October 13, 2011
Bosch is a large company selling patented car windshield wiper blades. Pylon is a small company selling patented car windshield wiper blades. Unfortunately for Pylon, Bosch owns the patents. Bosch successfully sued Pylon for infringement, but the district court refused to issue a permanent injunction based on equitability considerations. The plutocratic CAFC put paid to that.
Robert Bosch v. Pylon Manufacturing (CAFC 2011-1096) precedential; Judges Bryson (dissent), O'Malley (author), and Reyna
This court reviews the denial of a permanent injunction for abuse of discretion. See i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831, 861 (Fed. Cir. 2010). A district court abuses its discretion when it acts "based upon an error of law or clearly erroneous factual findings" or commits "a clear error of judgment." Ecolab, Inc. v. FMC Corp., 569 F.3d 1335, 1352 (Fed. Cir. 2009). A clear error of judgment occurs when the "record contains no basis on which the district court rationally could have made its decision or if the judicial action is arbitrary, fanciful or clearly unreasonable." Datascope Corp. v. SMEC, Inc., 879 F.2d 820, 828 (Fed. Cir. 1989) (quoting PPG Indus., Inc. v. Celanese Polymer Specialties Co., 840 F.2d 1565, 1572 (Fed. Cir. 1988) (Bissel, J., concurring)). "To the extent the court's decision is based upon an issue of law, we review that issue de novo." Ecolab, 569 F.3d at 1352 (quoting Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1374 (Fed. Cir. 2006)).
Consistent with traditional equitable principles, a patentee seeking a permanent injunction must make a four-part showing:
(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.
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). Prior to the Supreme Court's decision in eBay, this court followed the general rule that a permanent injunction will issue once infringement and validity have been adjudged, absent a sound reason to deny such relief. See, e.g., Richardson v. Suzuki Motor Co., 868 F.2d 1226, 1247 (Fed. Cir. 1989) (citing W.L. Gore & Assocs., Inc. v. Garlock, Inc., 842 F.2d 1275, 1281 (Fed. Cir. 1988)).
eBay overturned the presumption that the CAFC had cooked into injunctive relief.
In eBay, the Supreme Court made clear that "broad classifications" and "categorical rule[s]" have no place in this inquiry. 547 U.S. at 393. Instead, courts are to exercise their discretion in accordance with traditional principles of equity. Id. at 394.
But old habits die hard, and the Corrupt Appeals for Corporations lays a heavy thumb on the scale for large corporations crushing small competitors.
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.
The abolition of categorical rules and the district court's inherent discretion to fashion equitable relief, moreover, also do not mandate that district courts must act on a clean slate. "Discretion is not whim, and limiting discretion according to legal standards helps promote the basic principle of justice that like cases should be decided alike." eBay, 547 U.S. at 395 (Roberts, J., concurring) (quoting Martin v. Franklin Capital Corp., 546 U.S. 132, 139 (2005)). In this area, as others, "a page of history is worth a volume of logic" when "it comes to discerning and applying those standards." Id. (quoting New York Trust Co. v. Eisner, 256 U.S. 345, 349 (1921) (Holmes, J.)). This wisdom is particularly apt in traditional cases, such as this, where the patentee and adjudged infringer both practice the patented technology. See id. at 396-97 (Kennedy, J., concurring) (contrasting the relevant considerations in traditional patent infringement actions with certain cases arising now "in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees," "[w]hen the patented invention is but a small component of the product," and those involving "the burgeoning number of patents over business methods" (citation omitted)).
The majority found that Bosch had suffered irreparable harm. For the plutocratic majority, the hammer hit hardest on the fact that Pylon, by the very fact of being a small competitor, deserved to be wiped out, as opposed to paying royalties.
More importantly, the questionable financial condition of both Pylon and its parent company reinforces the inadequacy of a remedy at law. A district court should assess whether a damage remedy is a meaningful one in light of the financial condition of the infringer before the alternative of money damages can be deemed adequate. While competitive harms theoretically can be offset by monetary payments in certain circumstances, the likely availability of those monetary payments helps define the circumstances in which this is so.
The appeals court wasn't going to give a fair-minded judge the opportunity to let Pylon slip the noose, so it put the injunction in place without remand.
Remand is particularly inappropriate here because it would only delay relief to which Bosch currently is entitled.
The final pouring of salt into the wound -
Costs are awarded to Bosch.
In dissent, Judge Bryson appeared weak-kneed by following the law, with willingness to let the merits be appropriately adjudged.
Bosch is large, and its wiper blade sales are only a small part of its business, while Pylon is small and wiper blades account for all of its sales. The district court regarded those facts as cutting against the issuance of an injunction on the ground that the economic impact of the lost sales would not result in irreparable harm to Bosch. The majority is correct that harm may be comparatively small but still irreparable-- if, for example, Pylon is financially unable to compensate Bosch for its losses from Pylon's ongoing infringement. But the respective size of the two parties affects another factor bearing on whether the injunction should be granted: the balance of hardships. As to that issue, the majority simply says that a party cannot escape an injunction just because it is small, and that requiring Bosch "to compete against its own patented invention" is a hardship in itself. While that may be true so far as it goes, the respective impact of an injunction on the parties is an important equitable consideration, and the impact of the injunction on each party can be significantly affected by their respective size and the nature of their business.
Whether Bosch is entitled to injunctive relief is a fact-intensive inquiry that requires a careful balancing of competing equitable concerns, none of which is dispositive.
The majority concludes that on this record any decision by the district court to deny an injunction to Bosch would be an abuse of discretion. I disagree. In my view, there are enough open questions of fact bearing on the propriety of injunctive relief that we should not bypass the district court's consideration of those factual issues on remand. It is the district court, not this court, that should consider those factors and weigh them in the overall equitable balance.
I would therefore not direct the entry of an injunction, but would follow the ordinary course of remanding for the district court to decide whether an injunction should issue based on a proper application of the four-part test for granting permanent injunctive relief. See eBay Inc v. MercExchange, L.L.C., 547 U.S. 388, 394 (2006) (remanding "so that the District Court may apply that framework in the first instance"); Ecolab, Inc. v. FMC Corp., 569 F.3d 1335, 1351-52 (Fed. Cir. 2009) ("Although the district court did not consider the eBay factors, FMC nonetheless asserts that it made the required showing and that it is entitled to injunctive relief. However, we decline to analyze the eBay factors in the first instance."); Acumed LLC v. Stryker Corp., 483 F.3d 800, 811 (Fed. Cir. 2007) ("If we were to weigh the evidence ourselves to reach a conclusion on injunctive relief, we would effectively be exercising our own discretion as if we were the first-line court of equity. That role belongs exclusively to the district court. Our task is solely to review the district court's decisions for an abuse of discretion.").
Posted by Patent Hawk at October 13, 2011 6:45 PM | Injunction