Irreparable harm in patent law

In my prior post (The Federal Circuit Clarifies Injunction Requirements in Patent Cases), I reviewed the Titan case, but my curiosity was piqued by the Court of Appeals noting that irreparable harm, the balance of harms, and the public interest all weighed in favor of the movant; the injunction was denied only because of an unlikelihood of success. So I pulled the lower court’s opinion to see what it said on these subjects: of interest to those who can show a likelihood of success and need to argue these other factors as well.

Patent holders have an interest in not being forced to license their invention. The right to exclude is important. So many cases hold that a presumption of irreparable harm arises from infringement itself.   Most injunction cases rely on an inability to prove money damages to justify irreparable harm arguments, but patent infringement allows money damages, and permits tripling them if the infringement is willful. Why an injunction, then?

The court noted that the potential loss to the moving party may include loss of trade, sales, reputation, and goodwill, some of which may never be remedied with money damages, and the size of the parties’ relative investment.    The court spent time analyzing only a few of these elements.  

  1. The court considered delay, noting that delay in pursuing rights under a patent can negate an argument of irreparable harm, but here the movant explained the delay by its lack of knowledge of infringement, its immediate retention of counsel once discovered, and the short time that elapsed between that time and its sending the cease and desist letter, the investigation of the claims, followed by the lawsuit. The timeline satisfied the court and negated the delay argument.
  2. The reputation component. The inventor can select the companies he or she wants to make the product; if they do so badly, the inventor’s reputation suffers. The opponent failed to offer proof to this argument, so the court deemed that irreparable harm was proven.
  3. Loss of goodwill. It is difficult to quantify the costs of customer confusion. This occurs if one company is licensed to manufacture the product or if the inventor manufactures it; another similarly appearing or functioning product bleeds off sales. Why can’t this be compensated in money damages from the bleedor? The value of a one-time purchase is more than the profit from the sale. Collateral products might be purchased, or the buyer might return for later sales to the same source at a later time, and it is difficult to determine the value of those sales, all of which is captured in the concept of goodwill, damage to which is a harm that cannot easily be quantified. 
  4. The movant explained its great investment in developing the products based on the patent. This went unrebutted by the opponent (who could have explained how much it spent to develop its allegedly infringing product). 

Protecting the Judge

At a presentation last week to the DuPage County Bar Association, I mentioned that the federal courts required the movant to present a draft order along with the motion for a temporary restraining order or preliminary injunction. Illinois and many other states lack this requirement, but following a suggestion made by Maxwell II and Jacobs, I said it was useful to focus your attention on the exact relief you needed: who you are going to enjoin and what you are going to prohibit or require, because“[t]he first thing the court wants to know is precisely what action it is being asked to take.”  Edward B. Maxwell II & Jack B. Jacobs, How to Win an Injunction, 10 Litig. 20, 21 (1983). 

Afterward, Dupage County Circuit Court Judge Kenneth L.Popejoy agreed that it was useful for a Judge to see exactly what the movant was proposing, but mentioned a more important point: Judges are required to make specific findings of fact and conclusions of law. A draft order helps them focus on what facts have been shown and what conclusions the movant thinks are required by the facts. As a practitioner, I instantly agreed. 

One of the functions of an injunction requestor is to protect the court from being reversed on appeal or having to reconsider an order. To some extent this is true in every case, but injunctions happen quickly and interlocutory appeals are permitted, so an early mistake might not be as recoverable in injunction actions as it would be in ordinary litigation. Why embarrass a Judge by persuading him or her to enter an order that on its face is erroneous?

In a recent case, for example, my opponent got an ex parte TRO and tendered a draft order without mentioning a bond. In federal court, a bond is required, although the court has discretion to set the amount. Failure to discuss the bond required is a reason to vacate the TRO. In our motion opposing the extension of the TRO, we pointed out how the movant (not the Judge) had erred in failing to post a bond, and the Judge ruefully noted that perhaps he should have required one, and thereafter brokered a reasonable agreed order. I liked being able to challenge the credibility of an opponent on a clear requirement in my first appearance in the case.