Patent Injunctions

1. Patent Injunctions April 25, 2019 Fordham Intellectual Property Law & Policy Conference David J. Kappos

2. Agenda

3. Recent Trend of Decreased Patent Injunctions The number of permanent injunctions issued in patent cases last year fell compared to recent years Source: Lex Machina

4. Root Cause of Decreased Patent Injunctions Landmark Decisions eBay v. MercExchange LLC 2006: The Supreme Court reaffirmed the traditional four-part test to determine whether a patent owner should be granted an injunction. Apple Inc. v. Samsung Electronics Co. Ltd. 2012: The Federal Circuit set a “casual nexus” standard, which allows injunctions only when the patent owner can show that people buy an infringing product because of the patented component. District courts have interpreted this standard narrowly. In a subsequent trial that found Samsung had infringed six Apple patents, a district court denied Apple’s request for a permanent injunction on the Samsung products, stating “to establish a casual nexus, Apple would need to show not just that there is demand for the patented features, but that the patented features are important drivers of consumer demand for the infringing products.” 2015: The Federal Circuit clarified its “casual nexus” standard, stating that a patent owner need only show “some connection” between the patented features and the market demand (i.e., an “impact” on consumer demand is sufficient). A Recent Interpretation Genband US LLC v. Metaswitch 2017: Following a district court’s denial of a patent owner’s permanent injunction request on the grounds that irreparable harm was not established, the Federal Circuit again clarified its “casual nexus” standard. The district court reached a conclusion that “may have relied on too stringent an interpretation of the requirement, for an injunction, that the allegedly irreparable harm is being caused by the infringement.” Instead, “the injury asserted to be irreparable [need only] be injury from the defendant’s use of infringing features.”

5. Current Landscape • A de facto compulsory licensing regime? • Ecoservices, LLC v. Certified Aviation Services, LLC (2018) • Ecoservices, LLC brought an action against a competitor, Certified Aviation Services, alleging infringement of patents claiming an automated system and method for washing turbine engines. Following a finding of patent infringement, Ecoservices filed a motion for permanent injunction, claiming irreparable harm in the form of: (1) lost market share, (2) lost future sales, and (3) erosion in the price point for engine washes. • The district court held that Ecoservices did not suffer irreparable harm to warrant permanent injunction. The court reasoned that Ecoservices did not show the lost market shares and sales were caused directly by defendant, as other competitors in the market existed. Similarly, the court reasoned that Ecoservices could not show that it would have been able to retain its original price but for the defendant’s infringement of its patents. • Verinata Health, Inc. v. Ariosa Diagnostics, Inc. (2018) • Verinata Health filed suit against Ariosa Diagnostics claiming infringement of patents directed to methods for non-invasive prenatal screenings of fetal abnormalities. Following a finding that its patents were valid and infringed, and an award of $27 million in damages, Verinata Health moved for permanent injunction. • The district court held that Verinata Health did not suffer irreparable harm, reasoning that (1) no direct competition between plaintiffs and defendant could be shown, (2) the monetary damages awarded are sufficient to compensate for the harm resulting from infringement, (3) the balance of hardships is neutral, and (4) the public interest will not be served by the issuance of a permanent injunction, in large part because the patent being infringed is not currently in practice. • Nichia Corp. v. Everlight Americas, Inc. (2016) • Nichia Corporation, an LED manufacturer, asserted a patent infringement claim and requested a permanent injunction against Everlight Americas, Inc. based on allegations of the defendant's unauthorized, infringing manufacture, use, importation, sale and offer for sale in the United States of its products. • Although the district court found for Nichia on its patent infringement claim, it denied Nichia’s request for permanent injunction on the grounds that Nichia failed to show irreparable harm. The court reasoned that Nichia does not view Everlight as a meaningful competitor and that the total sales opportunity lost to Everlight was less than $50,000 – a “drop in the bucket.”

6. Contact Information David J. Kappos dkappos@cravath.com +1 212.474.1168