The Sky Is Not Falling

Submitted by patentadmin on Thu, 08/28/2008 - 11:45

An article appearing in IPO Daily News bemoans a recent decision (Voda v. Cordis Corp.) of the Court of Appeals for the Federal Circuit – the patent appeals court – as upholding the “categorical rule” that a “patent owner cannot obtain a permanent injunction by showing irreparable harm to its exclusive licensee.” The anguish is misplaced for two reasons: (1) the Court did not so hold; and (2) the entire problem could have been avoided if the patentee had employed better legal tactics.

In the article, it is asserted the Federal Circuit agreed that the district court did not err in adopting a categorical rule. The Federal Circuit did no such thing. A careful reading of the Court’s decision reveals that the statement as to a “categorical rule” referred to the Appellant’s argument on appeal. The Appellant had argued that the district court had adopted a categorical rule and such rule would conflict with precedent – the eBay decision. The Federal Circuit merely decided that the district court’s denial of a permanent injunction did not conflict with eBay and that the district court did not err or abuse its discretion in finding that the Appellant was adequately compensated by monetary damages.

The patentee’s failure was of its own doing. A true exclusive licensee has standing to sue for infringement of the licensed patent and may seek a permanent injunction on the grounds that its business is being irreparably harmed. In this case, the patentee could well have succeeded by granting a true exclusive license – one which conveys substantially all the indicia of ownership to the licensee – thereby allowing the licensee to bring the infringement action. The licensee might then have secured the desired injunction.

Two lessons are learned: (1) read case decisions very carefully when seeking to draw guidance from them; and (2) optimal legal tactics offer optimum results.

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