Injunctions easier to obtain for small markets
The primary right granted by the government through a patent is the right to exclude others from making, using, selling, offering for sale and importing the patented device into the United States. Thus, a patent should normally allow you to obtain an injunction stopping your competitors from infringing your patent. Obtaining an injunction requires analysis of many factors. One of those factors is whether the patent owner suffered an irreparable injury. Is the patent owner’s injury of a kind that money cannot make the patent owner whole. For many years if patent infringement was found, courts presumed irreparable injury arose, and thus granted the injunction. But the eBay case decided in 2006 ratcheted down the power of patentsby removing the presumption of irreparable injury and requiring the courts to separately analyze whether the injury was irreparable. .
Thus, since eBay the courts have allowed injunctions for patent cases only when the patent owner could prove irreparable injury above and beyond mere infringement of the patent. The following case illustrates that a small market with few competitors may make it easier to obtain an injunction.
In Trebro Manufacturing v. Firefly Equipement (Fed. Cir. 2014), Trebro, the patent owner, sued Firefly for patent infringement. The District Court denied a preliminary injunction but the Federal Circuit held the District Court committed clear error in denying the preliminary injunction. The Federal Circuit reviewed all of the factors of the multi factor analysis for issuing an injunction. However, I would like to focus on “irreparable injury” prong of the test.
To obtain either a preliminary injunction or a permanent injunction the patent owner must prove that it has been or will likely be irreparably injured from the infringement. In other words, an injunction will issue only if money cannot adequately compensate the patent owner for the damage caused by the infringement of the patent by the defendant. Here, Trebo’s patent was directed to “sod harvestors” or vehicle having knives that cut sod pieces from the ground, conveyor belts to transport the pieces, and mechanisms to stack them on a pallet. The sod harvester market is very small. Only three companies exist that build this type of machinery. The patent owner sells about eight (8) sod harvesters per year, in part because the sod harvesters are built to last for many years.
The District Court indicated that the harm to the patent owner was speculative and not irreparable. Tthe Federal Circuit disagreed. Because the sod harvester market is very small, each lost sale translates into a lost customer and a single lost sale is a sizeable percentage of the yearly market in this area. As such, the Federal Circuit indicated that infringement in this type of market inflicts a real and non-speculative harm for which monetary compensation is inadequate.
Also, the District Court erred in dismissing evidence of loss of market share and customers which are a type of irreparable injury many courts have used to find irreparable injury. The patent owner also asserted that it would have to lay off employees if the infringement continued further illustrating the types of harms a patent owner could show to prove irreparable injury.
The Federal Circuit vacated the District Court’s order denying the injunction and remanded for further proceedings.
I invite you to contact me with your patent questions. Please feel free to forward this article to your friends. As an Orange County Patent Lawyer, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.