February 10, 2010
Law360
By Lily Lim; Elizabeth A. Niemeyer
Authored by Lily Lim and Elizabeth A. Niemeyer
As a result of eBay Inc. v. MercExchange LLC, 547 U.S. 388 (2006), and Kyocera Wireless Corp. v. International Trade Commission, 545 F.3d 1340 (Fed. Cir. 2008), the availability of injunctive relief and the procedures for seeking such relief has changed both in the district courts and at the International Trade Commission. This article provides an update on how district court and ITC practice has adapted to those decisions limiting injunctive relief.
In 2006, the Supreme Court issued its decision in eBay, increasing the hurdles patentees had to jump in district courts in order to enjoin an infringer. The Supreme Court unanimously overruled the Federal Circuit's general rule that presumed irreparable harm for infringement of a valid patent.
Instead, the court required the application of the four-factor test in patent cases to determine whether or not to issue an injunction.
Those four factors are: (1) whether the patentee has suffered irreparable injury (2) whether remedies at law are inadequate to compensate for the injury (i.e., monetary damages are not sufficient), (3) whether the balance of hardships warrants a remedy for plaintiff, and (4) whether the public interest is not disserved by a permanent injunction.
After the issuance of eBay, the percentage of injunctions granted by district courts after a finding of infringement dropped from approximately 95 percent to approximately 72 percent, according to some aggregate studies.1 2
Although those aggregate numbers are telling of a general decrease in the likelihood of an injunction being granted, a closer examination of how the factors weigh for or against an injunction in a particular field would be warranted for any patentee who is considering pursuing injunctive relief.
In examining the post-eBay patent cases involving the medical field, including such subject matter as medical devices as well as pharmaceuticals, the last eBay factor, public interest, appears to play a more important role for that field. District courts are receptive to hearing evidence from accused infringers of the public need for additional medical treatments.
As an example, in Bard Peripheral Vascular v. W.L. Gore, 2009 WL 920300 (D. Ariz. Mar. 31, 2009), the district court determined that public interest favored denying an injunction because the accused infringer's vascular graft played an important role in aiding vascular surgeons in performing life saving medical treatments.
Similarly, with respect to infringing drug-eluting stents, another district court determined that public interest was better served by making the most medical devices available to the public and denied injunctive relief. Advanced Cardiovascular v. Medtronic Vascular, 2008 WL 4647384 (N.D. Cal. Oct. 20, 2008).
The public interest factor is not given much weight, however, when district courts have considered whether to enjoin an infringing generic drug manufacturer. District Courts appear to have little sympathy for generic drug manufacturers.
For instance, preliminary injunctions were issued against generics drug manufacturers prohibiting them from supplying a generic version of a drug for treating Alzheimer's disease, nutritional supplements for pregnant women, and the Clarithromycin antibiotic used for treating tonsillitis and sinus infections.
See e.g., Everett Labs v. Breckenridge Pharm., 573 F. Supp. 2d 855 (D.N.J 2008 ), Eisai v. Teva, 2008 WL 1722098 (D.N.J Mar. 28, 2008), Abbott v. Sandoz, 500 F.Supp. 2d 807 (N.D. Ill. 2007), affirmed 544 F.3d 1341 (Fed. Cr. 2009).
In addition, public interest is not a controlling factor when the accused infringer competes head-to-head with the patentee. Amgen v. F. Hoffman-La Roche, 581 F. Supp. 2d 160 (D. Mass. 2008) (granting injunction).
Thus, in patent cases, although the overall likelihood of obtaining injunctive relief in a district court has decreased, examination of patent cases in particular fields of technology provides additional insight because certain facts tend to influence the likelihood of obtaining an injunction.
Because the eBay decision decreased the likelihood of obtaining a permanent injunction in district court, many patentees might now also consider pursuing patent infringement claims in the ITC where the eBay decision does not apply. However, the rules have changed in the ITC too regarding the procedures needed to obtain meaningful injunctive relief.
In Kyocera Wireless Corp. v. International Trade Commission, the Federal Circuit limited the ability of a patentee to exclude "downstream products" containing infringing articles when the patentee does not name the downstream manufacturers as respondents to the investigation.
Prior to Kyocera, a complainant could seek a limited exclusion order against the named respondent and downstream products sold by others, who had not been named. Now that has changed.
In Kyocera, the Federal Circuit rejected the ITC's interpretation of its statutory authority to extend LEOs to the downstream products of parties that had not been named as respondents to the investigation.
At the time Kyocera issued, only four in-force LEOs extended to downstream products of nonrespondents. Thus, it is difficult to argue that the Kyocera significantly impacted the ITC's operations. Subsequently issued decisions and filed complaints, however, show the effects of Kyocera on the parties' practice at the ITC.
For example, Rambus named numerous downstream-product manufactures using nVidia's chips in its complaint. Certain Semiconductor Chips Having Synchronous Dynamic Random Access Memory Controllers & Prods. Containing the Same, 337-TA-661.
The ALJ recently issued a recommended determination for an LEO directed at only the respondents found to infringe Rambus's patents. Id.
As another example, on May 29, 2009, the ITC issued a public version of its Commission Opinion in Semiconductor Chips, which denied the complainant's request to issue a LEO to the named respondents' infringing articles and a GEO to downstream products of nonrespondents including those infringing articles. Certain Semiconductor Chips with Minimized Chip Package Size & Prod. Containing Same, ITC Inv. No. 337-TA-605, Commission Opinion (May 29, 2009 (public version)).
Yet another example, on Nov. 17, 2008, Spansion filed a complaint alleging violation of certain Samsung flash memory chips and downstream products containing these chips, and naming Samsung and numerous downstream-product manufacturers who use Samsung's chips. Certain Flash Memory Chips & Prods. Containing the Same, USITC Pub. No. 2640, Complaint at 1 (Nov. 17, 2008).
Thus, the practical impact of Kyocera has been for the complainants to change their practice to name all entities related to downstream products and request a limited exclusion order against all respondents.
The end result is that ITC investigations, where the accused product is not itself imported into the United States, have become more complicated and more expensive, but also have become less unpredictable with respect to remedies issued upon a finding of violation.
There are current efforts to amend the statute to give the ITC the authority to exclude downstream products of nonrespondents that contain infringing articles, but those efforts are not expected to reach conclusion in the immediate future.
Endnotes
1 Foley & Larder, Injunctive Relief after eBay v. MercExchange, Presentation to the APLA 2007 Annual Patent Law Committee, www.foley.com/files/tbl_s31Publications/FileUpload137/4541/InjunctiveReliefAftereBay.pdf. Another analysis of pre-eBay cases put the number at 84 percent. Robert M. Isackson, After 'eBay,' Injunctions Decrease, 30 Nat'l L.J., Dec. 3, 2007 at S1.
2 FTI Consulting analysis of relevant publicly available court cases (collecting cases between May 15, 2006, through Oct. 22, 2008, with 73 percent granted (41) / 26 percent denied (15) / 1 percent undecided (1) for a total of 57 cases). (unpublished report, on file with author); since then the undecided fell into the denial category.
Originally printed in Law 360 (www.law360.com). Reprinted with permission. This article is for informational purposes and is not intended to constitute legal advice. This memorandum may be considered advertising under applicable state laws.This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm’s clients.
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