intended to give the States a free hand
to enact any law that conflicts with ERISA so long as some portion
of the state enactment regulates insurance, banking, or securities.
No one would contend for this result. The Texas Legislature, in a
like manner, has said that

															"a person shall pay $1 as a court cost on conviction of any
criminal offense . . . except that a conviction arising under any law that regulates pedestrians or the parking of motor
vehicles is not included."

															Tex.Govt.Code Ann. § 56.001(b) (Supp.1990) (emphasis added). I
do not think that Texas intended by this language to exclude all
convictions that might arise under an act, such as a traffic code,
that regulates speeding in addition to pedestrians and parking.
And, when the Missouri Legislature specified that

															"[n]o governmental subdivision or agency may enact or enforce a law that regulates or makes any conduct in the area [of
gambling] an offense, "

															Mo.Rev. Stat. § 572.100 (1986) (emphasis added), I doubt that it
meant to invalidate local enactments in their entirety whenever
some portion of them regulates gambling. Countless other examples
confound the Court's method of reading the operative language in
this case. See, e.g., N.C.Gen. Stat. § 42-37.1 (1984)
(prohibiting retaliatory eviction by landlords for complaints about
violations of any " State or federal law that regulates premises
used for dwelling purposes ") (emphasis added); Cochran v.
Peeler, 209 Miss. 394, 408, 47 So. 2d
806 , 809 (1950) ("the violation of a law which regulates
human conduct in the operation of vehicles on the roads becomes, by legislative fiat, negligence") (emphasis added); Local 456, Int'l Brotherhood of Teamsters v.
Cortlandt, Page 496 U. S. 682 68 Misc.2d 645, 653, 327 N.Y.S.2d 143, 153 (1971) ("under the
home rule power to enact local laws, a town may enact a law
which regulates the powers, duties, qualifications, [etc.] of its
officers and employees ") (emphasis added); see also U.S. Const., Amdt. 14, § 1 ("No State shall make or enforce any
law which shall abridge the privileges or immunities of citizens of
the United States ") (emphasis added). Unless we assume that
these examples do not reflect ordinary usage, which I see no basis
for doing, we cannot hold that § 271(e)(1) refers to the entirety
of the FDCA or any other Act which regulates drugs. Instead, I
would conclude, the section refers only to the actual regulation of
drugs, and does not exempt the testing of a medical device from
patent infringement.

															Congress did not act in an irrational manner when it drew a
distinction between drugs and medical devices. True, like medical
devices, some drugs have a very high cost. See ante at 496 U. S. 673 ,
n. 5. Testing a patented medical device, however, often will have
greater effects on the patentholder's rights than comparable
testing of a patented drug. As petitioner has asserted,
manufacturers may test generic versions of patented drugs, but not
devices, under abbreviated procedures. See 21 U.S.C. §
355(j). These procedures, in general, do not affect the market in a
substantial manner, because manufacturers may test the drugs on a
small number of subjects, who may include healthy persons who
otherwise would not buy the drug. See § 355(j)(7)(B)
(stating the requirements of a showing of the "bioequivalence" of
drugs). By contrast, as in this case, manufacturers test and market
medical devices in clinical trials on patients who would have
purchased the device from the patent holder. See App.
39-42; see also 21 CFR § 812.7(b) (1989) (permitting
manufacturers to recover their costs in clinical trials). Although
the Court gives examples of high-cost drug dosages, it does not
demonstrate that the testing of these drugs detracts from a
patentholder's sales. Congress could have determined that the
differences Page 496 U. S. 683 in testing or some other difference between drugs and devices
justified excluding the latter from the ambit of § 271(e)(1). See 879 F.2d 849, 850, n. 4 (CA Fed.1989) (Newman, J.,
dissenting from the denial of rehearing en banc ). For
these reasons, I dissent.


OPINION OF THE COURT FONT SCAPS="1">EBAY INC. V. MERCEXCHANGE, L. L. C. 547 U. S. ____ (2006) SUPREME COURT OF THE UNITED STATES NO. 05-130 EBAY INC., et al., PETITIONERS v. MERCEXCHANGE, L. L. C.

															on writ of certiorari to the united states court of
appeals for the federal circuit

															[May 15, 2006]

															   Justice Thomas delivered the
opinion of the Court.

