Acumed LLC v. Stryker Corp. (Fed. Cir. 2009)
A court applying the four-factor test set forth in Ebay v. MercExchange has broad discretion to grant a permanent injunction so long as it does not commit legal error nor make any clearly erroneous factual fi ndings, according to the Federal Circuit.
Acumed sued Stryker for infringing U.S. Patent 5,472,444, which is directed to a proximal nail, a type of orthopedic nail used for the treatment of fractures of the humerus, or upper arm, bone. A jury found that Stryker had willfully infringed certain claims of the patent and awarded damages based on lost profi ts and a reasonable royalty. The District Court granted Acumed’s motion for permanent injunction, applying the general rule in patent cases that an injunction will issue, once infringement and validity have been adjudged, unless there are some exceptional circumstances that justify denying injunctive relief.
While Stryker’s appeal to the Federal Circuit was pending, the U.S. Supreme Court decided Ebay v. MercExchange, which held that the traditional fourfactor test for permanent injunctions must be faithfully applied in patent cases as in other types of cases. The Federal Circuit subsequently affi rmed the District’s Court of willful infringement, but vacated the permanent injunction (which had been stayed) and remanded the case to the District Court for reconsideration in light of Ebay v. MercExchange. The District Court applied the four-factor test and granted the permanent injunction. The Federal Circuit reviewed the District Court’s decision to grant a permanent injunction for abuse of discretion.
Irreparable Harm and Lack of Adequate Remedy at Law
The Federal Circuit considered the fi rst two factors, irreparable harm and lack of adequate remedy at law, together. Stryker argued that the District Court erred in giving weight to Acumed’s previous decisions to license the patent to two other competitors. According to Stryker, Acumed’s past willingness to grant licenses demonstrates that money damages in the form of a reasonable royalty are an adequate remedy. Acumed rebutted, stating that the amount of weight given to a patentee’s prior willingness to grant licenses is soley within the discretion of the court.
In holding that the District Court did not abuse its discretion, the Federal Circuit stated that the essential attribute of a patent grant is that it provides a right to exclude competitors from infringing the patent. In view of that right, stated the Federal Circuit, infringement may cause a patentee irreparable harm not remediable by a reasonable royalty. The fact that a patentee has previously chosen to license the patent may indicate that a reasonable royalty does compensate for an infringement, but that is just one factor to consider, according to the Federal Circuit. The Federal Circuit stated that a plaintiff’s past willingness to license its patent is not sufficient per se to establish lack of irreparable harm if a new infringer were licensee. Accordingly, the Federal Circuit concluded that the District Court did not abuse its discretion in fi nding that Acumed suffered irreparable harm from Stryker’s infringement with no adequate remedy at law.
Balance of Hardships
Stryker argued that the District Court abused its discretion because Stryker customers and patients (with fractured upper arm bones) would endure hardships under the injunction. In fi nding that the District Court did not abuse its discretion, the Federal Circuit stated that the balance considered is only between a plaintiff and a defendant, and thus the effect on customers and patients alleged by Stryker was irrelevant under this prong of the injunction test. Accordingly, the Federal Circuit concluded that the District Court did not abuse its discretion in determining that the balance of hardships tips in favor of Acumed.
Stryker argued that the District Court abused its discretion in essentially placing the burden on Stryker, rather than Acumed, with regard to the public interest factor because Acumed’s product is of a lower quality and is not as safe Stryker’s product. The Federal Circuit stated that the District Court did not abuse its discretion in concluding that there was not sufficient evidence of a public health issue with Acumed’s product. The Federal Circuit also stated that the District Court did not shift the burden to Stryker; rather, the District Court merely found that Acumed had made a prima facie showing that its product works. The Federal Circuit concluded that given the District Court’s review of the evidence presented, the Court was within its discretion to conclude that the public interest was not disserved by an injunction.
After review of the four-factor test set forth in Ebay v. MercExchange, the Federal Circuit concluded that the District Court did not abuse its discretion because it performed the required analysis, and in doing so, committed no legal error and made no clearly erroneous factual fi ndings.