Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. May 22, 2008) (Moran, Sen. J.).*

After a jury held that certain of defendants' (collectively "eSpeed") products willfuly infringed two of plaintiff Trading Technologies' (“TT”) futures trading software patents (the Court previously reversed the willfulness finding), the Court entered a permanent injunction preventing future sales of the infringing software -- a previous opinion granted summary judgment of noninfringement of eSpeed's current software and all software except that sold during a six month period shortly after TT's patents issued.  The Court looked at each of the four standard injunction elements, as required by the Supreme Court in eBay Inc. v. MercExchange, LLC.

Irreparable Harm

The Court held that TT would be irreparably harmed by any continued sales of infringing product because TT's successful business was built around its patented technology and, therefore, direct competitors with infringing products irreparably harmed TT.    The Court agreed with eSpeed that general claims of competition were insufficient pursuant to eBay, but the Court held that TT's direct competition assertions were supported by trial testimony.

Inadequate Remedy at Law

eSpeed argued that TT's numerous licenses proved that monetary damages could compensate TT, as the eBay district court held after remand.  but the Court distinguished eBay.  eBay was premised upon a combination of plaintiff MercExchange's:

• willingness to license;
  
• choice not to practice the patent;
  
• failure to seek preliminary injuctive relief; and
  
• consistent, clear statements that it desired monetary damages.

In contrast, TT manufactured a patented product and only licensed as an alternative to litigation.  And the Court acknowledged TT's concern that providing monetary damages after trial without an injuction would force a compulsory license on TT.

Balance of Hardships

The Court held that TT would be more harmed without an injunction than eSpeed would be harmed by an injunction.  eSpeed no longer made or sold the infringing software, so an injunction would cause eSpeed little or no harm.  Furthermore, eSpeed manufactured numerous non-infringing products.  So, the extent of any harm was further minimized.

Public Interest

eSpeed argued that the public interest weighed against granting injunctions regarding patents in reexamination.  But TT's patents had since been upheld in the reexam.  So, the only public interest factor was enforcement of TT's patent rights.

For these reasons, the Court entered a permanent injunction.  Click here to read the Permanent Injunction Order.

* Click here to read much more about this case in the Blog’s archives and click here for this opinion.

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Brian Higgins's Maryland IP Law Blog post about the progeny of In re Seagate, 497 F.3d 1360 (Fed. Cir. 2007), inspired me to do follow up posts identifying Northern District cases discussing recent major IP decisions -- click here for my post on injunctions after eBay Inc. v. MercExchange, L.L.C., 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006).  There have been a number of obviousness decisions in the Northern District since KSR Int’l Co. v. Teleflex Inc., __ U.S. __, 127 S.Ct. 1727 (2007).  Here they are:*

• Abbott Labs. v. Sandoz, Inc., No. 05 C 5373, 2007 WL 1549498 (N.D. Ill. May 24, 2007) (Coar, J.). -- Holding that the Court's pre-KSR analysis need not be reconsidered in light of KSR because an element was missing from the prior art, regardless of what standard was used.
  
• Herman Miller, Inc. v. Teknion Corp., No. 05 C 2761, 2007 WL 2230042 (N.D. Ill. Jul. 30, 2007) (Gettleman, J.). -- Noting that, in light of KSR, plaintiff issued a statement of non-liability and certain patents were removed from the suit.
  

• Lexion Medical, LLC v. Northgate Techs., Inc., No. 04 C 5705, Slip Op. (N.D. Ill. Jun. 8, 2007). -- Holding that the pre-KSR jury's decision would not have changed if given a KSR obviousness instruction.

These opinions suggest that KSR is not changing obviousness law in the Northern District much.  I suspect that is not true.  Once we have a larger sample of cases, including more where the initial analysis was not done pre-KSR, we will see more patents held invalid based upon obviousness.

