American Intellectual Property Law Association
Recent Court Cases Contesting Injunction:
NPEs and Standards Essential Patents
Kevin C. Kunzendorf
AIPLA / JPO Meeting
Tokyo, Japan
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April 9, 2013
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Cases Discussed
• NPEs
– Sabatino Bianco v. Globus Medical, 2012 U.S. Dist.
Lexis 163022, E.D. Texas, November 14, 2012 (denying
Motion for Preliminary Injunction)
– Clear With Computers v Hyundai Motor America, 2012
U.S. Dist. Lexis 186911, E.D. Texas, January 9, 2012
• Standards Essential
– Microsoft v. Motorola Mobility, 871 F. Supp. 2d 1089,
W.D. Wash., May 14, 2012
– Microsoft v. Motorola Mobility, 696 F.3d 872 (9th Cir.
Sept. 11, 2012)
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Standard for Preliminary Injunction
• To be entitled to a preliminary injunction, patentee
must show:
–
–
–
–
Likely to succeed
Suffer irreparable harm
Balance of equities favors; and
Public interest
• The courts have held that after e-Bay, a party’s
status as a non-practicing entity may be taken into
account
in evaluating the factors.
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Bianco v. Globus Medical Facts 1
• Bianco is a neurosurgeon in private practice;
Globus is a large privately held medical device
company
• Bianco and Globus had an agreement where
Bianco would share his ideas and designs for
medical devices, and Globus would evaluate for
possible commercial exploitation.
• Bianco submitted Invention Disclosure for an
expandable intervertebral fusion device for use in
minimally
invasive spinal surgery; Globus not
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interested in developing or commercializing.
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Bianco v. Globus Medical Facts 2
• Globus actively developing is own expandable
intervertebral fusion device called Caliber.
• Globus files a patent for the Caliber device, fails to
name Bianco as co-inventor; patent issues
• Bianco claims Globus used confidential
information from Invention Disclosure and
incorporated into the design, which has same
functions and features.
• Bianco seeks preliminary injunction to “return the
parties
the last uncontested status quo.”
Firm to
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Factors 1
• Likelihood of Success
– Court assumed arguendo that Bianco showed likelihood
of success based on his Trade Secret Misappropriation,
Breach of Contract, Correction of Inventorship, and
Texas Theft Liability claims.
• Balance of Equities
– Bianco conceded Global may endure some hardship,
but will not be “unfairly harmed”; Globus argued Caliber
is cutting-edge tech that is well-received in market.
– Court agreed with Globus; Globus invested substantial
resources;
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Bianco has invested nothing, thus no harm.
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Factors 2
• Irreparable Harm
– Bianco argued misappropriation deprives him of
statutory right to exclude; Caliber could be established
as “market leader” and prevent Bianco from ever
commercializing his ideas.
– Globus argued even if Bianco proves he is co-inventor,
he can not exclude other co-inventors; Bianco is nonpracticing entity, not a direct competitor; appropriate
remedy is thus monetary damages.
– Court agreed with Globus; Bianco failed to demonstrate
why monetary damages not adequate; Bianco is not
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operating
entity; Bianco and Globus are not competitors.
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Factors 3
• Public Interest
– Bianco argued strong public interest in protecting trade
secrets and preventing misappropriation.
– Globus argued taking Caliber off the market would be
disservice to public and patients that benefit from its use.
– Court agreed with Globus; strong public interest in
protecting trade secrets and IP rights, but public interest
is better served by not depriving the public of this
medical advance, particularly where monetary damages
can fairly compensate Bianco if he prevails.
• Preliminary
Firm Logo Injunction DENIED.
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Clear v. Hyundai – Facts 1
• Clear sued Hyundai alleging that Hyundai infringed its
patent.
• After a jury trial, jury returned verdict that the patent was
not invalid and was infringed by Hyundai, and awarded
damages to Clear of $11.5m.
• Both parties filed several Post-Trial Motions.
• Clear’s Motion for Permanent Injunction, or Alternatively,
Ongoing Royalty.
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Legal Standard – Permanent Injunction
• A party seeking a permanent injunction must
show:
–
–
–
–
Irreparable injury from infringement
Monetary damages inadequate
Balance of hardships favors; and
Public interest not disserved
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Factors 1
• Irreparable Harm
– Clear argued irreparably harm because it cannot
exclude Hyundai from practice of patent.
– Hyundai argued Clear does not practice the invention,
does not compete with Hyundai, licenses the invention
on nonexclusive basis; has shown no loss of goodwill or
brand recognition due to Hyundai’s infringement.
– Court found factor does not support an injunction.
• Monetary Damages
– Clear argued monetary damages rely on “stale sales
data”
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Logoinfringement may change
– Court – Clear is licensing entity; damages appropriate
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Factors 2
• Balance of Hardship
– Clear argued Hyundai can implement non-infringing
alternatives shown at trial, but acknowledges that since
patent will expire within 1 year, an ongoing royalty may
be more appropriate.
– Court – given the short remaining time of the patent, it is
undue hardship to require Hyundai to implement noninfringing alternatives.
• Public Interest
– Clear only argued significant interest in protecting patent
rights;
Court noted that same argument for any IP right.
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• Permanent Injunction DENIED; royalty of $21k/mo.
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AIA Strategies for Dealing With NPEs
• New requirement to file a separate suit against
each defendant where only common feature is the
patent being asserted.
