Permanent injunctions as punitive damages in patent infringement cases

Although much ink has been spilled over the decision by the Supreme Court in eBay v. MercExchange to modify the test for equitable relief in patent cases and to nullify the longstanding presumption that victims of infringement are always entitled to permanent injunctions, an obvious point is never pursued: injunctions in patent cases can function like punitive damages at common law. A straightforward example suffices: Greensweep, Inc., a manufacturer of lawn mowing equipment, invents a cleverly shaped mower deck that increases the suction and bagging function of its mowers. It anticipates net profits of $10million due to its innovation. After Greensweep has built an expensive new manufacturing plant and produced thousands of new and improved mowers, it is sued successfully by Airwings, Inc., a helicopter manufacturer who had patented the same decking shape used by Greensweep. Airwings suffered no lost profits due to the infringement, but is awarded a reasonable royalty of $8million for Greensweep's past infringement and permanent injunctive relief against Greensweep. The cost to convert its manufacturing facility to produce a non-infringing product would be $4million. No cheaper non-infringing alternative technologies are available to Greensweep. Armed with a good estimate of Greensweep's switching costs, Airwings is able to negotiate a $3million payment from Greensweep for a post-litigation license to use the patent.