*  A brief note on methodology:  this was not a thorough study and does not include cases that granted or denied injunctions without discussion.  For a more complete list of post-KSR decisions nationwide, go to the Fire of Genius.

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Brian Higgins's Maryland IP Law Blog post about the progeny of In re Seagate, 497 F.3d 1360 (Fed. Cir. 2007), inspired me to do follow up posts identifying Northern District cases discussing recent major IP decisions.  The first looks at cases discussing eBay Inc. v. MercExchange, L.L.C., 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006).  Here they are:*

• Black & Decker Inc. v. Robert Bosch Tool Corp., No. 04 C 7955, 2006 WL 3446144 (N.D. Ill. Nov. 29, 2006) (St. Eve, J.). -- Granting a permanent injunction in a case between competitors.
  
• Chamberlain Group, Inc. v. Lear Corp., No. 05 C 3449, 2007 WL 1017751 (N.D. Ill. Mar. 30, 2007) (Moran, J.). -- Granting a preliminary injunction in a case between competitors and holding that in eBay the Supreme Court limited the automatic presumption of irreparable harm based upon infringement.

For further analysis of post-eBay decisions, check out my post about Michael Smith's analysis (click here) and my post discussing Ray Nimmer's thoughts on the potential for compulsory licensing regimes because of eBay (click here).

*  A brief note on methodology:  this was not a thorough study and does not include cases that granted or denied injunctions without discussion.  For a more comprehensive list of decisions nationwide (updated through the end of 2007) go to the Fire of Genius.

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In a recent post on the University of Houston Law Center Faculty Blog (another LexBlog site), Ray Nimmer asks whether the Supreme Court's recent eBay v. MercExchange permanent injunction decision will lead to compulsory licensing.  Nimmer discusses two alternatives when a permanent injunction is not granted after a patent infringement finding:

One response is simply to assess damages as to past infringement, leaving any future use of the patent for a voluntary agreement of the parties (a license) or a subsequent infringement suit for the subsequent infringements. That is clearly the preferable option, although it does raise limited issues of judicial economy.

A second alternative is to permit subsequent use by the defendant subject to the payment of a reasonable royalty imposed by the court. This is a form of compulsory licensing that rewards the wrongdoer, unless the remedy has been requested by the patent owner. Nevertheless, a panel of the Federal Circuit indicated that such a remedy may be appropriate. One wonders why.

Nimmer concludes that courts should not impose compulsory licensing for future infringement absent substantial public policy reasons:

The preconditions should be both an opportunity to negotiate a license and, failing a bargain, a request by both parties for the court to impose a royalty as part of the remedy for infringement. A patent creates a right to exclude and, where the patent owner prefers to exercise that right, it should not be forced into a licensing arrangement resulting from a case in which it prevailed on the infringement claim. There may be some cases in which vital public policy interests justify this result, but those cannot be grounded simply in the fact that the court denied a permanent injunction or the parties have not agreed to license terms. A remedy should not penalize the person to whom the remedy is awarded. 

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Chamberlain Group, Inc. v. Lear Corp., No. 05 C 3449, 2007 WL 1017751 (N.D. Ill. Mar. 30, 2007) (Moran, J.).

Judge Moran granted plaintiffs' motion for a preliminary injunction, preventing defendant from marketing and selling its garage door opener transmitters.  Relying upon its two prior claim construction decisions (which can be found in the Blog's archives), the Court first determined that plaintiffs had proven a likelihood of success on its infringement claims.  Then the Court considered plaintiffs' irreparable harm claims.  The Court denied plaintiffs' argument that its showing of a strong likelihood of success creates a presumption of irreparable harm.  Citing eBay, Inc.  v. Merc Exchange, L.L.C., 126 S. Ct. 1837 (2006), the Court held that the Supreme Court limited the automatic presumption of irreparable harm based upon infringement.  Instead, the Court determined that plaintiffs' had shown that they were irreparably harmed because defendant's sales had eroded its prices and strained its customer relations.

