By Jason Rantanen
Robert Bosch LLC v. Pylon Mfg. Corp. (Fed. Cir. 2011) Download 11-1096
Panel: Bryson (dissenting-in-part), O'Malley (author), Reyna
This is a very important Federal Circuit decision that firmly eliminates the presumption of irreparable harm in the context of injunctive relief. While laying this issue to rest, however, the court offers an alternative idea: that even post-eBay, courts should (and implicitly must) consider the fundamental nature of patents as property rights when conducting an injunction analysis.
This case involves wiper blade technology. Bosch, the patent holder, sued Pylon for infringement of a set of wiper blade patents. At the trial court level, Bosch prevailed on a jury finding of validity and infringement before requesting entry of a permanent injunction. The district court denied the injunction and Bosch sought interlocutory appeal of the denial while the damages determination was pending.
The presumption of irreparable harm is dead. Much attorney and commentator ink has been spilled over whether the presumption of irreparable harm following judgment of infringement and validity survived eBay Inc. v. MercExchange, L.L.C. The Federal Circuit's opinion in Bosch v. Pylon should put an end to any further debate. "We take this opportunity to put the question to rest and confirm that eBay jettisoned the presumption of irreparable harm as it applies to determining the appropriateness of injunctive relief." Slip Op. at 10. Although not expressly stated by the court, the unequivocal implication is that this is as true for preliminary injunctions as it is for permanent injunctions.
Long live the requirement that courts acknowledge the fundamental nature of patents as property rights! While affirming the death of the presumption of irreparable harm, Bosch simultaneously suggests an alternative approach that perhaps may turn out not all that different: the importance of recognizing that patents are property rights when performing the injunction analysis.
Although eBay abolishes our general rule that an injunction normally will issue when a patent is found to have been valid and infringed, it does not swing the pendulum in the opposite direction. In other words, even though a successful patent infringement plaintiff can no longer rely on presumptions or other short-cuts to support a request for a permanent injunction, it does not follow that courts should entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude.
Slip Op. at 11. In other words, "While the patentee’s right to exclude alone cannot justify an injunction, it should not be ignored either." Id.
In the end, however, Bosch makes little use of this new approach, instead focusing on other types of errors committed by the district court. Thus, it remains to be seen whether a failure to consider the "fundamental nature" of patent rights will be grounds for reversal.
Reversal of district court denial of permanent injunction: In reversing the denial of an injunction, the court applies an approach reminiscent of the Supreme Court's own jurisprudence in recent years.
Over the past quarter-century, this court has encountered many cases involving a practicing patentee seeking to permanently enjoin a competitor upon an adjudication of infringement. In deciding these cases, we have developed certain legal standards that inform the four-factor inquiry and, in particular, the question of irreparable harm. While none of these standards alone may justify a general rule or an effectively irrebuttable presumption that an injunction should issue, a proper application of the standards to the facts of this case compels the conclusion that Bosch is entitled to the injunction it seeks. It is in ignoring these standards, and supplanting them with its own, that the district court abused its discretion.
Slip Op. at 12. Under this precedent, the court identifies two related legal errors and an error of judgment; taking the all the factors together, the majority concludes, compels the entry of a permanent injunction. The legal errors consisted of the district court's conclusions that the presence of additional competitors in the market, without more, cuts against a finding of irreparable harm, as did the non-core nature of Bosch's wiper blade business in relation to its business as a whole. "Injuries that affect a “non-core” aspect of a patentee’s business are equally capable of being irreparable as ones that affect more significant operations." Slip Op. at 16. Ultimately, the trial court's error "arises from its conclusion that, if a fact supports the granting of an injunction, its absence likely compels the denial of one. That is not the law, however." Slip Op. at 17.
Dissenting in part, Judge Bryson disagreed with the majority's decision to remand with instructions to enter an injunction. While Judge Bryson would not have affirmed the denial of an injunction, nor would he have expressly reversed, instead preferring to remand the matter back to the district court for further findings of fact and a reweighing of the equities.
To take it a step further Cowboy –
right to exclude == necessity for automatic injunctive relief == irreparable harm without injunctive relief == ability to negotiate a royalty.
Otherwise, the right to exclude is non-existant. It is now a right to hope for a royalty payment.
And again – (and again and again and again)
The actual loss is the loss of the exclusion – give that right to exclude back. Make the transgressed whole.
You still have not answered why this is such a difficult concept for you (the only clue I pick up so far is your out of context understanding of a tool of equity – don’t tell me that you are misunderstanding the tool of equity for what equity actually means).
Do you have something against making a patent holder whole?
