Injunctive relief in IP

A court order prohibiting the defendant from continuing infringing activity — available as a remedy in patent, copyright, and trade secret cases — which historically represented the most powerful leverage instrument in IP litigation. Following eBay Inc. v. MercExchange (2006), courts apply the traditional four-factor equitable test for injunctions in patent cases, and NPEs frequently fail to obtain them because they cannot demonstrate irreparable harm given their non-practicing status. For litigation funders, the availability of injunctive relief fundamentally affects settlement dynamics: practicing entity plaintiffs who can credibly threaten to shut down an infringing product or process command substantially larger settlements than those limited to damages. Funders underwriting patent cases model both the damages-only and injunction-plus-damages scenarios when projecting expected recovery ranges.

Since eBay, injunctions are rarely available to non-practicing plaintiffs, so funders backing NPE or PAE campaigns underwrite to a damages-only recovery model and treat any injunction threat as non-credible leverage in settlement modeling. For operating-company plaintiffs able to show irreparable harm, the calculus reverses: a credible shutdown threat against a competitor's infringing product line materially increases expected settlement value above the damages-only case, so funders confirm practicing-entity status and competitive overlap with the defendant early specifically to determine which dynamic applies.