Patent Law | Expert Legal Commentary
November 30, 2011
Bosch v. Pylon: Federal Circuit Confirms Elimination of the Presumption of Irreparable Harm in Permanent Injunction Analysis
Robert Bosch, LLC v. Pylon Manufacturing Corp.
Tom Zuber of Zuber Lawler & Del Duca and Sarah Brooks of Stradling Yocca Carlson & Rauth
The Federal Circuit recently cleared the confusion resulting from eBay and confirmed that case eliminated the presumption of irreparable harm in permanent injunction analysis. In Robert Bosch, LLC v. Pylon Manufacturing Corp., 659 F.3d 1142 (2011 Fed. Cir.), the Federal Circuit reversed the district court and granted Bosch a permanent injunction without remand. The Court noted the “fundamental nature of patents as property rights” as basis for patent holders to continue to receive permanent injunctions against competitors, even without the shortcut of the presumption.
Bosch develops and owns patents on beam blades, a type of windshield wiper blade. Bosch sells these blades to retailers and car manufacturers. Pylon sells its own beam blades and competes against Bosch and other manufacturers in these markets. Id. at 1145.
Bosch sued Pylon for patent infringement on several patents related to beam blades. On Pylon’s motion, the district court bifurcated the issues of damages and willfulness. The court, through both summary judgment and jury findings, held that Pylon infringed some of Bosch’s patents. Id. at 1145-46.
Bosch then moved for entry of a permanent injunction. The court noted that in analyzing permanent injunctions, other courts “frequently focused upon the nature of the competition between plaintiff and defendant in the relevant market.” Id. at 1146. Further, the court also noted a “tendency among district courts to award permanent injunctions: (1) under circumstances in which the plaintiff practices its invention and is a direct market competitor; and (2) where the plaintiff’s patented technology is at the core of its business.” Id. Using these factors, the court denied Bosch’s motion, citing the existence of additional competitors besides Pylon and the non-core nature of the wiper-blade business to Bosch’s business as a whole. Bosch then appealed to the Federal Circuit. Id.
Federal Circuit Confirms the Elimination of Presumption of Irreparable Harm
The Federal Circuit noted that a patentee seeking a permanent injunction must meet a four-factor test: (1) that it has suffered an irreparable injury; (2) that remedies are available lat 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. Id. at 1148.
Prior to eBay, courts generally applied a presumption of irreparable harm following judgment of infringement and validity in order to support the issuance of permanent injunctions. Id. However, eBay left an open question as to whether the rebuttable presumption of irreparable harm remained. The Court used this case to “confirm that eBay jettisoned the presumption of irreparable harm as it applies to determining the appropriateness of injunctive relief.” Id. at 1149. Yet the Court noted that even though the presumption no longer remains, the right to exclude remains and patentees can still ask for permanent injunctions.
Court Grants Permanent Injunction without Remand
On review, the Court found that the district court committed two legal errors and a clear error in judgment in reaching its decision not to grant a permanent injunction. The first error was the court’s contention that the absence of a two-player market cut against a finding of irreparable harm. The Court found this logic weak, as Bosch sought to protect itself against lost sales not only from Pylon, but other potential infringers. Id. at 1151. The second error was the court’s emphasis on the non-core nature of Bosch’s beam wiper business. The Court found that if this factor was given so much weight, companies would simply reorganize their operations around single-product subsidiaries. Id. at 1152.
The Court also found a clear error in judgment, as it found the facts demonstrated irreparable harm, and thus Bosch was entitled to a permanent injunction. Among the four factors, the Court first noted that Bosch demonstrated irreparable harm by showing the direct competition between Bosch and Pylon in numerous segments, including retail and OEM markets, in which Bosch lost sales to Pylon. Id. at 1154. Further, the Court cited evidence that Pylon may be unable to pay a judgment, thus leaving Bosch without recourse absent a permanent injunction. Id. On the second factor, the Court found that monetary damages alone would not fully compensate Bosch for lost market share and price erosion due to Pylon’s infringement. Moreover, the Court suggested that district courts should assess whether a monetary judgment is meaningful at all in light of an infringer’s inability to pay. Id. at 1155-56.
On the third factor of size, the court was not persuaded by the fact that Bosch is a multinational enterprise, while Pylon is a small domestic corporation. “A party cannot escape an injunction simply because it is smaller than the patentee or because its primary product is an infringing one.” Id. at 1156. Lastly, the Court found the fourth factor of public interest to be neutral. Id.
In summation, the Court found that Bosch demonstrated its need for a permanent injunction against Pylon. The Court found the facts so strong in Bosch’s favor that it did not remand the case to the district court. “Remand is particularly inappropriate here because it would only delay relief to which Bosch currently is entitled.” Id. at 1156-57.
As the presumption of irreparable harm is no longer available, patent holders must now show how the four-factor test weighs in favor of granting a permanent injunction. However, the Court’s swift action in Bosch demonstrates that the Court understands of the importance of such relief in the face of continued infringement and the potential inability to satisfy a monetary judgment. Parties facing patent infringement litigation should contact experienced patent counsel to see how Bosch affects your case.
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