In a non-precedential opinion, the Federal Circuit recently decided the important and open question of whether the Supreme Court’s decision 2006 in eBay v. MercExchange eliminated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.