# Continental Paper Bag v. Eastern: The Non-Practicing Patentee's Right to an Injunction

> The Supreme Court held in 1908 that a patentee who does not use its invention may still enjoin infringement, because the patent right is the right to exclude.

Topic: Patents  |  Author: Lidiia Levitska  |  Source: Intellectual Property Law (outsideipcounsel.com)
Canonical: https://outsideipcounsel.com/blog/continental-paper-bag-v-eastern-nonuse-injunction/


*Continental Paper Bag Co. v. Eastern Paper Bag Co.*, 210 U.S. 405 (1908), decided June 1, 1908, is the historic charter of the non-practicing patentee's right to an injunction. The Supreme Court, in an opinion by Justice McKenna, held that a patentee may obtain an injunction against an infringer even though the patentee does not itself use the patented invention, and even where the patentee has deliberately declined to use it. The right conferred by a patent, the Court explained, is essentially the right to exclude others, and that right does not depend on whether the owner chooses to practice the invention.

For most of the twentieth century this principle made injunctions nearly automatic for prevailing patentees, non-practicing or not. Its significance today is double: it states the classical understanding of the patent right as a right to exclude, and it marks the doctrine that the Supreme Court later tempered in *eBay Inc. v. MercExchange, L.L.C.*, 547 U.S. 388 (2006). The two decisions, read together, trace the entire arc of injunction law from presumptive relief to equitable discretion.

## At a glance

- **Case:** *Continental Paper Bag Co. v. Eastern Paper Bag Co.*, 210 U.S. 405 (1908)
- **Decided:** June 1, 1908; opinion by Justice McKenna; affirmed the grant of an injunction
- **Holding:** A patentee that does not practice its invention may still obtain an injunction against infringement, because the essence of the patent right is the right to exclude and is not conditioned on use.
- **Significance:** The classic statement of the right to exclude and the non-use rule, later reshaped by *eBay v. MercExchange*.

## The suppressed patent

Eastern Paper Bag Co. owned a patent on a machine for making "self-opening" paper bags, an improvement in paper-bag manufacturing. Eastern had not put the patented machine into commercial use. Continental Paper Bag Co., a competitor found to infringe, seized on that non-use as a defense to injunctive relief. Continental argued that a patentee who does not use its invention, and who appears to be holding the patent simply to keep a competing technology off the market, should not be entitled to the extraordinary remedy of an injunction. On that view, equity should withhold its aid from an owner who suppresses rather than exploits an invention.

The argument had intuitive appeal. Injunctions are equitable, and equity traditionally weighs the conduct and interests of the parties. Suppressing a useful invention to protect one's other products can look like the opposite of the patent system's purpose of promoting progress. Continental asked the Court to treat that non-use as a reason to deny the injunction.

## The holding: the right to exclude does not depend on use

The Court refused. Justice McKenna's opinion located the answer in the nature of the patent grant itself. A patent gives its owner the right to exclude others from making, using, or selling the invention. That exclusionary right is the substance of what the patent confers. It is not a right to use conditioned on actual use, nor a right that lapses if the owner declines to practice the invention. The patentee's title is exclusive, and exclusivity means the power to keep others out whether or not the owner comes in.

From that premise the conclusion followed. If the patentee has the right to exclude, then an injunction, the ordinary remedy for enforcing a right to exclude, is available to vindicate it. Non-use does not forfeit the right, so non-use does not forfeit the remedy. The Court acknowledged that the patentee had chosen not to use the invention, and even that it might be withholding it, but held that this choice was within the patentee's prerogative. The statutory monopoly carries with it the discretion to use or not to use, and neither the public nor a competitor can compel use as the price of enforcement.

The Court did preserve, in principle, the equitable character of the injunction. It did not say an injunction must issue in every case regardless of circumstances. But it rejected the specific proposition that non-use, standing alone, is a ground for denying relief. In the Court's framework, the patentee's failure to practice the invention was simply not a disqualifying equity.

## The doctrine's long reign and its qualification

For nearly a century, *Continental Paper Bag* underwrote a strong presumption that a patentee who proved infringement and validity would receive a permanent injunction. The Federal Circuit, after its creation in 1982, treated injunctive relief as the general rule, denied only in rare circumstances. Non-practicing entities relied on that presumption: the credible threat of an injunction gave enormous settlement leverage regardless of whether the patent owner made anything.

