Genband US LLC v. Metaswitch Networks Corp., No. 2017-1148, 2017 U.S. App. LEXIS 12233 (Fed. Cir. July 10, 2017) (Before Lourie, Taranto, and Chen, J.) (Opinion for the court, Taranto, J.).
Genband US LLC sued Metaswitch Networks Corp. and Metaswitch Networks Ltd. for patent infringement. A jury found that Metaswitch infringed various claims of several of Genband’s patents, and that the claims at issue had not been proven invalid. Thereafter Genband sought a permanent injunction, which the district court denied based on the determination that Genband had not established irreparable harm from the infringing activities. That conclusion by the district court, according to the Federal Circuit, may have relied on too stringent an interpretation of the requirement for an injunction that the allegedly irreparable harm is being caused by the infringement.
The district court denied a request for a permanent injunction against Metaswitch after a jury found infringement because Genband failed to establish irreparable harm. More specifically, the court found that Genband failed to establish a causal-nexus between infringement and irreparable harm, i.e. that “the patent features drive demand for the product.” The Federal Circuit remanded because this causal-nexus requirement was too stringent. The Federal Circuit explained that the court could not have confidence as to the answer to the causation question under the standard properly governing the inquiry or whether there is any independent ground for the district court finding no irreparable harm or otherwise denying an injunction.
To define the causal-nexus requirement, the Court examined its precedents in the numerous “Apple Cases.” The “drive demand” formula applied by the district court “is susceptible to importantly different interpretations, some stricter, some more flexible.” Instead, the Court found that the standards elucidated in “Apple III and Apple IV” govern the inquiry, “at least in a multi-purchaser, multi-component situation.” That standard requires “some connection” and it “just means that there must be proof that the infringement causes the harm.” The Court went on to elucidate that the correct standard reflects “general tort principles of causation” and makes the production of proof “practical.” The Court remanded to the district court so that it could evaluate the merits of a permanent injunction, including the application of the correct causal-nexus standard.
In a multi-purchaser, multicomponent situation, establishing a causal-nexus for a permanent injunction requires some connection between the infringement and harm to the patentee, which can be less demanding than showing that the infringement drove demand for the infringing product.