Since the Supreme Court’s ruling in eBay v. MercExchange, permanent injunctions in patent infringement cases have issued in accordance with a four-factor equitable test. One of the factors considers the presence of irreparable injury, which is harm not quantifiable or remediable as money damages. For the factor to be satisfied – for an injunction to issue – it must be determined that damages associated with ongoing infringement are economically incalculable. This factor, unpopular as it may be among some observers, has regularly been pointed to by Courts as conclusive in their decisions to issue or deny injunctions. Yet the factor is often analyzed only superficially, and even unpredictably.
Due to a lack of clarity about issues that render forward-looking damages quantifiable or not, Courts’ post-eBay analyses of irreparable harm have inconsistently addressed calculability. As a result of this inconsistency, there has been significant uncertainty among litigants regarding the likelihood of injunction following a finding of infringement. This was perhaps most visibly illustrated in the recent (and widely unexpected) denial of an injunction in the Apple v. Samsung matter.
Yesterday, the Judge Koh of the United States District Court for the Northern District of California, San Jose Division, denied Apple’s request for a permanent injunction in their ongoing patent war over smartphones with Samsung. The denial of the injunction will allow Samsung to continue to sell devices found to infringe Apple’s patents. See Order Denying Motion for Permanent Injunction.
This outcome is becoming all too commonplace ever since the United States Supreme Court issued its terribly damaging, misguided decision in eBay v. MercExchange. See Happy 5th Birthday eBay v. MerchExchange.Up until that decision a permanent injunction was nearly always granted to a victorious patent owner. That, of course, made perfect sense since the rights that are allegedly granted in a U.S. patent include THE RIGHT TO EXCLUDE! I know it is bad form to yell like that, but it is mind boggling to me still to this day. How can the Justices of the Supreme Court who profess to know everything about everything simply not comprehend something as simple and straight forward as the EXPLICIT TERMS OF THE PATENT GRANT! There I go again. Yelling at those who are so poorly informed as the Supreme Court likely isn’t going to help. It is, however, rather cathartic!
In eBay the Supreme Court determined that the familiar principles of equity as applied to permanent injunctions should apply to disputes arising under the Patent Act, even though the patent right is itself a right to exclude. The translation: the previously applied bright-line rule that resulted in permanent injunctions being issued as a matter of course was erased. That makes sense to no one who has thoughtfully considered the issue. Anyone who disagrees with that comment is either (1) not being honest; (2) hasn’t really considered the issues and equities; or (3) has a vested interest that requires them to engage in intellectually dishonest reasoning. The only reason to get a patent is to exclude others. That is why you pay so much money and why you spend so many years waiting for a patent — to exclude others. And what is an injunction? An injunction is only an order from a district court demanding that the loser (i.e., infringer) cease from ever doing the very thing that the patent says they cannot do.
Last week at the 6th Annual Patent Law Institute presented by the Practising Law Institute last week in New York City I found myself a little star struck; or maybe “surprised” is the right way to characterize it. The term “All Star Panel” is thrown around too liberally in the CLE world and relative to programming at various annual meetings. Having said that, the panel titled “Dialogue Between the Bench and Bar” was comprised of some of the biggest names in the industry, and they didn’t seem interested in pulling punches. Nothing seemed sacred, at least in terms of topics, which lead to a lively and entertaining discussion that lasted 90 minutes without a single question from either the live audience or the webcast audience.
The panel that ended the first day of the program was moderated by Don Dunner of Finnegan, Henderson, who is the unofficial “Dean of Federal Circuit Advocates.” I had the pleasure of interviewing Dunner nearly a year ago and always enjoy listening to his thoughts and soaking in his wisdom. To his left was Chief Judge Randall Rader of the United States Court of Appeals for the Federal Circuit, and to Rader’s left was Seth Waxman former Solicitor General of the United States and now of Wilmer Hale. To Dunner’s right was Judge William Young of the United States Federal District Court for the District of Massachusetts, and to Young’s right was John Whealan, currently of George Washington Law School and former USPTO Solicitor.
