Preliminary Injunctions in Patent Litigation

Motions for preliminary injunctions have become effective weapons in patent infringement litigation. One of the most important benefits to a patentee is quick relief, since a motion for preliminary injunction may be heard within weeks after a patent lawsuit is filed. Preliminary injunctions may also promote settlement, since if the injunction is granted, the effect can be devastating to a defendant. If the accused device or method is a central part of the defendant's business, an injunction may ruin the defendant financially. On the other hand, if the motion for preliminary injunction fails, a defendant may be much less willing to settle, since the defendant's invalidity and/or non-infringement positions may have been bolstered by denial of the preliminary injunction, not to mention the fact that the defendant's success was likely obtained at significant expense.

Indeed, the expense associated with a preliminary injunction can be considerable, depending on the local rules of the court. For example, in H.H. Robertson, the court conducted a 4-day mini-trial that included testimony of witnesses, briefings and arguments. H.H. Robertson Co. v. United Steel Deck, Inc., 820 F.2d 384 (Fed. Cir. 1987). Similarly, in Hybritech, the court permitted limited discovery in preparation for a 2-day hearing with briefing and argument. Hybritech, Inc. v. Abbott Laboratories, 849 F.2d 1446 (Fed. Cir. 1988). However, in some courts, preliminary injunction hearings are limited to argument on the briefs, declarations and affidavits. No live testimony is permitted. See, e.g., Local Rules of N.D. Cal. It is therefore important to consult both local rules of court as well as local counsel before deciding to seek a preliminary injunction.

Another factor to consider is that if a preliminary injunction is granted, the patentee will be required to post bond as security for damages to the infringer in the event that the injunction is determined to be wrongfully granted. Fed. R. Civ. P. 65(c). Bond premiums can be substantial, easily running into the hundreds of thousands or even millions of dollars.

Normally a patentee will be actively pursuing a business related to the patent before a preliminary injunction will be granted. This is because a preliminary injunction is an equitable remedy. If the patentee is not pursuing a business related to the patent, then it may appear to the court that financial compensation is a more appropriate remedy. If, however, a patentee can show a nonmonetary harm that is immediate and irreparable, a preliminary injunction may be warranted. There is no requirement that a patentee make, use, or sell its invention in order to enforce its patent rights. See, e.g., Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1547-48 (Fed. Cir. 1995).

Standards for Granting a Preliminary Injunction

There are four factors which the patentee must prove in order to receive a preliminary injunction: 1) a reasonable likelihood of success on the merits; 2) irreparable harm if relief is not granted; 3) the balance of hardships tips in the patentee's favor; and 4) the issuance of the injunction is in the public interest. Chrysler Motors Corp. v. Auto Body Panels, Inc., 908 F.2d 951, 952 (Fed. Cir. 1990). A district court must balance each of these factors against the others and against the magnitude of the relief requested before a preliminary injunction can be granted. Chrysler Motors, 908 F.2d at 952. However, when a preliminary injunction is denied, “the absence of an adequate showing with regard to any one factor may be sufficient, given the weight or lack of it assigned to the other factors, to justify the denial.” Chrysler Motors, 908 F.2d at 953.

Likelihood of Success on the Merits

In a motion for preliminary injunction, the patentee carries the burden of showing a reasonable likelihood of success on the merits with respect to the patent's validity, enforcement and infringement. Vehicular Tech. Corp. v. Titan Wheel Int'l., Inc., 141 F.3d 1084, 1088 (Fed. Cir. 1998). It is critical that the patentee demonstrate likelihood of success. See Ethicon, Inc. v. United States Surgical Corp., 762 F. Supp. 480, 504 (D. Conn. 1991), aff'd, 965 F.2d 1065 (Fed. Cir. 1992).

With respect to infringement, a patentee must demonstrate a reasonable likelihood that at trial, infringement by the defendant of at least one claim will be proved by a preponderance of the evidence. Jacobson v. Cox Paving Co., 19 U.S.P.Q.2d 1641, 1650 (D. Ariz.), aff'd, 21 U.S.P.Q.2d 2040 (Fed. Cir. 1991). Likelihood of success may be established by showing literal infringement or, although usually quite difficult, infringement under the doctrine of equivalents. Saes Getters S.P.A. v. Ergenics, Inc., 15 U.S.P.Q.2d 1212, 1215 (D. N.J. 1990).

Evidence tending to show infringement need not be admissible at trial. Flynt Distributing Co. v. Harvey, 734 F.2d 1389, 1394 (9th Cir.1984). A patentee need only demonstrate that whenever trial takes place, the necessary evidence will likely be available. However, declarations by expert and fact witnesses should be as fact specific as possible. See, e.g., Atari Games Corp. v. Nintendo of America, Inc., 897 F.2d 1572, 1575 (Fed. Cir. 1990) (“[A] district court should be wary of issuing an injunction based solely on allegations and conclusory affidavits submitted by plaintiff.”).

