The Software IP Report

Permanent Injunction Entered in Patent Case

By Charles Bieneman

Categories: Patent Civil Procedure, The Software IP Report

An injunction was the only way to remedy the plaintiff’s loss of its ability to exclusively practice its patent claims, according to the court in Brocade Comm. Sys. v. A10 Networks, No. C 10-3428 PSG (N.D. Cal. Jan 10, 2013). The court thus granted the plaintiff’s motion for a permanent injunction following a finding of patent infringement. The defendant had been found liable for infringing four claims of three patents, U.S. Patent No. 7,454,500, U.S. Patent No. 7,581,009 , and U.S. Patent No. 7,558,195. In reaching its decision, the court took note that the Federal Circuit has articulated standards for injunctions in the wake of the Supreme Court’s eBay decision, providing an implicit reminder that eBay did not kill patent injunctions.

The plaintiff and the defendant both sold “application delivery controllers (‘ADC’) with Global Server Load Balancing (‘GSLB’) and High Availability (‘HA’) features.” The patents related to use of GSLB devices. While the jury found infringement of the four patent claims, and awarded damages, it did not find willful or induced infringement.

The court articulated the applicable legal standard as follows:

Pursuant to eBay, Inc. v. MercExchange, LLC, there is no presumption in favor of an injunction in patent infringement cases. Instead, a plaintiff retains the burden of showing that the four traditional equitable factors support entry of a permanent injunction: (1) that the plaintiff has suffered irreparable harm; (2) that “remedies available at law are inadequate to compensate for that injury”; (3) that “considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted”; and (4) that “the public interest would not be ‘disserved’ by a permanent injunction.”

(Footnotes and citations omitted.)

Turning first to the question of irreparable harm, the court considered whether the requirement of a “causal nexus” between the alleged harm and the  infringement was required in the context of a permanent injunction as well as when a preliminary injunction was sought. While expressing doubt that a causal nexus was always required in the case of a permanent injunction, the court said that the issue was moot. The court thought that the plaintiff had “proven a sufficient nexus between the established infringement and irreparable harm from the loss of its exclusive right to practice its patents.” Indeed, “[t]he Federal Circuit recently repeated the importance of the right of exclusivity in Edwards Lifesciences AG v. CoreValve, Inc. and Presidio Components, Inc. v. American Technical Ceramics Corp.

Here, the plaintiff had shown that its products practiced the four infringed claims. There was no evidence that the plaintiff had licensed any of the patents. Therefore, the defendant’s “infringement prevents it from practicing its patents exclusively.” Further, the parties were in direct competition, and the plaintiff’s loss of exclusivity was therefore “particularly injurious.”

The court dealt quickly with the “inadequate remedies at law” prong of the injunction analysis. Money damages were able to compensate the plaintiff for past infringement, but could not protect the plaintiff’s right to practice its invention exclusively.

Turning to the third prong of the injunction analysis, the court found that the balance of hardships weighed in favor of the plaintiff. The defendant argued that its relatively small size when compared with the plaintiff balanced the hardships in its favor. However, the defendant’s expert had testified at trial that it could easily design around the infringed claims. Further, the infringing features did not drive product sales. Thus, when compared to the plaintiff’s hardship of losing its exclusivity, the defendant’s hardships were outweighed.

Considering the last prong of the analysis, the court considered whether an injunction was in the public interest, and decided that it was. Although the short-term exclusivity of a patent might deprive the public of products and competition in the marketplace, that short-term exclusivity “ideally encourages more investment in research and development of inventions.”

The court did narrow the scope of the injunction sought by the plaintiff. Because the trial had been bifurcated, the plaintiff was prevented from pursuing all of its claims at trial. The plaintiff nonetheless sought to enjoin the defendant from practicing all of the claims of the patents. The court refused to issue an injunction of this broad scope, explaining that the plaintiff “cannot seek what is in essence a preliminary injunction for the claims it has yet to prove [the defendant] infringed under the rubric of a permanent injunction.” Further, the court enjoined the defendant only from selling specific devices that included infringing features.

Finally, the court agreed with the plaintiff to impose a requirement that the defendant provide notice of the injunction to its customers. The defendant had argued that the notice would improperly “serve as punishment because the jury’s award of damages at trial serves as a license for the past infringement and allows customers to continue using the previously infringing products.” However, the court thought that it’s a narrowing of the injunction made a notice permissible to protect the plaintiff’s patent rights.