Because defendants entered no declarations or affidavits detailing its loss of revenue, sales or good will should a preliminary injunction be entered, the Court ruled that the balance of hardships tipped in plaintiffs' favor based upon its irreparable harm evidence.  Finally, the Court noted that there is a public interest in protecting valid patents.  Based upon these findings, the Court issued a preliminary injunction and required plaintiffs to post a $10,000,000 bond pursuant to Fed. R. Civ. P. 65 (c).

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Last Wednesday the Chicago IP Alliance held its second annual Chicago IP Day at Loyola.  It was, no surprise, an excellent program providing an information-packed day.  I do not have the time to summarize all of the presentations, but I will give some highlights.  George McAndrews, McAndrews, Held & Malloy, gave a very interesting presentation outlining his views on the Supreme Court's recent eBay v. MercExchange opinion requiring the use of the standard permanent injunction test to determine whether a permanent injunction should be granted after a patent infringement judgment.  Essentially, he argued that the Supreme Court's ruling contradicts the constitutional grant of a limited monopoly.  His presentation led to some spirited debate at various tables during the excellent lunch in Loyola's beautiful new conference room atop the law school.

The day's keynote presentation was by the USPTO's Deputy General Counsel and Solicitor General John Whealan.  John's presentation lived up to my advance billing.  He gave his take on the Supreme Court's recently increased interest in the patent laws.  While I cannot do all of his remarks justice, he outlined three instances in which he felt the Supreme Court was taking patent appeals.  First, circuit splits -- splits between the Federal Circuit  case law and the law of a regional circuit pre-Federal Circuit.  Second, and maybe the most obvious, splits between different Federal Circuit panels.  And third, on Cert. View of the Solicitor General ("CVSG").  CVSG is a process initiated by the Court, when they ask the Solicitor General for its view on whether the Court should grant cert.  The Solicitor General works with the relevant governmental entity, the USPTO in the case of patents, and hears arguments from each side of the case before sending the Supreme Court its recommendation.  Whealan stated that CVSG had been used once for a patent issue prior to 2000 and 17 times since then.  Once again, if you get the chance to hear Whealan speak, do not pass it up.  You always learn something and he is always an entertaining speaker.

Great job to the folks at Loyola and Kent for putting together an excellent and educational day.

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Black & Decker Inc. v. Robert Bosch Tool Corp., No. 04 C 7955, 2006 WL 3446144 (N.D. Ill. Nov. 29, 2006) (St. Eve, J.).*

In this opinion, Judge St. Eve issued what I believe is the first permanent injunction in the Northern District pursuant to the "new" Supreme Court standard set forth in eBay Inc. v. MercExchange, L.L.C., __ U.S. __, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006).  The Court found irreparable harm, satisfying the first prong of the injunction standard, based on the possibility of continuing sales (although defendant stated that it had stopped producing and selling the infringing product), harm to plaintiff's reputation as an innovator in the relevant market and plaintiff's loss of market share. 

The Court held that monetary damages were not adequate to compensate for plaintiff's harmed reputation and lost market share, satisfying the second prong of the injunction standard.  Because defendant stated it had stopped producing and selling the infringing products, the Court held that the balance of hardship favored plaintiff, satisfying the third prong of the injunction standard.  And finally, because public policy favors enforcing patents, the Court held that the public interest was not disserved by a permanent injunction, meeting the final prong of the injunction standard.

Additionally, the Court refused to add defendant's new product to the permanent injunction because evidence in the record indicated that defendant had made a good-faith effort to modify the new product to avoid the plaintiff's claims.  The Court noted that the issue was best resolved by the case plaintiff had already filed in the Northern District, before another judge, claiming infringement of defendant's new product.

 

* This case is a bit out of order, but I could not resist getting it posted quickly.  I currently have a minor backlog (for reasons which I hope to explain soon), which I will clear out quickly.  Also, you can see previous posts on this case here and here.

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