With respect to validity, although a patent is presumed to be valid until it is proven invalid by clear and convincing evidence (see Carella v. Starlight Archery & Pro Line Co., 804 F.2d 135, 138 (Fed. Cir. 1986)), this “presumption does not relieve a patentee who moves for a preliminary injunction from carrying the normal burden of demonstrating that it will likely succeed on all disputed liability issues at trial, even when the issue concerns the patent's validity.” New England Braiding Co., Inc. v. A.W. Chesterton Co., 970 F.2d 878, 882 (Fed. Cir. 1992). That said, a few courts have found that the presumption of validity alone may support a preliminary injunction where the alleged infringer has failed to come forward with any evidence of invalidity. See, e.g., Canon Computer Systems, Inc. v. Nu-Kote Int'l, Inc., 134 F.3d 1085, 1088 (Fed. Cir. 1998). However, a party seeking an injunction should nevertheless assume that it must demonstrate a reasonable likelihood that the defendant will be unable to establish invalidity by clear and convincing evidence. Oakley, Inc. v. Sunglass Hut Int'l., 316 F.3d 1331, 1339-40 (Fed. Cir. 2003)). A patent holder seeking a preliminary injunction can make a sufficient showing of patent validity in several ways: 1) a prior adjudication of the validity of the patent; 2) successful re-examination of the patent; or 3) expert testimony and other direct evidence such as commercial success and licensing activities to show industry acquiescence in the validity of the patent. See Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1359 (Fed. Cir. 2001); Drexelbrook Controls, Inc. v. Magnetrol International, Inc., 720 F. Supp. 397, 400 (D. Del. 1989), aff'd, 904 F.2d 45 (Fed. Cir. 1990).

Irreparable Harm

All patent cases concern money. Patent holders obtain patents solely to make money with them. It is therefore difficult for many courts to accept that payment of money damages will be insufficient to compensate a patent holder for infringement. Therefore, a showing of irreparable harm must be based on more than the fact that the patentee will suffer monetary damages as a result of the defendant's infringement.

A patentee can establish irreparable harm in two ways. Foremost, a “clear” or “strong” showing of success on the merits will create a presumption of irreparable harm. See, e.g., H.H. Robertson Co., 820 F.2d at 390. Secondarily, if the patentee's likelihood of success on the merits is persuasive but not clearly convincing, the patentee must prove irreparable harm using evidence of actual, imminent, nonmonetary harm.

“Irreparable harm is presumed when a clear showing of patent validity and infringement has been made.” Amazon.com, 239 F.3d at 1350. A clear or strong showing of validity is evident when a patent has successfully withstood previous validity challenges in other proceedings. Amazon.com, 239 F.3d at 1359. Thus, when a patentee presents clear proof that the validity of its patents has been unsuccessfully challenged in prior litigation, a court may conclude there is a strong likelihood that the patents are valid. Id. Conversely, if the alleged infringer raises a “bona fide” question of invalidity, then any presumption that may have been established by the patentee may no longer hold. See, e.g., Tennant Co. v. Hako Minuteman, Inc., 651 F. Supp. 945, 961 (N.D. Ill. 1986). A clear showing of infringement is typically established upon a literal reading of the claims, as interpreted by the court, on the accused device.

“Like most legal presumptions, [the presumption of irreparable harm] is rebuttable by clear evidence that it is overcome in the case at hand.” Roper Corp. v. Litton Systems, Inc., 757 F.2d 1266, 1272 (Fed. Cir. 1985). To rebut the presumption of irreparable harm, an alleged infringer who is confronted by a patentee's strong showing of validity and infringement must bring forward evidence that irreparable injury would not actually be suffered by the patentee if the motion for preliminary injunction were denied. Id. Where the presumption of irreparable harm has been established, it may not be rebutted by the mere fact that the plaintiff's injuries are fully compensable in money damages. Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 975-76 (Fed Cir. 1996). A presumption of irreparable harm may be rebutted by a showing that the patentee has delayed in seeking the injunction, has granted licenses, or has done other acts that are incompatible with his or her right to exclude others from the invention. T.J. Smith & Nephew, Ltd. v. Consolidated Medical Equipment, Inc., 821 F.2d 646, 648 (Fed. Cir. 1987).

