On January 10, 2013, the United States District Court, N.D. California, San Jose Division entered a permanent injunction against a patent-infringing defendant in BROCADE COMMUNICATIONS SYSTEMS, INC. v. A10 NETWORKS, INC., Dist. Court, ND California 2013 – Google Scholar. The ruling restrained the defendant and parties in active concert with it from “making, using, selling, or offering to sell in the United States, or importing into the United States any AX series application delivery controller that includes features that infringe claim 25 from U.S. Patent No. 7,454,500, claims 13 and 24 of U.S. Patent No. 7,581,009, or claim 1 of U.S. Patent No. 7,558,195.”
While this result would not have seemed odd before May of 2006, Brocade is now one of the few cases where permanent injunctions have been issued since the decision in eBay, Inc. v. Mercexchange, LLC, 547 U.S. 388 (2006). While the Supreme Court was careful to make it clear that permanent injunctions remained a viable remedy in patent cases, the eBay case changed somewhat well established case law that a prevailing patent infringement plaintiff was virtually always entitled to a permanent injunction.
A successful patent plaintiff must meet its “burden of showing that the four traditional equitable factors support entry of a permanent injunction: (1) that the plaintiff has suffered irreparable harm; (2) that “remedies available at law 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.”
While those factors might seem easy to meet, in practice, it is often very hard to show that legal remedies (damages) are inadequate. In Brocade, the court found that Brocade “practices its patent, that [the defendant] is its direct competitor, and that Brocade does not license its patents,” and therefore that “Brocade has shown that it suffers the type of irreparable harm that a permanent injunction is intended to remedy” (emphasis added).
For more information on patent licensing contact Mike Oliver.
Brocade is a district court case and may be subject to an appeal, but it now stands as one of the relatively few cases post eBay in which a permanent injunction was issued.
One take-away from this ruling for licensing transactions, is that a patent holder must consider whether this type of remedy will be sought before engaging in licensing, particularly come one come all or non exclusive types of licenses. That was one of the three key factors the court pointed to in finding irreparable harm and lack of an adequate remedy at law.
In AKAMAI TECHNOLOGIES, INC. v. LIMELIGHT NETWORKS, INC. (Fed Cir. August 31, 2012) the en banc court held that a person can be liable for inducement to infringe even if the direct infringement is only found by combining the acts of more than one other person. You can read all 103 pages of the case here: Akamai v Limelight
What? In English: If you are aware of a patent (inducement requires specific intent to induce, so it requires knowledge of the patent) and you either perform one step in the method and induce one or more other persons to perform the remaining steps, or if you induce two or more other persons to engage in steps that together infringe, you are liable for inducement to infringe.
This is a major change in the law. This case overruled a recent prior case that had held that inducement requires inducing a single other party to engage in the acts that constitute direct infringement.
What does this mean? It means that if you are a business that say, provides a load balanced server farm for your clients, and you make that server farm available to your clients, who use it to manage their web content, and Akamai informs you of their patent that covers this technology, you will be liable for inducement to infringe even though the mere operation of a server farm does not practice every element in the claims of the patent. It means that businesses that are made aware of patents will have to consider every conceivable set of steps, whether done by their clients or others (inducement does not require any agency between the inducer and the person engaging in direct infringement) because the patent holder can “aggregate” all of the users it needs to meet the requirement of showing infringement.
There were numerous dissenting opinions, and it is somewhat probable that the Supreme Court will take this case.
For more information, contact Mike Oliver.
We have all seen them – the short clips of video advertising we must watch before we are granted access to some other video content. A company known as Ultramercial claims that the “idea” of putting that short advertising clip in front of content was its novel, non obvious and hence patentable invention. A lower court disagreed, and invalidated the patent on subject matter grounds. Last September, however, in Ultramercial v Hulu, the Court of Appeals for the Federal Circuit reversed that decision and remanded the decision for further proceedings (the issue of whether the patent was even valid on novelty or non obvious grounds had not yet been decided).
On May 21, 2012 the Supreme Court of the United States granted certiorari and remanded the case back to the CAFC for further review in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., a decision in which the process and method of administering certain therapeutic drugs was held to be patent subject matter ineligible.
There has been a distinct level of Supreme Court review of patent cases recently, most of them restricting or limiting the validity and subject matter of patents. This latest remand indicates that the Supreme Court is expecting the CAFC to use these decisions in the internet area as well, to begin at least reviewing, and most likely holding invalid, many business method type patents that do not meet patent eligible subject matter requirements.
There are thousands of issued patents that cover basic functioning of the internet system (or, at least the commercial part of it) – that will be called into question in light of these recent Supreme Court decisions.
For more information, contact Mike Oliver.