Injunctions and Levels of Scrutiny

        It occurred to me the other day that there is an analogy between, on the one hand, the standards different jurisdictions apply in determining whether to deny or delay granting the prevailing patentee a permanent injunction, and the standards U.S. courts use in determining whether a statute (or any activity undertaken by the state) violates an individual’s constitutional rights.  Whether or not it is a useful analogy, I'm honestly not sure, and would be interested in hearing what readers think.

        Anyway, here is what I mean.  Suppose that the state enacts a statute that I believe interferes with my fundamental right to, let's say, freedom of speech, in violation of the First Amendment.  If I am correct in characterizing the statute as restricting my speech on the basis of my viewpoint or of its content, a court would apply “strict scrutiny” to determine whether the statute, on its face or as applied, is constitutional.  Under this standard, the statute survives only if it serves a compelling state interest and is narrowly tailored to achieve that interest (which is pretty rare).  The same sort of analysis would apply to deprivations of other fundamental rights, such as a denial of equal protection on the basis of a suspect classification such as race.  On the other hand, if the statute (or other state action) does not interfere with a fundamental right—if it is, say, just a commonplace economic regulation--then normally it would only undergo “rational basis” basis.  Under this standard, it survives as long as it could serve a legitimate government interest.  Almost all statutes and other forms of state action that are subject to this standard of review are constitutional.  Third, for certain types of state action, courts apply an intermediate standard of review.  Going back to the speech example, a content-neutral regulation that imposes only “incidental” burdens on speech is permissible if “it furthers an important or substantial governmental interest; if the governmental interest is unrelated to the suppression of free expression; and if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.”  Turner Broadcasting Co. v. FCC, 512 U.S. 622, 662 (1994) (quoting O’Brien v. United States, 391 U.S. 367, 377 (1968)).  Obviously there are many other nuances, and other constitutional issues, that require their own version of the above standards or different standards altogether; but for readers not familiar with U.S. constitutional law this is, in a nutshell, how the different standards of review work, and is sufficient for the analogy I wish to make here.

So here is the analogy.  In your typical civil-law jurisdiction, where courts almost always grant the prevailing patent owner a permanent injunction, you could think of the question whether to deny or delay entry of an injunction as requiring the court to engage in something that resembles the application of a form of strict scrutiny.  Traditionally, courts in these jurisdictions will grant an injunction except in the rare case in which the patentee is guilty of abusing its dominant position in violation of competition law, or engaging in an “abuse of right”; or the defendant successfully invokes a statutory right to a compulsory license. Moreover, even after Germany amended its Patent Act to permit courts to delay or deny injunctive relief when granting it would result in disproportionate hardship to the defendant or third parties (see, e.g., here), a defendant asking for a delay or denial of injunctive relief still faces (very much) an uphill task.  According to some of the commentary and decisions to date, for example, it is possible that the amendment doesn’t apply at all in FRAND cases, or is “subsidiary” to the Patent Act’s (rarely invoked) compulsory licensing provision (see here, here).  As with strict scrutiny, in other words, certain rationales for what the defendant is seeking to do may be off the table altogether, which reduces the need to balance various rights and interests; and if practice to date is indicative, even for those cases that could arguably present disproportionate hardship, the defendant is going to need to come forward with a pretty compelling argument for deviating from the norm.  Moreover, a stay is almost surely going to have to be (narrowly?) tailored, to last only as long as needed to permit a sell-off or design-around; outright denials are expected to be even more rare. 

By contrast, practice in the U.S. following eBay involves a more open-ended approach, in which the court may consider, and balance, various private and public interests as they relate to the four eBay factors; and outright denial of injunctive relief, coupled with an ongoing royalty, is not uncommon—though it remains the case, as far as I can tell, that prevailing patent owners who request permanent injunctions still get them in the majority of cases, albeit presumably with some degree of self-selection going on.  Finally, both grants and denials are subject to review on appeal only for abuse of discretion.  The analogy here would be to rational-basis scrutiny, under which the state is largely free to regulate as it pleases, and only rarely will it overstep the constitutional boundaries (though to be fair, reversals for abuse of discretion are probably much more common than are judgments that state action is precluded under rational-basis scrutiny).

Fitting somewhere in between (though probably closer in spirit to the civil-law model), and therefore perhaps somewhat analogous to intermediate scrutiny, is judicial practice in the U.K. and other Commonwealth countries, where there remains a presumption that the prevailing patent owner is entitled to an injunction, but there is some room to delay or deny where, e.g., the effect of an injunction would be “grossly disproportionate.”  A somewhat broader class of interests, such as public health, also may be relevant in the U.K., in comparison with what some of the German commentators and courts, thus far, have contemplated.

I’m not sure whether thinking about the different regimes in this manner is helpful or not, and as indicated above would be interested in hearing what readers think.