Trial courts have held that delay in seeking preliminary injunctive relief for the alleged infringement can rebut a presumption of irreparable harm. E.g. Ethicon, Inc., 762 F. Supp. at 505. However, the Federal Circuit has recognized that the “period of delay exercised by a party prior to seeking a preliminary injunction in a case involving intellectual property is but one factor to be considered by a district court in its analysis of irreparable harm.” Hybritech, 849 F.2d at 1457. Most patent cases where preliminary injunctive relief has been denied because of delays have involved delays of more than 1 year. See Henkel Corp. v. Coral, Inc., 754 F. Supp. 1280, 1322 (N.D. Ill. 1990). However, preliminary injunctions have been granted where the delay has been significantly longer than 1 year. E.I. du Pont de Nemours v. Polaroid Graphics, 706 F. Supp. 1135, 1145 (D. Del. 1989) (delay of more than 8 years); Jacobson v. Cox Paving Co., 19 U.S.P.Q.2d 1641, 1656 (D. Ariz.), aff'd, 21 U.S.P.Q.2d 2040 (Fed. Cir. 1991) (delay of more than 5 years).

Some courts have found irreparable injury assertions to be undercut by the patentee having licensed the patent and/or expressed a willingness to license the patent. E.g., Illinois Tool Works, Inc. v. Grip-Pak, Inc., 906 F.2d 679, 683 (Fed. Cir. 1990); T.J. Smith & Nephew, Ltd. v. Consolidated Medical Equipment, Inc., 821 F.2d 646, 648 (Fed. Cir. 1987). These courts have deemed such conduct to be “incompatible with the emphasis on the right to exclude.” See, e.g., T.J. Smith, 821 F.2d at 648. However, in one decision, for example, the court granted a preliminary injunction where the patentee had established a licensing program and the alleged infringer's ability to bid projects using the allegedly infringing product without paying royalty irreparably injured the licensing program. Amicus, Inc. v. Post-Tension of Texas, Inc., 686 F. Supp. 583, 587 (S.D. Tex. 1987).

Where a patentee has not made a clear showing of likelihood of success on the merits, the patentee has the burden of establishing actual irreparable harm. No matter how great the threat of irreparable injury, the threat must be immediate. Roper Corp. v. Litton Systems, Inc., 757 F.2d 1266, 1272 (Fed. Cir. 1985). Where the alleged infringer has stopped infringing with no intention of resuming, or where the alleged infringer is merely experimenting with a patented invention and has no immediate plans to use the invention commercially, a preliminary injunction may not be appropriate. Id. at 1273. However, where the alleged infringer has not yet marketed its product, injunctive relief may still be warranted if the defendant's entry into the market is imminent. Zeller Plastik, Koehn, Grabner & Co. v. Joyce Molding Corp., 698 F. Supp. 1204, 1227 (D. N.J. 1988).

Many different circumstances may support a finding of actual irreparable harm. The following examples are taken from a list compiled by Steven E. Shapiro, Preliminary Injunction Motions in Patent Litigation, IDEA: The Journal of Law and Technology 1993.

1) Damage to reputation, loss of goodwill, confusion in the marketplace and/or loss of ability to sell non-patented items in the relevant market.

2) Inability of the infringer to pay any likely damage award.

3) Harmful impact on the plaintiff's market share and pricing structure.

4) Encouragement of others to infringe.

5) Imminent threat to the survival of the plaintiff's business.

6) The alleged infringer is reaping the benefit of a substantial investment by the patent holder in product and market development.

7) The defendant has a significant presence in the related product market.

8) The plaintiff and defendant are direct competitors trying to influence the same group of customers.

9) The plaintiff's patent will expire in less than 2 years or there is a possibility that the value of the patent will be substantially diminished and the technology in the field will bypass the patented technology before the litigation is finished.

10) The patented invention is a principal part of the patent holder's business.

11) The patentee is at a significant competitive disadvantage without the patent.

12) The field of technology covered by the patent-in-suit is new or changes fairly quickly.

Balancing the Hardships

Even when irreparable injury is established, a court must still consider whether the balance of hardships favor the patentee. Datascope Corp. v. Kontron, Inc., 786 F.2d 398, 401 (Fed. Cir. 1986). “In considering the balance of hardships, the Court must balance the harm that will occur to the moving party from the denial of the preliminary injunction with the harm that the nonmoving party will incur if the injunction is granted.” Drexelbrook Controls, 720 F. Supp. at 408. One important consideration in weighing the balance of harms is whether the alleged infringer was aware of the patent when it developed its accused product. Courts have frequently issued preliminary injunctions where the infringement could have been avoided in the first place. See, e.g., Southwest Aerospace Corp. v. Teledyne Industries, Inc., 702 F. Supp. 870, 883 (N.D. Ala. 1988), aff'd, 884 F.2d 1398 (Fed. Cir. 1986). Conversely, where a defendant developed an infringing product without knowledge of the patent, courts are more likely to weigh the balance of harms in favor of the defendant. See Amoco Corp. v. Exxon Chemical Corp., 7 U.S.P.Q.2d 1453, 1460-61 (N.D. Ga. 1987).

