The Presumption of Irreparable Harm?


PatentLawPic858By Dennis Crouch

In a non-precedential opinion, the Federal Circuit  recently decided the important and open question of whether the Supreme Court’s decision 2006 in eBay v. MercExchange eliminated the presumption of irreparable harm that has been traditionally associated with the ongoing infringement of a patent that has been valid and enforceable. Automated Merchandising Systems (AMS) v. Crane Co. (Fed. Cir. 2009). The AMS opinion (authored by Chief Judge Michel and signed by Judges Clevenger and Dyk) holds that there is no presumption of irreparable harm “based just on proof of infringement.”


[T]he district court relied on . . . the old presumption that harm from patent infringement was irreparable, [and consequently that] the burden was on the defendant to demonstrate that the potential harm from not granting a preliminary injunction was finite, calculable, and compensable. This is no longer the law, as these cases all pre-dated the Supreme Court’s decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392-94 (2006), in which the presumption of irreparable harm, based just on proof of infringement, was discarded. The burden is now on the patentee to demonstrate that its potential losses cannot be compensated by monetary damages.

Interestingly, neither party raised the presumption issue in their briefs except for a footnote by the defendant Crane arguing that the question of “whether such a presumption still exists or applies here is not at issue in this appeal.”

In two prior cases, the Federal Circuit refused to consider this same question — instead deciding the cases on other grounds. In Broadcom Corp. v. Qualcomm, Inc., 543 F.3d 683 (Fed. Cir. 2008), the court indicated that “[i]t remains an open question whether there remains a rebuttable presumption of irreparable harm following eBay.” Likewise, in Amado v. Microsoft Corp., 517 F.3d 1353 (Fed. Cir. 2008), the court refused to consider the question. Incidentally, the court in AMS could have also avoided the issue because the lack of irreparable harm was one of two alternate justifications for its judgment. (The court also held that the patentee had not shown a sufficient likelihood of success on the merits.). Both the Broadcom and Amado opinions were written by Judge Linn. (The Broadcom panel included Judges Linn, Friedman, and Prost while the Amado panel included Judges Bryson, Clevenger, and Linn).  District court cases have been decided both ways, although the predominant approach is to deny the presumption and instead force the patentee to provide evidence of irreparable harm.

The AMS decision could be isolated as a preliminary injunction decision using the policy grounds that preliminary relief should require a higher standard of proof.  However, the court’s reliance on eBay (a permanent injunction case) suggests such isolation is incorrect. Another potential distinguishing feature is the AMS’s statement that “the presumption of irreparable harm, based just on proof of infringement, was discarded.”  Permanent injunctive relief is typically based on ongoing infringement (not just infringement) and typically include a judgment that the patent is valid (not invalid) and enforceable (not unenforceable).  Of course, those features were also present in the eBay decision that serves as the Federal Circuit’s source of law. 

Of course, the AMS case does not serve as precedent and future panels (and lower courts) are still free to fill-in-the-blank left by eBay.

16 thoughts on “The Presumption of Irreparable Harm?

  1. Six:

    Do I correctly derive from these posts (yours and another’s)that you are a patent examiner? If so, what’s your keen interest in expounding on this subject as such a partisan? If not, do you not anticipate having a client on whose behalf you might argue one side or the other? Posts like those of Six, and Malcolm Mooney, dissuade lawyers from reading these due to an expectation that they will revert to such unnecessary and unhelpful vitriole emanating from some sort of religious view of our patent system.

    This is just one of those issues flowing from a SCOTUS decision that gets threshed out in the courts. Even the “debate” here makes that quite apparent. What is not apparent (and what was lost in the discussion), as Dennis implies the outset, is why the Fed Cir panel did not authorize the decision for publication in view of the prior decisions of the court. It is a very good example of the reasons for the recent adoption of FRAP 32.1. See, link to patentlyo.com

  2. Six says,

    “Even if you could (which I’m not saying you can, because a court probably cannot) infer “harm”

    I’m sure this is not what you mean to say. Once the infringement and damages part of the trial is over, the question of whether harm implies infringment *has* been decided. But as you rightly conclude, the question of whether the harm is *irreparable* remains.

    In some tort cases, establishing on-going harm would be enough. If someone is continually walking into your house and using your shaving razors, the court does not require the homeowner to accept rent in lieu of a court order to stqay off the premises. A rebuttable presumption that ongoing trespassing will result in a restraining order is just fine even after Ebay.

    Similarly a *rebuttable* presumption in a patent infringement case might once ongoing infringement is established as long as the other three factors are also considered, with the defendant’s silence when asked why an injunction should not issue considered to be evidence. If the presumption is not rebuttable.

    Personally, I think Ebay did stomp a mudhole in the rebuttable presumption, at least for patent infringment cases. But since the fed circuit has said that the question is still open, I think they owe us a precedential opinion if its really closed.

    On the other hand, I disagree with Punchy as well. If you have to prove something less than the ultimate conclusion before the burden shifts, then you are getting the benefit of a presumption.

  3. Hi eye of newt gingrich,

    Re:
    “JAOI, if you’re around, any thoughts on this case?”

