It Ain't What It Seems

Recently patentees nationwide celebrated the decision in Broadcom Corp. v. Qualcomm, Inc., which seemed to suggest that a prevailing nonpracticing entity (NPE) could secure a permanent injunction barring the defendant from further infringement of the patent(s)-in-suit. Alas, the celebration is unwarranted. The holding in this case resulted from its rather unique facts. The general rule still remains that an NPE likely will not be awarded a permanent injunction.

In the now famous (or infamous, depending on your perspective) eBay decision, the Supreme Court held that the grant of a permanent injunction in patent cases, heretofore largely automatic, should be governed by the traditional test for equitable relief. Not to bore the reader with over many details, this test essentially precluded injunctions in favor or NPE’s. In Broadcom, however, the Court Of Appeals For The Federal Circuit awarded an injunction to Broadcom despite the fact that its products were not directly competitive with those of Qualcomm which had been found to be infringing.

While this seems favorable to NPEs, it is to be noted that, due to the peculiar nature of the cell phone industry, Broadcom was able to establish that its products competed “indirectly” with those of the defendant and, again due to the peculiar nature of the industry, continued infringement by Qualcomm would cause “irreparable harm.” Also, the injunction entered by the Court included a “sunset provision” allowing continued infringement for twenty months while Qualcomm completed work on “design-arounds” that it had claimed were already in process.

The lesson to be learned: If you are an NPE, don’t count on securing an injunction if you prevail at trial.