In weighing the balance of harms, a number of trial courts have balanced the proportional, rather than the absolute, harms of the parties. Henkel Corp. v. Coral, Inc., 754 F. Supp. 1280, 1322 (N.D. Ill. 1990). In one case where the defendant would lose only a very small percentage of its total business by issuance of an injunction, and the plaintiff's potential loss would represent a far greater percentage of its business if infringement were permitted to continue, the balance of harms favored granting the motion. Kalipharma, Inc. v. Bristol-Myers Co., 707 F. Supp. 741, 756 (S.D.N.Y. 1989).

Courts have been less inclined to grant preliminary injunctions where the purportedly infringing product is the defendant's primary product and an injunction would be extremely harmful to the financial stability of the defendant's company. See, e.g., Archive Corp. v. Cipher Data Products, Inc., 12 U.S.P.Q.2d 1464, 1468 (C.D. Cal. 1988). However, “[p]utting a defendant out of business is not enough to preclude a preliminary injunction, when the infringement and validity issues are clear. …” Total Containment, Inc. v. Environ Products, Inc., 23 U.S.P.Q.2d 1305, 1307 (E.D. Pa. 1992). On the other hand, the fact that the infringer's sales of infringing product are small will generally favor imposition of an injunction. Saes Getters S.P.A. v. Ergenics, Inc., 15 U.S.P.Q.2d 1212, 1218 (D. N.J. 1990).

Preliminary injunctions have also been granted where the alleged infringer had a viable non-infringing alternative available for market, where the injury to the alleged infringer would be merely temporary in duration, where many of the parts of the infringer's enjoined product inventory could be used in its non-infringing product line, and where the infringer had just recently entered the market with its infringing product. See Henkel, 754 F. Supp. at 1323; Lubrizol Corp. v. Exxon Corp., 696 F. Supp. 302, 318 (N.D. Ohio 1988); Pittway Corp. v. Black & Decker, 667 F. Supp. 585, 592 (N.D. Ill. 1987); Tri-Tech v. Engineering Dynamics, 8 U.S.P.Q.2d 1371, 1373 (D. Mass. 1988).

The Public Interest

The focus of a district court's public interest analysis should be whether there exists some critical public interest that would be injured by the grant of preliminary relief. Datascope Corp. v. Kontron, Inc., 786 F.2d 398, 401 (Fed. Cir. 1986) (denial of preliminary injunction affirmed where “the public will be harmed by an injunction in that some physicians prefer defendant's dual lumen IABs”); Cordis Corp. v. Medtronic, Inc., 835 F.2d 859, 864 (Fed. Cir. 1987) (denial of preliminary injunction affirmed where the alleged infringers “continuing ability to produce pacemaker leads was an issue of public interest”).

Many courts have granted preliminary injunctions on the grounds that public policy favors protection of the rights of patent owners. Typically, however, these cases involve circumstances where the patentee has made a clear showing of likelihood of success as well as irreparable harm, and there is no public interest that would be injured by the preliminary injunction. E.g., Southwest Aerospace, 702 F. Supp. at 886.

Strategies to Frustrate a Preliminary Injunction

Evidentiary Strategies

A preliminary injunction is a judicial action that is almost always filed in the early stages of litigation. Therefore, one of the most straightforward defense strategies is to emphasize the limited nature of existing evidence. See, e.g., Scripps Clinic & Research Foundation v. Genentech, Inc., 666 F. Supp. 1379, 1401 (N.D. Cal. 1987). As an alternative, a defendant would be well advised to formulate a discovery plan to acquire the necessary evidence, and to ask the court for time to conduct preliminary discovery. In addition, a defendant may also ask for additional time to prepare an opposition brief. However, if the infringer has known of the patent for some time, the ability to receive additional time will be somewhat limited. See National Presto Indus., Inc. v. Dazey Corp., 18 U.S.P.Q.2d 1113, 1120 (N.D. Ill. 1990).

Stay Pending Re-examination

If a defendant can identify new prior art that was not before the PTO during examination of the asserted patent, and the defendant can make a colorable argument that new prior art creates a substantial question of patentability, the defendant may ask the PTO to re-examine the patent. Based on such an ex parte request for re-examination, a defendant may argue that substantial doubt has been placed on the patentee's likelihood of success with respect to validity. Moreover, relying on the request for re-examination, a defendant may move a district court to stay a litigation pending the outcome of the re-examination on the grounds that the PTO is better qualified to examine the validity of the patent. E.g., In re Laughlin Products, Inc., 265 F. Supp. 2d 525, 531 (E.D. Pa. 2003) (“The PTO 'is in a better position than the Court to evaluate the validity of the patent in view of the prior art references.'”) (citations omitted).

Conclusion

Preliminary injunction motions are effective weapons in patent infringement actions. However, the case law concerning preliminary injunctions provides an opportunity for considerable variation in application. The situation in each case will be highly factual. Therefore, the circumstances surrounding each case should be carefully analyzed to discover the most promising opportunities for success.

William K. Wells is a patent attorney and partner in the law firm of Kenyon & Kenyon in Washington, DC.

