Nonpracticing Entity (CSIRO) Gets Injunction

ScreenShot061CSIRO v. Buffalo Technology (E.D.Tex. 2007)

CSIRO operates as a technology licensing arm of the Australian Government. CSIRO does not practice its inventions, but has asserted its wireless LAN patent against a number of accused infringers, including Intel, Microsoft, Marvell, and Buffalo. The patent is broad enough to cover all 802.11a/g wireless technology and has a 1992 priority date.

In the case against Buffalo, CSIRO won a slam-dunk summary judgment of validity and infringement. The court then considered whether to award a permanent injunction in favor of the non-practicing entity (NPE).

The Supreme Court’s recent pronouncement in eBay v. MercExchange makes clear that injunctive relief will not always be available for a patent holder — even after showing that the patent is valid and infringed. Rather, to obtain an injunction, a patentee must show:

  1. Irreparable injury due to continued infringement;
  2. Insufficiency of monetary damages;
  3. Balance of hardship weighs in favor of patentee; and
  4. The public interest supports an injunction.

Although the purpose of a non-practicing licensing entity is usually to obtain monetary royalties, the Supreme Court has held a willingness to license or lack of commercial use are not sufficient reasons to deny injunctive relief.

Here, the district court found that CSIRO would suffer irreparable injury due to continued infringement. In particular, the court pointed to two issues:

  • “[Without an injunction, CSIRO’s] research institution [will continue to be] impugned just as another company’s brand recognition or good will may be damaged [by the sale of unauthorized infringing goods].”
  • Because ongoing damage calculations would “not necessarily include other [unmentioned] non-monetary license terms that are as important as monetary terms,” [m]onetary damages are not adequate to compensate CSIRO for its damages, which are not merely financial.

In its decision, the court found relevant (1) that CSIRO is an ongoing research institution, as opposed to a small shop such as z4; (2) that the CSIRO invention was a core feature of wireless standards as opposed to a small component of a larger product;

Notes:

32 thoughts on “Nonpracticing Entity (CSIRO) Gets Injunction

  1. I think the US Supreme court wants to limit the power of small patent holders as well as patent trolls from claiming monetary damages against any company. They want small innovators sell their IP to bigger companies instead for a cheap price.

    THis way, patents are used not to extract royalties but to cross license with others. Making patents obsolete in a way or worthless.

    I think that is what the US Supreme wants to do. My guess is innovation is no longer an important element of the US economy. The courts wants innovations to be free for all. This is what China always thought this is suppose to be because they never heard of the concept of patents. Anyone invented anything would be used for free by anyone else. That wsa how it works for thousands of years in China.

  2. A hypothetical case:

    A small patentee, which doesn’t manufacture product, engages in R&D resulting in a series of patents. Efforts to commercialize via a small supplier in the industry gets quashed by a large OEM (LOEM) by way of the threat of a patent infringement suit against the small patentee & it’s supplier partner.

    7 years go by…

    …during which the licence between the small patentee and the small supplier terminates…

    …the patentee has gone flat broke…

    …the dog is dead, the wife has left, the pickup truck is rusting in the front yard…

    …of the house with the Sherrif’s Sale notice accross the doorway…

    …in which the sole remaining employee of the small patentee is shaking off a huge hangover…

    …when he finds an SEC filing by LOEM touting the virtues of a product representing a slavish copy from patentees specification…

    …patentee contacts friend at LOEM, presents matter to management, is invited to piss up the hypothetical rope…

    …friend damn near gets fired for association with patentee, patentee loses friend…

    Present Day: LOEM exceeds $500M/year in sales at 75% Gross Profit Margin. The other OEMs in the industry follow suit with comparable product. Present day global annual sales across the industry exceed $2.5B. Contingency Fee litigation deal executed, trial attorney drooling over the propect of having a really cool story to tell, suit is filed in a rocket docket…

    …Patentee is living in a dumpster behind the couthouse…

    Injunction: Small patentee pursues an injunction claiming that control of the invention is critical to ensuring the quality of product released to market (think Macintosh computer software authoring license vs PC open platform). Past and Future Irreprable harm is claimed on the basis that existing product design is insufficiently safe and effective thus negatively impacting consumer percieved quality of the invention – - – direct impact on the goodwill of the patentee. With proper safety and performance features described in the asserted patents, sales projected to exceed $1B by LOEM.

