Finisar v. DirecTV (Fed. Cir. 2007 — On appeal)
A jury found Finisar’s patent willfully infringed. However, the Eastern District of Texas denied injunctive relief. Instead, the court entered a compulsory licensing scheme that gives DirecTV a right to continue to infringe after paying a fee.[Link] On appeal, Finisar lays out its claim for injunctive relief.
Short Facts: Finisar does not practice its patented invention and is unlikely to ever practice its invention. Likewise, Finisar has not licensed its invention. An injunction blocking DirecTV from selling its infringing satellite television services would potentially create a monopoly for EchoStar. And, DirecTV has money to pay for any damages.
In eBay v. MercExchange, the Supreme Court held that injunctive relief in patent cases requires satisfaction of the traditional four factor test of equitable relief. In eBay, the Supreme Court also made clear that the injunction decision must be made on a case-by-case basis without any bright-line rules or Litmus tests.
About Money: The sufficiency of monetary damages relates to both of the first two eBay factors: (1) whether an injunction would protect against irreparable harm to the patentee and (2) whether damages at law are adequate to compensate the patentee for any continued infringement. Finisar first argues that these two these factors must be wrapped together. The argument is simple – a failure of relief at law results in irreparable harm and vice-versa. Tying the two factors is useful for a patentee because it would then only need to prove one of the two factors primary factors.
Particularly focusing on money damages, Finisar argues that damages are inadequate because the calculation of future royalties is speculative and too uncertain. This type of argument, if factually true, regularly supports injunctive relief.
EBay also declares that the factors must be determined on a case by case basis rather than applying categorical rules. Thus, the fact that a plaintiff is only truly interested in a monetary reward may be a legally insufficient reason to deny relief.
Presumption of Irreparable Harm: Although it avoids using the word ‘presumption,’ Finisar argues that the finding of patent infringement creates a presumption of irreparable harm. This presumption issue was not answered by the eBay decision. In fact, that issue could be seen as the dividing point between the two concurring opinions by Roberts and Kennedy. Following this theme, Finisar argues that the particular harm created by allowing ongoing infringement includes: (1) destroying Finisar’s ability to grant an exclusive license; and (2) hurting Finisar’s ability to license to others because the compulsory license does not deter infringement. A well paid damages expert could calculate the value of those harms and include them in the monetary damage award. I would include the further argument in favor of relief: that long-held precedent would require a presumption of irreparable harm.
Notes:
- DirecTV is appealing the judgment as well — arguing that the patent is invalid and not infringed.
- File Attachment: Finisar.DirecTV.Brief.pdf (6908 KB)
- File Attachment: Finisar.Brief.pdf (3878 KB)
- File Attachment: Finisar.DirecTV.Reply.pdf (4284 KB)
- File Attachment: Finisar.Reply.pdf (2868 KB)
- File Attachment: Finisar.NYIPLA.pdf (1706 KB) (Amicus)
- File Attachment: Finisar.NYIPLA.Reply.pdf (946 KB) (Not entered by Court)
- File Attachment: DIRECTV's_Rule_28(j)_Letter_re_Paice_(11-14-07).pdf (126 KB)
- File Attachment: Finisar's_Rule_28(j)_Letter_re_Paice_(11-26-07).pdf (221 KB)
