• Federal Circuit Awards Permanent Injunction to Patentee in "Close Case"
  • March 13, 2009
  • Law Firm: Sheppard, Mullin, Richter & Hampton LLP - Los Angeles Office
  • As a result of the Supreme Court's decision eBay Inc. v. MercExchange, L.L.C., a patentee no longer can expect an automatic grant of a permanent injunction after patent infringement and validity is established. Instead, the patentee must satisfy a four-factor test by demonstrating that (1) it has suffered an irreparable injury; (2) remedies available at law (e.g., money damages) are inadequate to compensate for the injury; (3) the balance of hardships between the plaintiff and the defendant warrants a remedy; and (4) the public interest would not be harmed by a permanent injunction.

    Though this test makes it more difficult for the patentee to get relief, the Federal Circuit's December 30, 2008, decision in Acumed LLC v. Striker Corp. et al., 2008 WL 5397567, demonstrates that a patentee can obtain a permanent injunction even in a relatively close case, where the patentee licensed the patent to other major competitors. In 2004, Acumed, a small orthopedic technology company headquartered in New Jersey, filed suit in the U.S. District Court for the District of Oregon against Stryker, one of the largest orthopedic medical technology companies in the world, for infringement of U.S. Patent No. 5,462,444 ("the '444 patent"), which is directed to a type of orthopedic nail used to treat upper arm bone fractures. A jury ruled in favor of Acumed, and the Court granted a permanent injunction. During Stryker's appeal to the Federal Circuit, the Supreme Court issued the eBay decision. In view of this decision, the Federal Circuit remanded the permanent injunction issue to the District Court for reconsideration.

    After hearing additional evidence and applying the eBay test, the District Court granted Acumed's motion for permanent injunction, and Stryker again appealed to the Federal Circuit. The Federal Circuit reviewed the lower court's decision for abuse of discretion and affirmed for the following reasons:

    1) Acumed's prior licenses of the '444 patent did not contradict its claim that there was irreparable harm and a lack of an adequate remedy at law. The Federal Circuit found that the District Court did not abuse its discretion by finding that Acumed suffered irreparable harm from lost market share, and further that Acumed's previous decisions to license the '444 patent to two large competitors did not necessarily mean that an adequate remedy at law existed. Indeed, the Federal Circuit noted that the "essential attribute of a patent grant is that it provides a right to exclude competitors from infringing the patent," and "adding a new competitor to the market may create an irreparable harm that the prior licenses did not." 2008 WL 5397567, at *3.

    2) The balance of hardships tips in favor of Acumed due, in large part, to the relative sizes of the parties and the importance of the patented product to Acumed. Stryker argued that a non-commercial straight nail proffered by Acumed as an alternative to the patented product was not an acceptable alternative, and noted that a permanent injunction enjoining Stryker's use of the patented product would create a hardship for its customers and patients. The Federal Circuit agreed with the District Court's decision, however, noting that "the effect on customers and patients . . . is irrelevant under this prong of the injunction test." Id. at *4. The Federal Circuit approved of the District Court's analysis, which focused on the facts that (1) Acumed is much smaller than Stryker, and (2) Acumed's patented nail is its "flagship product." The Federal Circuit discounted Stryker's arguments regarding the expenses incurred in designing and marketing the infringing product, and the feasibility of marketing the alternative product.

    3) There was insufficient evidence that Stryker's infringing product was safer than Acumed's patented product, so the public interest would not be harmed by enjoining Stryker from selling its product. The Federal Circuit noted that the District Court found that "Acumed had made a prima facie showing that their screw works." Id. at *5. The District Court did not find Stryker's public health argument persuasive, and the Federal Circuit agreed.

    The Federal Circuit further found that the District Court did not abuse its discretion by allowing Acumed to present new evidence and arguments in its reply memorandum in support of its motion for a permanent injunction. These arguments and evidence were presented in response to new evidence presented by Stryker, and Stryker was given the chance to respond at oral argument.

    The Federal Circuit's decision in Acumed LLC v. Stryker Corp. et al. closes with an acknowledgement that this was a "close case, especially with regard to the irreparable harm and lack of adequate remedy at law prongs of the four-factor test, in view of past licenses having been granted, and the public interest prong, in light of testimony that the accused product was a medically superior one." Id. at *6. Nevertheless, the Acumed decision demonstrates that, on such close facts, a permanent injunction may be attainable.