Presumption of Injunction: How the RESTORE Act Aims to Re-Empower Patent Holders

by Dennis Crouch

For the vast majority of American history, a judgment of patent infringement (by a court sitting in equity) led almost directly to injunctive relief barring ongoing infringement.  This construct was flipped by the Supreme Court's 2006 decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), a case which served as the first major step of weakening patentee rights over the past two decades.  Now, a new bipartisan bill aims to restore the pre-eBay status quo. The Realizing Engineering, Science, and Technology Opportunities by Restoring Exclusive (RESTORE) Patent Rights Act of 2024, introduced by Senators Coons (D-Del.) and Cotton (R-Ark.), with a House companion bill from Representatives Moran (R-Texas) and Dean (D-Pa.), seeks to reshape and repair the availability of injunctive relief for patent holders.  As you'll see, one nice element of the Bill is that it simply adds 1 sentence - creating a rebuttable presumption


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Comparison of the Current U.S. First-to-Invent System with the First-Inventor-To-File System Proposed in the Patent Reform Act of 2011 (S.23)

Guest Post By Prof. Ann McCrackin, Stephen Brodsky, and Amrita Chiluwal. Prof. McCrackin is Director of the Patent Prosecution Program at the Univ. of New Hampshire School of Law (formerly Franklin Pierce Law Center). Mr. Brodsky and Ms. Chiluwal are both 2011 JD Candidates at the Univ. of New Hampshire School of Law.

The Patent Reform Act of 2011 ("S.23") is now being considered by the full U.S. Senate. One of the provisions of S.23 would replace the current first-to-invent ("FTI") system with a first-inventor-to-file ("FITF") system. Some of the differences between these two systems are outlined below in order to help understand the changes in Sec. 2 of the S.23 Bill. For simplified illustrative purposes, Parties ("A" and "B") and their invention ("Widget") will be used below.

First-to-Invent

The current U.S. system is a first-to-invent ("FTI") system. Under the FTI system, the first party to invent is entitled a patent on that invention upon filing for a patent application (as long as all of the other patentability requirements are met). Even if the first party to invent is not the first to file, that party could still be entitled to the patent rights. In situations where there are multiple inventors of the same invention, the determination as to who is entitled to the patent rights is made during an interference proceeding. Interference proceedings are administrative proceedings held at the USPTO that legally determine the first inventor. However, there are time constraints on interference proceedings, e.g., typically a party cannot bring an interference proceeding on an invention after a patent has issued on that patent. Therefore, the first person to file would get the patent unless another person is able to prove prior invention in an interference proceeding.

The following examples involve two parties who claim the same invention in an FTI system:


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The RESTORE Patent Rights Act: One Little Sentence that Could Change Everything

by Dennis Crouch

The Senate Judiciary Committee’s Subcommittee on Intellectual Property recently held a new hearing focusing on the RESTORE Patent Rights Act, a deceptively simple one-sentence bill that could dramatically reshape patent enforcement in the United States. The hearing highlighted the stark divide between those who believe stronger injunctive relief is needed to protect patent rights and those who warn that presumptive injunctions could harm innovation.

At its core, the RESTORE Act would establish a rebuttable presumption that courts should grant permanent injunctions when patent infringement is found. The key language is as follows:

If . . . the court enters a final judgment finding infringement of a right secured by patent, the patent owner shall be entitled to a rebuttable presumption that the court should grant a permanent injunction with respect to that infringing conduct.

This would partially reverse the Supreme Court’s 15-year-old decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) which eliminated the near-automatic granting of injunctions in patent cases and instead required courts to apply a four-factor test considering irreparable harm, adequacy of monetary damages, balance of hardships, and the public interest.  Under the proposal, the four factors would (I presume) continue to apply, but with the burden shifted to adjudged infringers to show that they do not support injunctive relief.  In my mind, the bill also highlights an aspect of eBay that is not much discussed. The Supreme Court said nothing explicit about whether a presumption of irreparable harm persists — that elimination of even a presumption of irreparable harm came from the Federal Circuit most notably in Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142 (Fed. Cir. 2011).  In Bosch, the Federal Circuit took the additional step of interpreting eBay to eliminate the presumption of irreparable harm.  Overruling Smith Int’l, Inc. v. Hughes Tool Co., 718 F.2d 1573 (Fed. Cir. 1983) (“where validity and continuing infringement have been clearly established, immediate irreparable harm is presumed.”).

The December 18, 2024 hearing was led by Senators Coons and Tillis and included four witnesses.