You do understand that making whole is not limited to making monitarily whole? You do understand that making whole means – as best as possible – returning the transgressed to their original state? You do realize that with patents this means something just a little, let’s say, special, given the proper understanding of what a patent actually is?
So again, why do you seem to have a problem making a patent holder whole?
The patent owner did get an injuction in this case, and from a major infringer who had taken away major customers with infriging products and driven down its profit margins.
Without injuctions, unless actual infringement damages recoveries [not just judgements] are considerably larger than infringers profits from infringing, there is really no disincentive for businesses to just regular ignore patents of others, and even to continue to infringe even after losing a patent suit at the District Court. But that assumes that the infringer will ever pay such damages. Hence the factor that is really important is whether the infringer has enough cash or assets to ever pay all the past and future infringement damages, or even post an appeal bond sufficent to full pay all the damages before and during the appeal. Such bonds do not seem to be required nearly as often as it should be?
Unlike the above examples of stealing milk from a neighbors cow, etc., knowingly deliberate or reckless patent infringers in some cases can make literally hundreds of millions of dollars [while being protected from competion from other companies that avoid intentional infringement risks]. That is, making far more profits than the costs of defending a patent suit and gambling on winning on some basis, and thus a strong inducement to infringe, absent injunctive relief and/or statutory double or treble damage recoveries for willful infringement, not just minimal actual damage recoveries that merely let the infringer continue to engage in infringing activities with no serious adverse consequences. Unlike stealing milk from a neighbors cow or the like, or even trademark or copyright infringements, there are no parallel criminal case deterrents to patent infringement.
make the transgressed whole.
Sounds like a great idea to me. If the “transgressed” has suffered no loss, he is already whole.
“most ideal way of reaching the basic tenets of equity – make the transgressed whole.”
The tenets of equity only matter for everyone except Infringers.
It says so right there in the Infringers Bible. Chapter 1.
“what the property right of a patent is (and, once again, a hint: it is not the right to sue someone.)”
What is it then, regardless of your conversation with IANAE I’m very curious.
“Why should you get one if you suffer no harm at all?”
That would be simple and is the closest and most ideal way of reaching the basic tenets of equity – make the transgressed whole.
Why are you having such a difficult time with this? Why not give the transgressed what is clearly the closest thing ever to the actual starting point? If you think the value is “exactly zero economic value,” why are you fighting so hard to not make the transgressed whole? What earthly reason can you have to deny this simple and practically complete rememdy for the transgressed?
Oh, wait, you don’t want to be asked such questions…(then maybe you should not post here – the Supreme Court doesn’t post here).
By the way, for those occasions where the court does not enjoin infringement and sets a royalty for continued infringement, I cannot for the life of me see any reason why it should not be a trebled version of a reasonable royalty.
The court is saying that it will allow adjudged infringement to continue and the defendant knowingly continues his conduct that has been judicially determined to infringe a patent not proven to be invalid. That HAS to be willful infringement warranting treble damages.
“IANAE said…
The right to sue someone =‘
And yet again we have IANAE trying to sneak in a bastardization of what a patent is.
“Yes, patents are property. So what?”
So, if you don’t mind, try actually beginning a discussion with understanding (and not mistating ) what the property right of a patent is (and, once again, a hint: it is not the right to sue someone.)
Didn’t you just get done with a similar dance on another thread being taken to task for your errant view on patents? I seem to recall MaxDrei jumping to your side and both of you being slammed. Hard.
Back to your Tower with you!
except the actual only right that a patent gives you, you mean, right?
Right. A loss that is of exactly zero economic value to you in the hypothetical under consideration. Either because you weren’t using the patent to make money at all, or because the infringement doesn’t affect your ability to make money at all, or because the infringement has been fully paid-for at market licensing rates.
Injunctions are for preventing irreparable harm. Why should you get one if you suffer no harm at all?
LOL!!!!!
IANAE, you are doing the unimaginable–digging the hole you currently occupy, even deeper.
Sadly, you’re rapidly approaching MM status for me–while you’re currently only unworthy of a meaningful response, you may soon be entirely unworthy of consideration at all.
I almost can’t believe that I’ve devoted a couple of minutes to this board today.
“you haven’t lost anything at all.”
except the actual only right that a patent gives you, you mean, right?
d_amm that little fact.
You seem to be confusing what else you can do with a patent with what the patent right actually is and what the actual harm is. You seem to miss what the property actually means, and you are only looking at secondary effects, and not the primary harm.
If that primary harm is so slight in your mind, then why this fantastic effort of yours to not simply make the transgressed whole in what is easily the most simplest and most logical way?
That’s a funny choice of words, given the context.
Don’t tell me, tell the Supreme Court. They seem to share my sense of humor on the subject.
