Federal Circuit’s Four Factor Fiddle Raises the Bar for Patent Injunctions

LED colossus Nichia (the world’s largest supplier of LEDs) accused Everlight of infringing three patents relating to tiny LEDs used in LCD backlights, video displays, automobiles, an general lighting:

U.S. Patent No. 8,530,250, entitled “Light emitting device, resin package, resin-molded body, and methods for manufacturing light emitting device, resin package and resin-molded body”;
U.S. Patent No. 7,432,589, entitled “Semiconductor device”; and
U.S. Patent No. 7,462,870, entitled “Molded package and semiconductor device using molded package”

The district court found the patents to be valid and that Everlight infringed all three patents.  However, the court denied Nichia’s request for a permanent injunction.  Everlight appealed on infringement and validity, while Nichia appealed the injunction decision.

On appeal, the important part of the Federal Circuit opinion relates to the law on injunctions in patent cases.

Current law on permanent injunctions for patent infringement comes from the Supreme Court’s eBay v. Mercexchange decision, which established the following four-factor test for determining whether to grant a permanent injunction:

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

Since the eBay decision, courts have typically granted a permanent injunction upon a determination that a balancing of all four factors weighed in favor of injunctive relief and the patentee proved either irreparable injury (factor 1) or no adequate remedy at law (factor 2).

Here, however, the Federal Circuit held that proof of irreparable injury is required for a permanent injunction, regardless of whether the patentee has an adequate legal remedy, elevating factor 1 above all the others.

The court of appeal did not find “clear error in the district court’s finding that Nichia failed to prove that it would suffer irreparable harm absent the injunction.”

“Because Nichia failed to establish one of the four equitable factors,” the Federal Circuit continued, “the [district] court did not abuse its discretion in denying Nichia’s request for an injunction.”

And with that conclusion, the Federal Circuit ended its analysis, declining to review the district court’s findings on monetary damages (factor 2):

Because we affirm the court’s conclusion on irreparable harm, we do not reach the adequacy of monetary damages.

This may represent a significant change in the law, where instead of considering and balancing all four factors, the courts require the patentee to satisfy all four elements to obtain injunctive relief.

Such a shift would make it more difficult for a patentee to get an injunction after proving infringement.

This article was originally published on Eric's Green Patent Blog.