USPTO, DOJ Statement of Interest Supports Injunctive Relief  

Need to know

• The U.S. Patent and Trademark Office (USPTO) and Department of Justice (DOJ) have issued a statement of interest advocating for broader availability of injunctions in patent infringement actions even where the patentee is a non-practicing entity, further reflecting the agencies’ pro-injunction turn under the current administration. 

Recently, the USPTO and DOJ (“Agencies”) jointly filed a statement of interest (“Statement”) under 28 U.S.C. § 517 to provide their views on considerations relevant to assessing whether courts should grant permanent injunctions in patent infringement cases. The Statement is “in support of neither party” in an underlying case in which a non-practicing entity is seeking a permanent injunction blocking a large conglomerate. Statement at 3. Rather, the Statement represents a broad policy statement for “consistent and correct application and enforcement of the intellectual property laws, including the Patent Act, to safeguard patents, fuel economic growth, and spur innovation to advance American freedoms.” Statement at 1.  

Recognizing that “[t]he innovation incentive of the patent is grounded on the market exclusivity,” the Agencies make a broad policy statement for “ensuring this incentive system functions effectively to encourage innovation not only from large firms, but also from small business and innovators.” Statement at 2. According to the Agencies, “the patentee’s ‘right to exclude . . . has its roots in the Constitution’ itself, and courts can take into account ‘the nature of patent rights,’ including this right to exclude, ‘in the appropriate equitable analysis.’” Id. (internal citation omitted). The Agencies further note that “[t]he incentive to innovate at the heart of the Patent Act is undermined when the availability of injunctions to block infringement is unduly limited.” Id.  

Historical perspective: The eBay factors

Advocating for a “robust patent system,” the Statement specifically deals with the equitable principles of the Supreme Court's eBay standard. Statement at 3-4. As a refresher, eBay requires a party seeking an injunction to satisfy a four-factor test:  

1. That it has suffered an irreparable injury
2. That remedies available at law, such as monetary damages, are inadequate to compensate for that injury
3. That, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted
4. That the public interest would not be disserved by a permanent injunction.  

eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).

In revisiting the eBay case, the Agencies cite to Chief Justice Roberts’ concurrence in which he observed that since “at least the early 19th century, courts have granted injunctive relief upon a finding of infringement in the vast majority of patent cases.” Statement at 5-6 (internal citation omitted). Justice Roberts further explained that this “long tradition of equity practice is not surprising, given the difficulty of protecting a right to exclude through monetary remedies that allow an infringer to use an invention against the patentee’s wishes” — a difficulty that implicates both irreparable harm and the inadequacy of monetary damages. Id.  

Since eBay, the Agenies note that the Federal Circuit has continued to recognize that the “axiomatic remedy for trespass on property rights is removal of the trespasser,” occasionally citing Chief Justice Roberts’ eBay concurrence as noting the historical equity practice of routinely granting injunctions for infringement. Id. Viewed through this historical lens, the Agencies believe that “[e]ven without practicing the claimed invention, the patentee can suffer irreparable injury.” Statement at 6-7 (emphasis added).

Agencies argue that non-practicing entities can still suffer “irreparable harm” and demonstrate “inadequate remedies at law” under eBay

It is the Agencies’ view that non-practicing patent holders can suffer irreparable harm from infringement without adequate monetary compensation. Statement at 7-8. According to the Agencies, neither the choice by the non-practicing patent holder to “license its patent in exchange for a monetary royalty,” nor “the existence of a damages award,” would foreclose the existence of irreparable harm. Id. “[I]rreparable harm from infringement without adequate monetary compensation for a non-practicing patentee that licenses for a royalty can occur because (1) patents can be hard to value and (2) damages can be difficult to calculate.” Id.  

According to the Agencies, patents are unique assets with “attributes both of personal property and of a public franchise, with exclusive rights.” Statement at 8. Citing precedent from traditional property law, the Agencies believe that “the loss of control over a unique product or business opportunity” can result in "unquantifiable losses for which there is no adequate remedy at law." Id.  

The Agencies go on to explain the difficulty of calculating damages from patent infringement. Statement at 9-10. According to the Agencies, calculating an ongoing "fair and reasonable royalty" for patent damages is uncertain, expensive, and difficult, which courts have sometimes described as “a difficult judicial chore, seeming often to involve more the talents of a conjurer than those of a judge.” Id. As support, the Agencies cite a case in which the Federal Circuit found irreparable injury and lack of adequate legal remedy based on the difficulty of calculating monetary damages in a competitive “design win” market. Id.  

Final caution

Having discussed the first two eBay factors, the Statement cautions that merely establishing irreparable harm and inadequate legal remedies are not enough to qualify for injunctive relief. Rather, a patentee must also satisfy the remaining two factors of the eBay test, i.e., proving that the "balance of hardships" favors an injunction and that the public interest would not be harmed. Statement at 10-11. In this regard, the Agencies strongly believe that “traditional equitable practice and eBay require courts to tailor injunctive relief to the equities of the case, including the scope and timing of a potential injunction.” Statement at 11.  

The Agencies also caution that injunctions are meant to prevent the violation of patent rights, not to be punitive or give the patent owner "undue leverage.” Id. As noted by the Agencies, the leverage an injunction provides would depend on the actual value of the patent — if there are equally good non-infringing alternatives, the injunction will provide little leverage, but if the invention is essential, the leverage in negotiations will be greater. In this regard, the Agencies believe “[a]n appropriately scoped injunction leaves it to the parties, rather than courts, to determine the value of the technology.” Id.  

Takeaways

The Statement is further evidence of the current administration’s pro-injunction turn, as it follows on the heels of the Agencies’ earlier statement arguing that “the incentive to innovate at the heart of the Patent Act is undermined when the availability of preliminary injunctions to block infringement is unduly limited.” Statement of Interest of the United States of America: Radian Memory Systems LLC v. Samsung Electronics Co., Ltd., and Samsung Electronics America, Inc.; see also Joint Comment on the Public Interest of the United States Patent and Trademark Office and the United States Department of Justice (“without the exclusive rights that patents secure, breakthrough innovations would remain stranded in laboratories and workshops rather than reaching consumers through competitive markets.”)

With the USPTO and DOJ now advocating for broader use of injunctions in patent infringement suits, patent owners — whether practicing or non-practicing entities — may want to consider recalibrating their patent procurement strategies to emphasize greater patent quality.