That regime ended, or at least changed fundamentally, in *eBay Inc. v. MercExchange, L.L.C.*, 547 U.S. 388 (2006). A unanimous Supreme Court held that there is no general rule entitling a prevailing patentee to a permanent injunction. Instead, courts must apply the traditional four-factor test of equity: irreparable injury, inadequacy of legal remedies, the balance of hardships, and the public interest. Justice Thomas's opinion pointedly reaffirmed that a patentee's willingness to license, or its non-use of the patent, does not by itself justify denying an injunction, echoing *Continental Paper Bag*. But by requiring the full equitable analysis, *eBay* made non-use a factor courts could weigh in assessing irreparable harm, rather than the near-irrelevancy it had been.

The result is that *Continental Paper Bag*'s core principle, that non-use does not forfeit the right to exclude, survives, while the automatic-injunction practice that grew up around it does not. A non-practicing patentee is still entitled to enforce its patent, but must now satisfy the equitable factors to obtain an injunction, and its lack of use may make irreparable harm harder to prove.

## Open questions

The interaction of the two cases leaves genuine uncertainty. *eBay* did not overrule *Continental Paper Bag*; it channeled it. How much weight non-use should carry within the four-factor test remains contested, and district courts diverge on whether a licensing-focused patentee can ever show irreparable harm. The rise of standard-essential patents and FRAND commitments has added further complexity, with injunctions sometimes unavailable as a matter of the patentee's own licensing promises. And commentators continue to debate whether the classical right-to-exclude conception of *Continental Paper Bag* is fully compatible with a remedy regime that now turns on case-specific equity. The doctrine sits at the intersection of property theory and equitable discretion, and the balance is still being negotiated.

## Implications for inventors and businesses

- **Owning a patent does not require using it.** *Continental Paper Bag* confirms that non-use is a legitimate exercise of the patent right and does not forfeit enforcement. Portfolio and defensive patenting remain lawful strategies.
- **But an injunction is no longer automatic.** After *eBay*, expect to prove the four equitable factors. A patentee that does not practice the invention should build a record on irreparable harm, for example through exclusive-licensing relationships or direct competitive injury.
- **Non-use cuts against irreparable harm.** For accused infringers, a patentee's failure to use or exclusively license the invention is a point to press against injunctive relief and toward an ongoing-royalty remedy instead.
- **Standard-essential and FRAND commitments can bar injunctions.** Where a patent is encumbered by a licensing commitment, the right to exclude may be limited by the patentee's own promises, independent of the *eBay* analysis.

## Frequently asked questions

**What did Continental Paper Bag decide?** The Supreme Court held that a patentee's failure to use its invention, even a deliberate decision to suppress it to protect other products, does not bar the patentee from obtaining an injunction against infringement. The essence of the patent grant is the right to exclude others, which does not depend on the patentee's own use.

**Does non-use still guarantee an injunction today?** No. *eBay Inc. v. MercExchange, L.L.C.* (2006) rejected any general rule that patentees are automatically entitled to injunctions and required the traditional four-factor equitable test. A patentee's non-use is now one factor courts may weigh, not an irrelevancy, so *Continental Paper Bag*'s near-automatic injunction no longer holds.

**Why do the two cases matter together?** *Continental Paper Bag* and *eBay* bookend the arc of injunction doctrine. The 1908 case treated the right to exclude as nearly absolute regardless of use; the 2006 case restored equitable discretion. Read together they show how the remedy for infringement shifted from presumptive to discretionary.

## Authorities and sources

- *Continental Paper Bag Co. v. Eastern Paper Bag Co.*, 210 U.S. 405 (1908). Opinion via [Cornell LII](https://www.law.cornell.edu/supremecourt/text/210/405) and [FindLaw](https://caselaw.findlaw.com/court/us-supreme-court/210/405.html). Justice Harlan dissented.
- *eBay Inc. v. MercExchange, L.L.C.*, 547 U.S. 388 (2006), restoring the four-factor equitable test for injunctions.
- 35 U.S.C. § 283, authorizing injunctions in accordance with the principles of equity.
- [Wikipedia, "Continental Paper Bag Co. v. Eastern Paper Bag Co."](https://en.wikipedia.org/wiki/Continental_Paper_Bag_Co._v._Eastern_Paper_Bag_Co.), for factual background and the non-use holding.