Motions for preliminary injunctions have become effective weapons in patent infringement litigation. One of the most important benefits to a patentee is quick relief, since a motion for preliminary injunction may be heard within weeks after a patent lawsuit is filed. Preliminary injunctions may also promote settlement, since if the injunction is granted, the effect can be devastating to a defendant. If the accused device or method is a central part of the defendant's business, an injunction may ruin the defendant financially. On the other hand, if the motion for preliminary injunction fails, a defendant may be much less willing to settle, since the defendant's invalidity and/or non-infringement positions may have been bolstered by denial of the preliminary injunction, not to mention the fact that the defendant's success was likely obtained at significant expense.

Indeed, the expense associated with a preliminary injunction can be considerable, depending on the local rules of the court. For example, in H.H. Robertson, the court conducted a 4-day mini-trial that included testimony of witnesses, briefings and arguments. H.H. Robertson Co. v. United Steel Deck, Inc., 820 F.2d 384 (Fed. Cir. 1987). Similarly, in Hybritech, the court permitted limited discovery in preparation for a 2-day hearing with briefing and argument. Hybritech, Inc. v. Abbott Laboratories , 849 F.2d 1446 (Fed. Cir. 1988). However, in some courts, preliminary injunction hearings are limited to argument on the briefs, declarations and affidavits. No live testimony is permitted. See, e.g., Local Rules of N.D. Cal. It is therefore important to consult both local rules of court as well as local counsel before deciding to seek a preliminary injunction.

Another factor to consider is that if a preliminary injunction is granted, the patentee will be required to post bond as security for damages to the infringer in the event that the injunction is determined to be wrongfully granted. Fed. R. Civ. P. 65(c). Bond premiums can be substantial, easily running into the hundreds of thousands or even millions of dollars.

Normally a patentee will be actively pursuing a business related to the patent before a preliminary injunction will be granted. This is because a preliminary injunction is an equitable remedy. If the patentee is not pursuing a business related to the patent, then it may appear to the court that financial compensation is a more appropriate remedy. If, however, a patentee can show a nonmonetary harm that is immediate and irreparable, a preliminary injunction may be warranted. There is no requirement that a patentee make, use, or sell its invention in order to enforce its patent rights. See, e.g., Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1547-48 (Fed. Cir. 1995).

Standards for Granting a Preliminary Injunction

There are four factors which the patentee must prove in order to receive a preliminary injunction: 1) a reasonable likelihood of success on the merits; 2) irreparable harm if relief is not granted; 3) the balance of hardships tips in the patentee's favor; and 4) the issuance of the injunction is in the public interest. Chrysler Motors Corp. v. Auto Body Panels, Inc., 908 F.2d 951, 952 (Fed. Cir. 1990). A district court must balance each of these factors against the others and against the magnitude of the relief requested before a preliminary injunction can be granted. Chrysler Motors, 908 F.2d at 952. However, when a preliminary injunction is denied, “the absence of an adequate showing with regard to any one factor may be sufficient, given the weight or lack of it assigned to the other factors, to justify the denial.” Chrysler Motors, 908 F.2d at 953.

Likelihood of Success on the Merits

In a motion for preliminary injunction, the patentee carries the burden of showing a reasonable likelihood of success on the merits with respect to the patent's validity, enforcement and infringement. Vehicular Tech. Corp. v. Titan Wheel Int'l., Inc., 141 F.3d 1084, 1088 (Fed. Cir. 1998). It is critical that the patentee demonstrate likelihood of success. See Ethicon, Inc. v. United States Surgical Corp., 762 F. Supp. 480, 504 (D. Conn. 1991), aff'd, 965 F.2d 1065 (Fed. Cir. 1992).

With respect to infringement, a patentee must demonstrate a reasonable likelihood that at trial, infringement by the defendant of at least one claim will be proved by a preponderance of the evidence. Jacobson v. Cox Paving Co., 19 U.S.P.Q.2d 1641, 1650 (D. Ariz.), aff'd , 21 U.S.P.Q.2d 2040 (Fed. Cir. 1991). Likelihood of success may be established by showing literal infringement or, although usually quite difficult, infringement under the doctrine of equivalents. Saes Getters S.P.A. v. Ergenics, Inc. , 15 U.S.P.Q.2d 1212, 1215 (D. N.J. 1990).

Evidence tending to show infringement need not be admissible at trial. Flynt Distributing Co. v. Harvey , 734 F.2d 1389, 1394 (9th Cir.1984). A patentee need only demonstrate that whenever trial takes place, the necessary evidence will likely be available. However, declarations by expert and fact witnesses should be as fact specific as possible. See, e.g., Atari Games Corp. v. Nintendo of America, Inc., 897 F.2d 1572, 1575 (Fed. Cir. 1990) (“[A] district court should be wary of issuing an injunction based solely on allegations and conclusory affidavits submitted by plaintiff.”).

