Douglas Dynamics, LLC v. Buyers Products Co.

Addressing a request for injunctive relief in a case between two competitors, the U. S. Court of Appeals for the Federal Circuit reversed a lower court’s denial of a permanent injunction to prevent continued infringement by a competitor, noting that patentees often suffer irreparable harm when forced to compete against infringers. Douglas Dynamics, LLC v. Buyers Products Co., Case Nos. 11-1291, 12-1046, -1057, -1087 and -1088 (Fed. Cir., May 21, 2013) (Rader, C.J.) (Mayer, J., dissenting).

In a suit involving patents relating to snowplow mounting assemblies, the district court granted summary judgment of infringement of two patents, but denied the plaintiff’s motion for an injunction which would have permanently enjoined the defendant from producing and selling its low-end snowplow assemblies.

Distinguishing the facts of two prior Federal Circuit cases, Acumed and i4i Limited, and relying heavily on the evidence presented at trial concerning the plaintiff’s market dominance, the district court found that the plaintiff failed to prove a loss of market share or reputation resulting from the defendant’s infringing activities. Instead, the court found that the plaintiff was in a “position of power” within its industry. The plaintiff produced a high-quality product and possessed a 60 percent market share as compared to the defendant’s low-end product that possessed a 5 percent market share. The court also found that the public would be better served by having a new competitor in the market which offered a lower-cost product option. Douglas appealed.

The Federal Circuit reversed, finding that a patentee’s ability to remain profitable in the face of infringing competition does not automatically rebut a case for irreparable harm. Rather, a maker of a high-end product that tends not to directly compete with a low-end version may still be harmed by loss of distinctiveness and market lure when the low-end manufacturer can advertise “similar features” in its infringing products “at half the price.”

The Federal Circuit, giving weight to the plaintiff’s strategic decision not to license the infringed technology, the defendant’s ability to attain a 5 percent market share in just three years and the defendant’s failed first attempt to design around one of the patents, explained that injunctive relief was appropriate. The Court concluded its irreparable harm discussion with an edict clearly in favor of patentees: “[t]he public has a greater interest in acquiring new technology through the protections provided by the Patent Act than it has in buying ‘cheaper knockoffs.’”