Courts not required to grant injunction upon finding of infringement unless patentee proves all four equitable factors

The patentee sued the alleged infringer in the Eastern District of Texas, asserting infringement of three patents related to designs and methods of manufacturing LED lights. The district court found that the alleged infringer infringed all three patents and did not prove the patents invalid. The district court then denied the patentee’s request to enter a permanent injunction against the alleged infringer, finding that the plaintiff failed to show that it had suffered irreparable harm and that remedies at law provided inadequate compensation. On appeal, the Federal Circuit affirmed the district court in its entirety.

The Federal Circuit reviewed the four-factor test laid out by the U.S. Supreme Court in eBay Inc. v. MercExchange, L.L.C., which established that a party seeking an injunction must demonstrate: “(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.” Acknowledging that courts have historically granted injunctive relief at the conclusion of the majority of successful patent infringement suits, the Federal Circuit specified that “an injunction in patent law must be justified like any other” such that the moving party must prove that it meets all four of the eBay equitable factors on the merits of its case.

The Federal Circuit agreed that the district court correctly weighed these four factors in favor of the alleged infringer. Specifically, the district court found that the patentee failed to establish that there is “meaningful competition” between it and the alleged infringer because the two companies generally sell to different parties. Additionally, the district court found that the patentee failed to establish past or future irreparable harm because it failed to show that the alleged infringer was responsible for causing “a single lost sale” in the U.S. and because the patentee’s price reductions were based on a client request independent of any action by the alleged infringer.

Finally, the district court found that the patentee’s prior licensing activities were an independent ground for denying injunction. The Federal Circuit rejected the denial of injunction based on patents that have been licensed to be a “categorical rule,” but stated that “[w]hile evidence of evidence of licensing activities cannot establish a lack of irreparable harm per se, that evidence can carry weight in the irreparable-harm inquiry.”