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Existence of other licenses under patent does not preclude finding of irreparable harm

January 05, 2009
Post by Blog Staff

In a decision Tuesday, the Federal Circuit affirmed a district court's grant of a permanent injunction. The district had previously granted a permanent injunction after a jury found willful infringement. In a previous appeal, the Federal Circuit affirmed the finding of willful infringement, but vacated the permanent injunction because the district court did not consider the four-factor test mandated by the Supreme Court's decision in eBay v. MercExchange (which was decided while the appeal was pending).

On remand, the district court again granted a permanent injunction. The Federal Circuit affirmed, holding there was no abuse of discretion, although it was a "close case." The patentee had previously licensed the patent to two other parties (one as the result of settlement of a previous infringement suit), but the court held the existence of previous licenses did not mean an injunction could not issue. Instead, it was one factor to consider among others when considering whether there is irreparable harm, including "the identity of the past licensees, the experience in the market since the licenses were granted, and the identity of the new infringer." Finding no abuse of discretion by the lower court, on this or the other three factors, the Federal Circuit affirmed the injunction.

More detail of Acumed LLC v. Stryker Corp after the jump.

Acumed and Stryker are both manufacturers of medical devices. Acumed is the assignee of U.S. Patent number 5,472,444 ("the '444 patent), directed to a proximal humeral nail ("PHN"), an orthopedic device used in treatment of fractures of the upper arm bone, the humerus. Acumed's PHN is sold under the trade name "Polarus." Stryker has a similar product, the T2 PHN, which was found to infringe the '444 patent.

In the previous decision on appeal in the case, the Federal Circuit affirmed the finding of willful infringement by Stryker of the '444 patent, but remanded the case to the district court in light of the Supreme Court's eBay decision, which required that a patentee satisfy the four factor test before a court can grant a permanent injunction. Both parties submitted memoranda to the district court, which ultimately decided the four factors favored Acumed, and therefore a permanent injunction would be appropriate. Stryker appealed.

The Federal Circuit affirmed the permanent injunction, although it stated it was a "close case." The Federal Circuit reviews district court decisions regarding injunctions for abuse of discretion, so Stryker had to show "that the court made a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings.

Considering first the issues of irreparable harm and lack of adequate remedy at law, Stryker argued that Acumed's willingness to previously grant licenses to use the '444 patent demonstrated that money damages, in the form of a reasonable royalty, would be an adequate remedy, and the court abused its discretion in failing to so hold. This conclusion was rejected in eBay, as the willingness of a patent holder to license his patent is insufficient, in itself, to establish a lack of irreparable harm. Instead, the previous grant of licenses is just one factor to consider, along with other facts regarding the licenses, such as "the identity of the past licensees, the experience in the market since the licenses were granted, and the identity of the new infringer." Stryker also argued that the court's willingness to consider three district court cases cited by Acumed was an abuse of discretion, because in each of those cases the patentee had not previously granted a license to the patent. According to the Federal Circuit, however, both the weighing of evidence and the consideration given to prior case law are within the discretion of the court, and the court did not make any legal or factual errors in its consideration of the evidence and case law.

The Federal Circuit also held the district court's determination that the balance of hardships favored Acumed was not incorrect. The district court refused to consider evidence of hardship to Stryker's customers and patients, as well as Stryker's expenses in designing and marketing the infringing product. Under this factor, only the hardship between the plaintiff and defendant are balanced. Further, expenses relating to an infringing product are irrelevant to the defendant's hardship, because a party "who elects to build a business on a product found to infringe cannot be heard to complain if an injunciton against continuing infringement destroys the business so elected."

Finally, Stryker argued that its T2 PHN product was safer and superior to Acumed's Polarus, and therefore the public interest would be disserved by an injunction against Stryker. The district court did not find sufficient objective evidence to make such a conclusion, noting there was also evidence that the problems with Acumed's product were minimized and, as noted previously, there are two licensees of the patent from which alternatives to Acumed's product may be obtained. The Federal Circuit once again found no abuse of discretion in this analysis.

As a result, the Federal Circuit found the district court had not abused its discretion, and affirmed the decision to grant a permanent injunction against Stryker.

To read the full decision in Acumed LLC v. Stryker Corp., click here.


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