ADVANCED PATENTS COTTER SPRING 2015
I. Full Outline
A. Remedies
1. Introduction to Patent Remedies & Injunctions
What sort of remedies does the patentee usually want (for infringement)?
–INJUNCTIONS
● Permanent Injunctions
● TROs
● Preliminary Injunctions
–COMPENSATORY DAMAGES (for harms caused by Infringer)
● Lost Profits
● Royalties
–DEFENDANT’S PROFITS?
–ENHANCED DAMAGES
–ATTORNEYS’ FEES
–PREJUDGMENT INTEREST
–OTHER RELIEF
● ITC Exclusion Orders
● Damages for Future Use, In Lieu of Permanent Injunction
What sort of remedies do the defendants or potential defendants want?
–ATTORNEYS’ FEES
–OTHER MONETARY RELIEF (for patentee misconduct)
–REEXAMINATION
–INVALIDATION
–STAYS
–BONDS
–DECLARATORY JUDGMENTS
Principal Statutory Provisions (see “Remedy Intro” Slides p. 2)
● 35 U.S.C. ss. 283: Injunctions
● 35 U.S.C. ss. 284: Damages
● 35 U.S.C. ss. 285: Attorneys’ Fees
● 35 U.S.C. ss. 154(d): Reasonable Royalties
● 35 U.S.C. ss. 287: Patent Marking
● 35 U.S.C. ss. 289: D’s Profits in Design Patent Infringement
● 35 U.S.C. ss. 292: (AIA) False Patent Marking
● 28 U.S.C. ss. 2201-02: Fed. Declaratory Judgments
● 19 U.S.C. ss. 1337: ITC Orders
Property Rules vs. Liability Rules
–PROPERTY RULE: Entitlement is backed up by a right to injunctive relief
–ADVANTAGES OF PROPERTY RULE IN PATENT LAW:
● Parties can usually bargain around an injunction; e.g., agree to terms under which D can use property.
● Parties may be more creative than a court; property rules. encourage relevant actors to set up their own institutions for clearing rights (e.g., “patent pools”).
● Parties likely to have better info than does a court about the value of property and its contemplated use IP rights are unique.
● Typically, the # of affected parties is not large.
–LIABILITY RULE: Entitlement is backed up by a right to monetary relief
–ADVANTAGES OF LIABILITY RULE IN PATENT LAW:
● A necessary safety valve in some cases.
○ Compulsory licensing of essential medicines?
○ Gov’t uses (see 28 U.S.C. ss. 1498; cb p. 953 n. 8)
● May work better when bargaining-around is not feasible (e.g., large numbers of affected parties)
● May not be all that difficult for courts to assess damages
● May help to ensure that property owners do not abuse their rights: patent holdup, patent trolls (see cb pp. 894-97 nn. 1, 2).
–GENERALLY: The law makes use of both property and liability rules.
● Contract rights: mostly protected by liability rules; occasionally by property rules (e.g. specific performance)
● Real property is often (not always) protected by property rules
–WHAT IS THE RULE IN PATENT LAW?
● Recall 35 U.S.C. ss. 283: “courts…may grant injunctions in accordance with the principles of equity” to prevent violation of patent rights.
● And 35 U.S.C. ss. 154(a)(1): Grant of patent contains right to exclude
● And 35 U.S.C. ss. 261 “Patents shall have the attributes of personal property.”
● Continental Paper Bag (U.S. 1908) (Cited by eBay) S.C. disapproved of an order denying injunctive relief to nonpracticing patent owner
○ Historically, courts usually (as a matter of course) awarded permanent injunctions to prevailing patentees; though there were some exceptions.
○ Prior to eBay, the CAFC had settled on a general rule that the prevailing patentee was entitled to a permanent injunction absent exceptional circumstances.
○ eBay changed that!!!
a) eBay Inc v. MercExchange, LLC (S.C.; 2006)
Four-factor test; permanent injunctive relief; NO presumption of irreparable harm
● S.C. rejects the CAFC’s general rule regarding injunctions.
● Ss. 283 only says that courts may issue injunctions “in accordance with the principles of equity.”
● Ss. 261 defines patents as property but doesn’t specify the remedy for the violation of patent rights.
● RULE: COURTS SHOULD APPLY THE “TRADITIONAL FOUR-FACTOR TEST”
● S.C. also appeared to reject a bright-line rule that nonpracticing entities are never entitled to injunctive relief.
THE TRADITIONAL FOUR-FACTOR TEST FOR PERMANENT INJUNCTIVE RELIEF
To satisfy the four-factor test and win relief, P must show:
1. It has suffered an irreparable injury;
2. Remedies available at law, such as monetary damages, are inadequate to compensate for that injury;
3. Considering the balance of hardships between the P and D, a remedy in equity is warranted; and
4. The public interest would not be disserved by a permanent injunction.
● Roberts-Scalia-Ginsburg Concurrence:
○ “Discretion is not whim.” Means: giving the courts discretion on whether to issue injunctive relief does not mean courts will deny injunctive relief on a whim; in fact most Ps may still get injunctive relief
● Implications of eBay?
○ See p. 6 of “Remedy Intro” slides for prof’s criticisms of the four-factor test; i.e., what P/ must prove?
○ Courts appear to be granting injunctive relief to prevailing patent owners about 75% of the time (but not necessarily to NPEs
ture were absent from the product. Thus, a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct.
● Moreover, a mere showing that Apple might lose some insubstantial market share as a result of Samsung’s infringement is not enough. As the SC has pointed out, a party seeking injunctive relief must make a “clear showing” that it is at risk of irreparable harm, which entails showing “a likelihood of substantial and immediate irreparable injury.”
–Apple III (CAFC 2013): Vacated and remanded an order denying Apple a permanent injunction, on the ground that the DC incorrectly required evidence that the patented feature was the exclusive reason for consumer demand; all that is necessary is “some connection between the patented feature and demand for Samsung’s products.”
● Is “nexus” a fifth factor or part of one of the other factors?
● Is it becoming too difficult to obtain a preliminary injunction in a patent case?
e) A word on ITC Exclusion Orders under 19 U.S.C. ss. 1337
Importation of infringing goods; Spansion v. ITC (2010)
Exclusion orders issued by the ITC may be able to stop importation of infringing goods (cb. pp. 1079-80)
● Held before an ALJ
● Very quick review (12-15 months)
● Two types of exclusion orders:
○ Limited (to named parties in proceeding)
○ General (Avail. w/ pattern of violation, limited exclusion won’t work, etc.; more difficult to get)
● No consideration given to 4-factor eBay test
2. Reasonable Royalties
a) The FRAND Commitment
● Reasonable and non-discriminatory terms (RAND), also known as fair, reasonable, and non-discriminatory terms(FRAND), are a licensing obligation that is often required by standards organizations for members that participate in the standard-setting process.[1] Standard-setting organizations are the industry groups that set common standards for a particular industry in order to ensure compatibility and interoperability of devices manufactured by different companies.
● Are permanent injunctions avail. if FRAND commitment? (so far, courts are saying “no”–see Microsoft v. Motorola & Apple v. Motorola (2012))
● Correct as a matter of doctrine after eBay? (probably not)
● Correct as a matter of policy, because the risk of patent holdup is very high?