– Increases filing costs for NPEs
• Use of PGR/IPR system to attack patents-in-suit
– Challenges the validity with lower standard of proof
– Forces delays
– Increases risks in contingency fee arrangements
• Costs of USPTO proceeding 10-20% less than litigation
• USPTO forum less familiar than courts
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•Firm
Stays
the high-cost court proceeding
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Anti-NPE Legislation
• Saving High-Tech Innovators from Egregious
Legal Disputes (SHIELD) Act of 2013
– Provides that party asserting invalidity or noninfringement may move for judgment by the court that
adverse party is not one of the following:
• An original inventor, joint inventor, or assignee
• A party that can prove substantial investment in exploitation of
patent through production or sale of an item covered by the
patent
• A university or technology transfer organization
– If court judges adverse party is NOT one of the above:
Logo party must post bond to cover “recovery of full costs”
•Firm
Adverse
• Adverse party pays if it loses
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Microsoft v. Motorola – Facts 1
• Microsoft & Motorola both members of IEEE and
ITU standard setting organizations
– ITU policy requires “Patent Statement and Licensing
Declaration” declaring whether party will grant licenses
on RAND terms. License has “worldwide” effect.
• Motorola owns many patents related to ITU H.264
Video Coding Standard.
• Motorola sent Microsoft letter offering to grant
worldwide, non-exclusive license at 2.25% per unit
for each H.264 compliant device (Xbox 360, Win
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7); attached non-exhaustive list of patents.
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Microsoft v. Motorola – Facts 2
• Microsoft – 2.25% is unreasonable royalty; filed
complaint that Motorola is breaching obligation to
ITU to grant RAND license, and seeking
declaration that Microsoft entitled to RAND license.
• Motorola counterclaims – 1) no breach, 2)
Microsoft rejected benefits of Motorola RAND
obligations, therefore Microsoft not entitled to
license to H.264 patents.
• Both parties asserted infringement claims.
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Microsoft v. Motorola – Facts 3
• 6 months later, Motorola filed suit in German court
alleging Microsoft infringed 2 European patents.
– Seeks injunctive relief prohibiting Microsoft from offering
products (Xbox, Win 7, etc.) in Germany that infringe the
patents.
– Both patents are essential to H.264, and were listed in
non-exhaustive list with US letter to Microsoft.
• Back in US case, Microsoft filed motion for
preliminary injunction to prohibit Motorola from
enforcing any injunctive relief that it may receive in
Firm Logo case (anti-suit injunction) related to
the German
the 2 declared-essential European patents.
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Legal Standard
• Where the injunction would prevent litigation of
similar claims in a foreign court, the likelihood of
success factor is modified:
– Likelihood of success  court must weigh 3 factors:
• Whether parties and issues same
• Whether foreign litigation would frustrate policy of US court
• Whether impact on comity* would be tolerable.
– Suffer irreparable harm
– Balance of equities favors; and
– Public interest
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* “Comity” – legal reciprocity (German courts – US courts)
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Three Factors Favor Injunction
• Parties are same; Issues are the same
• whether Microsoft is entitled to worldwide RAND license;
whether Microsoft has rejected its rights; whether Motorola may
seek injunctive relief re its standard essential patents; if there is
a license, what the RAND terms are.
• Frustration of policies weighs for injunction
• Concerns of inconsistent judgments, and of forum shopping, and
duplicative litigation given Motorola invoked German action on
only 2 patents and before US court could adjudicate the issue.
• Comity issues alleviated
• Foreign court belatedly asked to adjudicate issue already before
US court; scope limited to adjudicating duplicative dispute;
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court’s strong interest – two US companies, US documents; no
international issues or foreign government involvement.
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Injunction Factors 1
• Irreparable Harm
• Microsoft may be forced to withdrawn Xbox, Win 7 from German
market – causing Microsoft to lose sales, recent momentum,
market share. Each difficult to gain back – hard to recapture
shelf space, and third-party publishers of games likely to stop
production for Xbox in favor of Sony, Nintendo. Diminished
brand loyalty and affinity.
• Microsoft software license agreements involve multinational
companies who seek large scale agreements; Microsoft will
have to alter business relationships with carve-out for Germany;
Damage to Microsoft’s reputation for providing “broad IT
solutions” that operate across borders.
• Court
found an injunction enjoining sale of Xbox,
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Win 7 in Germany will result in irreparable harm.
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Injunction Factors 2
• Balance of Equities
• If Microsoft enjoined – cease sale of Xbox and Win 7 in
Germany incurring harm, or negotiate a license with threat of
injunction looming.
• Motorola faces little injury by anti-suit injunction – Motorola may
later receive injunctive relief; it only must wait until US court
adjudicates the issue; Microsoft is required to post $100m bond;
2.25% royalty request is admission that monetary damages
adequate.
• Public interest – served by Microsoft continuing
business interests until court can adjudicate the
injunctive relief issues.
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• Anti-suit Injunction GRANTED.
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Thanks for your attention! Questions?
Kevin C. Kunzendorf
Partner
Sughrue Mion PLLC
1-5-1 Otemachi
Chiyoda-ku, Tokyo-to
100-0004 JAPAN
+81-03 5220 0200
Kevin C. Kunzendorf
kkunzendorf@sughrue.com
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