Wednesday, October 12, 2011

CAFC: presumption of irreparable harm is jettisoned

The issue in Bosch v. Pylon was a permanent injunction:

Robert Bosch LLC (“Bosch”) appeals from the order of the United States District Court for the District of Delaware, denying Bosch’s post-trial motion for entry of a permanent injunction. Because the district court abused its discretion when it denied a permanent injunction on this record, we reverse and remand with instructions to enter an appropriate injunction.

The technology was wiper blades:

Beam blades are a relatively new technology that offers several advantages over conventional, or “bracketed,” wiper blades, including more evenly distributed pressure across the length of the blade and better performance in inclement weather.

Of the injunction:

In light of the jury’s determination that Pylon infringed valid claims of the ’905 and ’434 Patents, Bosch moved for entry of a permanent injunction. In a memorandum opinion dated November 3, 2010, the court denied the motion on grounds that Bosch failed to show that it would suffer irreparable harm. At the outset of its analysis, the district court noted an apparent difficulty faced by courts “struggling to balance the absence of a presumption of irreparable harm with a patentee’s right to ex- clude,” and observed that other courts had “frequently focused upon the nature of the competition between plaintiff and defendant in the relevant market in the context of evaluating irreparable harm and the adequacy of money damages.” Robert Bosch LLC v. Pylon Mfg. Corp., 748 F. Supp. 2d 383, 407 (D. Del. 2010). The court also discerned a tendency among district courts to award permanent injunctions: (1) “under circumstances in which the plaintiff practices its invention and is a direct market competitor”; and (2) where the plaintiff’s “patented technology is at the core of its business . . . .” Id. at 407-08.

There was a jurisdiction issue:

Thus, on its face, the district court’s order denying Bosch’s request for a permanent injunction in a patent case falls within the scope of § 1292(a)(1), (c)(1). See Cross Med. Prods. v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293, 1300 (Fed. Cir. 2005) (“Medtronic appeals from an order permanently enjoining Medtronic from infringing the ’555 patent. On its face, the order falls within the scope of § 1292(a)(1), (c)(1).”).

Pylon admits that § 1292(a)(1) provides a sound basis for jurisdiction, but contends that jurisdiction under that section “has not been established.”

The CAFC noted:

This court has made clear that a party appealing an order that expressly grants or denies a permanent injunc- tion need not also demonstrate that the order will have “a serious, perhaps irreparable consequence” and that “the order can be effectively challenged only by immediate appeal.” See Cross Med. Prods., 424 F.3d at 1300. When confronted with this issue in Cross Medical, we explained that these “Carson requirements” apply only where there is no order specifically granting or denying injunctive relief, but the appellant argues that the appealed order has the effect of granting or denying such relief. Id. We also observed that the “Supreme Court [had] confirmed our reading of Carson as applying only to orders that have ‘the practical effect of granting or denying injunctions.’ ” Id. at 1301 (quoting Gulfstream Aerospace Corp. v. May- acamas Corp., 485 U.S. 271, 287-288 (1988) (“Section 1292(a)(1) will, of course, continue to provide appellate jurisdiction over orders that grant or deny injunctions and orders that have the practical effect of granting or deny- ing injunctions and have serious, perhaps irreparable, consequence.” (internal quotation marks omitted)). It is, thus, well-established that, “if the district court’s order expressly grants [or denies] an injunction, the order is appealable under § 1292(a)(1), without regard to whether the appellant is able to demonstrate serious or irreparable consequences.” Id. (quoting 19 James Wm. Moore et al., Moore’s Federal Practice ¶ 203.10[2][a], at 14 (3d ed. 2005)).
In this case, the district court entered an order ex- pressly denying Bosch’s motion for entry of a permanent injunction. The Carson requirements are, thus, inapplicable, and we have jurisdiction under 28 U.S.C. § 1292(a)(1).2

Of the injunction itself, the CAFC started with a reference to eBay:

Consistent with traditional equitable principles, a patentee seeking a permanent injunction must make a four-part showing:
(1) that it has suffered an irreparable 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 the defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). Prior to the Supreme Court’s decision in eBay, this court followed the general rule that a permanent injunction will issue once infringement and validity have been adjudged, absent a sound reason to deny such relief. See, e.g., Richardson v. Suzuki Motor Co., 868 F.2d 1226, 1247 (Fed. Cir. 1989) (citing W.L. Gore & Assocs., Inc. v. Garlock, Inc., 842 F.2d 1275, 1281 (Fed. Cir. 1988)).

