The recent Verizon v. Vonage majority opens the door to an expanded use of what I would call delayed injunctive relief. In particular, the two-member majority (JJ Dyk & Gajarsa) explains in Footnote 12 that the district court “should have” considered whether to allow the adjudged infringer Vonage more time to implement a workaround before enforcing an injunction.
“One factor that is relevant to the balance of the hardships required by the Supreme Court’s decision in eBay was not considered by the district court, namely whether the district court should have allowed time for Vonage to implement a workaround that would avoid continued infringement of the ’574 and ’711 patents before issuing its injunction.”
The appellate panel also notes that Verizon’s interest in putting Vonage “out of business” is not a legitimate interest — rather, the court’s obligation is to protect Verizon’s patent interests without disrupting other business activity.
“Verizon had a cognizable interest in obtaining an injunction to put an end to infringement of its patents; it did not have a cognizable interest in putting Vonage out of business.”
Historically, a finding of patent infringement resulted in a relatively quick form of complete injunctive relief requiring that any adjudged infringement cease immediately. The Supreme Court’s EBay v. MercExchange opinion considered injunctive relief a yes/no decision — either an injunction is granted or denied based on the traditional four-factor analysis. Here, the CAFC appears to be reformulating debate to focus on a timing question — i.e., if not now, at what point will the four-factors favor the patent holder?
In this case, the Court’s words are relegated to a footnote because Vonage never requested a workaround period. And, in addition, sufficient time has already passed since the verdict.
“Vonage made no request for a workaround period to the district court, and Vonage has already had several months since the district court’s judgment to implement a workaround.”
I don’t think that you can a really say that “stays pending appeal” was the status quo.
Isn’t CAFc just signaling that stays pending appeal – the old status quo pre-ebay – should again be the norm.
“It will be an exceptional case where, after the defendant loses on the merits, it is reasonably close to implementing a work-around.”
Designing and implemented are two different things. It may be relatively quick and inexpensive to create a new design; however, implementing that design may be very time consuming and expensive (for example, it may require a recall of hardware provided to customers).
In the typical case, the injunction at the district court would be issued after a year or more of toe-to-toe litigation. The defendant will have surely been looking into work-arounds during that time. It will be an exceptional case where, after the defendant loses on the merits, it is reasonably close to implementing a work-around. Far more common will be a situation where there is no practical work-around, and the defendant is just trying to buy more time.
It will be interesting to see how many courts will grant the design-around delay. The defendant will have had years in which to implement the design around, but didn’t — thus being less sympathetic. On the other hand, the design-around costs could be very expensive and thus the defendant may be justified in wanting infringement to be found before incurring those expenses. Will the courts consider to what extent the defendant has, in good faith, commenced investigating/developing potential design arounds? Should they?
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