															   Ordinarily, a federal court
considering whether to award permanent injunctive relief to a
prevailing plaintiff applies the four-factor test historically
employed by courts of equity. Petitioners eBay Inc. and Half.com,
Inc., argue that this traditional test applies to disputes arising
under the Patent Act. We agree and, accordingly, vacate the
judgment of the Court of Appeals.

															I

															   Petitioner eBay operates a
popular Internet Web site that allows private sellers to list goods
they wish to sell, either through an auction or at a fixed price.
Petitioner Half.com, now a wholly owned subsidiary of eBay,
operates a similar Web site. Respondent MercExchange,
L. L. C., holds a number of patents, including a business
method patent for an electronic market designed to facilitate the
sale of goods between private individuals by establishing a central
authority to promote trust among participants. See U. S. Patent No.
5,845,265. MercExchange sought to license its patent to eBay and
Half.com, as it had previously done with other companies, but the
parties failed to reach an agreement. MercExchange subsequently
filed a patent infringement suit against eBay and Half.com in the
United States District Court for the Eastern District of Virginia.
A jury found that MercExchange’s patent was valid, that eBay and
Half.com had infringed that patent, and that an award of damages
was appropriate.[ Footnote
1 ]

															   Following the jury verdict, the
District Court denied MercExchange’s motion for permanent
injunctive relief. 275 F. Supp. 2d 695 (2003). The Court of
Appeals for the Federal Circuit reversed, applying its “general
rule that courts will issue permanent injunctions against patent
infringement absent exceptional circumstances.” 401 F. 3d
1323, 1339 (2005). We granted certiorari to determine the
appropriateness of this general rule. 546 U. S.___ (2005).

															II

															   According to well-established
principles of equity, a plaintiff seeking a permanent injunction
must satisfy a four-factor test before a court may grant such
relief. A plaintiff must 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.
See, e.g. , Weinberger v. Romero&nbhyph;Barcelo, 456 U. S. 305 , 311–313
(1982); Amoco Production Co. v. Gambell, 480 U. S. 531 , 542
(1987). The decision to grant or deny permanent injunctive relief
is an act of equitable discretion by the district court, reviewable
on appeal for abuse of discretion. See, e.g. , Romero-Barcelo , 456 U. S., at 320.

															   These familiar principles apply
with equal force to disputes arising under the Patent Act. As this
Court has long recognized, “a major departure from the long
tradition of equity practice should not be lightly implied.” Ibid.; see also Amoco , supra , at 542.
Nothing in the Patent Act indicates that Congress intended such a
departure. To the contrary, the Patent Act expressly provides that
injunctions “may” issue “in accordance with the principles of
equity.” 35 U. S. C. §283.[ Footnote 2 ]

															   To be sure, the Patent Act also declares that
“patents shall have the attributes of personal property,” §261,
including “the right to exclude others from making, using, offering
for sale, or selling the invention,” §154(a)(1). According to the
Court of Appeals, this statutory right to exclude alone justifies
its general rule in favor of permanent injunctive relief. 401
F. 3d, at 1338. But the creation of a right is distinct from
the provision of remedies for violations of that right. Indeed, the
Patent Act itself indicates that patents shall have the attributes
of personal property “[s]ubject to the provisions of this title,”
35 U. S. C. §261, including, presumably, the provision that
injunctive relief “may” issue only “in accordance with the
principles of equity,” §283.

															   This approach is consistent with our treatment
of injunctions under the Copyright Act. Like a patent owner, a
copyright holder possesses “the right to exclude others from using
his property.” Fox Film Corp. v. Doyal, 286 U. S. 123 , 127
(1932); see also id. , at 127–128 (“A copyright, like a
patent, is at once the equivalent given by the public for benefits
bestowed by the genius and meditations and skill of individuals,
and the incentive to further efforts for the same important
objects” (internal quotation marks omitted)). Like the Patent Act,
the Copyright Act provides that courts “may” grant injunctive
relief “on such terms as it may deem reasonable to prevent or
restrain infringement of a copyright.” 17 U. S. C. §502(a).
And as in our decision today, this Court has consistently rejected
invitations to replace traditional equitable considerations with a
rule that an injunction automatically follows a determination that
a copyright has been infringed. See, e.g. , New York
Times Co. v. Tasini, 533 U. S. 483 , 505
(2001) (citing Campbell v. Acuff-Rose Music,
Inc., 510 U. S.
569 , 578, n. 10 (1994)); Dun v. Lumbermen’s Credit
Assn., 209 U. S.
20 , 23–24 (1908).

