Robert Bosch LLC v. Pylon Mfg. Corp.

After rejecting Pylon's preliminary arguments against the Federal Circuit's jurisdiction, the court reviewed the lower court's denial of injunctive relief based on its finding of no irreparable harm for abuse of discretion. The court began its analysis by recounting that before the Supreme Court's decision in eBay, the Federal Circuit had followed the general rule that a permanent injunction would issue where infringement of a valid patent was found. Id. at 1148. The court acknowledged that, in eBay, the Supreme Court held that there was no room for such general classifications in the injunction inquiry and that, like other parties seeking injunctive relief, a patentee seeking a permanent injunction must make the same four-part showing in accordance with the traditional equitable principles:

(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and the defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. Id. citing eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).

The Federal Circuit recognized that since the Supreme Court in eBay did not directly address the question of irreparable harm, and its own post-eBay Federal Circuit decisions did not definitively clarify it, the question of whether a presumption of irreparable harm remained for patent infringement was still an open question. Bosch, 659 F.3d at 1148. In Bosch, the Federal Circuit unequivocally laid the issue to rest. Finding such a presumption “irreconcilable” with eBay, the court ended doubt on the matter stating: “[w]e 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.” Id. at 1149. But the Federal Circuit went on to note that “courts should not entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude.” Id.

Reversing the trial court's denial of the injunction, the court explained that:

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. Id. at 1150.

The court held that the lower court had abused its discretion “by ignoring these standards, and supplanting them with its own.” Id. The court focused on the lower court's rationale for finding no irreparable harm and held that the presence of additional infringers in the marketplace does not negate irreparable harm. Id. at 1151. Rather, the court held that a patentee need not sue all infringers at once, and that suing one infringer at a time is not inconsistent with irreparable harm. Id. The court also pointed out that while the existence of a two-player market may weigh in favor of granting an injunction because it creates an inference that the patentee would lose sales to the infringer, the reverse is not true. Id.

Turning next to the “non-core” nature of Bosch's wiper blade business, the court held that the fact that only a portion of the patentee's business is affected says nothing about whether the harm can be rectified. Id. at 1152. The court reiterated that “a patent provides a right to exclude infringing competitors, regardless of the proportion that the infringing goods bear to a patentee's total business.” Id. at 1152 citing Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306, 1330 (Fed. Cir. 2008). The court held that “[a]n injury is either of the irreparable sort, or it is not” and does not turn on incidental details such as the patentee's corporate structure. Bosch, 659 F.3d at 1152. The court also noted that when the infringing product is central to the core of the patentee's business it can weigh in favor of granting an injunction ' but that the reverse is not true. Id.

The Federal Circuit held that the lower court had erred in concluding 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. The circuit court noted that: “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.” Id. In the end, the Federal Circuit held that the trial court's error “ar[ose] 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.” Id.

The court found that the facts of the case clearly demonstrated irreparable harm for Bosch where: 1) the parties were in direct competition, 2) Bosch had lost market share, and 3) Pylon did not have the financial wherewithal to satisfy a judgment. Id. The court addressed each of the remaining factors of the four-factor test in turn and concluded that three of the four factors weighed in favor of granting the injunction, with the public interest factor being neutral.

The Federal Circuit remanded the case to the lower court ' not to reevaluate the four-factor test but with direct instruction to issue the injunction, because the court concluded that further proceedings in the district court would be inappropriate when, in its view, the undisputed evidence conclusively showed that a permanent injunction was warranted and it would be unfair to Bosch to delay it. Id. at 1156-1157. Judge William C. Bryson dissented in part, agreeing that the district court erred in its application of the eBay factors but disagreeing with the decision to remand with instructions to enter an injunction. Bosch, 659 F.3d at 1157 citing eBay Inc., 547 U.S. at 394 (2006). Judge Bryson would have remanded to the district court for further findings of fact and a re-weighing of the equities. Bosch, 659 F.3d at 1158.

Conclusion

This case establishes unequivocally that, in the context of injunctive relief, a district court may not presume irreparable harm merely upon a finding of infringement of valid patent claims. The Federal Circuit's opinion makes it equally clear that there is also no presumption against irreparable harm, especially in light of a patent holder's right to exclude. But because the Bosch court focused almost entirely on the trial court's other errors, it remains to be seen whether a court's failure to consider the patentee's right to exclude is reversible error.

Veronica Mu'oz is a partner in the intellectual property practice at Hogan Lovells LLP. A trained biochemist, she is also a registered patent attorney specializing in life sciences patent litigation.

Robert Bosch LLC v. Pylon Mfg. Corp ., 659 F.3d 1142 (Fed. Cir. 2011), is an important decision that abolishes the presumption of irreparable harm in the context of injunctive relief for patent infringement. The case is also important because the Federal Circuit instructs that courts must still consider “the fundamental nature of patents as property rights granting the owner the right to exclude” when determining whether to issue an injunction.

