Monday, May 28, 2018

Stays of Injunctions in the U.K.

I recently published the third in a series of posts discussing the reluctance of courts in Germany to grant stays pending design-around (a/k/a tailored injunctions), that is, to allow infringers a period of time to find a noninfringing alternative before ceasing production and sales of existing products (see herehere, and here).  But as a policy matter there is something to be said for issuing such tailored injunctions under appropriate circumstances.  As Colleen Chien and Eric Shulman write in a recent paper:
Making tailored injunctions in component patent cases, rather than full injunctions the default when injunctions are warranted, has several benefits. First, tailored injunctions are less disruptive than removing the product but more powerful than simply giving damages. In this way, it can address both hold-up: the wielding of power by the patentee in light of the high costs of switching, and hold-out: the refusal of accused infringers to consider legitimate patent demands because they can. Under the threat of a non-tailored injunction, an implementer may end up settling based on unnecessary switching or design around costs, even though the patent is invalid or not infringed, a concept often referred to as “hold-up.” But without the threat of injunction, the patentee cannot get the alleged infringer to the table, a concept often referred to as “hold-out.”
While the prospect of a tailored, rather than all-or-nothing injunction, changes the dynamic for the parties, it benefits third parties as well. Tailored injunctions reduce the risk of error in calculating long-term damages. Rather than having to approximate the damages until the patent expires, the court orders the specific relief of injunction. That relief is simpler to determine (though it does create monitoring costs). Tailored injunctions reduce disruption to the public or third parties who have sunk costs into the existing solution.
Anyway, over on the IPKat Eibhlin Vardy reports on a decision last week by Mr. Justice Arnold (Patents Court for England and Wales) staying an injunction against Edwards LifeSciences, so that certain medical devices may continue to be used for at least one year, pending retraining of medical personnel, and potentially indefinitely, for patients for whom there are no adequate substitute devices (copy of the opinion here).  From the opinion:
15. It was common ground between the parties that, in determining the issues as to (i) the length of the stay and (ii) the scope and duration of the qualification, the Court should have regard to the public interest and should exercise its discretion in accordance with Article 3 of European Parliament and Council Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights ("the Enforcement Directive") . . . .
16. As I have observed in another context, the key consideration in Article 3 is proportionality and consideration of the other factors feeds into the proportionality analysis. . . .
60.  Given that a stay and a qualification of the injunction, albeit on terms that Boston receives a financial remedy in respect of future sales of the Sapien 3, will partly deprive Boston of the remedy to which it would ordinarily be entitled, the length of the stay and the nature and duration of the qualification must be proportionate, that is to say, they must strike a balance between Boston's interest in maintaining the monopoly conferred by 766 and the public interest in ensuring that patients with aortic stenosis receive appropriate treatment. Rightly, Edwards do not rely upon their own interests except in so far as they coincide with the public interest.
61. In considering the proportionality of the parties' respective proposals, a striking factor is what Boston's evidence does not say. There is no suggestion that continued sales of the Sapien 3 will cause Boston irreparable harm, that is to say, harm that cannot be fully compensated by a financial remedy against Edwards. This is unsurprising given that the Sapien 3 has been on the market since January 2014, that the Sapien 3 has some 60% of the market and that the Acurate only has 5-6% of the market. Indeed, it seems likely that the major beneficiary of the more limited stay and qualification proposed by Boston would be Medtronic. Nor is there any suggestion that Edwards will not be able to pay whatever sum may be determined to be payable in respect of future sales of the Sapien 3. Furthermore, as discussed above, Boston is not currently exploiting 766 in the UK. . . .
There will be a future hearing to determine the appropriate monetary award for past and future infringement (see para. 6), but in the meanwhile the court ordered Edwards to pay a royalty of 5% of net sales, "on account of whatever figure may be awarded in future" (para. 72).  If the matter does not settle before then, it will be interesting to see what award the court will mandate for the future infringement in particular, a question on which the law of England and Wales at present appears to be unsettled (see paras. 12-14).

Addendum:  I should note that courts may approach the decision whether to stay (or deny altogether) an injunction somewhat differently, depending on whether (as discussed in the above excerpt from Chien and Schulman) the case involves a complex product embodying numerous patents, or (as presented in the Edwards matter) the case centers on the public interest.

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