Addressing the issue of irreparable injury under the traditional four-factor test for permanent injunctions, the U.S. Court of Appeals for the Federal Circuit vacated a lower court’s denial of a permanent injunction, finding that district courts must not ignore the fundamental nature of patents as property rights granting the patent owner the right to exclude when weighing the four factors for permanent injunctions.  Presidio Components, Inc. v. Am. Tech. Ceramics Corp., Case Nos. 10-1355, 11-1089 (Fed. Cir., Dec. 19, 2012) (Rader, C.J.).

Presidio brought suit against American Technical Ceramics (ATC) for infringement of a patent directed to monolithic broadband capacitors.  The jury found the patent valid and willfully infringed, and it awarded lost profits.  After trial, the district court, among other things, denied Presidio’s motion for a permanent injunction, detecting no irreparable injury under the conventional four-factor permanent injunction test set forth in Bay v. MercExchange.  While the district court noted that substantial evidence existed that the products competed in the same market, the district court found that ATC was not a direct competitor for purposes of determining irreparable injury.  Presidio appealed.

The Federal Circuit reversed, finding that the district court’s conclusion that there was no competition for the purpose of an irreparable harm analysis conflicted with the clear finding of competition for the purpose of awarding damages.  The record showed direct and substantial competition between the parties.  The Federal Circuit found that this evidence combined with Presidio’s showing of lost market share and access to potential customers, in addition to Presidio’s unwillingness to license the patent-in-suit, showed that the district court erred by dismissing the irreparable harm evident on the record.

The Federal Court explained that analysis under the four-factor permanent injunction test must proceed with “an eye to the long tradition of equity practice granting injunctive relief upon finding of infringement in the vast majority of patent cases.”  The Court stated that while “a patentee is not entitled to an injunction in every case, it does not follow that court’s should entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude.”  The Federal Circuit emphasized that the patentee can suffer irreparable injury without even practicing the claimed invention. Moreover, the Federal Circuit clarified that direct competition in the same market is a factor that would strongly suggest the potential for irreparable harm if the right to exclude is not enforced.