Plaintiff Bosch, the patentee, sued defendant Pylon for infringement of certain wiper blade patents. At trial, Bosch prevailed with the jury finding validity and infringement. Bosch then sought entry of a permanent injunction. In denying Bosch's request for an injunction, the district court made a determination that Bosch had not proved irreparable harm based on three grounds: 1) its conclusion that Bosch failed to define a relevant market, 2) the existence of additional third-party wiper blade competitors in the market, and 3) the “non-core” nature of Bosch's wiper blade business in relation to its business as a whole. Robert Bosch LLC v. Pylon Mfg. Corp. , 659 F.3d 1142, 1145 (Fed. Cir. 2011) (hereinafter “Bosch“). The lower court focused on the nature of competition between the parties and whether wiper blades were the core of Bosch's business and stated: “[t]his is not a clear case of a two supplier market where a sale to Pylon necessarily represents the loss of a sale to Bosch” and “wiper blades are not at the core of [Bosch's] business.” Id. at 1146. The district court did not address the remaining three factors of the test for an injunction mandated by eBay. Since the damages phase of the case was bifurcated, Bosch sought interlocutory appeal of the denial while the damages determination was pending.

The Federal Circuit's Decision

After rejecting Pylon's preliminary arguments against the Federal Circuit's jurisdiction, the court reviewed the lower court's denial of injunctive relief based on its finding of no irreparable harm for abuse of discretion. The court began its analysis by recounting that before the Supreme Court's decision in eBay, the Federal Circuit had followed the general rule that a permanent injunction would issue where infringement of a valid patent was found. Id. at 1148. The court acknowledged that, in eBay, the Supreme Court held that there was no room for such general classifications in the injunction inquiry and that, like other parties seeking injunctive relief, a patentee seeking a permanent injunction must make the same four-part showing in accordance with the traditional equitable principles:

(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and the defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. Id. citing eBay Inc. v. MercExchange, L.L.C. , 547 U.S. 388, 391 (2006).

The Federal Circuit recognized that since the Supreme Court in eBay did not directly address the question of irreparable harm, and its own post-eBay Federal Circuit decisions did not definitively clarify it, the question of whether a presumption of irreparable harm remained for patent infringement was still an open question. Bosch, 659 F.3d at 1148. In Bosch, the Federal Circuit unequivocally laid the issue to rest. Finding such a presumption “irreconcilable” with eBay, the court ended doubt on the matter stating: “[w]e 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.” Id. at 1149. But the Federal Circuit went on to note that “courts should not entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude.” Id.

Reversing the trial court's denial of the injunction, the court explained that:

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. Id. at 1150.

The court held that the lower court had abused its discretion “by ignoring these standards, and supplanting them with its own.” Id. The court focused on the lower court's rationale for finding no irreparable harm and held that the presence of additional infringers in the marketplace does not negate irreparable harm. Id. at 1151. Rather, the court held that a patentee need not sue all infringers at once, and that suing one infringer at a time is not inconsistent with irreparable harm. Id. The court also pointed out that while the existence of a two-player market may weigh in favor of granting an injunction because it creates an inference that the patentee would lose sales to the infringer, the reverse is not true. Id.

Turning next to the “non-core” nature of Bosch's wiper blade business, the court held that the fact that only a portion of the patentee's business is affected says nothing about whether the harm can be rectified. Id. at 1152. The court reiterated that “a patent provides a right to exclude infringing competitors, regardless of the proportion that the infringing goods bear to a patentee's total business.” Id. at 1152 citing Praxair, Inc. v. ATMI, Inc. , 543 F.3d 1306, 1330 (Fed. Cir. 2008). The court held that “[a]n injury is either of the irreparable sort, or it is not” and does not turn on incidental details such as the patentee's corporate structure. Bosch, 659 F.3d at 1152. The court also noted that when the infringing product is central to the core of the patentee's business it can weigh in favor of granting an injunction ' but that the reverse is not true. Id.

The Federal Circuit held that the lower court had erred in concluding 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. The circuit court noted that: “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.” Id. In the end, the Federal Circuit held that the trial court's error “ar[ose] 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.” Id.

The court found that the facts of the case clearly demonstrated irreparable harm for Bosch where: 1) the parties were in direct competition, 2) Bosch had lost market share, and 3) Pylon did not have the financial wherewithal to satisfy a judgment. Id. The court addressed each of the remaining factors of the four-factor test in turn and concluded that three of the four factors weighed in favor of granting the injunction, with the public interest factor being neutral.

The Federal Circuit remanded the case to the lower court ' not to reevaluate the four-factor test but with direct instruction to issue the injunction, because the court concluded that further proceedings in the district court would be inappropriate when, in its view, the undisputed evidence conclusively showed that a permanent injunction was warranted and it would be unfair to Bosch to delay it. Id. at 1156-1157. Judge William C. Bryson dissented in part, agreeing that the district court erred in its application of the eBay factors but disagreeing with the decision to remand with instructions to enter an injunction. Bosch, 659 F.3d at 1157 citing eBay Inc., 547 U.S. at 394 (2006). Judge Bryson would have remanded to the district court for further findings of fact and a re-weighing of the equities. Bosch, 659 F.3d at 1158.

Conclusion

This case establishes unequivocally that, in the context of injunctive relief, a district court may not presume irreparable harm merely upon a finding of infringement of valid patent claims. The Federal Circuit's opinion makes it equally clear that there is also no presumption against irreparable harm, especially in light of a patent holder's right to exclude. But because the Bosch court focused almost entirely on the trial court's other errors, it remains to be seen whether a court's failure to consider the patentee's right to exclude is reversible error.

Veronica Mu'oz is a partner in the intellectual property practice at Hogan Lovells LLP. A trained biochemist, she is also a registered patent attorney specializing in life sciences patent litigation.