															   Neither the District Court nor the Court of
Appeals below fairly applied these traditional equitable principles
in deciding respondent’s motion for a permanent injunction.
Although the District Court recited the traditional four-factor
test, 275 F. Supp. 2d, at 711, it appeared to adopt certain
expansive principles suggesting that injunctive relief could not
issue in a broad swath of cases. Most notably, it concluded that a
“plaintiff’s willingness to license its patents” and “its lack of
commercial activity in practicing the patents” would be sufficient
to establish that the patent holder would not suffer irreparable
harm if an injunction did not issue. Id. , at 712. But
traditional equitable principles do not permit such broad
classifications. For example, some patent holders, such as
university researchers or self-made inventors, might reasonably
prefer to license their patents, rather than undertake efforts to
secure the financing necessary to bring their works to market
themselves. Such patent holders may be able to satisfy the
traditional four-factor test, and we see no basis for categorically
denying them the opportunity to do so. To the extent that the
District Court adopted such a categorical rule, then, its analysis
cannot be squared with the principles of equity adopted by
Congress. The court’s categorical rule is also in tension with Continental Paper Bag Co. v. Eastern Paper Bag
Co., 210 U. S.
405 , 422–430 (1908), which rejected the contention that a court
of equity has no jurisdiction to grant injunctive relief to a
patent holder who has unreasonably declined to use the patent.

															   In reversing the District Court, the Court of
Appeals departed in the opposite direction from the four-factor
test. The court articulated a “general rule,” unique to patent
disputes, “that a permanent injunction will issue once infringement
and validity have been adjudged.” 401 F. 3d, at 1338. The
court further indicated that injunctions should be denied only in
the “unusual” case, under “exceptional circumstances” and
“ ‘in rare instances . . . to protect the public
interest.’ ” Id. , at 1338–1339. Just as the District
Court erred in its categorical denial of injunctive relief, the
Court of Appeals erred in its categorical grant of such relief. Cf. Roche Products v. Bolar Pharmaceutical Co. , 733
F. 2d 858, 865 (CAFed 1984) (recognizing the “considerable
discretion” district courts have “in determining whether the facts
of a situation require it to issue an injunction”).

															   Because we conclude that neither court below
correctly applied the traditional four-factor framework that
governs the award of injunctive relief, we vacate the judgment of
the Court of Appeals, so that the District Court may apply that
framework in the first instance. In doing so, we take no position
on whether permanent injunctive relief should or should not issue
in this particular case, or indeed in any number of other disputes
arising under the Patent Act. We hold only that the decision
whether to grant or deny injunctive relief rests within the
equitable discretion of the district courts, and that such
discretion must be exercised consistent with traditional principles
of equity, in patent disputes no less than in other cases governed
by such standards.

															   Accordingly, we vacate the judgment of the
Court of Appeals, and remand for further proceedings consistent
with this opinion.

															It is so ordered. Footnote 1 EBay and Half.com continue to challenge the
validity of MercExchange’s patent in proceedings pending before the
United States Patent and Trademark Office. Footnote 2 Section 283 provides that “[t]he 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.” 547 U. S. ____ (2006) FONT SCAPS="1">EBAY INC. V. MERCEXCHANGE, L. L. C. 547 U. S. ____ (2006) SUPREME COURT OF THE UNITED STATES NO. 05-130 EBAY INC., et al., PETITIONERS v. MERCEXCHANGE, L. L. C.

															on writ of certiorari to the united states court of
appeals for the federal circuit

															[May 15, 2006]

															   Chief Justice Roberts, with whom
Justice Scalia and Justice Ginsburg join, concurring.

															   I agree with the Court’s holding
that “the decision whether to grant or deny injunctive relief rests
within the equitable discretion of the district courts, and that
such discretion must be exercised consistent with traditional
principles of equity, in patent disputes no less than in other
cases governed by such standards,” ante, at 5, and I join
the opinion of the Court. That opinion rightly rests on the
proposition that “a major departure from the long tradition of
equity practice should not be lightly implied.” Weinberger v. Romero&nbhyph;Barcelo, 456 U. S. 305 , 320
(1982); see ante, at 3.

