Nichia Corp v. Everlight Americas (Fed. Cir. 2017)
Nichia is the world’s largest supplier of LEDs. The defendant here also sells LEDs and was accused of infringing three Nichia patents. U.S. Patent Nos. 8,530,250, 7,432,589, and 7,462,870.
In a bench trial, the district court judge sided with the patentee – finding that it had proven infringement and the defendant had not proven the asserted claims invalid. However, the district court refused to issue a permanent injunction – finding that the patentee had failed to show that it suffered irreparable harm due to the infringement or that the remedies available “at law” were inadequate. On appeal, the Federal Circuit has affirmed — holding that the proof of irreparable harm is a necessary threshold test for permanent injunctive relief, regardless of whether the patentee is left with an adequate remedy at law. The decision is important (and quite problematic) because it allows for the possibility of no remedy for the patentee.
The baseline comes from the Supreme Court’s decision in eBay v. Mercexchange that established a four-factor test for determining whether to grant permanant injunctive relief. The patentee must prove: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
Prior to this decision, my conception of the four-factors were that the balance of the four must weigh in favor of injunctive relief and that the patentee must prove either (1) irreparable harm or (2) lack of remedy at law. The decision here rejects both of my prior-conceptions. Taking them in reverse order, the court holds that irreparable harm must be proven before relief can be granted. In addition, the court wrote (likely dicta) that each factor must be individually proven for injunctive relief to issue.
The movant must prove that it meets all four equitable factors. i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 861 (Fed. Cir. 2010). And it must do so on the merits of its particular case. eBay. . . . Because Nichia failed to establish one of the four equitable factors, the court did not abuse its discretion in denying Nichia’s request for an injunction.
The court here appears to shift this from a four-factor test to a four-element test. The result of this decision is that it becomes incrementally even more difficult for a patentee to obtain injunctive relief even after winning its infringement lawsuit and defending against validity challenges. I also expect that any analysis of the historical equitable factors (the approach suggested by eBay) will recognize that this holding is incorrect.