December 2, 2012
Notwithstanding a series of cases that seemed to tip the scales against enjoining infringers from continuing to infringe, the patentee’s right to enjoin infringing conduct remains not only alive and well, but presumptive. That is the teaching of the Federal Circuit in the recent case of Edwards Lifesciences v. Corevalve.
In eBay v. MercExchange, the Supreme Court reminded us that injunctions in patent cases were not to be granted automatically, but rather subject to principles of equity. Several subsequent cases seemed to further tilt the pendulum toward the infringer, notably ActiveVideo Networks, Inc. v. Verizon Communications, in which the Federal Circuit vacated a permanent injunction after a jury verdict of infringement.
In Edwards Lifesciences, the Federal Circuit seems to have righted the ship. The Court explained:
A patentee’s right to exclude is a fundamental tenet of patent law. The innovation incentive of the patent is grounded on the market exclusivity whereby the inventor profits from his invention. Absent adverse equitable considerations, the winner of a judgment of validity and infringement may normally expect to regain the exclusivity that was lost with the infringement…The Court in eBay did not hold that there is a presumption against exclusivity on successful infringement litigation. The Court did not cancel 35 U.S.C. §154, which states that “Every patent shall contain . . . a grant . . . of the right to exclude others from making, using, offering for sale, or selling the invention,” nor did the Court overrule Article I section 8 of the Constitution, which grants Congress the power to “secur[e] for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The Court held that equitable aspects should always be considered, stating: “We hold only that the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards.” eBay, 547 U.S. at 394. Statutory and historical as well as commercial considerations impinge on every equitable determination. Precedent illustrates the variety of equitable considerations, and responsive equitable remedy in patent cases: for example, the grant of a royalty-bearing license instead of imposing an injunction in situations where the patentee would experience no competitive injury, or where there is an overriding public interest in continued provision of the infringing product.
This is as it should be. The most fundamental of intellectual property rights, like other property rights, is the right to exclude. It is only in un-ordinary circumstances that the patentee’s right yield to some other equitable consideration. What remains questionable in my mind is whether such circumstances should include a case like ActiveVideo v. Verizon. By refusing the injunction and imposing a license fee, doesn’t the court substitute its wisdom as to the appropriate fee for that of the parties, who would likely negotiate a license if the injunction were granted?