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.
EDITORIAL NOTE: The decisiondenying Apple’s permanent injunctionwas recently followed by theCAFC decision in Presidiothat tilts the pendulum back toward the awarding of permanent injunctions when competitors are involved. Eric Guttag and I have communicated via e-mail about permanent injunctions. Guttag wrote the following article in 2006. I asked if I could republish it here and he agreed. Here is Guttag’s take on eBay v. MerchExchange.
Justice Clarence Thomas delivered the opinion of a unanimous Supreme Court in eBay v. MerchExchange in 2006.
Once upon a time, the view was that “methods of doing business” could not be patented. That view changed forever with the 1998 case of State Street Bank & Trust Company v. Signature Financial Group Inc. [i] In State Street, the Court of Appeals for the Federal Circuit (Federal Circuit) held there was no “business method” exception to patentability: “Whether the [patent] claims are directed to subject matter within § 101 [ii] should not turn on whether the claimed subject matter does “business” instead of something else. [iii]
In certain quarters, the grant of patents on “business methods” has been increasingly viewed with alarm and concern. One concern is that the holder of such patents could permanently enjoin such infringement, thus potentially increasing the bargaining position of the “business method” patent holder. That concern is very real. For example, in the “non-business method” patent context, the Federal Circuit held in the 1989 case of Richardson v. Suzuki Motor Company that, in view of the recognized “right to exclude” under the patent, “the general rule [is] that an injunction will issue when infringement has been adjudged, absent a sound reason for denying it.” [iv]
On Monday the United States District Court for the Northern District of California refused to issue a permanent injunction against Samsung’s continued infringement of Apple’s patents. That ruling was reached despite the fact that Apple’s patents withstood invalidity challenges from Samsung, despite the fact that Apple prevailed in the patent infringement litigation AND despite the fact that the district court found that Apple and Samsung were direct competitors. For my rant on the decision explaining why it was wrong and the damage done to the patent system by failure to grant permanent injunctions to victorious patentees who are competitors see No Permanent Injunction for Apple in Samsung Patent Battle.
On Wednesday, December 19, 2012, in a wholly unrelated case, but one that shares important factual similarity to the aforementioned Apple/Samsung matter, the United States Court of Appeals for the Federal Circuit determined that the United States Federal District Court for the Southern District of California abused its discretion when it refused to award a victorious patent plaintiff a permanent injunction where the patentee directly competes with the infringer. The case is Presidio Components v. American Technical Ceramics. The opinion was authored by Chief Judge Rader and joined by Judge Plager and Judge Wallach.
Perhaps this case will be a turning point, something of a Twisted Sister moment. You know — “we’re not gonna take it, no, we ain’t gonna take it, we’re not gonna take it anymore…” I sure hope so!
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.”
Many will recall that back in March 2006, the much anticipated patent settlement between Research In Motion, Ltd. (RIM) and NTP, Inc. was finalized for $612.5 million. In the five plus years since that settlement there has been a lot of talk about patent trolls, who are now more frequently referred to by the rather sanitized term “non-practicing entities.” Numerous articles have been written about the plague of patent trolls and many attempts have been undertaken to whittle away at patent rights in an attempt to make it more difficult for non-practicing entities to monetize their patent rights. Meanwhile, practically every independent inventor now believes that they have an invention that some Mega-Giant company is infringing and which entitles them to tens of millions of dollars. After all NTP was successful.
Indeed, over the years since that great NTP-RIM settlement there has been enormous focus on the $600+ million amount, and little on what lead to that settlement and the aftermath of that settlement, which has changed the patent law landscape. In some corners when listening to inventors one might almost start to think that any small company with a patent could easily stand up and take on industry giants. This, after all, was the David and Goliath — NTP v. RIM, right? Not so fast. First, the case was not as simple as it may have seemed. Second, for every David with a patent portfolio, there are numerous Goliaths defending their market shares vigorously. Third, thanks to judicial dislike of patent trolls all non-practicing entities have suffered. In fact, it is now extremely difficult to obtain an injunction as a non-practicing entity.
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 111th Congress once again left patent reform efforts on the table without any resolution or even a vote. That might be just as well given that in the minds of most the patent reform efforts were not truly “reform,” but rather were merely changes that would not have made for a stronger Patent Office or otherwise addressed some of the pressing issues that require Congressional attention.
At some point during 2011, however, I suspect that Congress will become engaged and interested as innovators find themselves on the short end of the Supreme Court sick in the Microsoft v. i4i case. We all know that the Supreme Court only takes patent cases to overrule or at least modify the law of the Federal Circuit. That only makes sense since there is but one Circuit responsible for patent law, thus no splits among the Circuits to resolve. So in taking the Microsoft-i4i case that asks whether there should be as broad a presumption of validity as required under the well-established law of the Federal Circuit, it doesn’t take a rocket scientist to figure out that the presumption of validity will be eroded by the Supreme Court, perhaps in this term. That being the case, it is at least plausible that Congress could be persuaded to become involved, perhaps even undertaking sensible reforms that protect innovators. Yes, I realize how naive that sounds, but please keep reading!
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.
Typically blog roll links are not helpful to a website's rank. To give some additional "link love" to those we think you might be interested in reading we have moved our blog roll and links to a dedicated page. Go to IPWatchdog Blog Roll & Links.