July 17, 2012
In patent and other intellectual property litigation, the critical fight is frequently over whether or not the defendant should be barred from selling its allegedly infringing products pending resolution of the case.
Although the issues of actual infringement and amount of monetary damages are key aspects of litigation, it is the issue of injunctive relief that often has the most immediate substantial impact on the defendant, as it can force commercial companies to keep their products out of potentially lucrative markets.
Even if an intellectual property plaintiff ultimately loses a case on the merits, it will have won at least a temporary competitive advantage if it can persuade a court to issue an injunction blocking sale of a competitor’s product, even for limited period of time.
A recent ruling by Judge Richard Posner in the U.S. Seventh Circuit Court of Appeals illustrates the way in which judges can profoundly influence the competitive effects of intellectual property litigation without any modifications to the underlying legislation.
In 2010, Motorola sued Apple alleging infringement of several wireless communications technology patents. Apple denied the allegations and filed several infringement claims against Motorola.
As the case progressed, Google acquired the Motorola patents through its purchase of Motorola Mobility.
As is common in this type of litigation, both parties in this case asked the court to issue injunctions blocking additional sales of the allegedly infringing products, pending resolution of the claims.
Judge Posner was ultimately called upon to determine whether or not injunctions were justified in this dispute.
In his 2012 ruling, he concluded that the parties should not be barred from selling their products. Judge Posner determined that neither party had adequately demonstrated that injunctive relief was required in order to prevent irreparable harm.
Judge Posner took the position that both parties had failed to make reasonable estimates of harm.
The damage estimates presented by both parties were, in Posner’s judgment, unreasonable.
The Judge contended that the damage estimates were so high that they did not constitute a “responsible calculation” of the likely harm resulting from the alleged infringement.
Accordingly, he denied all of the requests for injunctive relief in the case.
Judge Posner took the position that claims of irreparable harm must be supported by reasonable and realistic estimates of likely harm resulting from the infringement.
For Judge Posner, it is not enough to argue simply that the alleged infringement will likely have a substantial adverse commercial impact.
Instead, parties must provide realistic estimates of impact and must effectively demonstrate that the impact is likely to result in irreparable harm.
Judge Posner’s action is significant as it illustrates the influence courts can exert over commercial competition in sectors that rely on intellectual property rights enforcement.
Much current attention places emphasis on the legislative foundation for patent and other intellectual property rights.
There is sometimes a tendency to believe that the most important efforts to implement intellectual property rights management policies require some form of legislative action.
Judge Posner has reminded us that individual judges continue to wield substantial power over intellectual property rights enforcement through both their substantive and procedural rulings in individual infringement cases.