Tuesday, June 20, 2006

Which is the first post-eBay district court injunction case?

The blog IP Updates refers to the z4 case as being the first post-eBay permanent injunction decision: "The first, post-eBay patent injunction decision in z4 Technologies, Inc. v. Microsoft Corp., __ F.Supp.2d __ (E.D.Texas 2006)(Davis, J.)(citing eBay, Inc. v MercExchange, LLC, 126 S.Ct. 1837, 1839 (2006)) is perhaps most-notable for its discussion of 1) the lack of irreparable harm suffered by z4 and 2) the adequecy of remedies at law to compensate z4 for use of its product activation technology by Microsoft's Windows XP and Office software..."

The z4 decision was filed June 14, 2006 (Judge Leonard Davis).

In KEG TECHNOLOGIES, 2006 U.S. Dist. LEXIS 37726 (decided June 8, 2006), the district court cited eBay, Inc. v. MercExchange, LLC, -- U.S. --, 126 S. Ct. 1837, 164 L. Ed. 2d 641 (2006).

Of satisfaction of the four factor test in eBay, the district court noted: In the instant case, the Court finds that the evidence of record adequately demonstrates satisfaction of the first [irreparable injury] and fourth [public interest] elements of the foregoing test. But Plaintiffs did not show, and indeed, had little if any notice of the need to show, satisfaction of the remaining two elements, i.e., that a
monetary award would be inadequate, and that the balance of hardships tips in
their favor.

Thus, ND Georgia made the first post-eBay determination on irreparable injury in a patent case.

An interesting aspect of the eBay decision arises in the area of permanent injunctions, not necessarily in patent law. In ZEN INVESTMENTS, 2006 U.S. Dist. LEXIS 37171 (decided June 2, 1006), the court noted: The Third Circuit has been unsettled n5 on whether a plaintiff must prove irreparable harm to receive a permanent injunction, as opposed to a preliminary injunction which always requires a showing of irreparable harm.

One wonders how the Third Circuit could have considered the requirement for "irreparable harm" to be unsettled in a permanent injunction if the Supreme Court already had created a list of four factors including "irreparable harm." That's an interesting point.

The pertinent text in the Supreme Court eBay decision is the following:

According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable [164 L. Ed. 2d at 646] injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. See, e.g., Weinberger v. Romero-Barcelo, 456 U.S. 305, 311-313, 102 S. Ct. 1798, 72 L. Ed. 2d 91 (1982); Amoco Production Co. v. Gambell, 480 U.S. 531, 542, 107 S. Ct. 1396, 94 L. Ed. 2d 542 (1987).

Hmmm, the Supreme Court cites to Amoco Production, which is a PRELIMINARY INJUNCTION case. ["Accordingly, the Ninth Circuit erred in directing the issuance of a preliminary injunction.'] For example: The Court of Appeals' direction of a preliminary injunction conflicted with Weinberger v. Romero-Barcelo, 456 U.S. 305 , and was [480 U.S. 531, 532] in error. The only mention of the words "permanent injunction" in Amoco is in footnote 12: Finally, the Ninth Circuit distinguished Romero-Barcelo on the ground that the District Court in that case refused to issue a permanent injunction after a trial on the merits whereas in this case the District Court denied preliminary injunctive relief. We fail to grasp the significance of this distinction. The standard for a preliminary injunction is essentially the same as for a permanent injunction with the exception that the plaintiff must show a likelihood of success on the merits rather than actual success. See, e. g., University of Texas v. Camenisch, 451 U.S. 390, 392 (1981).

One will not find the four factors enumerated in Amoco. One will find the text:
We reviewed the well-established principles governing the award of equitable relief in federal courts. 456 U.S. at 311-313. In brief, the bases for injunctive relief are irreparable injury and inadequacy of legal remedies. In each case, a court must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief. Although particular regard should be given to the public interest, "[t]he grant of jurisdiction to ensure compliance with a statute hardly suggests an absolute duty to do so under any and all circumstances, and a federal judge sitting as chancellor is not mechanically obligated to grant an injunction for every violation of law." Id., at 313.

Ironically, the bigger impact of eBay may be in non-patent cases!

[IPBiz post 1679]


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