    Me be here now.

    Yes. The USSC fhucked up on their eBay decision.

    Their decision is in tension with The Constitution!

    Thanks for asking.

    I satretd eraly tdaoy to “semll the resos.”

  4. 6–

    My response to your last post is my post of 2:10 PM.

    Even if I agree with your conclusion in fact and in spirit, I cannot support your reasoning therefor.

  5. I know you’re all saying “Po-tay-to, po-tah-to”, but the distinction is an important one if you are planning to argue the point.

    I find the Federal Circuit woefully inarticulate.

  6. “The legal conclusion that follows could very well be that irreparable harm would/could be sustained in the absence of injunction.”

    Even if you could (which I’m not saying you can, because a court probably cannot) infer “harm” after such a showing has been made, Plaintiff still needs to prove that the harm cannot be compensated for by $$$ for it to be “irreparable”.

  7. 6 and others:

    If you have to prove SOMETHING, you do not benefit from a legal presumption.

    In this case, the fact that must be proven is that of ongoing infringement. The legal conclusion that follows could very well be that irreparable harm would/could be sustained in the absence of injunction.

    There is not necessarily a straight logical line between the two, but since when has the law needed a straight logical line? Demonstration or proof of a fact often leads to imputations in other areas of the law.

    Call it bootstrapping or whatever you like–courts sometimes favor it, sometimes they do not. Sometimes it is done for “social justice”, sometimes for “judicial economy”, but it IS done. Especially in criminal law.

    In any case, there is no presumption here. There is instead the burden of proving the fact of ongoing infringement to a particular standard which, when met, shifts the burden to the other party to present evidence tending to rebut, of sufficient quality and quantity such that the standard of proof is no longer satisfied.

  8. “Technically, the eBay court never went the extra step of saying that in making a showing of the second factor –movant will suffer irreparable harm without the injunction — a court cannot invoke an evidentiary presumption, such as the “presumption of irreparable harm.” ”

    You just said that the court did not bar them from doing something that they have no reason to do. Not being barred from doing something the courts have no reason to do hardly means that a court should, or even can, do it. Arbitrary and capricious ring a bell? For a judge to actually hold a presumption of irrepairable harm in this context today would be a textbook example of the term.
    That aside, I notice that you seem to come to the light near the end Bob, thanks to a huge extra-ebay analysis which you felt was necessary. As for the rest of us that can read the selection in ebay in context, we got the message the first time around.

    For you guys requiring extensive legal analysis to show what I said was true here you are:

    The Traditional four-factor test applied by courts of equity when considering whether to award permanent injunctive relief to a prevailing plaintiff applies to disputes arising under the Patent Act.

    ***

    That test REQUIRES a PLAINTIFF to DEMONSTRATE: (1) that it has suffered irreparable injury…

    ***

    Notice the words *requires* *plaintiff* *demonstrate* and then “irreparable” followed thereafter by “injury”. That means no “presumption that 1 is already met when plaintiff has not demonstrated as much”.

    “To be clear, the Supreme Court did not explicitly reject the notion that a court may presume irreparable harm once a patentee has proven ongoing infringement of an enforceable patent. ”

    You don’t need to “explicitly reject the notion that a court may presume irreparable harm once a patentee has proven ongoing infringment of an enforceable patent” when you’ve already REQUIRED them to DEMONSTRATE such irreparable harm.

    Now, all of this is not to say that a court could not decide factor 1 in plaintiff’s favor if ongoing infringment were to be DEMONSTRATED (proved) to be going on and some HARM that is not compensable by $$$ was DEMONSTRATED. But there simply is no “presumption” and it would be improper in the extreme for a court to disregard the requirement to demonstrate, in full, that the first factor indeed took place. It would be the antithesis of the enunciated analysis in ebay.

    I bolded a few words for those of you having a hard time understanding language. I suggest that you utilize a dictionary if you are at all confused about the meanings of any or all of these terms and I’m not just saying this to belittle you. If you have a hard time understanding from the USSC decision that plaintiff must show a few things, specifically amongst them suffering injury which is irreparrable, rather than having a court hand it to them, then I’m probably not going to be able to help you.

    In summary, D, your reply of “well the USSC didn’t say that the courts can count the “injury” part of (1) as AUTOMATICALLY being present when ongoing infringment has been proven” simply does not jive with what must be DEMONSTRATED.

    Read first page n weep.

    link to supremecourtus.gov

  9. “Everybody wants my legal analysis, nobody wants to pay to speed things up.”

    Six, it isn’t worth the trouble even if you are right about the state of the law.

    Unlike the BPAI which appears issue precedential opinons on a stingy fashion and also have “informative” opinions, generally speaking, the fed circuit’s full opinions in patent cases been precedential.

    Given the funky logic regarding the likelihood of success, I think this opinion is best left unprecedential, but surely that’s not what the panel was thinking…

  10. As KWC correctly notes, eBay only held that a permanent injunction cannot issue just because infringement has been proven. eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392-94 (2006). Instead the patentee must show entitlement to relief by showing it meets the traditional four factors. Id. at 391-92.