The discussion was lively, perhaps even explosive. You could nearly see sparks fly when Chief Judge Rader continued to pepper Waxman with question after question about his opinion on the propriety of parties lobbying the White House in order to obtain a favorable amici brief from the Department of Justice. Rader zeroed in on the slippery slope and obviously is not pleased with the mixing of law and politics, saying: “this is a cause for concern… Politics and law have a divide.”
As anyone who follows the United States Supreme Court knows, the Court has historically been extremely fond of taking important cases, with cutting edge issues, only to dodge the real issues and address some insignificant procedural or hyper-technical issue. Such disappointment is all to frequent, so Supreme Court watchers are seldom surprised when the Court passes on an opportunity to breathe clarity into otherwise unsettled waters. But what the Supreme Court did five years ago today in the eBay v. MercExchange case was far more sinister than merely refusing to address important issues of the day. The Supreme Court decided to throw out long standing and well established Federal Circuit jurisprudence and offered little or nothing in its place.
According to research Patstats.org, which is an ongoing patent statistics project by the University of Houston Law Center, since the Supreme Court’s decision in eBay v. MercExchange (through April 11, 2011) there have been 131 cases where a permanent injunction has issued and 43 cases where a permanent injunction has been denied. Some have tried to pass this off as not much of a departure from the practice prior to the Supreme Court’s decision. Such a viewpoint is, however, not correct. Prior to the Supreme Court’s decision it was virtually unheard of for a district court to deny a victorious plaintiff a permanent injunction in patent infringement case. So the Supreme Court’s decision in eBay v. MercExchange has been one that has significantly altered the patent litigation landscape and, therefore, is easily one of the most important Supreme Court patent cases in recent memory.
The January 17, 2011, edition of Fortune magazine has Chief Justice John Roberts on the cover. Roberts is the Chief Justice of the United States Supreme Court, a Court now made up predominantly of conservatives by a 5 to 4 majority. It is the contention of the author of the article on Roberts that the Roberts Court is the most pro-business Court the United States has ever seen. If that is the case, which I am not at all sure is the case, it would have to mean that one can be “pro-business” while being “anti-patent,” which given the state of American manufacturing and the future of the U.S. economy seems questionable.
Of course, if you are anti-patent then you are anti-innovation because those who innovate are not the behemoths of industry, but rather start-up companies that absolutely require patents in order to attract funding, expand and create jobs. Thus, given the hostility toward patents it is entirely accurate to characterize the Roberts Court as anti-innovation. The Roberts Court increasingly puts hurdles in the way of high-tech job growth. You see, it is easy for anyone to characterize the Supreme Court as “pro-business” because selecting a victor in a “business case” almost necessarily means that a business has been victorious. But what business? One that is likely to innovate, expand, create jobs and form new industry? Or one that once innovated and expanded, but now finds themselves stagnant and laying off employees?
John Roberts, Chief Justice of the United States Supreme Court
The latest edition of Fortune magazine has John Roberts, Chief Justice of the United States Supreme Court, on the cover. The Fortune cover proclaims that it will be taking “an unflinching look at the man who is presiding over the most pro-business court we have ever seen.” As I read that I couldn’t help but chuckle. Really!?!? The Roberts Court is the most pro-business court we have ever seen? I knew right away that this article couldn’t be about patents, or even mention patents, and I wondered how the article would treat the failure to get involved in the Chrysler bankruptcy, which fundamentally altered investors expectations in public companies beholden to unions. So how can it be that the Roberts Court, which has shown hostility toward innovators and contempt for patents that is unusual, is considered pro-business? On top of that, the Roberts Court seems poised to strike at the very heart of the patent right granted by the United States federal government; namely the presumption of validity. That sure doesn’t sound very pro-business to me.
