The
multicountry patent infringement litigation between Apple and Samsung has
resulted in some subtle--or perhaps not-so-subtle--modifications to the
standard for granting preliminary (a/k/a interlocutory) injunctions in both the
U.S. and Australia.
My
book (p.106 n.127) very briefly sketches out the alteration in U.S. law, which
occurred shortly before the book went to press.
To flesh it out just a little more, under U.S. law a court considering
whether to grant a preliminary injunction in a patent infringement case must
determine whether the plaintiff has shown “[1] that he is likely to succeed on
the merits, [2] that he is likely to suffer irreparable harm in the absence of
preliminary relief, [3] that the balance of equities tips in his favor, and [4]
that an injunction is in the public interest.”
Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1375-76 (Fed.
Cir. 2009) (quoting Winter v. Nat. Res. Def. Council, Inc., 129 S. Ct. 365, 374
(2008)). Last year, however, in interlocutory
appeals arising out of the two Apple v.
Samsung cases before Judge Koh, the Federal Circuit held that a party
seeking a preliminary injunction must show, as part of the irreparable harm
requirement, a causal nexus between the alleged infringement and the alleged
harm. See Apple, Inc. v. Samsung Elecs. Co., 678 F.3d 1314, 1324-25 (Fed.
Cir. 2012) (holding that “the district court was correct to require a showing
of some causal nexus between Samsung's infringement and the alleged harm to
Apple as part of the showing of irreparable harm. To show irreparable harm, it
is necessary to show that the infringement caused harm in the first place.
Sales lost to an infringing product cannot irreparably harm a patentee if
consumers buy that product for reasons other than the patented feature. If the
patented feature does not drive the demand for the product, sales would be lost
even if the offending feature were absent from the accused product. Thus, a
likelihood of irreparable harm cannot be shown if sales would be lost
regardless of the infringing conduct”; moreover, “[a] mere showing that Apple
might lose some insubstantial market share as a result of Samsung's infringement
is not enough. As the Supreme Court has pointed out, a party seeking injunctive
relief must make ‘a clear showing’ that it is at risk of irreparable harm,
which entails showing ‘a likelihood of substantial and immediate irreparable
injury’”) (citations omitted); Apple,
Inc. v. Samsung Elecs. Co., 695 F.3d 1370, 1375 (Fed. Cir. 2012) (reversing,
for lack of a sufficient nexus, the grant of a preliminary injunction directed
against the Galaxy Nexus, no pun intended).
If this standard continues to govern, it would seem to make it rather
difficult for the owner of a patent that reads on a relatively minor component
of a complex end product to obtain a preliminary injunction.
Within
the Commonwealth, the courts have sometimes cited with approval American Cyanamid Co. v. Ethicon Ltd., [1975]
A.C. 396, a decision of the British House of Lords, in which Lord Diplock
asserted that the party moving for a preliminary injunction is not required to
prove a probability of success or prima facie case, but rather only that “the
claim is not frivolous or vexatious, in other words, that there is a serious
question to be tried.” If the movant succeeds
with regard to this issue, the court then weighs the balance of conveniences, considering
both whether the moving party “would be adequately compensated by an award of
damages for the loss he would have sustained as a result of the defendant’s
continuing to do what was sought to be enjoined between the time of the
application and the time of the trial.” As
discussed in my book (pp. 177-78), however, Lord Diplock’s analysis has its
critics, and the Cyanamid analysis has
not been applied in an overly literal sense within Australia or other members
of the Commonwealth. In any event, the
Full Court of the Federal Court of Australia in Samsung Electronics Co. v. Apple Inc. [2011] FCAFC 156, has now clarified
that the correct analysis for determining whether to grant a preliminary injunction
consists of two aspects: first whether
the plaintiff has made out a prima facie case; and second, whether the balance
of conveniences favors entry of the injunction.
This second element encompasses the inquiry into irreparable harm and
adequacy of the remedy at law, as well as the public interest:
63 The interaction
between the Court's assessment of the likely harm to the plaintiff, if no
injunction is granted, and its assessment of the adequacy of damages as a
remedy, will always be an important factor in the Court's determination of
where the balance of convenience and justice lies. To elevate these matters
into a separate and antecedent inquiry as part of a requirement in every case
that the plaintiff establish “irreparable injury” is, in our judgment, to adopt
too rigid an approach. These matters are best left to be considered as part of
the Court's assessment of the balance of convenience and justice even though
they will inevitably fall to be considered in most cases and will almost always
be important considerations to be taken into account. . . .
66 In exercising that discretion, the Court is
required to assess and compare the prejudice and hardship likely to be suffered
by the defendant, third persons and the public generally if an injunction is
granted, with that which is likely to be suffered by the plaintiff if no injunction
is granted. In determining this question, the Court must make an assessment of
the likelihood that the final relief (if granted) will adequately compensate
the plaintiff for the continuing breaches which will have occurred between the
date of the interlocutory hearing and the date when final relief might be
expected to be granted. . . .
68 It may also
be necessary to consider and evaluate the impact that the grant or refusal of
an injunction will have or is likely to have on third persons and the public generally.
For
a good discussion of recent Australian case law on interlocutory injunctions
(and other issues), see King & Wood Mallesons commentaries on leading cases
for 2012 and 2011. Relevant case law for 2013 includes the Full
Court’s opinion in Generic Health Pty Ltd v. Otsuka Pharmaceutical Co., [2013] FCAFC
17, and Justice Foster’s opinion in Embertec Pty Ltd v. Energy Efficient
Technologies Pty Ltd, [2013] FCA 2.
Purely
as a theoretical matter, I think it is very difficult to make any definitive
statements about how often courts should issue preliminary injunctions. Judge Posner once tried to reduce the
relevant considerations to a formula, under which a court should grant a
preliminary injunction if P x HP > (1 – P) x HD, where
P is the plaintiff’s probability of success on the merits, HP the
harm the plaintiff will suffer if the injunction is not granted, and HD
the harm the defendant (and third parties) will suffer if the injunction is granted.
See Am. Hosp. Supply Corp. v. Hosp.
Prods., 780 F.2d 589, 593–94 (7th Cir. 1986); cf. Douglas Lichtman, Uncertainty
and the Standard for Preliminary Relief, 70 U. Chi. L. Rev. 197 (2003). The Australian court’s analysis seems, to me,
consistent with Judge Posner’s framework, insofar as it recognizes the
interdependence of the relevant factors.
Though I have not yet read it, apparently in his latest updates to his excellent and highly respected looseleaf treatise on Injunctions and Specific Performance (in Canada), Justice Robert Sharpe of the Ontario Court of Appeal sharply criticizes Cyanamid’s reluctance to look at the merits. You can add this to the list of critics.
ReplyDeleteThanks! I will ask our library to track down a copy for me.
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