Patently-O covers last week’s trial court denial of a permanent injunction in MercExchange v. eBay.  Prof. Crouch includes a link to the trial court’s opinion.

A district court judge has applied not only MedImmune, but also SanDisk and Teva, to determine whether declaratory judgment jurisdiction exists after a patentee has sent a routine licensing letter. Answer? “Yes.”

Here’s the key language from the court’s brief opinion denying the patentee’s motion to dismiss:

There is no reasonable way to distinguish the circumstances of this case from that held by the Sandisk court to confer upon this Court Article III jurisdiction over Crutchfield’s declaratory judgment complaint. In its May 2006 letter to Crutchfield Hill clearly enunciated its intent to assert its right to seek a licensing agreement under its patents with Crutchfield. In addition, the letter makes clear that, as an Internet retailer, Hill put Crutchfield in the same category as other Internet retailers against whom Hill had filed a patent infringement suit. Furthermore, it is clear that Hill was of the opinion that Crutchfield was engaging in allegedly infringing activity or it would not have offered a license in the first place. Having been put on notice that Hill had Crutchfield within its sight, Crutchfield sought to confirm its position that it did not infringe by filing the instant declaratory judgment action.

Hill asserts that the Court should require Crutchfield to notify Hill of its claims that it does not infringe and that one of Hill’s patents is invalid or to enter into license negotiations before Crutchfield seeks intervention from the Courts because, otherwise, there is no substantial controversy. This carries the standard enunciated by the Supreme Court too far. The only requirement is that the circumstances show “a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune, 127 S.Ct. at 771. The content of the May 2006, letter, including the clear articulation of Hill’s willingness to litigate against potential infringers of the patents in suit, its offer of a license to Crutchfield under its patents, and its request for a response by a date certain, indicate to any reasonable reader that a substantial controversy exists between parties with adverse legal interests and it is of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. Furthermore, Crutchfield’s counsel had first-hand knowledge of Hill’s patent enforcement tactics and self-proclaimed goals. Coupled with the letter, Crutchfield was faced with a decision to agree to a license or seek a declaration that it does not infringe or that the patents in suit were invalid. There has never been a requirement that a declaratory judgment plaintiff inform its adversary before it files suit; this Court will not change that long-standing practice under the circumstances presented here.

Crutchfield New Media, LLC v. Charles E. Hill & Assocs., Inc., No. 06-0837, 2007 WL 1320750 (S.D. Ind. May 4, 2007).

Does anyone have a citation to an electronic copy of the district court’s injunction order in the Verizon / Vonage case?  Or an electronic copy you’re willing to send by e-mail? I would like to add the case to my post-eBay Injunction Cases resource page.

Here’s the text of the Senate version of the Patent Reform Act of 2007, numbered S. 1145.

And here’s the text of the House version of the Patent Reform Act of 2007, numbered H. 1908.

I first blogged about the Senate version of the patent reform bill back in August, just after it was introduced.

A comment in a post from just a few days ago prompted me to take a look back at the Senate bill.  Specifically, I wanted to remind myself of the new attorney fee shifting provision.  Here’s what Section 5(b) of the Senate patent reform bill, S. 3818, says (on p. 23 of the bill):

(b) ATTORNEY’S FEES. - Section 285 [of Title 35] is amended to read: “(a) The court shall award, to a prevailing party, fees and other expenses incurred by that party in connection with that proceeding, unless the court finds that the position of the nonprevailing party or parties was substantially justified or that special circumstances make an award unjust.”.

Today, 35 U.S.C. sec 285 reads as follows: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”

The House version of the patent reform bill does not contain this provision, as I recall.  I think it makes a great deal of sense, in U.S. patent litigation, to move much closer to the English Rule for damages.

Earlier today, the Federal Circuit issued its opinion in an appeal from a preliminary injunction grant. The case is Sanofi-Synthelabo v. Apotex, No. 06-1613 (Fed. Cir. Dec. 8, 2006). The court affirmed Sanofi’s preliminary injunction against Apotex.

The case is an important one, for at least two reasons:

1. By my reckoning (tracking all post-eBay injunction cases), this is the first time since the Supreme Court’s May 15, 2006, decision in eBay v. MercExchange that the Federal Circuit has affirmed a preliminary injunction. In Abbott Labs. v. Andrx Pharms., 452 F.3d 1331 (Fed. Cir. June 22, 2006), the court reversed the preliminary injunction on the ground that Teva had raised a substantial question about the validity of each of Abbott’s asserted patent claims. In Wireless Agents LLC v. Sony Ericsson Mobile Communications, 189 Fed. Appx. 965 (Fed. Cir. July 26, 2006), the court affirmed the denial of a preliminary injunction, and failed to mention eBay at all.