Microsoft has been on a long losing streak when it comes to i4i’s U.S. Patent No. 5,787,449. It is now trying to turn that streak around, by filing this past Tuesday another reexamination request against the ‘449 patent.
An East Texas jury found that the ‘449 patent was valid and infringed by Microsoft Word 2003 and Microsoft Word 2007 that contained custom XML. Judge Leonard Davis ordered Microsoft to pay i4i $290 million. This past December, the Court of Appeals for the Federal Circuit affirmed the judgment against Microsoft. In July the U.S. Patent Office concluded a reexamination of the ‘449 patent, confirmed that it was valid of certain prior art references submitted by Microsoft.
The sequence of events of In re Swanson is well known. A jury determined that the patent was valid and infringed. The trial court’s judgment based on the jury’s verdict was affirmed by the CAFC. The accused infringer then filed a reexamination request, and the PTO rejected the claims. The CAFC affirmed the rejection, despite having earlier found the claims to be valid – the CAFC reconciled these apparently contradictory results by noting that validity is a different issue at the PTO than it is in court. This surprising outcome in Swanson is one of the reasons that reexamination is so popular among accused infringers.
Judge James Cohn of the Southern District of Florida has now taken the Swanson approach one step further – in Flexiteek Americas v. PlasTEAK (Case No. 08-60996-civ-Cohn/Seltzer) he has withdrawn a permanent injunction on basis of an advisory action in a reexamination, which found the patent-in-suit to be invalid.
Last summer J.D. Salinger sued the author/publisher of the book entitled “60 Years Later Coming Through the Rye” for copyright infringement. Salinger claimed that the book was a sequel to his famous book entitled “Catcher in the Rye” and therefore it was an infringing derivative work. Salinger sought and the district court granted a preliminary injunction barring publication of the book. On appeal, the U.S. Court of Appeal for the Second Circuit vacated the preliminary injunctionon April 30, 2010 and remanded the case to the district court.
Interestingly, the Second Circuit agreed with the district court that Salinger is likely to ultimately prevail in his lawsuit because the book is probably an infringing work which is not protected by the fair use exception to copyright infringement. However, the Second Circuit remanded because it held that the test used by the district court to decide whether to issue a preliminary injunction was no longer the proper test to use in light of the 2006 Supreme Court decision in eBay v. MercExchange, 547 U.S. 388.
In news that has already spread across the Internet like a wildfire, Eastman Kodak Company has sued Apple, Inc., alleging that Apple infringes numerous Kodak patents associated with the iPhone, iPod Touch and various Mac computers. News reports also indicate that Kodak has sued Research in Motion (RIM), maker of the Blackberry. As yet I have not seen a copy of the complaint filed by Kodak against RIM, but courtesy of the Docket Report, the two complaints filed by Kodak against Apple in the United States Federal District Court for the Western District of New York appeared in my inbox this morning. As should be apparent to everyone, the Docket Reportis a new advertiser on IPWatchdog.com, so you can take this with a grain of salt if you like, but the truth is the Docket Report is exceptionally detailed and shows up every morning with dozens of patent complaints and district court Orders. If you are trying to keep up with what is going on in the world of patent litigation it is an absolute must, and the best part is you can try it for free for a full month.
Returning to the matter at hand here, there is one thing that must be said immediately about Kodak suing Apple and RIM. Typically when large corporations sue other large corporations there is not all that much interest in taking the matter all the way through litigation to a court ordered disposition. Most times large companies sue each other for posturing purposes and to facilitate getting a better deal at the bargaining table. While there is some evidence to suggest that could be the case, with the presence of Kodak in any patent litigation one must stand up and take notice. Kodak was the defendant in the 15-year patent battle with Polaroid over instant camera technology. Kodak ultimately paid $925 million to Polaroid in 1991, and both Kodak and Polaroid spent several hundreds of millions of dollars in attorneys fees. So make no mistake, Kodak is no stranger to high stakes patent litigation. So pundits and observers can sit back and be thankful for a true heavyweight match of epic proportions could well be on the horizon and could well run for many years to come.
