IP Inn of Court
Is A Non-Practicing Entity Really Entitled
to a Permanent Injunction in a Patent Case?
By Cody Barela
On February 17th, 2011, a mock trial was held in front of the Honorable Judges Robert M. Russel and David J. Richman, and Mr. Todd Blakely to determine whether a non-practicing entity may obtain a permanent injunction for patent infringement. Plaintiff, Prop AB, and defendant, Drift Corp., are the two sole competitors that manufacture ethanol-based products for use in the production of jet fuel. Plaintiff patented the technology at issue; however, it does not use the technology itself. Drift Corp., however, does use the patented technology.
At the initial trial, the court determined that the plaintiff’s patent at issue was valid, enforceable and infringed by defendant. Plaintiff moved for a preliminary injunction prior to the damages award to stop any further damage.
Opening for the parties, Keith Scranton for plaintiff and Shane Percival for defendant, laid out the four-element test for a permanent injunction from the e-Bay case that was before the United States Supreme Court. The elements to this test require the plaintiff to show: (1) it suffered an irreparable harm, (2) that legal remedies are inadequate, (3) an equitable remedy is warranted based on the balance of hardships between the parties and (4) that the public interest would not be disserved by a permanent injunction. (eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)).
Plaintiff’s counsel Daniel Sherwinter’s direct exam of expert witness Christie Searls brought out facts relating to Prop AB’s loss of market share, loss of sales on related products and harm to plaintiff’s reputation as a technology leader. Defense counsel Victoria Donovan’s direct exam of David Teeze focused on the small number of competitors in the ethanol producing market, defendant’s expenses to research and develop this leading technology prior to plaintiffs patent and that plaintiff does not practice the patented technology at issue.
During closing arguments, where Molly Markley argued for plaintiff and Kyaw Tin argued for defendant, the three judge panel focused their questions on the harm a non-practicing entity would suffer by receiving profits through a license agreement, how to prove the specific cause of the plaintiff’s loss of market share, and how a permanent injunction would change the current state of the market since defendant voluntarily pulled the product from the market.
Ultimately, with a split decision, the court ordered a permanent injunction. Judge David Richman dissented finding a forced license agreement would remedy the harm and protect the public from taking the patented technology off the market completely.
Mr. Barela is a licensed patent attorney who recently graduated from the University of Denver Sturm College of Law. Prior to law school, he worked at Lockheed Martin as a mechanical design engineer, utilizing his manufacturing engineering degree from Boston University.