Of irreparable harm:

In eBay, the Supreme Court made clear that “broad classifications” and “categorical rule[s]” have no place in this inquiry. 547 U.S. at 393. Instead, courts are to exercise their discretion in accordance with traditional principles of equity. Id. at 394. The Supreme Court, however, did not expressly address the presumption of irreparable harm, and our subsequent cases have not definitively clarified whether that presumption remains intact. See Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 702 (Fed. Cir. 2008) (“It remains an open question whether there remains a rebuttable presumption of irreparable harm following eBay.” (internal quotation marks and citation omitted)).4 Our statements on this topic have led one district court judge to conclude that “the presumption of irreparable harm is at best on life support.” Red Bend Ltd. v. Google, Inc., 2011 WL 1288503, at *18 (D. Mass. Mar. 31, 2011) (citations omit- ted). We take this opportunity to put the question to rest and confirm that eBay jettisoned the presumption of irreparable harm as it applies to determining the appropriateness of injunctive relief. In so holding, we join at least two of our sister circuits that have reached the same conclusion as it relates to a similar presumption in copyright infringement matters. See Perfect 10, Inc. v. Google, Inc., --- F.3d ---, 2011 WL 3320297, at *4 (9th Cir. Aug. 3, 2011) (“[W]e conclude that our longstanding rule that a showing of a reasonable likelihood of success on the merits in a copyright infringement claim raises a presumption of irreparable harm is clearly irreconcilable with the reasoning of the Court’s decision in eBay and has therefore been effectively overruled.” (internal quotation marks and citations omitted)); Salinger v. Colting, 607 F.3d 68, 76-78 (2d Cir. 2010) (finding that eBay abrogated the presumption of irreparable harm in copyright cases).


Although eBay abolishes our general rule that an injunction normally will issue when a patent is found to have been valid and infringed, it does not swing the pendulum in the opposite direction. In other words, even though a successful patent infringement plaintiff can no longer rely on presumptions or other short-cuts to support a request for a permanent injunction, it does not follow that courts should entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude. Indeed, this right has its roots in the Consti- tution, as the Intellectual Property Clause of the Consti- tution itself refers to inventors’ “exclusive Right to their respective . . . Discoveries.” U.S. Const. art. I, § 8, cl. 8 (emphasis added). Although the Supreme Court disap- proved of this court’s absolute reliance on the patentee’s right to exclude as a basis for our prior rule favoring injunctions, that does not mean that the nature of patent rights has no place in the appropriate equitable analysis. See eBay, 547 U.S. at 392 (“According to the Court of Appeals, this statutory right to exclude alone justifies its general rule in favor of permanent injunctive relief. But the creation of a right is distinct from the provision of remedies for violations of that right.”). While the pat- entee’s right to exclude alone cannot justify an injunction, it should not be ignored either. See Acumed LLC v. Stryker Corp., 551 F.3d 1323, 1328 (Fed. Cir. 2008) (find- ing in a post-eBay decision that, “[i]n view of that right [to exclude], infringement may cause a patentee irreparable harm not remediable by a reasonable royalty”).

Justice Holmes is quoted:

The abolition of categorical rules and the district court’s inherent discretion to fashion equitable relief, moreover, also do not mandate that district courts must act on a clean slate. “Discretion is not whim, and limiting discretion according to legal standards helps promote the basic principle of justice that like cases should be decided alike.” eBay, 547 U.S. at 395 (Roberts, J., concurring) (quoting Martin v. Franklin Capital Corp., 546 U.S. 132, 139 (2005)). In this area, as others, “a page of history is worth a volume of logic” when “it comes to discerning and applying those standards.” Id. (quoting New York Trust Co. v. Eisner, 256 U.S. 345, 349 (1921) (Holmes, J.)).

Of the four-factor inquiry:

Over the past quarter-century, this court has encountered many cases involving a practicing patentee seeking to permanently enjoin a competitor upon an adjudication of infringement. In deciding these cases, we have developed certain legal standards that inform the four-factor inquiry and, in particular, the question of irreparable harm. While none of these standards alone may justify a general rule or an effectively irrebuttable presumption that an injunction should issue, a proper application of the standards to the facts of this case compels the conclu- sion that Bosch is entitled to the injunction it seeks. It is in ignoring these standards, and supplanting them with its own, that the district court abused its discretion.

