Patent Holder’s Equitable Remedies in Patent Infringement Actions Before Federal Courts and the International Trade Commission

Patent Holder’s Equitable Remedies in Patent Infringement Actions Before Federal Courts and the International Trade Commission

Richard L. Stroup, Susan Tull, Mindy Ehrenfried

A United States patent grants the patent holder the right to exclude others from practicing the claimed inventions within the territorial limits of the United States. When its patent is infringed, the patent holder can seek remedies in the form of monetary recoveries or equitable relief. This article addresses the equitable relief the federal courts or the United States International Trade Commission (“ITC”) can grant. That relief can be in the form of injunctions, orders, or even monetary awards, granted in equity.

The patent statute provides that an issued patent "shall contain … a grant to the patentee of the right to exclude others." It provides that the federal courts “may grant injunctions in accordance with the principles of equity.” And for actions before the ITC, the statute provides that that Commission “shall” enter an exclusion order, after a trial finding a violation, and “may” enter a preliminary order, before trial–if in both instances the patent holder can prove it has a domestic industry in the United States and the public interests or the President’s review do not preclude entry of such injunctive relief.

The forms of equitable relief available to a patent holder are diverse and dependent on the equities of a case. In extraordinary circumstances, the courts can grant ex parte temporary restraining orders enjoining infringement for a short period before a hearing is conducted. The courts can even enter an ex parte search and seizure order that would allow U.S. marshals, or others, to enter an alleged infringer’s premises and look for and confiscate infringing products, or related documents. With notice and a hearing, courts can issue preliminary injunctions preventing or restricting activities that otherwise might infringe the patent holder’s patent. When necessary, the courts can also enter early orders to secure assets to pay for any judgment entered, after trial on the merits. If the patent holder prevails at trial, the courts can issue a permanent injunction preventing the future infringement by products found to infringe, or mere colorable variations of such products. The courts can make the injunction enforceable immediately, or stay the enforcement of the injunction for a period of time. In the alternative, courts after trial can deny any injunction but award the patent holder ongoing royalties in lieu of an injunction, in amounts found to be equitable.

In litigation of certain drug products pursuant to the Hatch-Waxman Act or the Biologics Price Competition and Innovation Act (BPCIA), according to 35 U.S.C. § 271(e)(4)(A), proven acts of infringement under section (e)(2) result in a court order that sets the effective date of any approval by the U.S. Food and Drug Administration (FDA) of the drug or biological product proven to infringe as not earlier than the expiration of the infringed patent. This acts as a de facto injunction against the sale of the drug product until the infringed patent expires, meaning the prevailing patent holder need not prove it is entitled to injunctive relief. However, in both Hatch-Waxman and BPCIA litigation, preliminary injunctions may play a crucial role. Whether to grant or deny preliminary injunctions in such cases is guided by the same law and procedures applicable to general patent infringement actions; but precedent in prior pharmaceutical cases can be instructive.

The ITC can award forms of relief that are defined by statute but are equitable in nature. The ITC can issue exclusion and/or cease and desist orders that respectively prevent the importation into or sale in the United States of any infringing products, including future products different than those before the ITC. In certain circumstances, the ITC can enter a general exclusion order, excluding from importation products imported by third parties who were never before the ITC during the investigation and trial. The ITC can also enter temporary injunctive relief before trial, applying principles similar to those applied in federal court actions. But the ITC cannot award monetary damages or an equitable accounting to compensate the patent holder for the degree of infringement.

The federal courts have considerable discretion under equity to deny, issue, stay, modify, or dissolve injunctions and other equitable relief. The ITC similarly has significant discretion, essentially the same as a district court when deciding requests for preliminary equitable relief. The relief available in ITC actions after trial is less discretionary, given the applicable statutory mandates defining the applicable relief available and exceptions to such relief (public interests and Presidential review). But in all phases of district court and ITC litigations, the equities of a case can affect the grant, denial, or form of relief.

If an enjoined person violates an injunction or exclusion order, both the federal courts and the ITC can grant relief. And Customs can hold and thereby exclude importation of infringing articles subject to an exclusion order. The federal courts can find a violator in contempt and enter monetary awards and additional relief. The ITC can take a variety of steps to enforce compliance with its issued orders, including informal communications, fact-finding, revision of its orders, and formal enforcement or advisory-opinion proceedings. The ITC can award civil monetary penalties, payable to the U.S. government, as sanctions for violations of its orders. The ITC can even initiate actions in a federal district court to compel compliance with its orders or its award of sanctions.

The federal courts and the ITC also can review redesigned products made by an adjudicated infringer or an importer, to consider whether the products fall within an issued injunction or order. For actions initiated in district courts, redesigns might be addressed through a contempt proceeding or through a separate district court action. When the ITC enters an exclusion order, Customs will consider the redesigns and make its best judgment of whether the redesigns should be excluded or imported. In addition, the ITC can decide whether redesigns are covered by an entered exclusion order through informal exchanges, or through formal enforcement proceedings, or in advisory opinion proceedings. The Federal Circuit has appellate jurisdiction over these determinations by the federal courts and most, but not all, of the decisions of the ITC (no right to appeal informal decisions or advisory opinions).

Counsel should consider these equitable remedies whenever advising clients of the potential value and use of their patents, or the risks their clients face when using the patented inventions of others. The forum the patent holder selects can affect what equitable relief is available, the speed of the resolution, and perhaps even the probability of success. Counsel can assist the client in enforcing injunctions or orders, or minimizing the adverse effects of any such injunctive relief.

It is the purpose of this article to give counsel an overview of the applicable law and insight into its application. We have sought to objectively report on the status of the law, without presenting our personal views of where the law should be going. We have focused on controlling statutes and rules and precedent from the Supreme Court, the Federal Circuit, and the ITC, with the goal of providing a broad overview of the principles and factors that control. We have cited regional circuit and lower courts’ decisions to identify procedures, issues, or views that help fill in this overview. We have not addressed and described the complete wealth of relevant precedent of the Circuits and the district courts, or sought to explain the relevant differences between the law, local rules, and practices applied by the regional courts.

We have organized this article to include the sections identified in the above outline. While a reader can go directly to a section to gain some understanding and insight concerning the law applicable to the identified subject matter, we have sought to organize the article to flow logically and build progressively upon earlier sections. At least in several instances, counsel cannot fully appreciate the law and procedures applicable to a given type of equitable relief without considering some or all preceding sections.

99 J. Pat. & Trademark Off. Soc’y 530(2017)

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