On December 21, 2009, I embarked upon identifying the top 10 patent stories of the decade, which ends as we usher in the new year. The Top 10 Part 1 identified what I thought were in the bottom half of the top 10, and while any top 10 list is sure to be at least somewhat controversial, it seems as if the list hasn’t created too much of a stir, at least so far. Undoubtedly, once I set out the top 5 the real debating will begin as folks suggest what they would have preferred instead. Notwithstanding, I really cannot imagine any bigger stories than the top 5 below. Please also feel free (and I am sure you will) to point out things that I missed or clearly got wrong, at least in your opinion.
Without further ado, in descending order, here is Part 2 of my Top 10 Patent Related Stories of the Decade, with numbers 5 through 1. Up next, honorable mentions, which will be Part 3.
By now most probably know that the United States Court of Appeals for the Federal Circuit granted Microsoft a stay of the injunction against Word pending its expedited patent appeal. The Federal Circuit granted the stay of the permanent injunction on September 3, 2009, but I had a very difficult time finding the ruling. Being ever suspicious of the popular press given that they get patent news wrong more often than they get it right, I set out searching for the order to confirm it before I wrote out it. I could find the Federal Circuit ruling no where. It was not on the Federal Circuit Motion page, it was not on the Federal Circuit Opinions & Orders page, and I looked through the Federal Circuit PACER database, which incidentally has the most illogical set up I have ever seen, and I still couldn’t find it. I gave up and wrote Federal Circuit Grant Stay to Microsoft Injunction? I was not about to continue on a wild goose chase, and with such an important Order why would the Federal Circuit go to such lengths to hide it? I didn’t know, didn’t care and was frustrated. Then someone pointed out to me in a comment that it was on PACER, just indexed under the filing date of Microsoft’s request for the stay rather than the date it was granted, which is ridiculous enough, but then things took a much weirder turn for me. I HATE VISTA!!!!!
Perhaps you have come across this story in the popular press over the last day. It seems to be widely reported that Microsoft has convinced the United States Court of Appeals for the Federal Circuit to grant a stay of the permanent injunction issued against the Redmond, WA based company relative to its popular word processing software – Word. I cannot say that the Federal Circuit has not granted a stay, but I see absolutely no evidence that a stay has been granted. If the Federal Circuit has granted a stay they are doing a wonderful job at keeping it secret and holding it very close to the vest so that no one can actually read the Order.
Yesterday, Leonard Davis, a United States District Court Judge in the Eastern District of Texas, ordered Microsoft Corporation to stop selling Word, an order that becomes effective in 59 days (i.e., 60 days from yesterday). The permanent injunction issued after the conclusion of a patent infringement lawsuit brought by i4i Limited Partnership, a litigation where Microsoft was found to infringe U.S. Patent No. 5,787,449, which is titled Method and system for manipulating the architecture and the content of a document separately from each other. This permanent injunction follows a $200 million verdict against Microsoft, a verdict which issued in late May 2009. Shortly after the verdict was announced, Michel Vulpe, founder of i4i and inventor of the patent, said: “We are very pleased with the verdict. The jury heard extensive testimony and evidence and concluded that Microsoft had indeed infringed our patent. We feel vindicated with this result.” Not surprisingly, According to USA Today, Microsoft plans to appeal. A spokesman for Microsoft said: “We are disappointed by the court’s ruling. We believe the evidence clearly demonstrated that we do not infringe and that the i4i patent is invalid.”
How to Write a Patent Application is a must own for patent attorneys, patent agents and law students alike. A crucial hands-on resource that walks you through every aspect of preparing and filing a patent application, from working with an inventor to patent searches, preparing the patent application, drafting claims and more. The treatise is continuously updated to address relevant Federal Circuit and Supreme Court decision impacting patent drafting.
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