Injunctions: Using Patents to Stop Competitors

What is an Injunction?

Although money damages may seem like an obvious first choice, patent owners (or licensees with a right to sue) should also consider seeking equitable relief through an "injunction." An injunction is a court order that stops the infringer from committing the infringing acts covered by the patent claims namely making, using or selling goods or services that infringe.

This blog highlights three popular options for getting an injunction. Keep in mind that these options are not mutually exclusive, so all three can be pursued.

Option 1: Get a Permanent Injunction in Federal District Court

For many years, getting an injunction in the United States after a finding of patent infringement was straightforward, available "absent exceptional circumstances."[1] The idea was, after all, written in to the Constitution.[2] If denied, the judge would have to explain why. The long-standing rationale was that granting permanent injunctions validated the patent system because a patent gives its owner the exclusive right to the invention, which includes the right to exclude others from making, using, or selling it.

But in 2006, the analysis changed with the Supreme Court's decision in eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006). Scrapping decades-worth of Federal Circuit precedent, the Supreme Court held that traditional principles of equity applied in deciding whether to grant an injunction. Namely, a plaintiff must show (1) that it has suffered irreparable injury, (2) that remedies at law (e.g., monetary damages) are inadequate, (3) that a balancing of hardships favors a grant of injunction, and (4) that the public interest would "not be disserved" by the grant of a preliminary injunction.

Over time the District Courts evolved a body of law shedding light on how to apply these factors. The third factor balancing of hardships between patent owner and infringer has proven to be the pivotal factor and the most difficult to apply. The first two factors "irreparable injury" and "inadequate legal remedy" are often analyzed together, given that they are two sides of the same coin. After all, an "irreparable" injury presumes to some degree that remedies at law, i.e., money alone, is inadequate. Lastly, resolution of the public interest factor often depends on how the infringing product will be used by the public (e.g., is the product a life-saving medical device or a commodity product with many substitutes?).

eBay was a fundamental paradigm shift: it made permanent injunctions harder to get. And while parties can still apply for what's called a "preliminary injunction" at the start of the case using another test similar to eBay, those are even more difficult to obtain. Nonetheless, those with strong U.S. patents should consider this option and keep it in its arsenal, especially where the next two options (ITC and foreign courts) provide no recourse.

Option 2: Get an Exclusion Order at the International Trade Commission (ITC)

A second option, where the infringing goods are imported, is to seek an "exclusion order" at the ITC. Put simply, an exclusion order "directs the U.S. Customs and Border Protection to exclude articles from entry into the United States."[3] Exclusion orders can be "general" or "limited." Limited exclusion orders apply specifically to certain goods coming from a certain entity, while general exclusion orders exclude all infringing articles without regard to the source.

The relevant statute is Section 337 of the Tariff Act of 1930, which declares unlawful "[t]he importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee, of articles that (i) infringe a valid and enforceable United States patent. . . or (ii) are made, produced, or mined under, or by means of, a process covered by the claims of a valid and enforceable United States patent."[4] However, not everyone can take advantage of Section 337. The patent owner must demonstrate there is a "domestic industry" for the patented product, which practically means the patent owner is making, using or selling the patented product in the U.S.[5]

To get an exclusion order, the patent owner must first file a complaint with the Commission. Then, the Commission's Office of Unfair Import Investigations (OUII) examines the complaint and makes a recommendation on whether to institute a "Section 337 investigation." In many cases, institution is granted within 30 days of the filing of the complaint, with the investigation to be completed "at the earliest practicable time."[6]

The ITC has two key advantages over its District Court counterpart. First, given the statutory mandate, investigations are completed quickly, typically within 12-18 months. In contrast, district court cases can take two to four years to resolve. And second, the ITC wields broad jurisdiction, including nationwide subpoena power and in rem (over the property) jurisdiction on goods imported into the United States.[7] This in rem jurisdiction is significantly broader than in personam (over the person) jurisdictional requirement that must be met in district court.

Despite these advantages, money damages may not be sought at the ITC, as are they not authorized by statute. This limitation can be practically overcome by bringing a simultaneous district court action.

Option 3: Seek Injunctive Relief in a Foreign Court

Foreign courts are yet another option for parties seeking injunctive relief. This option may be preferred by those with strong foreign patent portfolios. In the two most popular foreign jurisdictions for patent litigation, Germany and China, a patentee has better legal arguments for an injunction compared to U.S. District Courts.

In Germany, for example, the German Patent Act gives a patent holder the right to request an injunction if an infringement is found. Injunctions are automatic, granted upon the finding of infringement, which can occur relatively quickly (generally between 12 and 15 months). However, recently there have been efforts to modify German patent law to change this remedy. Such efforts may have an impact on the calculus for getting an injunction.[8]

Likewise, in China, permanent injunctions are often available for the patent owner upon a finding of patent infringement. An added advantage is an injunction from a Chinese court can be used to prevent exports outside the country's borders.

Conclusion

Whether to pursue injunctive relief domestically, abroad, or at the ITC requires many considerations. Patent owners will have to assess the strengths and weaknesses of their patent portfolio, and consider, geographically, where the alleged infringer poses serious threats. For a coordinated, global attack, consider pursuing a combination of all three options.

[1] eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 390 (2006).

[2] Art. I, Sec. 8, Cl. 8, "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."

[3] https://www.usitc.gov/intellectual_property/documents/337_faqs.pdf

[4] 19 U.S.C. 1337(a)(1)(B).

[5] 19 U.S.C. 1337(a)(3).

[6] 19 U.S.C. 1337(b)(1).

[7] https://www.fr.com/services/litigation/itc-litigation/

[8] https://www.natlawreview.com/article/draft-amendment-to-german-patent-act-may-limit-availability-injunctions

More questions? Contact the authors or visitFish's Intellectual Property Law Essentials.