With respect to validity, although a patent is presumed to be valid until it is proven invalid by clear and convincing evidence ( see Carella v. Starlight Archery & Pro Line Co., 804 F.2d 135, 138 (Fed. Cir. 1986)), this “presumption does not relieve a patentee who moves for a preliminary injunction from carrying the normal burden of demonstrating that it will likely succeed on all disputed liability issues at trial, even when the issue concerns the patent's validity.” New England Braiding Co., Inc. v. A.W. Chesterton Co., 970 F.2d 878, 882 (Fed. Cir. 1992). That said, a few courts have found that the presumption of validity alone may support a preliminary injunction where the alleged infringer has failed to come forward with any evidence of invalidity. See, e.g., Canon Computer Systems, Inc. v. Nu-Kote Int'l, Inc., 134 F.3d 1085, 1088 (Fed. Cir. 1998). However, a party seeking an injunction should nevertheless assume that it must demonstrate a reasonable likelihood that the defendant will be unable to establish invalidity by clear and convincing evidence. Oakley, Inc. v. Sunglass Hut Int'l., 316 F.3d 1331, 1339-40 (Fed. Cir. 2003)). A patent holder seeking a preliminary injunction can make a sufficient showing of patent validity in several ways: 1) a prior adjudication of the validity of the patent; 2) successful re-examination of the patent; or 3) expert testimony and other direct evidence such as commercial success and licensing activities to show industry acquiescence in the validity of the patent. See Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1359 (Fed. Cir. 2001); Drexelbrook Controls, Inc. v. Magnetrol International, Inc., 720 F. Supp. 397, 400 (D. Del. 1989), aff'd, 904 F.2d 45 (Fed. Cir. 1990).

Irreparable Harm

All patent cases concern money. Patent holders obtain patents solely to make money with them. It is therefore difficult for many courts to accept that payment of money damages will be insufficient to compensate a patent holder for infringement. Therefore, a showing of irreparable harm must be based on more than the fact that the patentee will suffer monetary damages as a result of the defendant's infringement.

A patentee can establish irreparable harm in two ways. Foremost, a “clear” or “strong” showing of success on the merits will create a presumption of irreparable harm. See, e.g., H.H. Robertson Co., 820 F.2d at 390. Secondarily, if the patentee's likelihood of success on the merits is persuasive but not clearly convincing, the patentee must prove irreparable harm using evidence of actual, imminent, nonmonetary harm.

“Irreparable harm is presumed when a clear showing of patent validity and infringement has been made.” Amazon.com, 239 F.3d at 1350. A clear or strong showing of validity is evident when a patent has successfully withstood previous validity challenges in other proceedings. Amazon.com, 239 F.3d at 1359. Thus, when a patentee presents clear proof that the validity of its patents has been unsuccessfully challenged in prior litigation, a court may conclude there is a strong likelihood that the patents are valid. Id. Conversely, if the alleged infringer raises a “bona fide” question of invalidity, then any presumption that may have been established by the patentee may no longer hold. See, e.g., Tennant Co. v. Hako Minuteman, Inc. , 651 F. Supp. 945, 961 (N.D. Ill. 1986). A clear showing of infringement is typically established upon a literal reading of the claims, as interpreted by the court, on the accused device.

“Like most legal presumptions, [the presumption of irreparable harm] is rebuttable by clear evidence that it is overcome in the case at hand.” Roper Corp. v. Litton Systems, Inc., 757 F.2d 1266, 1272 (Fed. Cir. 1985). To rebut the presumption of irreparable harm, an alleged infringer who is confronted by a patentee's strong showing of validity and infringement must bring forward evidence that irreparable injury would not actually be suffered by the patentee if the motion for preliminary injunction were denied. Id. Where the presumption of irreparable harm has been established, it may not be rebutted by the mere fact that the plaintiff's injuries are fully compensable in money damages. Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 975-76 (Fed Cir. 1996). A presumption of irreparable harm may be rebutted by a showing that the patentee has delayed in seeking the injunction, has granted licenses, or has done other acts that are incompatible with his or her right to exclude others from the invention. T.J. Smith & Nephew, Ltd. v. Consolidated Medical Equipment, Inc., 821 F.2d 646, 648 (Fed. Cir. 1987).