2. The court, in this Sanofi case, expressly notes - and refuses to rule on - the question whether the presumption of irreparable harm that followed from a likelihood of success showing survives the Supreme Court’s eBay decision. (I have blogged about the different approaches the trial court’s have taken to the presumption, post-eBay, here, here, and here.) The court notes, on p. 20 of the slip opinion, that the trial court had “applied a presumption of irreparable harm in light of its conclusion that Sanofi established a likelihood of success on the merits.” In addition, however, the trial court had “also found that Sanofi proffered substantial evidence establishing other forms of irreparable harm.” Slip op. at 20. The Federal Circuit, for its part, affirmed on the basis of the trial court’s more detailed findings … not on the basis of the presumption. Slip op. at 20-22.

On the presumption’s continuing vitality, post-eBay, the Federal Circuit would say only this:

Apotex also argues that the district court erred by applying a presumption of irreparable harm because Sanofi established a likelihood of success on the merits. Apotex contends that applying such a presumption is in direct contravention of the Supreme Court’s decision in eBay v. MercExchange. Because we conclude that the district court did not clearly err in finding that Sanofi established several kinds of irreparable harm, including irreversible price errosion, we need not address this contention.

Slip op. at 22 n.9. It is interesting, too, that this is the one and only place in the opinion that eBay is mentioned.

A reader has asked what Boolean search query I use to keep a running tab on i.p. injunction cases that apply the eBay formulation, for my resource page on injunction cases.

It is this: ebay and (injunction or enjoin) and (patent or copyright or trademark) and date(after 5/15/2006)

A point on my procedure for maintaining the resource page … I’ve set up Westlaw to run the foregoing search for me automatically each day and e-mail me the result.  When the e-mail notice points me to a new case, I read the case to determine if it truly belongs on the resource page and update the page (or not) accordingly.  Even if the “last updated” date on the resource page is a week or two old, that simply means that there hasn’t been another pertinent reported case since that time.

In any event … happy hunting!

Earlier today, I posted on Judge Castel’s grant of a preliminary injunction in a patent case last Tuesday, August 29.  Two days later, another trial judge in the Southern District of New York — Judge Stein — granted a preliminary injunction against Apotex’s continuing sale of a generic version of Plavix.  The decision is styled Sanofi-Synthelabo v. Apotex Inc., 2006 WL 2516486 (S.D.N.Y. Aug. 31, 2006).

Two interesting things to note about Judge Stein’s decision: (1) it nowhere mentions the eBay case, at all (!); and (2) Judge Stein applies the traditional pre-eBay “presumption of irreparable harm” standard (see id. at *6, *22).

The first trial court decision of its kind, post-eBay: Last Tuesday, Judge Castel granted a patentee’s motion for a preliminary injunction against alleged infringement, Canon Inc. v. GCC Int’l Ltd., No. 06-Civ-3324, 2006 WL 2516568 (S.D.N.Y. Aug. 29, 2006). I’ve been tracking court cases that use the eBay standard quite closely, for my resource page on Injunction Cases. (If you know of any decisions not listed, or see mistakes on the list, please let me know.)

Judge Castel’s opinion is quite interesting, for two reasons.

First, the judge opines that speedy trial process can be an appropriate substitute for a preliminary injunction: “A preliminary injunction in a patent case is an extraordinary remedy reserved for circumstances in which the merits of movant’s case are clear, the irreparable injury is manifest, the hardships tip decidedly in the movant’s favor and the public interest is served by the injunction. Often justice is better served by employing other case management techniques, such as bifurcating issues, granting a reasonably tight discovery schedule and setting an early trial.” I don’t recall seeing this view stated before.

Second, the judge analyzes the irreparable harm factor without any mention of a presumption of irreparable harm in the patentee’s favor. (In early August, I posted on the existing trial court split on the presumption’s continued vitality, post-eBay.) Indeed, from the analysis, one gets the feeling that Canon might not have obtained the p.i. against an alleged infringer with more U.S. assets:

Here, money damages would not be an adequate remedy because of facts specific to these defendants. Christopher Paul Mercer, the CEO of “GCC Group,” was designated as a Rule 30(b)(6) witness on behalf of all defendants and was examined at deposition in this case. (Mercer Dep. at 28-29). He explained that GCC International Limited is a holding company located in Hong Kong with an office in the British Virgin Islands and that defendant Gatehill International Limited is the manufacturing arm located in China. (Id. at 11, 89) According to Mercer, there is an affiliated non-party company called Hawkwood which controls Q-Imaging (USA), Inc. (Id. at 11) Defendant GCC International Limited is a “sales arm”. (Id.) “The account[s are] all consolidated amongst the group.” (Id. at 11-12) All transactions of GCC [companies] go through Hong Kong banks. (Id. at 89) All assets of GCC Limited and Gatehill are in China, except for certain intangible assets–patents and trademarks–that are located in Australia. (Id. at 91)