LOL or OMG, depending on your perspective.
I’m leaning toward LOL, personally!
“Should the law intervene with draconian remedies”
by “draconian” you mean exactly what the right is…? exactly the best way to make the transgressed whole?
That’s a funny choice of words, given the context.
The cost, after all (as nicely pointed out by IANAE) may not even be monetary, and thus even more then is in line with a non-monetary response of restoring that exclusion.
Sure, in that case you should and will get an injunction.
But, as nicely pointed out by IANAE on numerous occasions, the cost may not exist at all. If you own a patent and haven’t even tried to practice or license it, and someone halfway across the country is infringing, you haven’t lost anything at all. Well, other than the warm feeling that you get to prevent people from doing something useful that you paid money to tell them how to do. Why are you even wasting judicial resources suing that infringer in the first place?
But, hey, equity is flexible. I’m sure the court can take all that stuff into account, to find an equitable solution.
Sure, if any of those factors apply they should be taken into account, to the extent that they affect the farmer who is the only interested party. Even so, the disruption to his business and the stress on his cow and resultant loss of yield can all be compensated in money, because we can figure out how much milk he’d ordinarily have gotten and what the fair market rate is for that much milk. Unless it turns out that bovine stress can’t be assessed until years later, in which case you might get that injunction, though in any event your losses could never be greater than the residual value of the cow.
The good news for patents is that they don’t work that way. An act of infringement typically won’t affect the profit the patentee might realize from other acts of infringement, licensed or not. If they somehow do in a particular case, equity can take the patentee’s arguments into account.
If I were the patent owner I might care, that my legitimate expectations of a right to exclude, bought and paid for, to the Government, have been ignored by the court.
Sure, you might care on principle. But the only reason you acquired the cow in the first place was to turn a profit by selling the milk. If the milk is being paid for at market rates, and such remedy is enforced by the same government, what’s the harm? Should the law intervene with draconian remedies simply to stop you feeling a bit sad?
Same goes for patents. The only reason to ever get a patent is because you expect to turn a profit either by securing yourself an exclusive market or by licensing. The right to exclude is only useful to you because it helps you make that profit. Now, supposing the court is willing to make that profit up to you and then some (you get royalties even when the infringement doesn’t cost you anything), and you can’t show that you’ve lost anything that can’t be fixed with money, where’s the injustice?
IANAE: “Even if he’s going to do that every day, as long as he’s willing to pay fair market for the milk, who cares?”
!
You ask: Who cares? If I were the cow, I might care. If I were the farmer’s employee who used to get decent pay for milking the cow twice a day, I might care. If I were the Government accustomed to taxing that cowman and not paying him unemployment benefit, I might care. If I were the farmer I might care about the disruption to my business, the stress imposed on my cows, the loss of milk yield resulting from the sub-optimal milking regime, the loss of reputation of my business, etc etc etc. If I were the patent owner I might care, that my legitimate expectations of a right to exclude, bought and paid for, to the Government, have been ignored by the court.
But, hey, equity is flexible. I’m sure the court can take all that stuff into account, to find an equitable solution.
Well, at least you didn’t argue that the decision is unconstitutional. Progress is being made.
“recover for your actual losses”
Since the only actual right of a patent is the right to exclude, the only actual loss when you have been violated (someone breaking that excluded zone), necessarily involves the exclusion, and thus shouldn’t recovery – at a minimum – include the restoration of that exclusion?
Seems basic to me and most in line with what the right at issue actually is, after all.
And, after all, isn;t the entire point of equity trying to best make the transgressed person whole?
Sure, money is an easy substitute, but by no means should that be the only or even the first form of restoring that transgressed personand making them whole.
The cost, after all (as nicely pointed out by IANAE) may not even be monetary, and thus even more then is in line with a non-monetary response of restoring that exclusion.
The right to sue someone = the right to recover for your actual losses.
Sounds about right to me.
Yes, patents are property. So what? Cows are property too. Chattel, in fact. If someone sneaks onto your dairy farm one day and milks one of your cows (which you have an exclusive right to do), you can easily be compensated in money. You were probably going to sell the milk anyway, and you still have the cow. Even if he’s going to do that every day, as long as he’s willing to pay fair market for the milk, who cares?
Compare that to patent infringement, where the infringing activity might not even cost you anything at all, and might not even be something that you as the patentee are legally entitled to do. What good does it do you to stop that infringer doing what he’s doing, and why should the law care, other than for the principle of the thing?
The right to exclude <> the remedy of actually excluding.
Even more sorry state of affairs.
The right to exclude = the right to ask for a royalty. QED
Sorry state of affairs.
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