															   From at least the early 19th century, courts
have granted injunctive relief upon a finding of infringement in
the vast majority of patent cases. This “long tradition of equity
practice” is not surprising, given the difficulty of protecting a
right to exclude through monetary remedies that allow an
infringer to use an invention against the patentee’s
wishes—a difficulty that often implicates the first two factors of
the traditional four-factor test. This historical practice, as the
Court holds, does not entitle a patentee to a permanent
injunction or justify a general rule that such injunctions
should issue. The Federal Circuit itself so recognized in Roche
Products, Inc. v. Bolar Pharmaceutical Co. , 733
F. 2d 858, 865–867 (1984). At the same time, there is a
difference between exercising equitable discretion pursuant to the
established four-factor test and writing on an entirely clean
slate. “Discretion is not whim, and limiting discretion according
to legal standards helps promote the basic principle of justice
that like cases should be decided alike.” Martin v. Franklin Capital Corp., 546 U. S. ___, ___ (2005) (slip
op., at 6). When it comes to discerning and applying those
standards, in this area as others, “a page of history is worth a
volume of logic.” New York Trust Co. v. Eisner, 256 U. S. 345 ,
349 (1921) (opinion for the Court by Holmes, J.). 547 U. S. ____ (2006) FONT SCAPS="1">EBAY INC. V. MERCEXCHANGE, L. L. C. 547 U. S. ____ (2006) SUPREME COURT OF THE UNITED STATES NO. 05-130 EBAY INC., et al., PETITIONERS v. MERCEXCHANGE, L. L. C.

															on writ of certiorari to the united states court of
appeals for the federal circuit

															[May 15, 2006]

															   Justice Kennedy, with whom
Justice Stevens, Justice Souter, and Justice Breyer join,
concurring.

															   The Court is correct, in my view,
to hold that courts should apply the well-established, four-factor
test—without resort to categorical rules—in deciding whether to
grant injunctive relief in patent cases. The Chief Justice is also
correct that history may be instructive in applying this test. Ante, at 1–2 (concurring opinion). The traditional
practice of issuing injunctions against patent infringers, however,
does not seem to rest on “the difficulty of protecting a right to exclude through monetary remedies that allow an infringer
to use an invention against the patentee’s wishes.” Ante, at 1 (Roberts, C. J., concurring). Both the
terms of the Patent Act and the traditional view of injunctive
relief accept that the existence of a right to exclude does not
dictate the remedy for a violation of that right. Ante, at
3–4 (opinion of the Court). To the extent earlier cases establish a
pattern of granting an injunction against patent infringers almost
as a matter of course, this pattern simply illustrates the result
of the four-factor test in the contexts then prevalent. The lesson
of the historical practice, therefore, is most helpful and
instructive when the circumstances of a case bear substantial
parallels to litigation the courts have confronted before.

															   In cases now arising trial courts should bear
in mind that in many instances the nature of the patent being
enforced and the economic function of the patent holder present
considerations quite unlike earlier cases. An industry has
developed in which firms use patents not as a basis for producing
and selling goods but, instead, primarily for obtaining licensing
fees. See FTC, To Promote Innovation: The Proper Balance of
Competition and Patent Law and Policy, ch. 3, pp. 38–39 (Oct.
2003), available at http://www.ftc.gov/os/2003/10/innovationrpt.pdf
(as visited May 11, 2006, and available in Clerk of Court’s case
file). For these firms, an injunction, and the potentially serious
sanctions arising from its violation, can be employed as a
bargaining tool to charge exorbitant fees to companies that seek to
buy licenses to practice the patent. See ibid . When the
patented invention is but a small component of the product the
companies seek to produce and the threat of an injunction is
employed simply for undue leverage in negotiations, legal damages
may well be sufficient to compensate for the infringement and an
injunction may not serve the public interest. In addition
injunctive relief may have different consequences for the
burgeoning number of patents over business methods, which were not
of much economic and legal significance in earlier times. The
potential vagueness and suspect validity of some of these patents
may affect the calculus under the four-factor test.

															   The equitable discretion over injunctions,
granted by the Patent Act, is well suited to allow courts to adapt
to the rapid technological and legal developments in the patent
system. For these reasons it should be recognized that district
courts must determine whether past practice fits the circumstances
of the cases before them. With these observations, I join the
opinion of the Court.