Only non-party “GCC, USA” and defendant Q-Imaging (USA) are located in the U.S. They have a leased office/warehouse in Austin, Texas. (Id. at 19, 23.) Mercer estimates the combined fixed assets in the U.S. to be “something like” $30,000. (Id. at 21) Other assets include “whatever inventory is on hand at any given time.” (Id. at 23.) Q-Imaging (USA) Inc. had (as of the date of the record produced by defendants) $84,000 in cash on hand in a bank. (Id. at 95) …

Assuming that the losses to Canon could be readily calculated and reduced to a money judgment, I conclude that money damages would not be an adequate remedy in this case because of the nature and location of defendants’ business. Defendants’ operations are far-flung, and locating and attaching assets sufficient to satisfy a money judgment would be exceedingly difficult.

Again, quite interesting! Not likely the sort of analysis one would have seen before eBay.

On August 4, the U.S. District Court for the Eastern District of Michigan denied an alleged infringer’s motion to reconsider, in light of eBay v. MercExchange, an earlier grant of preliminary injunction in the case. Christiana Indus. Inc. v. Empire Elecs., Inc., 2006 WL 2244014 (E.D. Mich. Aug. 4, 2006).

A chief ground of the motion to reconsider was the alleged infringer’s argument that eBay eliminated the presumption of irreparable harm that the Federal Circuit applies in preliminary injunction proceedings. The district court in this case rejected that contention:

Defendant asserts that in Ebay, Inc. v. Mercexchange, LLC, 126 S.Ct. 1837 (2006), the Supreme Court eliminated the presumption of irreparable harm for preliminary injunctions upon a showing of validity and infringement.

Plaintiff argues, and this Court agrees, that Ebay did not invalidate the presumption. The Ebay Court addressed the proper analysis for permanent injunctive relief. It held that courts err by categorically granting permanent injunctive relief on a showing of infringement and validity, without analyzing the traditional four factors for injunctive relief. The Court reiterated that the grant or denial of injunctive relief rests with the equitable discretion of the Court, which must consider the four factors.

This Court did precisely that in its decision that Plaintiff was entitled to a preliminary injunction.

This court’s conclusion is interesting here in its own right. And it’s even more interesting when one considers alongside the near-opposite conclusion a different district court reached in eBay’s immediate aftermath. In that other case, z4 Techs., Inc. v. Microsoft Corp., 434 F.Supp.2d 437 (E.D. Tex. June 14, 2006), the trial court rejected the contention that there is a presumption of irreparable harm in permanent injunction proceedings. Here’s the z4 court’s reasoning:

z4’s arguments for the application of a presumption of irreparable harm are creative, but z4 cannot cite to any Supreme Court or Federal Circuit case that requires the application of a rebuttable presumption of irreparable harm with regard to a permanent injunction. In Amoco Production, the Supreme Court stated that applying a presumption of irreparable harm in the context of an injunction “is contrary to traditional equitable principles.” See Amoco Prod. Co., 480 U.S. at 545, 107 S.Ct. 1396. Furthermore, in eBay, the Supreme Court indicated that an injunction may only issue “in accordance with the principles of equity” under both the patent and the copyright acts but does not in any way imply that a rebuttable presumption of irreparable harm should apply to permanent injunctions under either act. See eBay, 126 S.Ct. at 1840. Rather, the Supreme Court stated, “[A] plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable injury….” Id. at 1839. This language does not imply a presumption, but places the burden of proving irreparable injury on the plaintiff. Moreover, in eBay, the Supreme Court warned against the application of categorical rules when applying the traditional principles of equity. See id. at 1840- 41. z4’s suggestion, that the right to exclude creates a presumption of irreparable harm, is not in line with the Supreme Court’s holding, which mandates that courts balance the traditional principles of equity when considering the remedy of a permanent injunction in patent cases. Accordingly, the Court does not apply a presumption of irreparable harm.

For my money, the z4 court’s reasoning seems both (a) correct as to permanent injunctions, and (b) all the more forceful if applied to the preliminary injunction context, where there is even less information about the merits of the core question of liability in the case.

Whatever the merits of the presumption, the Federal Circuit will no doubt be wrestling with its continued vitality (or not) soon.