10.6.7 Preliminary relief
Patentees may seek preliminary relief early in the litigation, although the burden is high. Section 283 of the Patent Act provides that courts “may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.” Such preliminary relief can come in two forms: (1) a preliminary injunction, or (2) a temporary restraining order (TRO).
Preliminary injunction applications in patent matters present special challenges. Proving the likelihood of success on the merits typically calls for analysis of nearly every substantive issue that ultimately will be presented at trial. To address the merits, the court must at least preliminarily construe patent claim terms, and invalidity, infringement, and enforceability must be addressed based on those constructions. The patent holder has the burden of proof to demonstrate the predicates for a preliminary injunction. This includes the burden of showing that the asserted patents are likely infringed and the absence of any substantial question that the asserted patent claims are valid or that the patent is enforceable. The validity and enforceability determinations are made in light of the presumption of patent validity and that the accused infringer has the ultimate burden of proof on these issues at trial. To address harm, the parties often present complicated market analyses. These issues typically require both fact and expert discovery, undertaken on a compressed preliminary injunction schedule.
FRCP 65 sets forth the procedures governing preliminary injunction motions, and Federal Circuit law governs the analysis. While:
the grant of a preliminary injunction [is] a matter of procedural law not unique to the exclusive jurisdiction of the Federal Circuit, and on appellate review […] procedural law of the regional circuit in which the case was brought [applies], […] the general considerations underlying the grant or denial of a preliminary injunction do not vary significantly among the circuits.173
Consequently, the Federal Circuit has “built a body of precedent applying these general considerations to a large number of factually variant patent cases, and [it] give[s] dominant effect to Federal Circuit precedent insofar as it reflects considerations specific to patent issues.”174
While a preliminary injunction application places a weighty burden on a court’s limited resources, it also presents opportunities for prioritizing case management. Aggressive use of expedited discovery strategies enhances these opportunities. Effectively managing the parties’ expedited discovery demands can put the court in a good position to promote early settlement, summary judgment through revelation of case-dispositive issues, and possibly a consolidated trial under FRCP 65(a)(2).
10.6.7.1 Preliminary injunction
To evaluate a preliminary injunction application, the court uses the traditional four-factor test: the court weighs the applicant’s likelihood of success on the merits, the likelihood of irreparable harm to the applicant, the balance of harm between the parties, and the public interest.175 This standard is essentially the same as that for a permanent injunction, except that the applicant must prove a likelihood of success on the merits rather than actual success.176
After the Supreme Court’s eBay decision, patent owners who demonstrate a likelihood of success on the merits no longer enjoy a presumption of irreparable injury if the preliminary injunction is not granted.177 Nonetheless, even though the usual economic consequences of competition – price and market erosion – would likely be calculable and thus “reparable” through a damages award, courts might still conclude that a preliminary injunction is warranted.178
The grant or denial of a preliminary injunction is within the sound discretion of the district court.179 Abuse of discretion in granting or denying a preliminary injunction requires a “showing that the court made a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings.”180 The trial court must provide sufficient factual findings to enable a meaningful review of the merits of its order. This requirement does not, however, extend to the denial of a preliminary injunction, which may be based on a party’s failure to make a showing on any one of the four factors, particularly the first two – likelihood of success on the merits and of irreparable harm.
10.6.7.1.1 Discovery
Discovery relating to a preliminary injunction application can touch on nearly every substantive issue in a patent case. Claim construction is usually required, which may in turn require expert discovery if certain terms have special meaning in the art. The plaintiff may require fact and expert testimony as to the defendant’s products, including their development, structure, and operation. The plaintiff’s irreparable harm allegations may require fact and expert discovery as to market conditions and the defendant’s financial condition. The defendant’s invalidity and unenforceability allegations may require discovery into the prosecution of the plaintiff’s patents (especially where the defendant asserts inequitable conduct) and sales by the plaintiff of products covered by the patent (as relevant to a potential on-sale bar argument). The defendant might also seek financial data relevant to the amount of bond necessary should a TRO or preliminary injunction issue.
The initial challenge for a court confronting a preliminary injunction application in a patent case is balancing (1) the need to resolve the application based on a reasonably full record against (2) the twin considerations that (a) a preliminary injunction proceeding needs to be resolved expeditiously, and (b) the parties need to conduct their business in the interim. Where a preliminary injunction application is filed prior to the initiation of discovery, the court can order expedited discovery upon motion or stipulation. Because much of the business information in a patent case is highly confidential, it will likely be necessary for the court to enter a protective order before preliminary injunction discovery can proceed (see Section 10.6.12). In view of these considerations, courts should consider strictly limiting the number of patent claims and prior art references that may be asserted, the number of claim terms that will be construed, the number of depositions that may be taken, the number and nature of document requests, and the issues to be considered.