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The Patent Eligibility Restoration Act (PERA) of 2024: From Oz to Earth

by Dennis Crouch

As its name suggests, the Patent Eligibility Restoration Act (PERA) is designed to substantially overturn the Supreme Court's decisions in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012), and Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014). Together those cases created a firestorm of invalid patents and challenges for the patent office and patent holders alike.  The bipartisan proposal was introduced in the Senate (Coons/Tillis) earlier this term and most recently introduced to the US House of Representatives (Kiley/Peters).   Although Alice and Mayo doctrine created substantial confusion, much of that confusion has now died down in the past decade.* The bigger issue is that it is substantially harder to obtain patents and easier to invalidate issued patents -- particularly in cases where the invention lies in software or diagnostic methods.  This post examines the proposed PERA and its potential impact -- along with providing a bit of data.

* Although the extreme confusion is gone, there is still plenty to go around.  A case in point is the Federal Circuit's September 3, 2024 decision in BBiTV v. Amazon. In that case, the court showed its linguistic flexibility in distinguishing the claimed user interface (deemed ineligible) from those in Core Wireless and Data Engine (deemed eligible).


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Antitrust: Court Should Not Consider Potential Patent Validity in Sherman Act Analysis

PatentlyOImage013In re Ciprofloxacin Hydrochloride Antitrust Litigation (E.D.N.Y. March 31, 2005)

Bayer produces Cipro® (ciprofloxacin hydrochloride) and is assignee of U.S. Patent No. 4,670,444, which claims the active ingredient and its generic equivalents.

Hoping to produce a generic version, Barr Labs filed an ANDA requesting permission to produce the drug before the expiration of the patent — arguing that the patent was invalid and unenforceable. (Paragraph IV certification). Bayer then sued Barr for infringement.  The two companies eventually settled.  Under the settlement agreement Bayer paid Barr $398 million and Barr agreed to amend its ANDA to a Paragraph III certification, which would permit it to market the drug only after the patent expires.  The settlement agreement included an “out” for Barr in the case that the patent was subsequently declared invalid or unenforceable.

In the wake of the settlement, a class of buyers sued Bayer and Barr for antitrust violations under the Sherman Act, arguing that the exclusion-payment scheme is a form of anti-competitive conduct falling under Section 1 of the Act using a rule of reason analysis.  The district court, however, sided with Bayer, finding that there was no impermissible anticompetitive effect because the agreement did not extend beyond the “zone of exclusion” of the patent. 

Here, plaintiffs have failed to demonstrate anticompetitive effects in the market for ciprofloxacin because, although the Agreements undoubtedly restrained competition, they did not do so beyond the scope of the claims of the ‘444 Patent. The ‘444 Patent allows a zone of exclusion within the bounds of its claims.

Further, the court held that the “potential invalidity of the claims” could not be used to diminish the protection that the patent offers against Sherman Act claims.

This result is compelled by the presumption of validity Congress accorded patents and the destabilizing effect on patent law that a contrary decision would work. Any readjustment of the competing interests affected by exclusion payments is a matter better addressed by Congress than the courts.

Because the plaintiffs were unable to prove the first element in the rule of reason analysis (anticompetitive effect), defendants cannot be liable for the alleged antitrust violations.

Calvert Crary, a litigation analyst who writes the highly informative LitigationNotes sees this decision as falling in line with the March 8, 2005 11th Circuit decision in Schering-Plough v. FTC, but predicts that these decisions may result in a complete undermining of Hatch-Waxman.

[T]hese decisions, if broadly adopted, will decimate the statutory mechanisms of the Hatch-Waxman Act that remove barriers to price competition arising from invalid or inapplicable drug patents. (From Crary’s report on Kos Pharma v. Barr Labs).

< ?xml:namespace prefix ="" o />Mark Lemley is a law professor at Stanford, but he has also been quite involved with a number of patent appeals over the past several years.  In an e-mail, Professor Lemley argues that the Cipro court is “entirely wrong-headed” in this case.  In his view, this decision essentially creates a rule that allows obvious cartels regardless of the strength of the patent.

[The court] cites the 6th Circuit and [Schering-Plough v. FTC] for the proposition that we don’t want to enquire into patent validity in an antitrust case.  That’s true enough.  But those courts found the exclusion payment illegal without having to inquire into patent validity.  By rejecting the per se approach, and also rejecting any inquiry into the merits, the court has essentially created a rule of per se legality for a pretty obvious cartel.  No matter how weak the patent claim is, or how obviously the payment is a means of artificially maintaining a monopoly, under the court’s reasoning it will be permissible.  This is an abdication of antitrust responsibility.

In a recent paper, Lemley, along with Professors Herbert Hovenkamp and Mark Janis argue that “exclusion payments that exceed litigation costs should be deemed illegal per se.”  According to their analysis, there is “no legitimate reason for such payments, and the most likely reason . . . is anticompetitive.”  The three professors book, entitled IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law is available at Amazon.com.

 

 

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