Verizon v. Vonage (Fed. Cir. 2007).
Both Judge Dyk of the CAFC and Judge Hilton of the Eastern District of Virginia raise the issue of partial injunctive relief.
For his part, Judge Hilton issued a permanent injunction barring infringement by Vonage, but partially stayed the injunction pending appeal to the CAFC. According to the temporary modification, Vonage would be permitted to continue to sell infringing services to current customers, but would stop Vonage from infringing activity associated with any new customers. That injunction was stayed without discussion by the CAFC on an emergency motion before a panel of Judges Michel, Gajarsa, and Dyk. (2007 WL 1202744).
In oral arguments of the appeal, Judge Dyk shifted the focus to what he calls a “middle ground” when the infringer is facing an irreparable harm such as bankruptcy.
Judge Dyk: “They say no injunction, you say injunction. But, isn’t there kind of a middle ground in these cases where the injunction would put someone out of business? Shouldn’t that be a consideration in framing the injunction? Shouldn’t the district court perhaps allow time for a work-around as part of the injunction? Verizon’s interest is in not losing customers. I’m not sure that Verizon has an interest in putting Vonage out of business. Shouldn’t the district court under these circumstances consider whether the injunction should be framed in such a way as to allow reasonable time for a work-around – particularly where as here, it is non-willful infringement?”
Both judges focus on a middle-ground with a temporal limit. For Judge Hilton, the limited injunction ends at the appeal decision. For Judge Dyk, an injunction might remain entirely stayed, but only for a limited time to avoid bankruptcy while a work-around is developed. The problem with these stays is that they undermine the rule of law as well as the patentee’s legal claim. In addition, they run the risk of being proverbial solutions that leave neither party better off. Despite the problems, the temporal opportunities available in injunction jurisprudence should not be overlooked. A patentee who is denied injunctive relief should be allowed to present evidence of irreparable harm at a later date. Similarly, an enjoined infringer should be allowed to later provide new evidence of the sufficiency of monetary relief.
On appeal, Vonage also offered several reasons why injunctive relief should be rejected under the eBay standard. Perhaps most interesting is the question of whether Verizon’s potential lost customers would be lost due to the patented invention or some other feature of the Vonage equipment. Under Vonage’s apparent formulation, non-patent related harm should not be considered in the injunction analysis. The court would then not consider market share loss as irreparable harm if the customers switched because of Vonage’s service reputation rather than based on a patented feature. In addition, Vonage argues that Verizon’s four-year delay in filing suit evidences a lack of irreparable harm. Next, Vonage argues that irreparable harm should not be found where, as here, the infringer is not the patentee’s “main competitive threat.”