Federal Circuit affirms permanent injunction in face of prior license agreements

Acumed LLC v. Stryker Corp. (Fed. Cir. 2008)

In 2004, Acumed sued Stryker for infringing a patent covering an orthopedic nail used in reconstructing humerus fractures.  After a jury verdict of infringement, the district court ordered a permanent injunction. That pre-eBay ruling was subsequently vacated by the Federal Circuit because the lower court did not specifically consider the traditional four-factor test for injunctive relief. On remand, the district court again granted the permanent injunction.  That permanent injunction is affirmed here on appeal.

In eBay, the Supreme Court held that the traditional four factors of equitable relief must be considered before granting injunctive relief in a patent infringement case.  However, if a district court considers the requisite factors, the Federal Circuit will only vacate if they find an “abuse of discretion.” 

Irreparable Harm and Lack of Remedy at Law: The first two factors of (1) irreparable harm caused by continued infringement and (2) inadequate remedies available at law almost entirely overlap. The court easily considered those factors together. 

Acumed had previously licensed the patents to other manufacturers — perhaps indicating that money could be sufficient to compensate for the infringement. However, the district court distinguished the prior licenses based on the identities of the past licensees and Acumed’s more recent “experience in the market.”  The Federal Circuit found no abuse of discretion — noting that “[a] plaintiff’s past willingness to license its patent is not sufficient per se to establish lack of irreparable harm if a new infringer were licensed.” 

The Jury had awarded lost profit damages, and Acumed suggested that fact indicates that future harms would cause irreparable harm (or at least more than what would be compensated by a reasonable royalty).  On appeal, the Federal Circuit did not dispute (or explicitly affirm) this argument. However the court did note that “[t]he essential attribute of a patent grant is that it provides a right to exclude competitors from infringing the patent.”

Balance of Hardships: For the third factor – balancing the hardships – Stryker argued that its customers (who need their arms fixed) would suffer under an injunction. On appeal, the Federal Circuit rejected that argument as a matter of law — holding that the balancing factor “is only between a plaintiff and a defendant, and thus the effect on customers and patients alleged by Stryker is irrelevant.”  Under this construct of the balancing factor, the patentee will usually win — especially when applying the Windsurfing holding that “One who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against continuing infringement destroys the business so elected.”

Public Interest: The patentee must show that the public interest is “not dissereved by an injunction.”  Here, Stryker argued that the Acumed product was lower quality and that the arm bone repair would lead to increased morbidity. The district court did not find that public health argument persuasive and the Federal Circuit agreed that “the court was within its discretion to conclude that the public interest was not disserved by an injunction.”

Permanent Injunction Affirmed

Notes:

• The Jury found the infringement “willful.” That fact was not discussed in the eBay analysis.
• This case follows the conventional wisdom that the courts will continue to grant permanent injunctions against competitors who infringe.

Comments

[Bring it to the top!]

Some of the decisions made by the DC might have easily gone the other way, but all in all, doesn't seem like an abuse of discretion. One question I have though is: Why not use a different screw?

[Humorless Democrat]

Dennis, in the wake of eBay and all the whining here about the loss of injunctions, you should change the title of this post to "Federal Circuit affirms permanent injunction - in the face of prior license agreements, no less!" Anyway, it was heartening to see that not all injunctions are dead and not all patents toothless.

[Richard P. Beem]

After all, a patent is the right to exclude others from making, using or selling the patented invention.

[Andrew Dhuey]

That drawing looks much like an X-ray of my left knee. I have enough titanium in there to set off the metal detectors at federal courthouses (including the CAFC). Oddly enough, this doesn't happen at airport security.

This information must be fascinating to others.

[smashmouth football]

This case brought to mind another interesting case involving a permanent injunction prohibiting the further manufacturing and sale of the Titleist ProV1 family of golf balls. Callaway Golf Co. v. Acushnet Co., 2008 WL 4850755 (D. Del. Nov. 10, 2008).

What is especially interesting about the Callaway case is that Callaway was accused of infringing the same patents it later enforced against Titleist. The original patents were obtained by Spalding/Top Flite/Lisco Corp. (any golfers remember the Top Filte Strata?) Several years later, Lisco/Spalding went through bankruptcy, and as part of the settlement, Callaway paid consideration and was assigned the patents.

As a neophyte, it surprises me somewhat that these facts did not enter into the weighing of the equities. I would have supposed that Acushnet might be compelled to pay damages, but it seems a little strange that Callaway, with not-quite-clean hands, gets an injunction. Any comments?

[MaxDrei]

Don't understand the "not quite clean" hands, Smash. Who said that Callaway infringed and, even if it did, how does this amount to unclean hands? I would say that your comment provides me with more evidence that my "heavy equitable tail, wagging so much that the legal dog falls over " theory has some legs.

[smashmouth football]

Max

I think it's significant that Spalding accused Callaway (but not Titleist/Acushnet) of infringment of the same patents, in the early part of this decade. Obviously that doesn't carry the same weight as a judgment, but still it suggests (especially since Callaway bought the patents to settle the infringement case against it) that Callaway wasn't the purely innocent victim of Titleist's infringement. It's more a case of two infringers, one of which bought out the original patentee, in a situation where it's not so clear the original patentee had very much leverage. I understand that Callaway literally "stands in the shoes of" Lisco/Spalding, but I still get a funny feeling in my gut about this case.

[MaxDrei]

Well, Smash, I guess "funny feelings" aren't substantive enough to take up the time of the court, eh?

[smashmouth football]

Max said:
"Well, Smash, I guess 'funny feelings' aren't substantive enough to take up the time of the court, eh?"

But courts of equity routinely apply their "gut feelings" to cases. Or, to put it into legal jargon, maybe this judge abused her discretion. I was really wondering how often the factual scenario has come up, and if it's relevant to the balancing of the equities.

[Richard Stern]

"For the third factor – balancing the hardships – Stryker argued that its customers (who need their arms fixed) would suffer under an injunction. On appeal, the Federal Circuit rejected that argument as a matter of law — holding that the balancing factor 'is only between a plaintiff and a defendant, and thus the effect on customers and patients alleged by Stryker is irrelevant.'”
--Doesn't this conflict with the opinion of the Seventh Circuit in City opf Milwaukee v. Activated Sludge? And similar decisions on health and safety concerns? Surely this factor should be considered--either here or under the public interest factor.

[breadcrumbs]

Richard Stern,

Perhaps the factor under consideration is correct - consider that under the injunction, the end patients still have options and only the infringing party would suffer. It is not as if the injunction stops patients from being treated.

[smashmouth football]

breadcrumbs--

I think Richard Stern's argument relates to the language "as a matter of law." That's pretty inflexible. (I think too inflexible.) Weighing this factor should permit consideration of the broader public interest, subject to the facts of the case. But only if the result of granting the injunction would be to deprive the public of a product, etc. essential to life or health should the factor weigh very much. (I'm sure others could state the idea more precisely.) But the point is it's probably unnecessary for this case (and most cases) to make such a blanket statement. Not very good opinion drafting, in my view.

[PPA]

Injunctions still amount to something. Yay.