Once a competitor has been found to infringe by a court, the next step in enforcing your patent right is to prevent that same party from infringing again. In addition to being awarded monetary damages, the patentee can ask the court to prevent future damages by issuing a permanent injunction barring the infringing product from being sold in the market. But this is not automatic. The infringer will undoubtedly point to any license the patentee has entered into and argue that if a licensing fee was good enough for the patentee then, a monetary damage award should be enough for the patentee now. But as a recent Federal Circuit case highlights, the amount of weight given to those licenses is proportional to the similarity of the facts surrounding the licenses and the current infringement.
In Acumed v. Stryker, Acumed is the assignee of U.S. Pat. No. 5,472,444 directed to a metal pin that secures pieces of a broken upper arm bone. Finding Stryker to have willfully infringed, the district court awarded Acumed damages based on lost profits and a reasonable royalty. In addition, the district court issued a permanent injunction against Stryker that prohibited it from selling its infringing device. Stryker appealed the permanent injunction to the Federal Circuit.
The Federal Circuit reaffirmed that for a permanent injunction to be issued in a patent case, as with any case, four factors must be considered: (1) the irreparable harm suffered by the patentee; (2) whether or not monetary damages are adequate to compensate for the harm; (3) whether balancing the patentee’s hardship against the infringer’s hardship weighs in favor of patentee; and (4) whether the public interest will be disserved by a permanent injunction.
The Federal Circuit explained that a permanent injunction is in accordance with the well-established right of the patentee to exclude its competitors from infringing its patent. Since monetary damages resulting from past acts do not compensate the patentee for any infringement in the future, it may be that infringement may cause a patentee irreparable harm not remediable by a monetary award (the first two factors). While the fact that a patentee has chosen to license the patent may indicate that a reasonable royalty does compensate for an infringement, it is only one factor for the courts to consider. In addition to this factor, the court should also consider: (1) the identity of the past licensees: (2) the experience in the market since the licenses were granted; and (3) the identity of the new infringer.
In this case, infringer Stryker argued that the large sum awarded to Acumed for Stryker’s willful infringement was more than enough to remedy Acumed and that no permanent injunction was necessary. In addition, Stryker pointed to past licenses of Acumed to show that there would be no irreparable harm if Stryker paid Acumed a reasonable royalty for its future infringement, allowing Acumed to continue selling the infringing devices.
The Federal Circuit agreed with the district court that the two instances of Acumed licenses were distinguishable from the facts here. In one instance a license arose as part of a settlement agreement in a court action. In the other instance the licensee was not a direct competitor to Acumed. Since Stryker was a direct competitor, and since the district court found that Acumed successfully established lost profits, the Federal Circuit found that the district court did not abuse its discretion in issuing a permanent injunction.
This case highlights the importance of the context of previous licenses when a permanent injunction is at issue. Licenses that were negotiated between two parties that are not involved in a court action are more relevant than a license arising out of a settlement agreement. This is due to the many strategic factors that may be at play in the licensing fee during a settlement. Also, a license agreement between two direct competitors is more relevant than between non-competitors. This is so because the license fee between two direct competitors more accurately gauges the market share of each company.
Filed under: Uncategorized Tagged: | permanent injunction license patent
