July 11, 2017

Lack of Clarity for Reason for Denying Permanent Injunction Results in Remand

By Bryan K. Wheelock, Principal

In Genband US LLC v. Metaswitch Networks Corp., [2017-1148] (July 1-, 2017), the Federal Circuit vacated the denial of a permanent injunction and remanded for reconsideration.

The jury found U.S. Patent Nos. 6,772,210; 6,791,971; 6,885,658; 6,934,279; 7,995,589; 7,047,561; 7,184,427; and 7,990,984 not invalid and infringed, and awarded $8,168,400 in damages – but the district court denied a permanent injunction.  The district court rested its denial entirely on the determination that Genband failed to show that it would suffer irreparable harm from continued infringement.

The court declared that Genband had to prove that “the patented features drive demand for the product,” but the Federal Circuit could not be sure that the district court applied the proper nexus, i.e. whether the district court required that the patented feature be “the driver” or simply “a driver.”  The Federal Circuit said it is sufficient that the record established that the patented features influence consumers’ perceptions of and desire for these products.  Based upon the district court’s opinion, the Federal Circuit had no basis for inferring that the district court actually used the correct standard, rather than an unduly stringent test, to interpret and apply the “drive demand” standard.

The Federal Circuit said that a patentee may be able to make the causal connection between infringement and the relevant lost sales through evidence of various kinds (e.g., that the infringing features significantly increased the product’s desirability) that soundly supports an inference of causation of a significant number of purchasers’ decisions.

The Federal Circuit determined that remand was needed for the district court to clarify how Genband’s evidence was not sufficient.