As to the details of this case:

While we agree that the district court did not establish categorical rules, we nevertheless conclude that the district court committed legal error by the weight given to the factors cited, and made a clear error in judgment in its analysis of the irreparable harm factor. Specifically, while facts relating to the nature of the competition between the parties undoubtedly are relevant to the irreparable harm inquiry, the court erred in relying exclusively on the presence of additional competitors and on the non-core nature of Bosch’s wiper blade business.

Error of judgment:

In addition, the court committed a clear error of judgment when it concluded that Bosch failed to demonstrate irreparable harm in the face of overwhelming evidence to the contrary. This is particularly true in light of Bosch’s evidence of: (1) the parties’ direct competition; (2) loss in market share and access to potential customers resulting from Pylon’s introduction of infringing beam blades; and (3) Pylon’s lack of financial wherewithal to satisfy a judgment. Given these facts, there is “no basis on which the district court rationally could have” concluded that Bosch failed to show irreparable harm. See Datascope, 879 F.2d at 828. We first address the court’s legal errors and then turn to the clear error of judgment.

Of additional competitors:

The court’s first legal error lies in its conclusion that the presence of additional competitors, without more, cuts against a finding of irreparable harm. It is well- established that the “fact that other infringers may be in the marketplace does not negate irreparable harm.” Pfizer, Inc. v. Teva Pharms. USA, Inc., 429 F.3d 1364, 1381 (Fed. Cir. 2005). As we explained in Pfizer, a pat- entee need not sue all infringers at once. Id. “Picking off one infringer at a time is not inconsistent with being irreparably harmed.” Id. Were we to conclude otherwise, we would effectively establish a presumption against irreparable harm whenever the market contains a plural- ity of players. Under such circumstances, the first in- fringer sued could always point to the existence of additional competitors.

Of non-core business:

The court also erred in relying on the “non-core” na- ture of Bosch’s wiper blade business in relation to its business as a whole. As other courts have concluded, the fact that an infringer’s harm affects only a portion of a patentee’s business says nothing about whether that harm can be rectified. See, e.g., Hoffman-LaRoche, Inc. v. Cobalt Pharma. Inc., No. 07-cv-4539, 2010 U.S. Dist. LEXIS 119432, at *36-37 (D.N.J. Nov. 10, 2010) (“Cobalt points to Roche’s size and profitability, and the small impact the likely harms would have on Roche’s overall profitability. That says nothing about whether such harms are irreparable.”). Injuries that affect a “non-core” aspect of a patentee’s business are equally capable of being irreparable as ones that affect more significant operations.

Of judgment:

In addition to these legal errors, the district court committed a clear error in judgment when it concluded that Bosch failed to demonstrate irreparable harm. The record here contains undisputed evidence of direct compe- tition in each of the market segments identified by the parties. Bosch also introduced unrebutted evidence of loss of market share and access to potential customers, as well as Pylon’s inability to satisfy a judgment. The dis- trict court, however, did not address any of this evidence, but, instead, focused on: (1) the absence of a two-player market; (2) the non-core nature of Bosch’s wiper blade business; and (3) Bosch’s alleged failure to define a rele- vant market. In view of the entirety of the record, we are left with the firm conviction that there is no basis on which the district court rationally could have concluded that Bosch failed to demonstrate irreparable harm. We begin with an overview of the nature of competition between the parties before turning to the parties’ arguments regarding harms arising from Pylon’s competition with Bosch and Pylon’s apparent inability to satisfy a judgment.

The conclusion:

For the foregoing reasons, and because we find that Pylon’s remaining arguments are without merit, we reverse the district court’s denial of Bosch’s motion for entry of a permanent injunction and remand for entry of an appropriate injunction.

Judge Bryson dissented in part:

I agree with the majority that the district court erred in its application of the eBay factors, and I therefore agree that we should not affirm the district court’s order denying an injunction. However, I disagree with the majority’s decision that the record compels the issuance of an injunction and I therefore dissent with respect to that aspect of this court’s judgment.


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