Trial courts have held that delay in seeking preliminary injunctive relief for the alleged infringement can rebut a presumption of irreparable harm. E.g. Ethicon, Inc., 762 F. Supp. at 505. However, the Federal Circuit has recognized that the “period of delay exercised by a party prior to seeking a preliminary injunction in a case involving intellectual property is but one factor to be considered by a district court in its analysis of irreparable harm.” Hybritech, 849 F.2d at 1457. Most patent cases where preliminary injunctive relief has been denied because of delays have involved delays of more than 1 year. See Henkel Corp. v. Coral, Inc., 754 F. Supp. 1280, 1322 (N.D. Ill. 1990). However, preliminary injunctions have been granted where the delay has been significantly longer than 1 year. E.I. du Pont de Nemours v. Polaroid Graphics , 706 F. Supp. 1135, 1145 (D. Del. 1989) (delay of more than 8 years); Jacobson v. Cox Paving Co., 19 U.S.P.Q.2d 1641, 1656 (D. Ariz.), aff'd, 21 U.S.P.Q.2d 2040 (Fed. Cir. 1991) (delay of more than 5 years).

Some courts have found irreparable injury assertions to be undercut by the patentee having licensed the patent and/or expressed a willingness to license the patent. E.g., Illinois Tool Works, Inc. v. Grip-Pak, Inc., 906 F.2d 679, 683 (Fed. Cir. 1990); T.J. Smith & Nephew, Ltd. v. Consolidated Medical Equipment, Inc., 821 F.2d 646, 648 (Fed. Cir. 1987). These courts have deemed such conduct to be “incompatible with the emphasis on the right to exclude.” See, e.g., T.J. Smith, 821 F.2d at 648. However, in one decision, for example, the court granted a preliminary injunction where the patentee had established a licensing program and the alleged infringer's ability to bid projects using the allegedly infringing product without paying royalty irreparably injured the licensing program. Amicus, Inc. v. Post-Tension of Texas, Inc., 686 F. Supp. 583, 587 (S.D. Tex. 1987).

Where a patentee has not made a clear showing of likelihood of success on the merits, the patentee has the burden of establishing actual irreparable harm. No matter how great the threat of irreparable injury, the threat must be immediate. Roper Corp. v. Litton Systems, Inc., 757 F.2d 1266, 1272 (Fed. Cir. 1985). Where the alleged infringer has stopped infringing with no intention of resuming, or where the alleged infringer is merely experimenting with a patented invention and has no immediate plans to use the invention commercially, a preliminary injunction may not be appropriate. Id. at 1273. However, where the alleged infringer has not yet marketed its product, injunctive relief may still be warranted if the defendant's entry into the market is imminent. Zeller Plastik, Koehn, Grabner & Co. v. Joyce Molding Corp., 698 F. Supp. 1204, 1227 (D. N.J. 1988).

Many different circumstances may support a finding of actual irreparable harm. The following examples are taken from a list compiled by Steven E. Shapiro, Preliminary Injunction Motions in Patent Litigation, IDEA: The Journal of Law and Technology 1993.

1) Damage to reputation, loss of goodwill, confusion in the marketplace and/or loss of ability to sell non-patented items in the relevant market.

2) Inability of the infringer to pay any likely damage award.

3) Harmful impact on the plaintiff's market share and pricing structure.

4) Encouragement of others to infringe.

5) Imminent threat to the survival of the plaintiff's business.

6) The alleged infringer is reaping the benefit of a substantial investment by the patent holder in product and market development.

7) The defendant has a significant presence in the related product market.

8) The plaintiff and defendant are direct competitors trying to influence the same group of customers.

9) The plaintiff's patent will expire in less than 2 years or there is a possibility that the value of the patent will be substantially diminished and the technology in the field will bypass the patented technology before the litigation is finished.

10) The patented invention is a principal part of the patent holder's business.

11) The patentee is at a significant competitive disadvantage without the patent.

12) The field of technology covered by the patent-in-suit is new or changes fairly quickly.

Balancing the Hardships

Even when irreparable injury is established, a court must still consider whether the balance of hardships favor the patentee. Datascope Corp. v. Kontron, Inc., 786 F.2d 398, 401 (Fed. Cir. 1986). “In considering the balance of hardships, the Court must balance the harm that will occur to the moving party from the denial of the preliminary injunction with the harm that the nonmoving party will incur if the injunction is granted.” Drexelbrook Controls, 720 F. Supp. at 408. One important consideration in weighing the balance of harms is whether the alleged infringer was aware of the patent when it developed its accused product. Courts have frequently issued preliminary injunctions where the infringement could have been avoided in the first place. See, e.g., Southwest Aerospace Corp. v. Teledyne Industries, Inc., 702 F. Supp. 870, 883 (N.D. Ala. 1988), aff'd, 884 F.2d 1398 (Fed. Cir. 1986). Conversely, where a defendant developed an infringing product without knowledge of the patent, courts are more likely to weigh the balance of harms in favor of the defendant. See Amoco Corp. v. Exxon Chemical Corp., 7 U.S.P.Q.2d 1453, 1460-61 (N.D. Ga. 1987).