10.6.7.1.2 Hearing or trial
A court has considerable discretion as to the handling of a hearing for a TRO or preliminary injunction application. FRCP 65 is not explicit about whether the court must have a hearing to consider a preliminary injunction. Given the complexity of patent TRO and preliminary injunction applications, however, courts generally hear arguments. Evidence received on a preliminary injunction motion that would be admissible at trial “becomes part of the trial record and need not be repeated at trial.”181
Since the bulk of the substance of a patent case will be in play in deciding a preliminary injunction, one or more issues may be ripe for final disposition, even at this early stage. For example, a defendant might argue that its product is noninfringing because it is clear that a particular claim element is not in its revised product and that the plaintiff is using patent litigation as a tactic to disrupt or destroy the defendant’s business. In such a case, FRCP 65 presents the court and the litigation “victim” with an opportunity to resolve the issue efficiently in the form of an early trial on the merits, through consolidation with the preliminary injunction hearing.182 A district court may order advancement of trial and consolidation with a preliminary injunction hearing on its own motion.183 Of course, the decision to do so must be tempered by due process considerations.
10.6.7.1.3 Bond
As a result of the potential hardship of a preliminary relief on a defendant, FRCP 65(c) requires the patentee to post a security bond “in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained.” Because the amount of the security bond is a procedural issue not unique to patent law, the amount is determined according to the law of the district court’s regional circuit. The amount of a bond rests within the sound discretion of a trial court.
10.6.7.1.4 Order
FRCP 65(d)(1)(A) requires that the court address the factors considered in granting or denying the injunction. It must also specifically describe the infringing actions enjoined with reference to particular products.184 An order granting an injunction must explain how the court assessed the four factors, providing the court’s reasoning and conclusion. The order should also address the technology at issue as well as the scope of the injunction and the amount of the bond. Depending on the facts of the case, the court may also need to address the persons bound by the order. Denial of an injunction may be based on a finding that the movant has failed to demonstrate the likelihood of success on the merits or of irreparable harm.
10.6.7.1.5 Appellate review
A district court’s decision on a motion for preliminary injunction is usually immediately appealable, whether it has decided to grant or deny the injunction.185 “A decision to grant or deny a preliminary injunction pursuant to 35 U.S.C. § 283 is within the sound discretion of the district court,” reviewed for abuse of discretion.186 “[A] decision granting a preliminary injunction will be overturned on appeal only if it is established ‘that the court made a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings.”’187 However, to the extent a district court’s decision is based upon an issue of law, that issue is reviewed de novo.188
Instead of appealing, a party may seek a writ of mandamus from the Federal Circuit ordering imposition or dissolution of a preliminary injunction:
The remedy of mandamus is available only in extraordinary situations to correct a clear abuse of discretion or usurpation of judicial power. A party seeking a writ bears the burden of proving that it has no other means of attaining the relief desired, and that the right to issuance of the writ is clear and indisputable.189
Accordingly, a party dissatisfied with the outcome of a motion for preliminary injunction should first seek to stay the result and file a notice of appeal.190
A party subjected to a preliminary injunction may ask the district court to stay the injunction pending appeal: “While an appeal is pending […] from an order […] that grants, dissolves or denies an injunction, the court may suspend, [or] modify” the injunction.191 Whether to issue a stay of enforcement of a preliminary injunction is within the sound discretion of the district court.192
10.6.7.2 Temporary restraining order
A TRO “is available under [FRCP] 65 to a [patent] litigant facing a threat of irreparable harm before a preliminary injunction hearing can be held.”193 Courts assess the same four factors as for a preliminary injunction in evaluating an ex parte TRO application.
The Supreme Court has explained that “[e]x parte temporary restraining orders are no doubt necessary in certain circumstances, but under federal law they should be restricted to serving their underlying purpose of preserving the status quo and preventing irreparable harm just so long as is necessary to hold a hearing, and no longer.”194 Consequently, TROs are exceedingly rare in patent cases. Entering a TRO enjoining the practice of a given technology can have extreme consequences, including the complete shutdown of a competitor’s business. Further, the factual and legal complexity of patent cases makes it difficult – if not impossible – for a court to make the sort of hair-trigger decisions necessary to grant a TRO application.
While a preliminary injunction may be issued only on notice to the adverse party, a TRO may issue without such notice.195 Nonetheless, where an adverse party has adequate notice of an application for a TRO such that a meaningful adversarial hearing on the issues may be held, the court may treat an application for TRO as a motion for a preliminary injunction. Courts have discretion to handle the hearing, scheduling, and expedited discovery associated with TRO applications in a manner that best suits the circumstances of the case. The court may grant or deny the ex parte application without a hearing. Alternatively, the court may decline to rule on the TRO application until the adverse party has had an opportunity to respond.
A decision to grant or deny a TRO is not usually appealable.196