October.18.2011
Prior to the Supreme Court's 2006 decision in eBay v. MercExchange, a patent plaintiff was awarded an injunction as a matter of course after proving infringement and validity. 547 U.S. 388 (2006). eBay abolished this rule in favor of the traditional four-prong equitable test[i] for injunctions, creating a great deal of uncertainty as to what circumstances would permit a successful patent plaintiff to obtain an injunction. In its recent decision in Robert Bosch LLC v. Pylon Mfg. Corp., No. 2011-1096 (10/12/2011), the Federal Circuit has resolved some of this uncertainty by finding that a patent plaintiff can obtain an injunction on showing that the infringing product competes with the patentee's product and that the patentee is losing customer accounts and business prospects to the accused infringer.
Bosch is a large corporation involved in many areas of business, including selling "beam-type" wiper blades according to a patented Bosch design. Bosch sued Python, a company that only sells windshield wiper blades, for infringement of several Bosch patents covering the beam-type blade. Bosch obtained a jury trial verdict that two of its patents were valid and infringed.
Following the jury trial verdict, Bosch moved for an injunction against the infringing Python windshield wiper blades. To show irreparable harm, Bosch presented unrebutted evidence that it had lost customers to Python as well as access to potential customers and that Python would not be able to satisfy a money judgment. Judge Sue Robinson of the District of Delaware found that this evidence was inadequate to meet the "irreparable harm" prong of the injunction test, finding 1) Bosch had failed to identify a relevant market in which the parties competed (by failing to show the parties' relevant market shares); 2) Bosch's evidence failed to account for the fact that wiper blade market had multiple competitors; and 3) Bosch was not irreparably harmed by competition to a "non core" business. Id. at 4.
On appeal, the Federal Circuit confirmed that eBay had "jettisoned" any presumptions or "short-cuts" to showing any of the prongs for receiving a permanent injunction, including any presumption of "irreparable harm," noting that post-eBay cases in the Second and Ninth Circuits had abrogated the presumption of irreparable harm in the context of copyright cases. Id. at 10 (citing Perfect 10, Inc. v. Google, Inc., – F.3d ---, 2011 WL 3320297 (9th Cir. Aug. 3, 2011) and Salinger v. Colting, 607 F.3d 68, 76-78 (2d Cir. 2010)). Nevertheless, the Court cautioned that "although eBay abolishes the Court's 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" given the "patentee's right to exclude." The Court further found that district courts did not "act on a clean slate" in considering injunctions, finding that prior Federal Circuit case law concerning injunctions between business competitors should continue to inform the injunction analysis in competitor cases post-eBay.
The Court of Appeals in Robert Bosch LLC found that the district court "erred in relying exclusively on the presence of additional competitors and on the non-core nature of Bosch's wiper blade business." First, the Court found that the fact that competitive harm that otherwise qualified as "irreparable harm" could still be enjoined even if the patentee had other businesses. The Court then took the unusual step of reversing the denial and entering an injunction (rather than remanding to the district court to consider the question again), based on the testimony and documents showing:
(1) Bosch and Pylon competed in three sales channels.
(2) Bosch had lost business from Wal-Mart, a significant customer, to Pylon and losing Wal-Mart business meant that Wal-Mart's competitors (such as Sears, Target and K-Mart) had a reduced incentive to stock Bosch wipers. The Court relied on the fact Bosch lost Wal-Mart business to Pylon to rebut the argument that Bosch could not attribute its losses directly to Pylon's infringement.
(3) Documents showed that Pylon and its corporate parent faced a "moderate risk" bankruptcy and could only obtain high interest financing, further evidencing their shaky financial state.
The Federal Circuit in Robert Bosch LLC was interested in clarifying the post-eBay standards for entering an injunction in patent cases between business competitors. By reversing a denial of an injunction (under an "abuse of discretion" standard), and entering an injunction without remand, the Court has sent a strong signal that an injunction against a competing product remains a viable remedy in competitor patent disputes, notwithstanding the Supreme Court's eBay decision. Moreover, the Federal Circuit appears to have set a relatively low standard for showing irreparable harm in these cases lower than it otherwise could have, by entering an injunction without a detailed economic analysis of losses attributable to the infringing activities (as opposed to other market factors) or other expert testimony on the matter of irreparable harm.
[i] The four-prong test requires a party to show (1) that the party requesting the injunction 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.