Wither Irreparable Harm? The Federal Circuit Eliminates the Presumption of Irreparable Harm in Patent Infringement Lawsuits
One of the most attractive and valuable features of patent ownership is the ability to control the use of your invention by others. A patent on a key technological advance can convey significant market power, but only if you can ensure that your competitors are prohibited from using your invention without permission and payment. Plaintiffs in patent infringement cases frequently seek damages for lost profits and award of reasonable royalties, but one of the most powerful awards is a permanent injunction. In a permanent injunction, the court orders the defendant to stop using or selling the patented technology for the life of the patent, and violation of the order is punishable by contempt of court. A permanent injunction is a form of equitable relief, and requires the plaintiff to prove four factors before the court will grant an injunction: (1) that the plaintiff has suffered irreparable harm, (2) that money damages are inadequate to compensate the injury, (3) that considering the balance of hardships between the parties, an injunction is appropriate, and (4) that a permanent injunction would not harm the public interest.
Before 2006, the courts followed a general rule that a permanent injunction was appropriate once the plaintiff had proven the patent’s validity and the defendant’s infringement. The basis of the general rule was a presumption of irreparable harm in patent infringement cases. All that changed after the Supreme Court’s 2006 decision in eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006). In eBay, the Supreme Court struck down the general rule, and required the courts to address each of the four factors listed above before granting a permanent injunction. But the Supreme Court did not directly address the effect of their ruling on the presumption of irreparable harm.On October 13, 2011, in Robert Bosch LLC v. Pylon Mfg. Corp., the Federal Circuit made it clear that the presumption was dead, joining the 9th and 2nd Circuits in ruling that the Supreme Court’s decision in eBay eliminated the presumption of irreparable harm. In Bosch, windshield wiper maker Robert Bosch sued Pylon for infringement of several patents covering “beam-type” wiper blades. After proving the validity of the applicable patents, and Pylon’s infringement, Bosch asked the district court to issue a permanent injunction. The district court denied the request, finding that the presence of additional competitors in the market and the fact that wiper blades were a “non-core” part of Bosch’s business, meant that continuing infringement would pose no irreparable harm. Bosch appealed to the Federal Circuit Court of Appeals.
The Federal Circuit first recognized that eBay eliminated the presumption of irreparable harm. But the appeals court took issue with the district court’s findings that the presence of additional competitors and the status of wiper blades as a “non-core” business justified denial of a permanent injunction. The court took great pains to make it clear that the removal of the presumption of irreparable harm did not take permanent injunctions off the menu. As long as the plaintiff can prove all four factors required for injunctive relief, the court should grant the injunction. Although a finding that the patented invention was part of a core business model would support a permanent injunction, the absence of that fact does not require denial. Indeed, the court noted, “[i]njuries that affect a “non-core” aspect of a patentee’s business are equally capable of being irreparable as ones that affect more significant operations.” Reviewing the facts in this case, the Federal Circuit concluded that a permanent injunction was justified, and reversed the district court’s denial.
Thus, going forward, a permanent injunction may be more difficult to obtain than it was five years ago, but it is by no means impossible. In many cases, a patentee’s damages can be measured in lost sales and missing royalties, and a permanent injunction may not be necessary. Other times, the nature of the product and the company’s business model demand the protection that can only be provided with a permanent injunction. In those cases, it’s good to know that the elimination of a presumption does not result in the elimination of relief.
For more information on the subject of this article, contact the author of this article, or the Larkin Hoffman attorney who customarily handles your matters. Larkin Hoffman Daly & Lindgren Ltd. has proudly served the legal and business counseling needs of clients since 1958. The firm includes over 70 attorneys serving clients’ legal needs throughout the state, the country and around the globe. As a full-service law firm, it provides counsel and legal guidance in more than 20 areas of law to clients ranging from individuals to emerging companies and Fortune 500 corporations.While the information provided in this publication is believed to be accurate, it is general in nature and should not be construed as legal advice. You should consult an attorney for advice regarding your individual situation.