October 17, 2011
The Federal Circuit’s recent decision in Robert Bosch LLC v. Pylon Mfg. Corp. clarified the standard for injunctive relief and, in the process, emphasized the “fundamental nature” of patents as constituting exclusionary property rights.
An important element in a court’s analysis of whether to issue an injunction is a showing of “irreparable harm.” In 2006, in eBay Inc. v. MercExchange, L.L.C., the Supreme Court announced that courts should follow traditional equitable principles when determining whether a court should grant a permanent injunction to a prevailing patentee. Nonetheless, there remained a question as to whether a successful patent plaintiff enjoyed a presumption of irreparable harm. The Federal Circuit in Bosch directly answered this question: “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.”
The Federal Circuit also emphasized that the fundamental nature of a patent is the exclusionary right, or right to exclude others: “[E]ven 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.”
In applying the eBay standard to the facts of Bosch, the Federal Circuit found that the district court erred in failing to grant an injunction in favor of Bosch, the prevailing plaintiff. The district court had focused on three factors in denying the injunction, which were Bosch’s alleged failure to define a relevant market, the “existence of additional competitors,” and the “non-core nature” of the patented product in relation to Bosch’s business as a whole. The Federal Circuit dismissed this analysis, holding that these factors did not weigh against the grant of an injunction in the case at hand.
More significantly, held the court, Bosch had adduced evidence of the parties’ direct competition, Bosch’s loss in market share and access to potential customers resulting from the infringement, and the defendant’s lack of financial wherewithal to satisfy a judgment. These factors, in combination with the other equitable factors, compelled the court to reverse. The Federal Circuit remanded the case to the district court with instructions to grant an injunction. Judge Bryson dissented and would have remanded to the district court for further weighing of the equitable factors.
Thus, while Bosch holds there is no presumption of irreparable harm in favor of a successful patent plaintiff, this case also holds that the fundamental nature of patent is an exclusionary interest. Bosch also provides guidance on the types of factors a court should and should not consider on the question of whether the patentee will suffer irreparable harm absent the injunction. This case is significant to both plaintiffs and defendants in patent cases where the plaintiff seek an injunction.
For more information, please contact Fitch Even partner Allen E. Hoover.
Prepared by Brett J. Smith.