Monsanto Co. v. Geerston Seed Farms
In the recent Supreme Court case of Monsanto Co. v. Geertson Seed Farms, the Court shed some additional light on how district courts should assess the factors required to determine whether to impose an injunction. The Monsanto decision did not concern patents, however it raises some interesting issues that would apply to injunctions in the patent context, particularly when a patent is found to be infringed in a district court litigation, but is also under concurrent reexamination. See our earlier discussion of the use of patent reexamination to defeat an injunction for more information on this issue.
Specifically, the Monsanto decision noted that “[a]n injunction is a drastic and extraordinary remedy, which should not be granted as a matter of course. If a less drastic remedy … was sufficient to redress respondents’ injury, no recourse to the additional and extraordinary relief of an injunction was warranted.” Monsanto Co. v. Geertson Seed Farms, 130 S. Ct. 2743, 177 L. Ed. 2d 461, 481 (June 21, 2010).
In Monsanto, applying the traditional four-factor test for injunctions, the Supreme Court found that the District Court had abused its discretion in enjoining a federal administrative agency from deregulating a species of plant pending the completion of an environmental impact statement. Id. at 481. The Court felt that simply vacating the federal administrative entity’s decision could redress Respondents’ injury, thus it was unnecessary to resort to the “additional and extraordinary relief of an injunction.” Id.
The potential effect of Monsanto on patent litigation involving concurrent reexamination was not lost on patent practitioners. Just a few short weeks after the decision in Monsanto, in an amicus brief to the Federal Circuit, Verizon Communications, called attention to Monsanto’s aversion to injunctions. Br. for Verizon Commc’n at 4, Tivo, Inc. v. Echostar Corp., No. 2009-1374 (Fed. Cir. July 2, 2010). In particular, Verizon applied the concepts of Monsanto to injunctions issued in connection with a patent pending reexamination, stating that “[c]ourts must ensure that injunctive remedies are imposed only where no legal remedy is adequate and that the public interest — including the interest in continuing innovation — is taken fully into account in crafting any injunctive remedy.” Id. at 2. Bearing in mind the point-of-view expressed by the Court in Monsanto, Verizon likewise questioned the appropriateness of permanent injunctions where a patent is undergoing concurrent reexamination. Id. at 3-11.
With respect to the four factor test for determining whether a permanent injunction is warranted, and specifically the first factor, irreparable harm, Verizon’s amicus brief makes a compelling argument that a party found to infringe a patent may suffer irreparable harm when a permanent injunction goes into effect prior to the conclusion of the reexamination of the patent-in-suit. “[T]he defendant – if a patent is invalidated – has no remedy against the patent holder as a result of losses occasioned by successful (though unjustified) patent enforcement.” Id. at 9. Verizon added that “defendant’s harm may stem from the plaintiff’s ability to strengthen its relative market position by improperly excluding the defendant from use of non-proprietary technology.” Id. This argument also finds support in Federal Circuit dicta that considers a patent “void ab initio” when found unpatentable as a result of reexamination. Standard Havens Products Inc. v. Gencor Industries Inc., 996 F.2d 1236 (Fed. Cir. 1993) (per curiam).
The second factor of the four-factor test, the inadequacy of remedies available at law, mimics very closely the proposition that injunctions are harsh and should not be issued where a lesser remedy would be sufficient. Especially where a patent is subject to pending reexamination proceedings, a lesser remedy of monetary damages may prove more appropriate. Where monetary damages are not sufficient, a preliminary injunction should be imposed, if the reexamination proceedings have not reached their final stages and the patent owner is likely to prevail on the merits.
The harshness of injunctions may also play a part in balancing hardships between the parties, the third factor of the four-factor test. Clearly, the Monsanto Court felt that an injunction, being such an extraordinary remedy, would present a great hardship for the party enjoined. Especially where the party enjoined is an alleged infringer of a patent undergoing reexamination, and thus there are questions about the validity of the patent, a permanent injunction may prove too great a hardship for the enjoined party.
In connection with the last factor, public interest, it is often argued in patent cases that the public interest serves to uphold valid patents, eliminate invalid patents, and preserve innovation. As Verizon stated, “[t]o ensure that patent law promotes rather than discourages innovation, it must calibrate infringement remedies to reflect the value of patents and the societal interests in continuing innovation and competition.” Br. for Verizon at 1. Where the validity of a patent is in question, enjoining the public from making, using, or selling the patented invention may not serve the public interest to uphold only valid patents or to preserve innovation.
Clearly, an infringer’s request to delay entry of a permanent injunction until reexamination concludes is more likely to be well-taken by a district court when the reexamination is near conclusion and rejecting the patent owner’s claims. Depending on the length of time that passes before a litigant requests reexamination of a patent, either party could argue that the timing of the request supports it’s own interests under the four factor test and the balancing of the equities, as always, the earlier the filing the better.