    Technically, the eBay court never went the extra step of saying that in making a showing of the second factor –movant will suffer irreparable harm without the injunction — a court cannot invoke an evidentiary presumption, such as the “presumption of irreparable harm.” Thus, as Dennis has pointed out the Federal Circuit picked up on this when it stated: “It remains an open question ‘whether there remains a rebuttable presumption of irreparable harm following eBay,’ Amado v. Microsoft Corp., 517 F.3d 1353, 1359 n.1 (Fed. Cir. 2008)….” Broadcom Corp. v. Qualcomm, Inc., 543 F.3d 683, 702 (Fed. Cir. 2008). Cf. Sanofi-Synthelabo v. Apotex Inc., 470 F.3d 1368, 1383 n.9 (Fed. Cir. 2006) (avoiding addressing the issue)

    What the Federal Circuit has not yet addressed is the fact that the eBay court also instructed that injunctions must issue in accordance with “traditional principles of equity.” eBay, 547 U.S. at 394 (“We hold . . . that the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards.”) In Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 544-45 (1987), a case cited in the eBay opinion (and never cited by the Federal Circuit in any of its pre-eBay presumption of irreparable harm opinions), the Supreme Court, in the context of a PRELIMINARY injunction noted that presumptions of irreparable harm are “contrary to traditional equitable principles.” Hence, Amoco in conjunction with eBay makes the notion of applying a presumption of irreparable harm to meet the second factor dubious. See z4 Technologies, Inc. v. Microsoft Corp., 434 F. Supp. 2d 437, 440 (E.D. Tex. June 14, 2006), appeal dismissed, 219 Fed. Appx. 992 (Fed. Cir. Mar. 12, 2007) (stating that a presumption of irreparable harm for permanent injunctions against infringer was contrary to eBay in view of Amoco) See also Annotated Patent Digest, § 32:64 Questions Regarding Legality of the Presumption; and § 32:159.10 Presumption of Irreparable Harm.

    Further, the Supreme Court’s post eBay opinion in Winter, addressing proving irreparable harm in the context of a preliminary injunction, casts even further doubt on the ability to use a presumption of irreparable harm in any case. Winter v. Natural Resources Defense Council, 129 S. Ct. 365, 375-76 (2008). In Winter the court reversed a grant of a preliminary injunction where the lower court held that in view of the strong showing of a likelihood of success the movant only had to show a “possibility” of irreparable harm. According to the Court, the “possibility” standard was “too lenient.” In my view, a “presumption of harm” appears to apply a standard even more lenient than proving a “possibility” of irreparable harm, and therefore would be improper under Winter.

    There also is Justice Kennedy’s statement in a concurring opinion that: “When considering success on the merits and irreparable harm, courts cannot dispense with the required showing of one simply because there is a strong likelihood of the other.’” Nken v. Holder, 129 S. Ct. 1749, 1763-64 (2009) (Kennedy, J., concurring) (addressing requirement to show entitlement to a stay pending appeal, which applies the similar factors of likelihood of success and irreparable harm as applied for injunctive relief).

    Given the collective effect of Amoco, eBay, Winter, and Nken it seems that the presumption of irreparable harm should be dead for both permanent and preliminary injunctions. But the Federal Circuit has yet to definitively make this ruling. Announcing in a nonprecedential opinion that the presumption of irreparable harm has been “discarded,” under factual circumstances where the patentee did not even have the right to invoke the presumption of irreparable harm (since it had not made a “strong” showing of likelihood of success on the merits) hardly seems to be a definitive ruling, but it likely is showing the writing on the wall for future cases.

  11. “It would be great if you could point to the holding in eBay that eliminates the presumption of irreparable harm based on proof of infringement. ”

    K. Later. Everybody wants my legal analysis, nobody wants to pay to speed things up.

    “More like, one can only hope that 6 is never in the position to train new examiners (or sign his own cases for that matter).”

    Already am.

  12. N.B. other comments re this same point in this same case are attached to the immediately preceeding blog.

  13. “One can only hope that your students don’t happen to be reading your blog today D.”

    More like, one can only hope that 6 is never in the position to train new examiners (or sign his own cases for that matter).

    JAOI, if you’re around, any thoughts on this case?

  14. 6 – It would be great if you could point to the holding in eBay that eliminates the presumption of irreparable harm based on proof of infringement. Although such a holding has been routinely attributed to eBay, I’ve been unable to find it in the text of the opinion. All I’ve been able to find is the elimination of the presumption that an injunction will issue following a finding of infringement.

  15. 6 – To be clear, the Supreme Court did not explicitly reject the notion that a court may presume irreparable harm once a patentee has proven ongoing infringement of an enforceable patent.

    Some areas of law (such real property) do typically follow such a presumption. Other areas do not.

  16. If by “fill in the blank left by Ebay” you mean hold exactly what this panel held, because this is based upon what the law is, then you are correct. It doesn’t take a precedential decision from the Fed Circ to make what is the law from the USSC the law D. This decision is Non-p because there is no need to call this a decision creating new precedent when all they’re doing is supporting the previous precedent.

    One can only hope that your students don’t happen to be reading your blog today D.

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