    Question: Does the court award the injunction?

  3. DWAP – your last post reflects the thoughts of a reasonable man. Calm, considered, and polite, especially considering the provocative nature of my previous post. Instead of burying the hypothetical hatchet, lets fling it to the woods as insufficently relevant to future interests. Good ‘nuf?

  4. SF: I actually find Michael Moore movies quite amusing. It is absolutely hilarious for the elite to throw into our faces what they do and then make us all upset about it. It is only then that the elite demonstrate their power. We quickly realize that there is absolutely nothing we can do about their policies. In short Michael Moores puts in our faces the lack of power each and everyone of us has. I find it truly amusing that the masses lack the intellectual capacity to realize that. If you fail to understand the direction of my comments, there is a really moving scene in the 1999 movie Instinct during which Anthony Hopkins places Cuba Gooding, Jr., in a headlock and queries him on his greatest illusion, which by the way, is that Cuba Gooding, Jr. has control.

    So yes I touch myself watching Michael Moore movies by placing a hand over my mouth so as not to laugh too loudly.

  5. Anon – thank you for a true belly laugh. I formally bow to your superior talents!!! :)

    SF – dead nuts on.

  6. DWAP – I suspect that watching Micheal Moore movies makes you want to touch yourself, but it would be impolite for me to make note of it.

    If you want to discuss the rule changes, there is a seperate post for that.

  7. DWAP asked, “Am I the only one who likes to upcoming changes to continuation practice?”

    No. Big businesses that don’t need patents to compete love the changes because they have the man-power to quickly copy patent-application-disclosed ideas that have been “disclosed and dedicated” before the end of the statutory 20-year term. They essentially complain that 20 years is too long to wait to copy something disclosed in the patent application.

  8. I take offense at the “even wittier” suggestion. The way to improve the limerick is to change some of the earlier lines. My suggestion:

    There once was a dog named Injunction
    Who licked himself without compunction
    He had every intention
    To infringe my invention
    But had neither the means nor the function

  9. Ok I will switch to DECAF; however, I do note that you failed to refute any of my allegatiosn concerning the group of miscreants in DC at this point in time of American history.

  10. I put smallinventor’s latin into Intertran, but got only this :-

    And it is allowed Iovi , not it is allowed ox

    Anyone care to translate?

  11. DWAP – switch to decaf.

    If the CAFC upholds this, it becomes the basis for the four part test for everyone, domestic & international, and I for one would not embrace law that discriminates between the two. Japan does that sh*t constantly so I no longer bother to file there. Read the full opinion before barfing up political slogans with ZERO causal analysis.

    So far the limerick reads:

    I once had a dog named injunction
    He wasn’t quite sure of his function
    He’d hump yer leg
    Drool, Fart & Beg
    And lick himself without compunction

    Dennis – C’mon! You are a professor, I hope to see you offer an even wittier last line!

  12. Look don’t you people get it. This is the most anti-American agents ever seated in the halls of power of our government. Bush and his minions have drafted tax breaks to send U.S. jobs overseas. They have established immigration regulations to allow illegal immigrants to take jobs away from Americans. It has been responsible, single handedly for more American deaths than any administration since World War II and for nothing more than foreign money interests. It is no small wonder, therefore, that a foreign company benefits from the ruling. Christ people don’t you know when you are gettin screwed. I ask only this question . . . WHERE IS OUR AMERICAN OLIVER CROMWELL!!!

  13. “So a big foreign research organization is worthy of awarding patent injunction and some small inventor-owned garage workshop is not worthy ?”

    This certainly isn’t a fair reading of the quoted passage.