In weighing the balance of harms, a number of trial courts have balanced the proportional, rather than the absolute, harms of the parties. Henkel Corp. v. Coral, Inc., 754 F. Supp. 1280, 1322 (N.D. Ill. 1990). In one case where the defendant would lose only a very small percentage of its total business by issuance of an injunction, and the plaintiff's potential loss would represent a far greater percentage of its business if infringement were permitted to continue, the balance of harms favored granting the motion. Kalipharma, Inc. v. Bristol-Myers Co., 707 F. Supp. 741, 756 (S.D.N.Y. 1989).

Courts have been less inclined to grant preliminary injunctions where the purportedly infringing product is the defendant's primary product and an injunction would be extremely harmful to the financial stability of the defendant's company. See, e.g., Archive Corp. v. Cipher Data Products, Inc., 12 U.S.P.Q.2d 1464, 1468 (C.D. Cal. 1988). However, “[p]utting a defendant out of business is not enough to preclude a preliminary injunction, when the infringement and validity issues are clear. …” Total Containment, Inc. v. Environ Products, Inc., 23 U.S.P.Q.2d 1305, 1307 (E.D. Pa. 1992). On the other hand, the fact that the infringer's sales of infringing product are small will generally favor imposition of an injunction. Saes Getters S.P.A. v. Ergenics, Inc., 15 U.S.P.Q.2d 1212, 1218 (D. N.J. 1990).

Preliminary injunctions have also been granted where the alleged infringer had a viable non-infringing alternative available for market, where the injury to the alleged infringer would be merely temporary in duration, where many of the parts of the infringer's enjoined product inventory could be used in its non-infringing product line, and where the infringer had just recently entered the market with its infringing product. See Henkel, 754 F. Supp. at 1323; Lubrizol Corp. v. Exxon Corp., 696 F. Supp. 302, 318 (N.D. Ohio 1988); Pittway Corp. v. Black & Decker, 667 F. Supp. 585, 592 (N.D. Ill. 1987); Tri-Tech v. Engineering Dynamics, 8 U.S.P.Q.2d 1371, 1373 (D. Mass. 1988).

The Public Interest

The focus of a district court's public interest analysis should be whether there exists some critical public interest that would be injured by the grant of preliminary relief. Datascope Corp. v. Kontron, Inc., 786 F.2d 398, 401 (Fed. Cir. 1986) (denial of preliminary injunction affirmed where “the public will be harmed by an injunction in that some physicians prefer defendant's dual lumen IABs”); Cordis Corp. v. Medtronic, Inc., 835 F.2d 859, 864 (Fed. Cir. 1987) (denial of preliminary injunction affirmed where the alleged infringers “continuing ability to produce pacemaker leads was an issue of public interest”).

Many courts have granted preliminary injunctions on the grounds that public policy favors protection of the rights of patent owners. Typically, however, these cases involve circumstances where the patentee has made a clear showing of likelihood of success as well as irreparable harm, and there is no public interest that would be injured by the preliminary injunction. E.g., Southwest Aerospace, 702 F. Supp. at 886.

Strategies to Frustrate a Preliminary Injunction

Evidentiary Strategies

A preliminary injunction is a judicial action that is almost always filed in the early stages of litigation. Therefore, one of the most straightforward defense strategies is to emphasize the limited nature of existing evidence. See, e.g., Scripps Clinic & Research Foundation v. Genentech, Inc., 666 F. Supp. 1379, 1401 (N.D. Cal. 1987). As an alternative, a defendant would be well advised to formulate a discovery plan to acquire the necessary evidence, and to ask the court for time to conduct preliminary discovery. In addition, a defendant may also ask for additional time to prepare an opposition brief. However, if the infringer has known of the patent for some time, the ability to receive additional time will be somewhat limited. See National Presto Indus., Inc. v. Dazey Corp., 18 U.S.P.Q.2d 1113, 1120 (N.D. Ill. 1990).

Stay Pending Re-examination

If a defendant can identify new prior art that was not before the PTO during examination of the asserted patent, and the defendant can make a colorable argument that new prior art creates a substantial question of patentability, the defendant may ask the PTO to re-examine the patent. Based on such an ex parte request for re-examination, a defendant may argue that substantial doubt has been placed on the patentee's likelihood of success with respect to validity. Moreover, relying on the request for re-examination, a defendant may move a district court to stay a litigation pending the outcome of the re-examination on the grounds that the PTO is better qualified to examine the validity of the patent. E.g., In re Laughlin Products, Inc., 265 F. Supp. 2d 525, 531 (E.D. Pa. 2003) (“The PTO 'is in a better position than the Court to evaluate the validity of the patent in view of the prior art references.'”) (citations omitted).

Conclusion

Preliminary injunction motions are effective weapons in patent infringement actions. However, the case law concerning preliminary injunctions provides an opportunity for considerable variation in application. The situation in each case will be highly factual. Therefore, the circumstances surrounding each case should be carefully analyzed to discover the most promising opportunities for success.

William K. Wells is a patent attorney and partner in the law firm of Kenyon & Kenyon in Washington, DC.