Role of an injunction and patents
Prior to 2006, an injunction was typically issued as a right of the patent owner. If the defendant infringed a patent, the patent owner would seek and obtain an injunction almost without question. The reason was that the Patent Act states that a patent provides the patent owner the right to exclude others from making, using, selling, offering for sale or importing the patented invention. The keyword in this phrase is the word “exclude.” As such, the ability to exclude or enjoin an entity or person from infringing a patent right was central to the patent rights granted to inventors.
In 2006, the Supreme Court held in eBay v. MercExchange that the decision to award or deny a permanent injunction in a patent infringement suit was within the equitable discretion of the district court. That Supreme Court decision weakened the patent’s exclusionary right because injunctions were no longer automatic. Patent owners had to show that it was equitable to issue the permanent injunction.
Traditional four factor test for injunction
In order to assist courts in determining the equities of a permanent injunction, the Supreme Court found that an injunction in the patent context must also be analyzed within the traditional framework of whether to grant a permanent injunction as in other non-patent cases. The traditional framework required the court to review four factors to determine whether it would be equitable to grant or deny the permanent injunction. These four factors included:
- whether the patent owner has suffered irreparable injury;
- whether remedies available at law, such as monetary damages, are inadequate to compensate for the injury;
- whether, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
- whether the public interest would not be disserved by a permanent injunction.
After eBay v. MercExchange (2006), the percentage of permanent injunctions granted in patent lawsuits dropped. It was difficult to convince courts that based on the four factors, the equities tilted in favor of issuing the injunction. In most cases, monetary damages could compensate the patent owner for any injury caused by the infringement. In other cases the public interest would not be served best by removing competitive alternatives to the patented product.
In the instant case of Apple v. Samsung (Fed. Cir. 2015) that involved several of Apple’s iPhone patents, the Court of Appeals recognized that two of the four factors, namely, the third and fourth factors relating to the balance of hardships and the public interest factors, could tilt in favor of the patent owner when seeking feature-based injunctions. In particular, Apple did not seek a product-based injunction but instead sought an injunction on certain features of Samsung’s phones. Apple did not seek an injunction which prevented Samsung from selling any phone incorporating features which infringed Apple’s patents but only sought an injunction to remove infringing features from existing phones and not implemented in any new phone.
Apple sought an injunction requiring Samsung to change the software in its phones so as to provide an alternative, non-infringing feature. In relation to the balance of hardship factor, the Court found that depriving the patent owner of the right to exclude others from practicing a patented feature and allowing others such as Samsung to compete against them utilizing the patented features is a substantial hardship to Apple.
Moreover, during the prior lawsuit Samsung repeatedly indicated that it would be an easy fix to remove such patented feature from its phones through a software update and that it would take no longer than 30 days to incorporate or implement that change. Samsung’s comments favored grant of Apple’s sought after feature based injunction.
Balance of hardships factor for an injunction
The important aspect of the opinion was how the right to exclude others convinced the Court of Appeal to tilt the third factor in favor of the patent owner. The appellate court held that given the narrow, feature-based nature of the injunction and the statutory right to exclude infringers, this factor strongly weighed in favor of granting Apple its requested injunction.
Public interest factor for an injunction
In relation to the public interest factor, the Federal Circuit recognized the benefit of a healthy competitive environment between companies. However, the Federal Circuit also recognized that the public generally does not benefit when that competition comes at the expense of the patent owner’s investment backed property right.
The Federal Circuit relied on the right to exclude others to tilt the public interest factor in favor of granting the injunction for the patent owner. The Federal Circuit stated that the public interest factor is based on Patent Act’s statutory right to exclude infringers, which derives from the Constitution, but is also based on the importance of the patent system to encourage innovation.
The Federal Circuit also spoke about investment based property rights which related to patent owners who practice their inventions rather than merely sue or threaten to sue others for license fees. The opinion hints or may even be said to express a bias against non-practicing entities (some of which are patent trolls) since patents owned by non-practicing entities are not in some ways investment backed. The Federal Circuit also recognized that the encouragement of investment based risk is a fundamental purpose of the patent grant, and is based directly on and protected by the right to exclude. Once again, the Federal Circuit pointed to the importance of the right to exclude in its analysis in order to tilt the public interest factor in favor of the patent owner.
Exception to public interest factor
The Federal Circuit said an exception could exist where the existence of the patent may not tilt the public interest factor in favor of the patent owner, but that exception did not apply here. For example, in the pharmaceutical industry, if the invention was related to a life-saving drug then the public interest factor may not tilt in favor of the patent owner since a permanent injunction may deprive the public access to a life-saving drug. This explanation by the Federal Circuit suggests that injunctions would be harder to obtain for inventions that relate to the improvement of life.
In Apple v. Samsung, the products being enjoined were cell phones and computer tablets and no recall would be necessary since the features could be removed with a remote software update that users could perform at home on their previously purchased products.
Irreparable harm factor for injunction
Other important clarifications in injunctive relief made by the Federal Circuit in this case relate to the casual nexus requirement when proving the irreparable harm factor. Injunctions are only available when monetary awards do not compensate the patent owner for the infringement. Hence, the harm must be irreparable to qualify for an injunction. The Federal Circuit found that to prove causal nexus between the infringement and the injury, the patent owner need not show that the injury was solely or primarily due to incorporating the infringing feature into the Samsung phones. This would be very difficult to prove from an evidentiary standpoint for products that contain thousands of features, and thus thousands of other potential causes that must be ruled out in order to show the patented feature was the primary cause or sole cause of the sale.
Rather, the Federal Circuit explained that proving causal nexus requires the patent owner to show “some connection” between the patented features and demand for the infringing products. Thus, in a case involving a phone with hundreds of thousands of available features, it was legal error for the District Court to effectively require Apple to prove that the infringement or the patented feature was the sole cause of lost downstream sales.
The Federal Circuit found that the District Court erred when it required Apple to prove that the infringing features was the predominant reason why consumers bought Samsung’s products in order to find irreparable harm. Apple need not show that the infringing features were the reason why consumers purchased Samsung products. Rather, Apple need only show that the patented features incorporated into the Samsung phones were important to customers.
Summary
This opinion clarifies that limiting the scope of the injunction to a claimed feature instead of enjoining the entire product, improves the patent owner’s ability to obtain an injunction by tilting the balance of the hardship factor and the public interest factor in favor of the patent owner. An aspect of the facts of this case that was important for the court in issuing the feature based injunction was that the patented feature was merely one of many features of the multi-function and multi-faceted handset or phone sold by Samsung. By enjoining just one of many features, the injunction did not effectively enjoin the product. As such, the limited impact of the requested injunction to Samsung helped the Federal Circuit affirm the District Court’s decision to grant the injunction. Lastly, the irreparable harm factor only requires some connection between the patented feature and the purchase of an infringing product and does not require that the irreparable harm was solely or primarily due to the infringement.
I invite you to contact me with your patent questions at (949) 433-0900. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.