  14. I once had a dog named injunction
    He wasn’t quite sure of his function
    He’d hump yer leg
    Drool, Fart & Beg
    de dada de dada de dada…

    Can anyone come up with a good line to finish the limerick? :)

  15. If, as indicated, there are several actual or potential defendants who have filed DJ cases against this patent, presumably some of which seek to invalidate claims, why hasn’t a much less costly, now generally faster, and much better odds, REEXAMINATION been filed against this patent? Or is one pending?

  16. Hey, anon,
    looks like you are writing from the SCOTUS bench – so much mess in your head that you can’t even formulate a question…

  17. Does anyone here want to comment on eBay v. MercExchange for me? Isn’t a post-judgment injunction in addition to the underlying obligation under patent law not to infringe? I know I’ve seen at least one pre-eBay IP case where some innocent infringement occurred, the jury granted $1 damages and the court declined to issue an injunction on the grounds that renewed infringement was deemed unlikely. If a court applies traditional factors and decides not to grant an injunction, isn’t the the patent owner free to bring suit again – alleging willful infringement the next time? Does eBay v. MercExchange say that the court can order mandatory patent licensing, or just that it must use traditional principles in determining the scope of any post-judgment injunction that is in addition to the obligation not to infringe? How does a patent owner lose his statutory right to exclude an infringer from a decision determining the correct application of a court’s injunctive powers?

  18. Small Inventor: With respect to the small component vs. core feature, I think the court was trying to distinguish exactly what you stated – though they may not have done it well.

    Take a microwave oven as an example. If someone comes up with a mechanism to rotate the tray, the feature may have been patentable and it may have made the microwave more useful, but the tray is not a core feature of the microwave. On the other hand, take away the klystron and there is no microwave.

    As for your other point about Z4 vs. CSIRO, I again think the court may have had the right intent but could have articulated their intent better. If Joe’s Invention Shop has made little or no money and is an adjunct to Joe’s Toaster Repair Shop, it is unlikely that Joe’s Invention Shop has sufficient market presence to be harmed by the continued practice of a toaster company to infringe Joe’s novel toaster handle. Conversely, CSIRO’s primary business is research and the inventions that come from that research. CSIRO’s primary business could be harmed by the continued infringement and the court took that in allowance.

    Note that the court could find similar circumstances for a small inventor given similar circumstances. If Joe’s Invention Shop could show that income from inventions was the primary source of revenue for Joe’s Invention Shop and his shop was recognized in the toaster industry as a source of toaster inventions, I would expect the court to give the same result as it did in the CSIRO case.

    Lonnie

  19. “So a big FOREIGN research organization is worthy of awarding patent injunction and some small inventor-owned garage workshop is not worthy ?
    Small component of a larger product ? Ha-ha-ha-ha-ha”

    What on earth has the fact that the organisation is foreign got to do with anything? Paris convention anyone?

  20. Why am I not surprised about this decision? Oh… it is from the famous E.D.Texas where plantiffs get everything and anything they want.

  21. I expect a fair treatment of all patent holders, large and small…
    But I guess the word “fairness” has a different meaning to some of those judges..
    Something like “Quod licet Iovi, non licet bovi”…

  22. Excuse me again, but wasn’t Z4 vs. Microsoft also decided in the Eastern District of Texas shortly after Ebay ?

  23. You missed the significance of it being in the Eastern District of Texas. I mean what do those boys in DC know that the good ‘ol boys down there is Texas know about patent laws, injunctions and stuff. Shee’t howdy boy I bet they all gotta dog named Injunction;)

  24. “In its decision, the court found relevant (1) that CSIRO is an ongoing research institution, as opposed to a small shop such as z4; (2) that the CSIRO invention was a core feature of wireless standards as opposed to a small component of a larger product;”

    Excuuuuzzzzzzz-me…

    So a big foreign research organization is worthy of awarding patent injunction and some small inventor-owned garage workshop is not worthy ?
    Small component of a larger product ? Ha-ha-ha-ha-ha
    What if after removing or replacing that “small component” with non-infringing component the whole product stops working or shows much degraded performance so nobody wants to buy it anymore ?
    Is “small” synonymous to “not worthy” ?
    It certainly looks this way from SCOTUS perspective…

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